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Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

July 20, 2006

Date of report (Date of earliest event reported)

SEI Investments Company

(Exact name of registrant as specified in its charter)

Pennsylvania

0-10200

23-1707341

(State or other jurisdiction

of incorporation)

(Commission File No.)

(I.R.S. Employer

Identification No.)

1 Freedom Valley Drive

Oaks, Pennsylvania 19456

(Address of principal executive offices) (Zip Code)

(610) 676-1000

(Registrants’ telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On Thursday, July 20, 2006, SEI Investments Company issued a press release announcing its financial and operating results for the second quarter ended June 30, 2006. A copy of the press release is furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference.

As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02 and in Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing with the Securities and Exchange Commission, except as shall be expressly provided by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)

Exhibits.

99.1

Press Release dated July 20, 2006 of SEI Investments Company.

SIGNATURES

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


	SEI Investments Company

Date: July 24, 2006	By:	/s/ Dennis J. McGonigle
		Dennis J. McGonigle
		Chief Financial Officer

EXHIBIT INDEX


Exhibit Number		Description
99.1		Press Release dated July 20, 2006 of SEI Investments Company.

Press Release

Exhibit 99.1

NEWS FROM SEI

For Immediate Release


Contact:	Mark Samuels, SVP	Murray Louis, VP	Larry Wexler, Corp PR
Voice:	610.676.2024	610.676.1932	610.676.1440
E-mail	msamuels@seic.com	mlouis@seic.com	lwexler@seic.com
Pages:	Eight

SEI Investments Reports Second-Quarter 2006 Results

Net Income up 31%

OAKS, Pa., July 20, 2006 — SEI Investments Company (NASDAQ:SEIC) today announced financial results for second-quarter 2006, reporting increases in revenues, net income and earnings per share, compared to the corresponding period for the prior year. Revenues in the second-quarter 2006 include (in thousands) $69,651 from LSV Asset Management (LSV) due to the consolidation of its operations with SEI. Revenues in the second-quarter 2006 without LSV are (in thousands) $215,367, an increase of 13 percent.


Consolidated Overview (In thousands, except earnings per share)	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2006		2005		%		2006		2005		%
Revenues	$	285,018	$	190,080	50	%	$	562,151	$	375,761	50	%
Net Income Before Taxes		85,238		69,364	23	%		171,978		138,197	24	%
Net Income		57,911		44,184	31	%		112,817		87,893	28	%
Diluted Earnings Per Share	$	.57	$	.43	33	%	$	1.11	$	.84	32	%

“We continue to be satisfied with our quarterly results, especially since we are shifting into the execution stage of our new strategies,” said Alfred P. West, Jr., SEI Chairman and CEO.

“The investments we are making are on schedule, the market acceptance of our new solutions is strengthening, and our transformation is well underway. In the long run, we remain firm in our belief that what we are doing will position us to provide our clients with increased opportunities for success and allow us to grow our future revenues and profits more rapidly.”

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


(In thousands)	For the Three Month Period Ended June 30,								For the Six Month Period Ended June 30,
	2006			2005			%		2006			2005			%
Private Banking and Trust:
Revenues	$	70,169		$	67,491		4	%	$	139,163		$	135,788		2	%
Expenses		45,742			42,226		8	%		90,845			84,899		7	%

Operating Profit	$	24,427		$	25,265		(3	)%	$	48,318		$	50,889		(5	)%
Operating Margin		35	%		37	%				35	%		37	%

Investment Advisors:
Revenues		55,232			48,838		13	%		110,529			97,216		14	%
Expenses		28,993			21,513		35	%		55,210			42,781		29	%

Operating Profit		26,239			27,325		(4	)%		55,319			54,435		2	%
Operating Margin		48	%		56	%				50	%		56	%

Enterprises:
Revenues		38,523			31,734		21	%		77,051			61,492		25	%
Expenses		26,154			21,341		23	%		50,604			41,659		21	%

Operating Profit		12,369			10,393		19	%		26,447			19,833		33	%
Operating Margin		32	%		33	%				34	%		32	%

Money Managers:
Revenues		29,051			25,286		15	%		56,336			49,514		14	%
Expenses		22,554			21,246		6	%		45,027			40,722		11	%

Operating Profit		6,497			4,040		61	%		11,309			8,792		29	%
Operating Margin		22	%		16	%				20	%		18	%

Investments in New Businesses:
Revenues		22,392			16,731		34	%		43,387			31,751		37	%
Expenses		28,045			23,965		17	%		53,034			46,553		14	%

Operating Loss		(5,653	)		(7,234	)	(22	)%		(9,647	)		(14,802	)	35	%
Operating Margin		(25	)%		(43	)%				(22	)%		(47	)%

LSV
Revenues		69,651			—		—			135,685			—		—
Expenses (1)		42,840			—		—			83,778			—		—

Operating profit (2)		26,811			—		—			51,907			—		—
		38	%							38	%

Consolidated Segment Totals:
Revenues	$	285,018		$	190,080		50	%	$	562,151		$	375,761		50	%
Expenses		194,328			130,291		49	%		378,498			256,614		47	%

Operating Profit	$	90,690		$	59,789		52	%	$	183,653		$	119,147		54	%
Operating Margin		32	%		31	%				33	%		32	%

(1)	Includes $36,573 and $70,866 for the three and six month periods ended June 30, 2006, respectively, of minority interest to the other partners of LSV.

(2)	Our proportionate share in the earnings of LSV for the three and six month periods ending June 30, 2005 was $17,636 and $32,862, respectively, and was reflected in Equity in the earnings of unconsolidated affiliate.

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, 2006 are as follows:


	Three months ended June 30,						Six months ended June 30,
	2006			2005			2006			2005
Total operating profit from business segments	$	90,690		$	59,789		$	183,653		$	119,147

General and Administrative expenses		(8,927	)		(9,390	)		(18,849	)		(17,119	)
Equity in the earnings of unconsolidated affiliate		—			17,636			—			32,862
Net gain (loss) from investments		602			(78	)		360			349
Interest, net		1,650			1,407			3,149			2,958
Other income		—			—			1,588			—
LSV Employee Group (1)		1,223			—			2,077			—

Income before taxes	$	85,238		$	69,364		$	171,978		$	138,197

(1)

– LSV Employee Group includes $15 and $26 expense for the three and six month periods ended June 30, 2006, respectively, included in general and administrative, $7 for the six month period ended June 30, 2006 included in interest income, and $1,208 and $2,058 for the three and six month periods ended June 30, 2006, respectively, included in interest expense. These items are offset through Minority interest since SEI does not have any ownership in LSV Employee Group LLC.

Second-Quarter Business Commentary:

•

As of the first-quarter, SEI began to consolidate the operations of LSV Asset Management and LSV Employee Group. As of the second-quarter, the company’s percentage ownership in LSV remained at 43 percent. In the second-quarter 2006, the company recognized $26.8 million as its portion of the earnings from LSV versus $17.6 million in second quarter 2005.

•

Private Banking & Trust revenue was modestly higher versus a year ago reflecting net new client activity.

•

While the Investment Advisors, Enterprises, Money Managers and Investments in New Businesses segments all realized double digit growth versus year ago levels, the Investment Advisors and Enterprises segments’ revenues were flat versus the prior quarter due to weak capital markets.

•

The Investment Advisors segment’s operating margin was affected by a one time write-off of approximately $3.4 million.

•

Net income was positively affected by a lower effective tax rate of approximately 32% and option expense under FAS 123 (R) of $3.4 million, versus $4.5 million in the first-quarter 2006.

•

The Money Managers segment realized an improved operating margin as a result of continuing revenue growth.

•

Assets under management grew by $1.6 billion during the second quarter to $161.7 billion. This growth came entirely from LSV.

•

In the second quarter, SEI purchased 819,000 shares of its common stock for $36.5 million.

Earnings Conference Call

A conference call to review earnings is scheduled for 2:00 PM EDT on July 20, 2006. Investors may listen to the call at www.seic.com, or listen at www.earnings.com, a service of CCBN. The call may also be accessed at numerous financial services web sites including AOL, Motley Fool 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 836117.

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 the period ending June 30, 2006, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $334.3 billion in mutual fund and pooled assets and manages $161.7 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)


	Three Months Ended June 30,
	2006			2005
Revenues (1)	$	285,018		$	190,080

Operating and development expenses		113,174			97,080
Sales and marketing expenses (1)		42,955			33,211
General and administrative expenses		8,927			9,390

Income before interest and taxes		119,962			50,399

Minority Interest		(36,976	)		—
Equity in earnings of unconsolidated affiliate		—			17,636
Net gain (loss) on investments		602			(78	)
Interest income (1)		3,098			1,784
Interest expense (1)		(1,448	)		(377	)

Income before taxes		85,238			69,364

Income taxes		27,327			25,180

Net income	$	57,911		$	44,184

Diluted earnings per common share	$	.57		$	.43

Shares used to calculate diluted earnings per common share		101,263			103,391

Basic earnings per common share	$	.59		$	.44

Shares used to calculate basic earnings per common share		98,495			100,786

(1)

– Includes the operations of LSV and LSV Employee Group for the second-quarter 2006. Revenues include $69,651 from LSV, Sales and marketing includes $6,267 from LSV, Interest income includes $315 from LSV and LSV Employee Group, and Interest expense includes $1,208 from LSV Employee Group. The portion of ownership of LSV and LSV Employee Group by non-affiliated SEI entities is reflected through Minority interest. Our proportionate share in the earnings of LSV for second-quarter 2005 was reflected in Equity in the earnings of unconsolidated affiliate.

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)


	Six Months Ended June 30,
	2006			2005
Revenues (1)	$	562,151		$	375,761

Operating and development expenses		219,642			191,507
Sales and marketing expenses (1)		85,041			65,107
General and administrative expenses		18,849			17,119

Income before interest and taxes		238,619			102,028

Minority Interest		(71,738	)		—
Equity in earnings of unconsolidated affiliate		—			32,862
Net gain on investments		360			349
Interest income (1)		5,752			3,760
Interest expense (1)		(2,603	)		(802	)
Other income		1,588			—

Income before taxes		171,978			138,197

Income taxes		59,161			50,304

Net income	$	112,817		$	87,893

Diluted earnings per common share	$	1.11		$	.84

Shares used to calculate diluted earnings per common share		101,287			104,043

Basic earnings per common share	$	1.14		$	.87

Shares used to calculate basic earnings per common share		98,627			101,281

(1)

– Includes the operations of LSV and LSV Employee Group for the six months in 2006. Revenues include $135,685 from LSV, Sales and marketing includes $12,912 from LSV, Interest income includes $654 from LSV and LSV Employee Group, and Interest expense includes $2,058 from LSV Employee Group. The portion of ownership of LSV and LSV Employee Group by non-affiliated SEI entities is reflected through Minority interest. Our proportionate share in the earnings of LSV for six-months in 2005 was reflected in Equity in the earnings of unconsolidated affiliate.

SEI INVESTMENTS COMPANY

CONDENSED BALANCE SHEETS

(In thousands)


	June 30, 2006		December 31, 2005
Assets

Cash and short-term investments (1)	$	177,284	$	130,128
Restricted Cash		10,250		10,250
Receivables (1)		207,631		128,545
Other current assets		50,347		37,053

Total current assets		445,512		305,976

Property and Equipment, net		122,343		114,505
Investments available for sale		40,864		54,632
Capitalized Software, net		145,393		116,670
Goodwill (2) (3)		95,062		—
Investment in unconsolidated affiliate (1)		—		51,941
Other assets		22,127		13,423

Total assets	$	871,301	$	657,147

Liabilities

Current liabilities (1) (3)	$	147,187	$	167,470
Long-term debt (2) (3)		74,039		9,000
Deferred income taxes		60,876		58,989
Minority Interest		94,384		—

Shareholders’ Equity		494,815		421,688

Total liabilities and shareholders’ equity	$	871,301	$	657,147

(1)	– Includes the accounts of LSV as of June 30, 2006. Cash includes $60,942, Receivables includes $72,043, and Current Liabilities includes $4,057 from LSV. Prior to 2006, our investment in the net assets of LSV was recorded in Investment in unconsolidated affiliate.

(2)

– Primarily relates to LSV Employee Group. Goodwill was primarily generated as a result of LSV Employee Group buying an equity investment of LSV for $92,000. LSV Employee Group financed the purchase price, of which $10,000 is classified as a current liability and the remaining $69,039 is reflected as Long-term debt at June 30, 2006.

(3)	- The Company provided an unsecured loan guarantee to LSV Employee Group which resulted in consolidating the accounts of LSV Employee Group.

SEI INVESTMENTS COMPANY

ASSET BALANCES

(In millions)


	Jun. 30, 2005		Sep. 30, 2005		Dec. 31, 2005		Mar. 31, 2006		Jun. 30, 2006
Private Banking and Trust:
Equity/Fixed Income prgms.	$	2,495	$	2,504	$	2,363	$	2,404	$	2,109
Collective Trust Fund prgm.		1,700		1,704		1,657		1,581		1,459
Liquidity funds		7,442		7,668		7,485		7,139		7,627

Total assets under mgmt.	$	11,637	$	11,876	$	11,505	$	11,124	$	11,195

Client assets under admin.		16,704		10,612		10,275		15,279		15,157

Total assets under admin.	$	28,341	$	22,488	$	21,780	$	26,403	$	26,352

Investment Advisors:
Equity/Fixed Income prgms.	$	27,674	$	28,993	$	29,553	$	31,569	$	30,709
Collective Trust Fund prgm.		2,610		2,623		2,479		2,482		2,473
Liquidity funds		991		1,011		1,103		1,017		1,306

Total assets under mgmt.	$	31,275	$	32,627	$	33,135	$	35,068	$	34,488

Enterprises:
Equity/Fixed Income prgms.	$	25,642	$	27,626	$	30,203	$	32,083	$	32,709
Collective Trust Fund prgm.		1,001		1,013		1,172		1,157		1,147
Liquidity funds		2,836		2,389		3,153		4,076		3,823

Total assets under mgmt.	$	29,479	$	31,028	$	34,528	$	37,316	$	37,679

Money Managers:
Equity/Fixed Income prgms.	$	12	$	13	$	11	$	33	$	34
Collective Trust Fund prgm.		8,108		8,524		8,770		9,096		8,923
Liquidity funds		167		185		412		505		363

Total assets under mgmt.	$	8,287	$	8,722	$	9,193	$	9,634	$	9,320

Client assets under admin.		158,332		168,399		147,357		151,688		153,406

Total assets under admin.	$	166,619	$	177,121	$	156,550	$	161,322	$	162,726

Investments in New Businesses:
Equity/Fixed Income prgms.	$	12,259	$	11,093	$	12,396	$	12,848	$	13,322

Total assets under mgmt.	$	12,259	$	11,093	$	12,396	$	12,848	$	13,322

Client assets under admin.		7,296		6,841		5,894		4,496		4,053

Total assets under admin.	$	19,555	$	17,934	$	18,290	$	17,344	$	17,375

LSV Asset Management
Equity/Fixed Income prgms.	$	37,740	$	43,192	$	47,781	$	54,128	$	55,687

Consolidated:
Equity/Fixed Income prgms (A,B)	$	105,822	$	113,421	$	122,307	$	133,065	$	134,570
Collective Trust Fund prgm.		13,419		13,864		14,078		14,316		14,002
Liquidity funds (B)		11,436		11,253		12,153		12,737		13,119

Total assets under mgmt.	$	130,677	$	138,538	$	148,538	$	160,118	$	161,691

Client assets under admin.		182,332		185,852		163,526		171,463		172,616

Total assets	$	313,009	$	324,390	$	312,064	$	331,581	$	334,307

(A)	Equity/Fixed Income programs include $2,986 of assets invested in SEI’s Asset Allocation Funds at 6/30/06

(B)	In addition to the numbers presented, SEI also administers an additional $9,979 in Funds of Funds assets (as of June 30, 2006) on which SEI does not earn an administration fee.