Litigation Costs Weigh Down Bisys

ROSELAND, N.J. –Bisys Group reported a 36% decline in net income for its fiscal second quarter ended December 31, mostly as a result of its ongoing securities litigation. The company, a provider of back-office services to credit unions and banks, reported net income for the second quarter of $14.3 million, or 12 cents a share, down from $22.3 million, or 19 cents a share for the same period last year. As a result, net income for the first six months of the year fell 21% to $28.3 million, or 24 cents a share, even as revenues for the second quarter climbed 7% and for the first six months by 5%. The drop in net was caused by $11.2 million in excess corporate expenses during the first two quarters, including $7.3 million in litigation expenses, as well as professional fees and severance associated with the restatement of the company’s financials. In October, Bisys agreed to pay shareholders $66 million to settle civil fraud claims over the mistatement of earnings, and in September the company agreed to pay $21 to the Securities and Exchange Commission to settle fraud charges that it made illegal kickbacks to brokers that were recommending its mutual funds to customers.