BISYS, a leading provider of outsourcing solutions for the financial services sector, today filed its Q3 fiscal 2006 Form 10-Q for the period ended March 31, 2006.
The Company earned $236.2 million in net income (including a $203.7 million gain on the sale of its Information Services segment) based on revenues of $211.7 million, compared to a net loss of $66.4 million based on $212.4 million of revenue for the same quarter of fiscal year 2005.
The Company earned $30.2 million in pretax operating earnings in Q3 fiscal 2006 compared to $5.1 million for the same quarter of fiscal year 2005, exclusive of discontinued operations. The improved results were primarily driven by fluctuations in litigation and regulatory settlement costs. In Q3 fiscal 2006, BISYS' legal costs and regulatory settlements netted to an expense offset of $8.1 million due to the receipt of a $9.0 million insurance recovery, while in the same period of the previous year it recorded $19.4 million of litigation and regulatory settlement costs. Q3 2006 also included $2.3 million in restructuring and other related costs associated with the move of our corporate headquarters, and $1.8 million of investigation fees and severance compared to Q3 2005. In addition, Q3 fiscal 2005 revenues were reduced by a $9.7 million disgorgement adjustment that flowed through to the bottom line; it is part of the Company's proposed settlement offer made to the SEC to resolve an outstanding investigation. FAS123R was adopted for fiscal 2006 reporting and, as a result, $0.7 million of stock option expense was included in Q3 fiscal 2006 results.
On the segment level, Q3 revenues were higher year-on-year in the Insurance Services segment, though operating earnings were lower due to greater headcount related costs and first year sales commissions. In Investment Services, both revenue and operating earnings were lower, due in large measure to the performance of the Fund Services business.
BISYS reported net income of $271.9 million on revenues of $624.7 million for Q3 YTD fiscal 2006, compared to a net loss of $18.3 million on revenues of $635.3 million for Q3 YTD fiscal 2005. The Company earned $72.2 million in pretax operating earnings for Q3 YTD fiscal 2006 versus $55.9 million for the same period of the prior year, exclusive of discontinued operations. The primary difference between periods related to the insurance recovery received in Q3 fiscal 2006 and legal and regulatory costs. These items totaled ($0.6) million in Q3 YTD 2006, compared to $20.6 million in Q3 YTD 2005. Q3 YTD fiscal 2006 investigation fees, restructuring and other charges, and severance of $8.7 million are up $3.0 million compared to Q3 YTD 2005. As noted earlier, fiscal 2005 revenues were also reduced by a $9.7 million disgorgement adjustment that flowed through to the bottom line. Q3 YTD fiscal 2006 included $2.2 million of stock option expense based on adoption of FAS123R, while the same period of the prior year did not.
Revenue for full year fiscal 2006 is expected to be down approximately 1% year-over-year, with low single-digit growth of the Insurance Segment offset by the low single-digit decline in the Investment Services segment. Margins for the Investment Services and Insurance Services segments are expected to be about 12% and in the mid-20's, respectively, for full year fiscal 2006. On a GAAP basis, the Company currently expects to earn between $2.41 and $2.43 in earnings per share, due in large part to discontinued operations, which accounts for approximately $1.94 of the earnings per share. Earnings per share for continuing operations is expected to be between $0.47 to $0.49.
"We are pleased to complete the Q3 2006 10Q and provide investors with more current financials," said Bruce Dalziel, CFO. "We are working hard to complete all the necessary Sarbanes-Oxley work to release the 2006 10K as quickly as possible, and we look forward to a successful 2007." The Company announced that it is likely that the 10K will be delayed a month or more beyond the required filing date of September 13, 2006.Download the document now 253 kb (Adobe Acrobat Document)