SEI Reports Second-Quarter 2008 Results

Revenues down 4%, Net Income down 34%

OAKS, Pa., July 23 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for second-quarter 2008, reporting decreases in revenues, net income and earnings per share compared to second-quarter 2007. Net income during the second-quarter was negatively affected by a $27.3 million non-cash pre-tax charge (approximately $.09 per share post-tax). This charge is related to previously-disclosed support agreements covering holdings of structured investment products by SEI- sponsored money market funds. This current period charge increases the total accrual for these support agreements to $78.2 million.



    Consolidated Overview
    (In thousands,
     except earnings     For the Three Months         For the Six Months
      per share)              Ended June 30,             Ended June 30,
                         2008      2007      %       2008      2007      %
    Revenues           $329,523  $343,258   (4%)   $663,431  $665,983   --
    Net Income
     Before Taxes        73,385   112,102  (35%)    151,192   213,021  (29%)
    Net Income           46,164    69,501  (34%)     95,110   132,878  (28%)
    Diluted
     Earnings
     Per Share             $.24      $.34  (29%)       $.48      $.65  (26%)

"We continue to make progress, even in the face of difficulties created by the capital and credit markets," said Alfred P. West, Jr., SEI Chairman and CEO.

"We generated good sales across our core businesses, realized further acceptance of our new strategies, continued to operate and expand our Global Wealth Platform, and made good progress on our other key investments. The current market environment will make growth in revenues and profits, in the short-term, challenging. In the long run, we remain firm in our belief that what we are doing will provide our clients with increased opportunities for success and allow us to grow our future revenues and profits."



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

    (In thousands)     For the Three Month Period   For the Six Month Period
                              Ended  June 30,            Ended  June 30,
                          2008      2007       %      2008      2007      %
    Private Banks:
      Revenues          $103,602  $100,090     4%   $210,656  $197,828    6%
      Expenses            85,367    80,829     6%    171,534   158,822    8%
      Operating Profit   $18,235   $19,261    (5%)   $39,122   $39,006    --
      Operating Margin        18%       19%               19%       20%

    Investment Advisors:
      Revenues            61,848    65,446    (5%)   122,367   127,009   (4%)
      Expenses            31,551    30,919     2%     62,927    60,293    4%
      Operating Profit    30,297    34,527   (12%)    59,440    66,716  (11%)
      Operating Margin        49%       53%               49%       53%

    Institutional
     Investors:
      Revenues            51,300    48,911     5%    101,989    95,540    7%
      Expenses            29,328    30,181    (3%)    59,468    58,354    2%
      Operating Profit    21,972    18,730    17%     42,521    37,186   14%
      Operating Margin        43%       38%               42%       39%

    Investment Managers:
      Revenues            37,307    35,293     6%     73,800    69,287    7%
      Expenses            25,012    24,302     3%     50,976    49,204    4%
      Operating Profit    12,295    10,991    12%     22,824    20,083   14%
      Operating Margin        33%       31%               31%       29%

    Investments in New
     Businesses:
      Revenues             1,864     1,836     2%      3,698     3,466    7%
      Expenses             4,147     4,725   (12%)     8,799     9,577   (8%)
      Operating Loss      (2,283)   (2,889)   21%     (5,101)   (6,111)  17%
      Operating Margin       n/a       n/a               n/a       n/a

    LSV:
      Revenues            73,602    91,682   (20%)    150,921   172,853 (13%)
      Expenses (1)        45,840    56,262   (19%)     93,196   106,159 (12%)
      Operating profit    27,762    35,420   (22%)     57,725    66,694 (13%)
      Operating Margin        38%       39%                38%       39%

    Consolidated
     Segment Totals:
      Revenues          $329,523  $343,258    (4%)   $663,431  $665,983   --
      Expenses           221,245   227,218    (3%)    446,900   442,409   1%
      Operating Profit  $108,278  $116,040    (7%)   $216,531  $223,574  (3%)
      Operating Margin        33%       34%                33%       34%

    (1) Includes $38,072 and $48,861 for the three month period ended June 30,
        2008 and 2007, respectively, and $79,310 and $91,533 for the six month
        period ended June 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 six month periods ended June 30, 2008 and 2007 is as follows:



                                    Three Months Ended   Six Months Ended
                                         June 30,             June 30,
                                      2008       2007      2008      2007

    Total operating profit
     from business segments         $108,278   $116,040  $216,531  $223,574

    Corporate overhead expenses      (10,347)   (10,578)  (20,456)  (20,705)
    Minority interest reflected
     in segments                      39,082     50,033    81,270    93,625
    LSV Employee Group Expenses (1)   (1,819)    (1,820)   (3,640)   (3,640)

    Income from operations          $135,194   $153,675  $273,705  $292,854

    (1) Includes $1,806 for the three month period ending June 30, 2008 and
        2007, and $3,611 for the six month period ended June 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.


    Second-Quarter Business Commentary:

-- The Private Banks, Institutional Investors and Investment Managers segments generated gains in second-quarter 2008 revenues versus second-quarter 2007 due to new client activity.

-- The Institutional Investors and Investment Managers segments generated gains in second-quarter 2008 operating profits versus second-quarter 2007.

-- Private Banks second-quarter 2008 operating profit was down versus second-quarter 2007 due to increased costs associated with putting the Global Wealth Platform into production and supporting operations.

-- The LSV and Investment Advisors segments were most directly affected by the weakening capital markets resulting in second-quarter 2008 revenues and operating profits declining from second-quarter 2007 levels.

-- The Global Wealth Platform was placed into service during the third- quarter 2007. Second-quarter 2008 expenses reflect an increase of approximately $3.5 million for amortization versus second-quarter 2007 levels. The amortization is primarily recognized in the Private Banks and Investment Advisors segments.

-- The company's percentage ownership in LSV remained at approximately 43 percent. In the second-quarter 2008, the company recognized $27.8 million as its portion of the earnings from LSV versus $35.4 million in the second- quarter 2007.

-- Assets under management declined by $6.4 billion during second-quarter 2008 to $178.2 billion, primarily due to market depreciation.

-- In the second-quarter 2008, SEI purchased 1.9 million shares of its common stock for $45.5 million.

-- The second-quarter 2008 results include a $27.3 million non-cash charge related to money market funds support agreements. Additional information about the capital support agreements is contained in SEI's 2007 Form 10-K filed February 26, 2008 and SEI's 2008 first-quarter 10-Q filing dated May 2, 2008.

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM ET on July 23, 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 953975.

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 June 30, 2008, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $420 billion in mutual fund and pooled assets and manages $178 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 our responses 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 June 30,
                                                        2008        2007

    Asset management, admin. and distribution fees    $260,931    $276,653
    Information processing and software servicing fees  57,088      55,414
    Transaction-based and trade execution fees          11,504      11,191

    Total revenues                                     329,523     343,258

    Commissions and fees                                43,045      43,036
    Compensation, benefits and other personnel          83,529      88,552
    Consulting, outsourcing and professional fees       26,611      22,617
    Data processing and computer related                11,229      10,227
    Facilities, supplies and other costs                18,417      17,700
    Depreciation and amortization                       11,498       7,451

    Total expenses                                     194,329     189,583

    Income from operations                             135,194     153,675

    Minority interest                                  (36,930)    (47,242)
    Net loss on investments (1)                        (27,294)       (997)
    Interest and dividend income                         3,223       4,882
    Interest expense                                      (808)     (1,168)
    Other                                                  --        2,952

    Income before taxes                                 73,385     112,102

    Income taxes                                        27,221      42,601

    Net income                                         $46,164     $69,501


    Diluted earnings per common share                     $.24        $.34

    Shares used to calculate diluted
     earnings per common share                         195,992     203,604

    Basic earnings per common share                       $.24        $.35

    Shares used to calculate basic
     earnings per common share                         192,187     197,314

    (1)  Includes $27,301 for the three month period ended June 30, 2008 of a
         non-cash charge related to money market funds support agreements.



                           SEI INVESTMENTS COMPANY
                      CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share data)
                                 (Unaudited)

                                                    Six Months Ended June 30,
                                                        2008        2007

    Asset management, admin. and distribution fees    $520,990    $533,051
    Information processing and software servicing fees 117,227     109,646
    Transaction-based and trade execution fees          25,214      23,286

    Total revenues                                     663,431     665,983

    Commissions and fees                                88,340      85,673
    Compensation, benefits and other personnel         167,421     172,830
    Consulting, outsourcing and professional fees       53,368      43,496
    Data processing and computer related                21,777      20,994
    Facilities, supplies and other costs                35,802      35,260
    Depreciation and amortization                       23,018      14,876

    Total expenses                                     389,726     373,129

    Income from operations                             273,705     292,854

    Minority interest                                  (76,759)    (87,976)
    Net loss on investments (1)                        (51,340)     (1,313)
    Interest and dividend income                         7,361       8,933
    Interest expense                                    (1,775)     (2,429)
    Other                                                   --       2,952

    Income before taxes                                151,192     213,021

    Income taxes                                        56,082      80,143

    Net income                                         $95,110    $132,878


    Diluted earnings per common share                     $.48        $.65

    Shares used to calculate diluted
     earnings per common share                         197,102     204,153

    Basic earnings per common share                       $.49        $.67

    Shares used to calculate basic
     earnings per common share                         192,908     197,614

    (1)  Includes $53,096 for the six month period ended June 30, 2008 of a
         non-cash charge related to money market funds support agreements.



                           SEI INVESTMENTS COMPANY
                           CONDENSED BALANCE SHEETS
                                (In thousands)

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

    Cash and short-term investments                 $320,385       $360,921
    Restricted cash                                   26,822         10,250
    Receivables                                      275,492        275,109
    Securities owned                                  11,987         16,777
    Other current assets                              54,563         31,877

      Total current assets                           689,249        694,934

    Property and equipment, net                      141,775        143,516
    Investments available for sale                    75,069         77,169
    Capitalized software, net                        248,939        231,684
    Goodwill                                          22,842         22,842
    Intangible assets                                 56,348         60,177
    Other assets, net                                 18,260         22,043

      Total assets                                $1,252,482     $1,252,365


    Liabilities

    Current liabilities (1)                         $230,715       $230,367
    Long-term debt                                    33,819         43,971
    Deferred income taxes                             77,869         73,600
    Long term liabilities                             12,623         11,895
    Minority interest                                133,901        136,149

    Shareholders' Equity                             763,555        756,383

      Total liabilities and shareholders' equity  $1,252,482     $1,252,365

    (1)  Includes $78,218 and $25,122 for the period ended June 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)

                             Jun. 30,   Sep. 30,  Dec. 31,  Mar. 31, Jun. 30,
                               2007      2007      2007      2008     2008
    Private Banks:
      Equity/Fixed
       Income prgms.         $20,666    $21,816   $21,160   $18,904  $18,163
      Collective Trust
       Fund prgm.              1,078      1,056     1,007     1,008      955
      Liquidity funds          8,224      8,836     8,886     9,198    8,345
      Total assets
       under mgmt.           $29,968    $31,708   $31,053   $29,110  $27,463

      Client assets
       under admin.           15,019     15,655    14,235    13,897   13,242
      Total assets           $44,987    $47,363   $45,288   $43,007  $40,705

    Investment Advisors:
      Equity/Fixed
       Income prgms.         $36,923    $37,751   $36,378   $32,736  $31,938
      Collective Trust
       Fund prgm.              2,334      2,325     2,295     2,310    2,259
      Liquidity funds          1,400      1,619     2,079     2,461    2,410
      Total assets
       under mgmt.           $40,657    $41,695   $40,752   $37,507  $36,607

    Institutional
     Investors:
      Equity/Fixed
       Income prgms.         $40,771    $43,504   $44,833   $43,134  $43,608
      Collective Trust
       Fund prgm.                895        907       897       924      947
      Liquidity funds          4,128      4,342     3,629     4,077    3,950
      Total assets
       under mgmt.           $45,794    $48,753   $49,359   $48,135  $48,505

    Investment Managers:
      Equity/Fixed
       Income prgms.             $32        $24       $24       $20      $19
      Collective Trust
       Fund prgm.              7,990      6,814     6,651     6,571    6,572
      Liquidity funds            271        360       325       571      438
      Total assets
       under mgmt.            $8,293     $7,198    $7,000    $7,162   $7,029

      Client assets
       under admin.          192,931    205,251   215,124   225,005  228,722
      Total assets          $201,224   $212,449  $222,124  $232,167 $235,751

    Investments in New
     Businesses:
      Equity/Fixed
       Income prgms.            $887       $907      $929      $869     $838
      Liquidity funds             43         40        74        77       98
      Total assets
       under mgmt.              $930       $947    $1,003      $946     $936

    LSV Asset Management
      Equity/Fixed
       Income prgms.         $73,100    $71,349   $67,599   $61,765  $57,692

    Consolidated:
      Equity/Fixed
       Income prgms (A)     $172,379   $175,351  $170,923  $157,428 $152,258
      Collective Trust
       Fund prgm.             12,297     11,102    10,850    10,813   10,733
      Liquidity funds         14,066     15,197    14,993    16,384   15,241
      Total assets
       under mgmt.          $198,742   $201,650  $196,766  $184,625 $178,232

      Client assets
       under admin. (B)      207,950    220,906   229,359   238,902  241,964
      Total assets          $406,692   $422,556  $426,125  $423,527 $420,196

    (A)  Equity/Fixed Income programs include $3,146 of assets invested in
         various asset allocation funds at June 30, 2008.
    (B)  In addition to the numbers presented, SEI also administers an
         additional $6,678 in Funds of Funds assets (as of June 30, 2008) on
         which SEI does not earn an administration fee.

SOURCE SEI