SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 ----------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------------- --------------------- Commission file Number 0-10200 -------------------------------------------------------- A. Full title of the plan and the address of the plan, if different from that of the issuer named below: SEI Investments Capital Accumulation Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: SEI Investments Company 1 Freedom Valley Drive Oaks, Pennsylvania 19456 SEI INVESTMENTS CAPITAL ACCUMULATION PLAN ----------------------------------------- INDEX TO FINANCIAL STATEMENTS AND SCHEDULES -------------------------------------------
Page ---------------- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 FINANCIAL STATEMENTS: Statement of Net Assets Available for Benefits -- December 31, 1998 2 Statement of Net Assets Available for Benefits -- December 31, 1997 3 Statement of Changes in Net Assets Available for Benefits -- for the Year Ended December 31, 1998 4 NOTES TO FINANCIAL STATEMENTS 5-9 SUPPLEMENTAL SCHEDULES: I. Item 27(a)--Schedule of Assets Held for Investment Purposes December 31, 1998 10 II. Item 27(d)--Schedule of Reportable Transactions--for the Year Ended December 31, 1998 11 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Plan Administrator of SEI Investments Capital Accumulation Plan: We have audited the accompanying statements of net assets available for benefits of SEI Investments Capital Accumulation Plan (the "Plan") as of December 31, 1998 and 1997, and the related statement of changes in net assets available for benefits for the year ended December 31, 1998. These financial statements and the schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998 and 1997, and the changes in its net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the accompanying index are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Philadelphia, Pa., May 14, 1999 -1- SEI INVESTMENTS CAPITAL ACCUMULATION PLAN ----------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS ---------------------------------------------- DECEMBER 31, 1998 ----------------- The accompanying notes are an integral part of this statement. -2-
Core Large Interna- Small Large Diversified Stable Fixed Cap tional Cap Cap Moderate Asset Income Value Equity Growth Growth Growth Fund Fund Fund Fund Fund Fund Fund ----------- ----------- ------------ ----------- ------------ ------------ ----------- INVESTMENTS $6,413,190 $3,990,661 $16,346,608 $3,755,479 $11,519,567 $22,076,065 $447,166 PARTICIPANT LOANS -- -- -- -- -- -- -- EMPLOYEE AND EMPLOYER CONTRIBUTIONS RECEIVABLE 15,653 9,741 39,899 9,166 28,117 53,884 1,091 INTEREST RECEIVABLE 32,743 18,116 -- -- -- -- -- ---------- ---------- ----------- ---------- ----------- ----------- -------- NET ASSETS AVAILABLE FOR BENEFITS $6,461,586 $4,018,518 $16,386,507 $3,764,645 $11,547,684 $22,129,949 $448,257 ========== ========== =========== ========== =========== =========== ======== SEI Investments Diversified Diversified Emerging Company Global Global Diversified Markets Common Growth Stock Conservative Equity Stock Participant Fund Fund Fund Fund Fund Loans Total ----------- ----------- ------------ --------- ----------- ----------- ------------ INVESTMENTS $2,598,201 $4,918,137 $531,645 $288,544 $5,802,238 $ -- $78,687,501 PARTICIPANT LOANS -- -- -- -- -- 941,915 941,915 EMPLOYEE AND EMPLOYER CONTRIBUTIONS RECEIVABLE 6,342 12,004 1,298 704 13,937 -- 191,836 INTEREST RECEIVABLE -- -- -- -- -- -- 50,859 ---------- ---------- -------- -------- ---------- ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $2,604,543 $4,930,141 $532,943 $289,248 $5,816,175 $941,915 $79,872,111 ========== ========== ======== ======== ========== =========== =========== SEI INVESTMENTS CAPITAL ACCUMULATION PLAN ----------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS ---------------------------------------------- DECEMBER 31, 1997 ----------------- The accompanying notes are an integral part of this statement. -3-
Core Large Interna- Small Large Diversified Stable Fixed Cap tional Cap Cap Moderate Asset Income Value Equity Growth Growth Growth Fund Fund Fund Fund Fund Fund Fund ----------- ----------- ------------ ----------- ------------ ------------ ----------- INVESTMENTS $5,564,378 $3,447,108 $15,840,422 $3,607,507 $12,073,979 $17,029,296 $143,238 CASH AND SHORT- TERM FUND 606 375 1,724 393 1,314 1,854 16 PARTICIPANT LOANS -- -- -- -- -- -- -- EMPLOYEE AND EMPLOYER CONTRIBUTIONS RECEIVABLE 13,426 8,315 38,016 8,658 28,977 40,870 INTEREST RECEIVABLE 29,998 17,597 -- -- -- -- -- ---------- ---------- ----------- ---------- ----------- ----------- -------- NET ASSETS AVAILABLE FOR BENEFITS $5,608,408 $3,473,395 $15,880,162 $3,616,558 $12,104,270 $17,072,020 $143,598 ========== ========== =========== ========== =========== =========== ======== SEI Investments Diversified Diversified Emerging Company Global Global Diversified Markets Common Growth Stock Conservative Equity Stock Participant Fund Fund Fund Fund Fund Loans Total ----------- ----------- ------------ --------- ----------- ----------- ------------ INVESTMENTS $2,340,225 $4,276,445 $380,959 $363,228 $1,515,934 $ -- $66,582,719 CASH AND SHORT- TERM FUND 265 465 41 40 154 -- 7,247 PARTICIPANT LOANS -- -- -- -- -- 846,067 846,067 EMPLOYEE AND EMPLOYER CONTRIBUTIONS RECEIVABLE 5,616 10,263 914 872 3,639 -- 159,910 INTEREST RECEIVABLE -- -- -- -- -- -- 47,595 ---------- ---------- -------- -------- ---------- ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $2,346,106 $4,287,173 $381,914 $364,140 $1,519,727 $846,067 $67,643,538 ========== ========== ======== ======== ========== =========== =========== SEI INVESTMENTS CAPITAL ACCUMULATION PLAN ----------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS --------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1998 ------------------------------------ The accompanying notes are an integral part of this statement. -4-
Core Large Interna- Small Large Diversified Stable Fixed Cap tional Cap Cap Moderate Asset Income Value Equity Growth Growth Growth Fund Fund Fund Fund Fund Fund Fund ------------ ------------ ------------- ------------ ------------- ------------- ------------ EMPLOYEE CONTRIBUTIONS $ 179,698 $ 193,726 $ 840,073 $ 327,472 $ 920,608 $ 1,044,375 $ 60,016 EMPLOYER CONTRIBUTIONS 52,273 60,212 263,169 105,698 277,061 313,534 13,613 NET REALIZED/ UNREALIZED GAIN (LOSS) -- 3,761 635,770 513,438 531,873 5,868,339 3,634 DIVIDEND AND INTEREST INCOME 375,601 307,372 1,048,695 199,623 53,082 323,186 22,895 INTERFUND TRANSFERS - NET 2,054,483 393,820 (815,671) (430,747) (1,021,912) (689,915) 207,210 DISTRIBUTIONS TO PARTICIPANTS (1,808,877) (413,768) (1,465,691) (567,397) (1,317,298) (1,801,590) (2,709) ----------- ---------- ----------- ---------- ----------- ----------- -------- NET INCREASE/ (DECREASE) 853,178 545,123 506,345 148,087 (556,586) 5,057,929 304,659 NET ASSETS AVAILABLE FOR BENEFITS, JANUARY 1, 1998 5,608,408 3,473,395 15,880,162 3,616,558 12,104,270 17,072,020 143,598 ----------- ---------- ----------- ---------- ----------- ----------- -------- NET ASSETS AVAILABLE FOR BENEFITS, DECEMBER 31, 1998 $ 6,461,586 $4,018,518 $16,386,507 $3,764,645 $11,547,684 $22,129,949 $448,257 =========== ========== =========== ========== =========== =========== ======== SEI Investments Diversified Diversified Emerging Company Global Global Diversified Markets Common Growth Stock Conservative Equity Stock Participant Fund Fund Fund Fund Fund Loans Total ------------ ------------ ------------- ---------- ------------ ------------ ------------- EMPLOYEE CONTRIBUTIONS $ 363,423 $ 620,883 $ 25,404 $ 84,978 $ 317,718 $ -- $ 4,978,374 EMPLOYER CONTRIBUTIONS 100,426 178,666 7,199 25,330 71,655 -- 1,468,836 NET REALIZED/ UNREALIZED GAIN (LOSS) 148,213 221,500 43,182 (104,285) 3,612,835 -- 11,478,260 DIVIDEND AND INTEREST INCOME 148,697 284,890 30,923 1,011 5,338 -- 2,801,313 INTERFUND TRANSFERS - NET (311,212) (512,817) 46,085 (36,184) 938,728 178,132 -- DISTRIBUTIONS TO PARTICIPANTS (191,110) (150,154) (1,764) (45,742) (649,826) (82,284) (8,498,210) ---------- ---------- -------- -------- ---------- -------- ----------- NET INCREASE/ (DECREASE) 258,437 642,968 151,029 (74,892) 4,296,448 95,848 12,228,573 NET ASSETS AVAILABLE FOR BENEFITS, JANUARY 1, 1998 2,346,106 4,287,173 381,914 364,140 1,519,727 846,067 67,643,538 ---------- ---------- -------- -------- ---------- -------- ----------- NET ASSETS AVAILABLE FOR BENEFITS, DECEMBER 31, 1998 $2,604,543 $4,930,141 $532,943 $289,248 $5,816,175 $941,915 $79,872,111 ========== ========== ======== ======== ========== ======== =========== SEI INVESTMENTS CAPITAL ACCUMULATION PLAN ----------------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 1998 ----------------- 1. PLAN DESCRIPTION: ----------------- The following description of the SEI Investments Capital Accumulation Plan (the "Plan"), formerly SEI Corporation Capital Accumulation Plan, provides only general information. The Plan, a contributory defined contribution plan, was established effective January 1983 by the Board of Directors of the Company. Participants should refer to the Plan document for a more complete description of the Plan's provisions. The Plan's sponsor is SEI Investments Company ("SEI" or the "Company"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan provides retirement benefits, including provisions for early retirement and disability benefits, as well as a tax-deferred savings feature. An employee may enroll in the Plan on the first day of the payroll period in the month following their date of employment. A participant may make tax-deferred contributions to the Plan up to the lesser of 15% of compensation or $10,000 for the calendar year 1998, which are deposited into a "deferral account." All Company contributions are discretionary and will be made out of available profits. The Company's matching contribution may not exceed 4% of the participant's annual compensation or $3,840, whichever is lower, and will be credited to the participant's matching contribution account. In addition, the Company may make a contribution to all participants which will be allocated among eligible participants in the same proportion that each participant's compensation bears to the aggregate compensation of all participants. These contributions will be credited to the participant's profit-sharing account. Participants are eligible to receive Company contributions at the point when the participant is eligible to contribute to the Plan. The Company's matching contributions to the Plan were $1,468,836 and $1,455,603 for 1998 and 1997, respectively. The Company made no other discretionary contributions during 1998 and 1997. As of December 31, 1998, contributions may be invested in the following investment options: a Stable Asset Fund, a Core Fixed Income Fund, a Large Cap Value Fund, an International Equity Fund, a Small Cap Growth Fund, a Large Cap Growth Fund, a Diversified Moderate Growth Fund, a Diversified Global Growth Fund, a Diversified Global Stock Fund, a Diversified Conservative Fund, an Emerging Markets Equity Fund and an SEI Investments Company Common Stock Fund. All funds in the Plan are sponsored by the Company. -5- A description of each investment option is provided below: Stable Asset Fund--This fund is designed to maintain the value of the money contributed to the Plan and earn interest. The fund invests mostly in Guaranteed Investment Contracts purchased from insurance companies and other financial institutions which are either highly rated (AAA or AA) or guaranteed by the U.S. Government or its agencies. This fund's contract value approximates fair value. Core Fixed Income Fund--This fund invests in governmental and corporate bonds and is structured to earn income without significant price improvement. Large Cap Value Fund--This fund is structured to invest in equity securities of large companies. This fund invests in the stocks of companies whose prices appear low relative to certain fundamental characteristics such as earnings, book value, or return on equity. The value of the fund will rise and fall based on these companies' performance. International Equity Fund--This fund purchases equity securities in companies outside of the United States. A majority of these investments are made in European and Asian companies that have a long-term potential for growth. Small Cap Growth Fund--This fund invests in equity securities of small companies. The object of this fund is to allow the investment to grow as the companies grow. Large Cap Growth Fund--This fund invests in equity securities of large companies. The object of this fund is to allow the investment to grow as the companies grow. Diversified Moderate Growth Fund--This fund seeks to provide long-term capital appreciation with a limited level of current income through investments in equity and fixed-income funds, including non-U.S. Equity funds. Diversified Global Growth Fund--This fund invests primarily in other equity funds. The object of this fund is to provide long-term capital appreciation through participation in both U.S. and international equity markets. Diversified Global Stock Fund--This fund's object is to provide long-term capital appreciation through participation in the global equity markets. The fund achieves this goal primarily through investment in both U.S. and non-U.S. equities. Diversified Conservative Fund--This fund invests primarily in money market and fixed income funds to provide current income with the opportunity for capital appreciation. -6- Emerging Markets Equity Fund--This fund seeks to provide capital appreciation by investing primarily in a diversified portfolio of equity securities of emerging market issuers. SEI Investments Company Common Stock Fund--This fund seeks long-term growth by investing in shares of the Company's Common Stock. Participants are immediately vested in their voluntary contributions to the Plan. Participants obtain a non-forfeitable right of ownership in all employer contributions credited to their accounts at the time of contribution. Amounts in participants' accounts will be distributed in the form of an annuity, lump sum amount, or a combination thereof to participants or their beneficiaries upon termination of employment, retirement, death, or total disability. Employee contributions in a participant's deferral account may be withdrawn during employment after the employee reaches age 59 1/2 or upon showing immediate and substantial financial hardship. Under the tax-deferral feature, after two years of participation in the Plan, a participant is eligible for a loan amount not to exceed the lesser of $50,000 or 50% of his salary deferred account balance; the minimum loan amount is $1,000. The loans are made at a rate equivalent to those being charged on similar commercial loans with terms from one year to five years, except for loans for the purchase of a primary residence, which can have terms of up to 10 years. Participants may only borrow against their accounts if they have been making tax-deferred contributions for at least 24 months. Participants may no longer make post-tax contributions into the Plan, however, they may withdrawal previously contributed post-tax amounts at any time. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ------------------------------------------- Basis of Accounting - ------------------- The accompanying financial statements are prepared using the accrual basis of accounting. Income Taxes - ------------ The Plan is qualified pursuant to Section 401(a) of the Internal Revenue Code (the "Code") and accordingly the trust is exempt from income taxation under the provisions of Section 501(a) of the Code. The Plan has a favorable determination letter from the IRS. This signifies that the Plan meets the Code requirements for design. Management believes the Plan is designed and operating in compliance with the Code and accordingly, there is no provision for income taxes in the accompanying financial statements. Valuation of Investments - ------------------------ The Plan's investments are stated at market value in the accompanying financial statements. -7- Management's Use of Estimates - ----------------------------- The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan's management to make estimates and assumptions that affect the reported amounts of the net assets available for benefits and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates. 3. INVESTMENTS: ------------ In December 1997, the Company filed a registration statement on Form S-8 with the Securities and Exchange Commission to register 1,000,000 shares of the Company's Common stock to be offered or sold as an investment option of the Plan. Additionally, during 1997, the Plan opened the Emerging Markets Equity Fund to participant investment. The fair market values of individual assets that represent 5% or more of the Plan's net assets available for benefits as of December 31, 1998 and 1997 are as follows: 1998: ----- Stable Asset Fund $ 6,413,190 Core Fixed Income Fund 3,990,661 Large Cap Value Fund 16,346,608 International Equity Fund 3,755,479 Small Cap Growth Fund 11,519,567 Large Cap Growth Fund 22,076,065 Diversified Global Stock Fund 4,918,137 SEI Investments Company Common Stock Fund 5,802,238 1997: ----- Stable Asset Fund $ 5,564,378 Core Fixed Income Fund 3,447,108 Large Cap Value Fund 15,840,422 International Equity Fund 3,607,507 Small Cap Growth Fund 12,073,979 Large Cap Growth Fund 17,029,296 Diversified Global Stock Fund 4,276,445 4. PLAN EXPENSES: -------------- All normal administrative costs of the Plan are paid by the Company. -8- 5. PLAN TERMINATION: ----------------- Although it has no expressed intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of whole or partial termination of the Plan, or complete discontinuance of employer contributions, each participant shall receive a total distribution of their account. 6. DISTRIBUTIONS TO PARTICIPANTS: ------------------------------ Distributions to terminated participants are generally made in the year following termination. Distributions payable to participants at December 31, 1998 and 1997 amounted to $257,586 and $373,661, respectively. 7. RECONCILIATION TO FORM 5500: ---------------------------- Distributions payable to participants are recorded as a liability in the Plan's Form 5500 and not recorded as a liability in the accompanying statements of net assets available for benefits in accordance with generally accepted accounting principles. The following table reconciles net assets available for benefits per the financial statements to the Form 5500 as filed by the Company. -9-
Net Assets Available for Benefits 1998 1998 December 31 Accrued Benefits ----------------------------------- Distributions Paid 1998 1997 ---------------- ---------------- ----------------- ---------------- Per financial statements $ -- $8,498,210 $79,872,111 $67,643,538 Accrued distributions 257,586 257,586 (257,586) (373,661) Reversal of 1997 accrual for distributions -- (373,661) -- -- -------- ---------- ----------- ----------- Per Form 5500 $257,586 $8,382,135 $79,614,525 $67,269,877 ======== ========== =========== =========== SCHEDULE I EIN #23-1707341 PIN #002 SEI INVESTMENTS CAPITAL ACCUMULATION PLAN ----------------------------------------- ITEM 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES ----------------------------------------------------------- DECEMBER 31, 1998 ----------------- * Represents a party-in-interest. -10-
Number of Current Shares Description Cost Value - --------------- --------------------------------------------------- ----------------- ---------------- 6,413,190 SEI* Stable Asset Fund $ 6,413,190 $ 6,413,190 377,189 SEI* Institutional Managed 3,956,825 3,990,661 Trust--Core Fixed Income Fund 858,090 SEI* Institutional Managed 13,390,085 16,346,608 Trust--Large Cap Value Fund 356,646 SEI* Institutional International 3,642,078 3,755,479 Trust--International Equity Fund 659,014 SEI* Institutional Managed 10,880,414 11,519,567 Trust--Small Cap Growth Fund 822,813 SEI* Institutional Managed 14,372,506 22,076,065 Trust--Large Cap Growth Fund 36,804 SEI* Asset Allocation Trust--Diversified Moderate 443,250 447,166 Growth Fund 197,732 SEI* Asset Allocation Trust--Diversified Global 2,363,042 2,598,201 Growth Fund 388,786 SEI* Asset Allocation Trust--Diversified Global 4,266,832 4,918,137 Stock Fund 45,713 SEI* Asset Allocation Trust--Diversified 478,703 531,645 Conservative Fund 40,928 SEI* Institutional International Trust--Emerging 321,518 288,544 Markets Equity Fund 57,261 SEI* Investments Company Common Stock Fund 3,521,668 5,802,238 N/A Participant Loans (Interest rates range from 7.9% - 11.5%) 941,915 941,915 ----------- ----------- Total $64,992,026 $79,629,416 =========== =========== SCHEDULE II EIN #23-1707341 PIN #002 SEI INVESTMENTS CAPITAL ACCUMULATION PLAN ----------------------------------------- ITEM 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS ----------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1998 ------------------------------------ The purchase prices and selling prices of the above transactions represent the current value of the assets on the transaction date. * Represents a party-in-interest. -11-
Number Number Gain of of Purchase Sale Cost (Loss) Description of Assets or Security Purchases Sales Price Proceeds Basis on Sale - ------------------------------------- ------------- ---------- --------------- ------------- ------------- -------------- Series - ------ SEI* Stable Asset Fund 121 106 $11,451,123 $9,263,575 $9,263,575 $ -- SEI* Institutional Managed Trust--Large Cap Value Fund 89 112 2,794,781 1,931,587 1,884,871 46,716 SEI* Institutional Managed Trust--Small Cap Growth Fund 81 140 1,673,056 2,061,349 2,152,608 (91,259) SEI* Institutional Managed Trust--Large Cap Growth Fund 122 127 3,313,455 3,058,544 2,711,967 346,577 SEI* Institutional International Trust--International Equity Fund 77 113 7,088,774 7,096,173 6,703,167 393,006