A company that sells support services to life insurers, annuity issuers and other financial services companies says it will be correcting all annual financial statements it has released since the fiscal year that ended June 30, 2002.[@@]
The company, BISYS Group Inc., New York, also says it will be changing the quarterly statements it has filed with the U.S. Securities and Exchange Commission for the quarters ending Sept. 30, 2003; Dec. 31, 2003; Sept. 30, 2004; and Dec. 31, 2004.
The old financial statements “should not be relied upon,” BISYS says in an announcement of the restatement.
BISYS also is continuing to work on efforts to complete a Form 10-Q quarterly report for the quarter that ended March 31, the company says.
BISYS says it is talking about the restatements with PricewaterhouseCoopers L.L.P., New York, its independent auditor.
The restatement probably will relate to transactions that “principally took place” in fiscal years before fiscal year 2004, BISYS says.
Many of the restatement items identified so far deal with matters such as accounting for acquisitions, recognizing revenue for new business acquisition and conversion services, accounting for building leases, and accounting for vendor rebates, BISYS says.The changes probably will cut net income for periods before fiscal year 2004 but increase net income for fiscal year 2005 and the first half of fiscal year 2005, BISYS says.
Adjustments resulting from the restatement could cut shareholders’ equity by as much as 5%, BISYS says.
“We are disappointed that this restatement is necessary,” BISYS President Russ Fradin says in a statement about his company’s accounting problems. “However, based upon the results of the ongoing investigation to date, with the exception of the accounting for escalation clauses in leases, all of the transactions that are currently expected to be the subject of this restatement were initiated more than 18 months ago.”
BISYS notes that it must persuade issuers of its credit facility to wait for the release of the Form 10-Q for the quarter that ended March 31.
BISYS believes the credit facility lenders will wait at least until Sept. 13 for BISYS to release the Form 10-Q, but, if the lenders exercise certain credit agreement rights, BISYS might have to refinance its credit facility balance, the company says.
In separate news, BISYS says it believes resolving discussions with the U.S. Securities and Exchange Commission about alleged problems with mutual fund administration could cost it a total of about $25 million.