SEI Reports Third-Quarter Revenues Down 10%, Net Income Down 53%

Net income negatively affected by $40.8 million in SIV-related charges

OAKS, Pa., Oct. 22 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for third-quarter 2008, reporting decreases in revenues, net income and earnings per share compared to third-quarter 2007. Net income during the third-quarter 2008 was negatively affected by a $40.8 million pre-tax charge (approximately $.13 per share post-tax) for previously-disclosed structured investment vehicle-related issues involving SEI-sponsored money market funds. The total loss recognized during 2008 is $93.9 million and the total cumulative loss recognized is $119.0 million.


    Consolidated Overview   For the Three Months       For the Nine Months
    (In thousands, except   Ended September 30,        Ended September 30,
     earnings per share)
                           2008     2007       %      2008      2007       %

    Revenues
                         $316,086  $349,636  (10%) $979,517  $1,015,619   (4%)
    Net Income Before
     Taxes                 54,305   111,727  (51%)  205,497     324,748  (37%)
    Net Income             34,495    73,299  (53%)  129,605     206,177  (37%)
    Diluted Earnings Per
     Share                   $.18      $.37  (51%)     $.66       $1.02  (35%)

"The turmoil in the capital markets made the third-quarter a particularly challenging one," said Alfred P. West, Jr., SEI Chairman and CEO.

"The current market environment presents one of the most challenging ever faced. However, our diverse portfolio of businesses and our strong capital base and balance sheet should enable us to maintain profitability, continue to generate cash and stay the course in the implementation of our new strategies.

"Rest assured, during these times, we will continue to work hard to improve our business and its results. We are firm in our belief that what we are doing will provide our clients with opportunities for success, position us to prosper as times get better."

    Summary of Third-Quarter and Year to Date Results by Business Segment

    (In thousands)         For the Three Month     For the Nine Month Period
                                  Period                     Ended
                           Ended  September 30,           September 30,
                             2008      2007     %       2008       2007    %
    Private Banks:
       Revenues           $99,882  $104,280    (4%) $310,538   $302,108    3 %
       Expenses            79,545    82,846    (4%)  251,079    241,668    4 %
       Operating Profit   $20,337   $21,434    (5%)  $59,459    $60,440   (2%)
       Operating Margin        20 %      21 %             19 %       20 %

    Investment Advisors:
       Revenues            58,846    65,715   (10%)  181,213    192,724   (6%)
       Expenses            30,775    31,257    (2%)   93,702     91,550    2 %
       Operating Profit    28,071    34,458   (19%)   87,511    101,174  (14%)
       Operating Margin        48 %      52 %             48 %       52 %

    Institutional
     Investors:
       Revenues            52,757    51,275     3 %  154,746    146,815    5 %
       Expenses            30,525    30,980    (1%)   89,993     89,334    1 %
       Operating Profit    22,232    20,295    10 %   64,753     57,481   13 %
       Operating Margin        42 %      40 %             42 %       39 %

    Investment Managers:
       Revenues            38,202    35,844     7 %  112,002    105,131    7 %
       Expenses            26,566    25,445     4 %   77,542     74,649    4 %
       Operating Profit    11,636    10,399    12 %   34,460     30,482   13 %
       Operating Margin        30 %      29 %             31 %       29 %

    Investments in New
    Businesses:
       Revenues             1,811     1,881    (4%)    5,509      5,347    3 %
       Expenses             4,023     5,020   (20%)   12,822     14,597  (12%)
       Operating Loss      (2,212)   (3,139)   30 %   (7,313)    (9,250)  21 %
       Operating Margin       n/a       n/a              n/a        n/a

    LSV:
       Revenues            64,588    90,641   (29%)  215,509    263,494  (18%)
       Expenses (1)        40,754    56,252   (28%)  133,950    162,411  (18%)
       Operating Profit    23,834    34,389   (31%)   81,559    101,083  (19%)
       Operating Margin        37 %      38 %             38 %       38 %

    Consolidated Segment
    Totals:
       Revenues
                         $316,086  $349,636   (10%) $979,517 $1,015,619   (4%)
       Expenses           212,188   231,800    (8%)  659,088    674,209   (2%)
       Operating Profit  $103,898  $117,836   (12%) $320,429   $341,410   (6%)
       Operating Margin        33 %      34 %             33 %       34 %

(1) Includes $32,741 and $47,671 for the three-month period ended September 30, 2008 and 2007, respectively, and $112,051 and $139,204 for the nine-month period ended September 30, 2008 and 2007, respectively, of minority interest to the other partners of LSV.

A reconciliation of the totals reported for the business segments to the applicable line items in the Consolidated Statements of Income for the three and nine-month periods ended September 30, 2008 and 2007 is as follows:


                                    Three Months Ended    Nine Months Ended
                                       September 30,        September 30,
                                     2008      2007       2008       2007

    Total operating profit from
     business segments              $103,898   $117,836   $320,429  $341,410

    Corporate overhead expenses      (10,420)    (9,754)   (30,876)  (30,459)
    Minority interest reflected in
     segments                         33,291     49,016    114,561   142,641
    LSV Employee Group Expenses (1)   (1,820)    (1,820)    (5,460)   (5,460)

    Income from operations          $124,949   $155,278   $398,654  $448,132

(1) Includes $1,805 for the three-month period ending September 30, 2008 and 2007, and $5,416 for the nine-month period ended September 30, 2008 and 2007 of amortization expense related to intangible assets owned by LSV Employees Group LLC. The amortization is offset through Minority interest since SEI does not have any ownership in LSV Employee Group LLC.

Third-Quarter Business Commentary:

-- The Institutional Investors and Investment Managers segments generated gains in third-quarter 2008 revenues and operating profits versus third-quarter 2007 due to new client activity.

-- The LSV and Investment Advisors segments were most directly affected by the weakening capital markets resulting in substantial third-quarter 2008 revenue and operating profit declines from third-quarter 2007 levels.

-- The company's percentage ownership in LSV remained at approximately 43 percent. In the third-quarter 2008, the company recognized $23.8 million as its portion of the earnings from LSV versus $34.4 million in the third-quarter 2007.

-- Assets under management declined by $16.4 billion during third-quarter 2008 to $161.8 billion, primarily due to market depreciation.

-- The third-quarter 2008 results include a $34.2 million non-cash charge related to money market funds support agreements. Additionally, on September 30, 2008, SEI purchased all of the SIVs held by the SDIT Money Market fund for a cash purchase price of $15.3 million. The purchased securities on that date had a fair value of $8.7 million which resulted in a $6.6 million loss recognized in the third quarter. SEI has recognized losses of $93.9 million during 2008 and cumulative losses of $119.0 million associated with SIV-related issues involving SEI-sponsored money market funds. Additional information about the capital support agreements is attached to this release and is also contained in SEI's 2007 Form 10-K filed February 26, 2008 and SEI's 2008 second-quarter 10-Q filed July 31, 2008.

-- In the third-quarter 2008, SEI purchased 770,000 shares of its common stock for $16.7 million.

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM ET on October 22, 2008. Investors may listen to the call at www.seic.com (Investor Information section), or listen at www.earnings.com, a service of Thomson Streetevents. The call may also be accessed at numerous financial services web sites including AOL and Yahoo. Investors may also listen to replays at these web sites, or by telephone at (USA) 1-800-475-6701; (International) 320-365-3844, access code 966006.

About SEI

SEI (NASDAQ: SEIC) is a leading global provider of outsourced asset management, investment processing and investment operations solutions. The company's innovative solutions help corporations, financial institutions, financial advisors, and affluent families create and manage wealth. As of September 30, 2008, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $431 billion in mutual fund and pooled assets and manages $162 billion in assets. SEI serves clients, conducts or is registered to conduct business and/or operations, from more than 20 offices in over a dozen countries. For more information, visit www.seic.com.

Many of the statements in this release may be considered "forward looking statements" and include discussions about future operations, strategies and financial results. Forward-looking statements are based upon estimates and assumptions that involve 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.



                           SEI INVESTMENTS COMPANY
                      CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share data)
                                 (Unaudited)
                                              Three Months Ended September 30,
                                                    2008             2007

    Asset management, admin. and distribution
     fees                                          $243,162         $280,287
    Information processing and software
     servicing fees                                  56,577           58,485
    Transaction-based and trade execution fees       16,347           10,864

    Total revenues                                  316,086          349,636

    Commissions and fees                             42,336           44,184
    Compensation, benefits and other personnel       80,932           88,463
    Consulting, outsourcing and professional
     fees                                            26,213           23,703
    Data processing and computer related             11,325           10,410
    Facilities, supplies and other costs             18,656           16,607
    Depreciation and amortization                    11,675           10,991

    Total expenses                                  191,137          194,358

    Income from operations                          124,949          155,278

    Minority interest                               (31,078)         (46,463)
    Net loss on investments (1) (2)                 (42,047)            (202)
    Interest and dividend income                      3,384            4,381
    Interest expense                                   (903)          (1,267)

    Income before taxes                              54,305          111,727

    Income taxes                                     19,810           38,428

    Net income                                      $34,495          $73,299


    Diluted earnings per common share                  $.18             $.37

    Shares used to calculate diluted
       earnings per common share                    194,696          200,321

    Basic earnings per common share                    $.18             $.38

    Shares used to calculate basic
       earnings per common share                    191,554          194,930

(1) Includes $34,205 for the three month period ended September 30, 2008 of a non-cash charge related to money market funds support agreements.

(2) Includes $6,588 for the three month period ended September 30, 2008 of a loss related to the purchase of structured investment vehicles from a SEI- sponsored money market fund.



                           SEI INVESTMENTS COMPANY
                      CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share data)
                                 (Unaudited)
                                               Nine Months Ended September 30,
                                                    2008             2007

    Asset management, admin. and distribution
     fees                                          $764,152         $813,338
    Information processing and software
     servicing fees                                 173,804          168,131
    Transaction-based and trade execution fees       41,561           34,150

    Total revenues                                  979,517        1,015,619

    Commissions and fees                            130,676          129,857
    Compensation, benefits and other personnel      248,353          261,293
    Consulting, outsourcing and professional
     fees                                            79,581           67,199
    Data processing and computer related             33,102           31,404
    Facilities, supplies and other costs             54,458           51,867
    Depreciation and amortization                    34,693           25,867

    Total expenses                                  580,863          567,487

    Income from operations                          398,654          448,132

    Minority interest                              (107,837)        (134,439)
    Net loss on investments (1) (2)                 (93,387)          (1,515)
    Interest and dividend income                     10,745           13,314
    Interest expense                                 (2,678)          (3,696)
    Other                                                --            2,952

    Income before taxes                             205,497          324,748

    Income taxes                                     75,892          118,571

    Net income                                     $129,605         $206,177


    Diluted earnings per common share                  $.66            $1.02

    Shares used to calculate diluted
       earnings per common share                    196,300          202,875

    Basic earnings per common share                    $.67            $1.05

    Shares used to calculate basic
       earnings per common share                    192,457          196,720

(1) Includes $87,301 for the nine month period ended September 30, 2008 of a non-cash charge related to money market funds support agreements.

(2) Includes $6,588 for the three month period ended September 30, 2008 of a loss related to the purchase of structured investment vehicles from a SEI- sponsored money market fund.



                             SEI INVESTMENTS COMPANY
                             CONDENSED BALANCE SHEETS
                                  (In thousands)

                                                (Unaudited)
                                               September 30,      December 31,
                                                   2008              2007
    Assets

    Cash and short-term investments              $345,790           $360,921
    Restricted cash                                34,250             10,250
    Receivables                                   253,776            275,109
    Securities owned                               12,093             16,777
    Other current assets                           68,208             31,877

         Total current assets                     714,117            694,934

    Property and equipment, net                   150,735            143,516
    Marketable securities                          86,017             77,169
    Capitalized software, net                     258,190            231,684
    Goodwill                                       22,842             22,842
    Intangible assets                              54,434             60,177
    Other assets, net                              17,039             22,043

         Total assets                          $1,303,374         $1,252,365



    Liabilities

    Current liabilities (1)                      $267,515           $230,367
    Long-term debt                                 29,623             43,971
    Deferred income taxes                          81,978             73,600
    Long term liabilities                          12,021             11,895
    Minority interest                             128,858            136,149

    Shareholders' Equity                          783,379            756,383

         Total liabilities and
          shareholders' equity                 $1,303,374         $1,252,365

(1) Includes $112,423 and $25,122 for the period ended September 30, 2008 and December 31 2007, respectively, of an accrual related to money market funds support agreements.



                           SEI INVESTMENTS COMPANY
                                ASSET BALANCES
                                (In millions)
                                 (Unaudited)

                             Sep. 30,  Dec. 31, Mar. 31,  Jun. 30,  Sep. 30,
                               2007     2007      2008      2008      2008
    Private Banks:
       Equity/Fixed Income
        prgms.                $21,816  $21,160   $18,904   $18,163   $14,436
       Collective Trust Fund
        prgm.                   1,056    1,007     1,008       955     1,028
       Liquidity funds          8,836    8,886     9,198     8,345     9,253
       Total assets under
        mgmt.                 $31,708  $31,053   $29,110   $27,463   $24,717

       Client assets under
        admin.                 15,655   14,235    13,897    13,242    12,301
       Total assets           $47,363  $45,288   $43,007   $40,705   $37,018

    Investment Advisors:
       Equity/Fixed Income
        prgms.                $37,751  $36,378   $32,736   $31,938   $27,817
       Collective Trust Fund
        prgm.                   2,325    2,295     2,310     2,259     2,471
       Liquidity funds          1,619    2,079     2,461     2,410     2,859
       Total assets under
        mgmt.                 $41,695  $40,752   $37,507   $36,607   $33,147

    Institutional Investors:
       Equity/Fixed Income
        prgms.                $43,504  $44,833   $43,134   $43,608   $39,775
       Collective Trust Fund
        prgm.                     907      897       924       947     1,001
       Liquidity funds          4,342    3,629     4,077     3,950     3,930
       Total assets under
        mgmt.                 $48,753  $49,359   $48,135   $48,505   $44,706

    Investment Managers:
       Equity/Fixed Income
        prgms.                    $24      $24       $20       $19       $10
       Collective Trust Fund
        prgm.                   6,814    6,651     6,571     6,572     6,453
       Liquidity funds            360      325       571       438       699
       Total assets under
        mgmt.                  $7,198   $7,000    $7,162    $7,029    $7,162

       Client assets under
        admin.                205,251  215,124   225,005   228,722   256,553
       Total assets          $212,449 $222,124  $232,167  $235,751  $263,715

    Investments in New
     Businesses:
       Equity/Fixed Income
        prgms.                   $907     $929      $869      $838      $704
       Liquidity funds             40       74        77        98       115
       Total assets under
        mgmt.                    $947   $1,003      $946      $936      $819

    LSV Asset Management
       Equity/Fixed Income
        prgms.                $71,349  $67,599   $61,765   $57,692   $51,296

    Consolidated:
       Equity/Fixed Income
        prgms (A)            $175,351 $170,923  $157,428  $152,258  $134,038
       Collective Trust Fund
        prgm.                  11,102   10,850    10,813    10,733    10,953
       Liquidity funds         15,197   14,993    16,384    15,241    16,856
       Total assets under
        mgmt.                $201,650 $196,766  $184,625  $178,232  $161,847

       Client assets under
        admin. (B)            220,906  229,359   238,902   241,964   268,854
       Total assets          $422,556 $426,125  $423,527  $420,196  $430,701

(A) Equity/Fixed Income programs include $2,697 of assets invested in various asset allocation funds at September 30, 2008.

(B) In addition to the numbers presented, SEI also administers an additional $6,485 in Funds of Funds assets (as of September 30, 2008) on which SEI does not earn an administration fee.



                           SEI Investments Company
          Impact of Support Provided to Sponsored Money Market Funds
          Third-Quarter 2008 and Cumulative as of September 30, 2008
                                (in thousands)

                                       Transaction   Par Value     Support
                                          Dates         of          Amount
                                                    Securities
    Securities currently held by
     funds:
    Capital Support Agreement (1)        Nov 2007     $274,069      $150,000

    Capital Support Agreement (2)        Dec 2007       74,286        20,000
    Total of securities currently
     held by funds                                     348,355       170,000

    Securities purchased from funds:
    Gryphon (formerly Cheyne)           Sept 2008       15,321        15,321
    Total of all Securities                           $363,676      $185,321


                                   Third Quarter 2008       Cumulative
                                   Gross    After-Tax    Gross     After-Tax
                                   Charge   Charge       Charge     Charge

    Securities currently held by
     funds:
    Capital Support Agreement (1) $27,871    $17,698    $93,659     $59,099

    Capital Support Agreement (2)   7,289      4,629     18,765      11,841
    Total of securities
     currently held by funds       35,160     22,327    112,424      70,940

    Securities purchased from
     funds:
    Gryphon (formerly Cheyne)       5,634      3,578      6,588       4,157
    Total of all Securities       $40,794    $25,905   $119,012     $75,097


    (1) Pertains to SEI Daily Income Trust Prime Obligation Fund

    (2) Pertains to SEI Liquid Asset Trust Prime Obligation Fund

SOURCE SEI