<PAGE>

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004

                                       OR
[ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

            FOR THE TRANSITION PERIOD FROM __________ TO ___________

                        COMMISSION FILE NUMBER: 001-31254

                              THE BISYS GROUP, INC.

             (Exact name of registrant as specified in its charter)

          DELAWARE                                     13-3532663

(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                       90 PARK AVENUE, NEW YORK, NEW YORK
                                      10016

                    (Address of principal executive offices)
                                   (Zip Code)

                                  212-907-6000

              (Registrant's telephone number, including area code)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORT(S), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

YES [X] NO [ ]

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12b-2 OF THE EXCHANGE ACT).

YES [X] NO [ ]

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:

AS OF JANUARY 31, 2005, THERE WERE 120,805,664 SHARES OF COMMON STOCK, PAR VALUE
$0.02 PER SHARE, OF THE REGISTRANT OUTSTANDING.

                        This document contains 28 pages.

================================================================================

<PAGE>

                              THE BISYS GROUP, INC.
                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                                             PAGE
<S>                                                                                                          <C>
PART I.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Condensed Consolidated Statements of Income for the three and six
                      months ended December 31, 2004 and 2003                                                  3

                  Condensed Consolidated Balance Sheets as of December 31, 2004 and
                      June 30, 2004                                                                            4

                  Condensed Consolidated Statements of Cash Flows for the six months
                      ended December 31, 2004 and 2003                                                         5

                  Notes to Condensed Consolidated Financial Statements                                         6

         Item 2.  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                                       15

         Item 4.  Controls and Procedures                                                                     23

PART II. OTHER INFORMATION

         Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
                  Securities                                                                                  24

         Item 4.  Submission of Matters to a Vote of Security Holders                                         24

         Item 5.  Other Information                                                                           25

         Item 6.  Exhibits and Reports on Form 8-K                                                            26

SIGNATURES                                                                                                    27

EXHIBIT INDEX                                                                                                 28
</TABLE>

                                       2

<PAGE>

                                     PART I

                          ITEM 1. FINANCIAL STATEMENTS

                     THE BISYS GROUP, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                  Three Months Ended      Six Months Ended
                                                     December 31,            December 31,
                                                ---------------------   ---------------------
                                                   2004       2003         2004       2003
                                                ---------   ---------   ---------   ---------
<S>                                             <C>         <C>         <C>         <C>
Revenues                                        $ 276,338   $ 261,381   $ 544,467   $ 497,815
                                                ---------   ---------   ---------   ---------

Operating costs and expenses:
   Service and operating                          177,793     166,314     352,132     316,233
   Selling, general and administrative             55,460      49,397     106,940      95,526
   Amortization of intangible assets                6,987       6,693      14,137      12,499
   Restructuring, impairment and other charges      2,350       2,151       2,838      14,775
                                                ---------   ---------   ---------   ---------
Total operating costs and expenses                242,590     224,555     476,047     439,033
                                                ---------   ---------   ---------   ---------

Operating earnings                                 33,748      36,826      68,420      58,782
Interest income                                       626         282       1,106         607
Interest expense                                   (4,526)     (4,735)     (9,377)     (9,399)
Investment gains                                    4,331           -       8,524           -
                                                ---------   ---------   ---------   ---------
Income before income taxes                         34,179      32,373      68,673      49,990
Income taxes                                       12,304      12,059      25,067      23,833
                                                ---------   ---------   ---------   ---------
Net income                                      $  21,875   $  20,314   $  43,606   $  26,157
                                                =========   =========   =========   =========

Basic earnings per share                        $    0.18   $    0.17   $    0.36   $    0.22
                                                =========   =========   =========   =========

Diluted earnings per share                      $    0.18   $    0.17   $    0.36   $    0.22
                                                =========   =========   =========   =========
</TABLE>

          The accompanying notes are an integral part of the condensed
                       consolidated financial statements.

                                       3

<PAGE>

                     THE BISYS GROUP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                    December 31,                  June 30,
                                                                                        2004                        2004
                                                                                   -------------              ---------------
<S>                                                                                <C>                        <C>
ASSETS

Current assets:
   Cash and cash equivalents                                                       $     144,606              $       139,872
   Restricted cash                                                                        49,007                       67,125
   Accounts receivable, net                                                              100,121                       96,385
   Insurance premiums and commissions receivable, net                                    121,967                       87,154
   Deferred tax asset                                                                     11,901                       13,484
   Other current assets                                                                   39,251                       49,747
                                                                                   -------------              ---------------
      Total current assets                                                               466,853                      453,767
   Property and equipment, net                                                           108,998                      112,074
   Goodwill                                                                              802,178                      802,178
   Intangible assets, net                                                                196,862                      211,298
   Other assets                                                                           25,581                       32,923
                                                                                   -------------              ---------------
      Total assets                                                                 $   1,600,472              $     1,612,240
                                                                                   =============              ===============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt                                            $      18,750              $         6,250
   Short-term borrowings                                                                       -                       66,000
   Accounts payable                                                                       17,857                       17,397
   Insurance premiums and commissions payable                                            148,170                      126,173
   Other current liabilities                                                             146,827                      158,459
                                                                                   -------------              ---------------
      Total current liabilities                                                          331,604                      374,279
   Long-term debt                                                                        381,250                      393,750
   Deferred tax liability                                                                 62,693                       54,669
   Other liabilities                                                                       6,272                        4,560
                                                                                   -------------              ---------------
      Total liabilities                                                                  781,819                      827,258
                                                                                   -------------              ---------------

Stockholders' equity:
   Common stock, $0.02 par value, 320,000,000 shares authorized, 121,238,514
    and 120,836,315 shares issued                                                          2,425                        2,417
   Additional paid-in capital                                                            395,417                      389,484
   Retained earnings                                                                     445,836                      403,738
   Notes receivable from stockholders                                                     (3,718)                      (8,116)
   Employee benefit trust, 415,242 and 342,613 shares                                     (6,558)                      (5,507)
   Deferred compensation                                                                   6,708                        5,292
   Unearned compensation - restricted stock                                               (9,738)                      (6,199)
   Accumulated other comprehensive income                                                    447                        6,337
   Treasury stock at cost, 865,617 and 158,559 shares                                    (12,166)                      (2,464)
                                                                                   -------------              ---------------
      Total stockholders' equity                                                         818,653                      784,982
                                                                                   -------------              ---------------
      Total liabilities and stockholders' equity                                   $   1,600,472              $     1,612,240
                                                                                   =============              ===============
</TABLE>

          The accompanying notes are an integral part of the condensed
                       consolidated financial statements.

                                       4

<PAGE>

                     THE BISYS GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                 Six Months Ended
                                                                                                   December 31,
                                                                                       -----------------------------------
                                                                                            2004                  2003
                                                                                       ------------           ------------
<S>                                                                                    <C>                    <C>
Cash flows from operating activities:
Net income                                                                             $     43,606           $     26,157
Adjustments to reconcile net income to net cash provided by operating activities:
   Restructuring, impairment and other charges                                                2,838                 14,775
   Depreciation and amortization                                                             31,980                 29,251
   Deferred income tax provision                                                             13,855                  7,968
   Investment gains                                                                          (8,524)                     -
   Change in operating assets and liabilities, net of effects from acquisitions              (5,446)                 7,056
                                                                                       ------------           ------------
Net cash provided by operating activities                                                    78,309                 85,207
                                                                                       ------------           ------------

Cash flows from investing activities:
   Acquisition of businesses, net of cash acquired                                                -                (41,709)
   Payments related to businesses previously acquired                                          (319)                (2,851)
   Capital expenditures                                                                     (14,830)               (16,802)
   Proceeds from sale of investments                                                         14,772                      -
   Change in other investments                                                                  677                  1,348
                                                                                       ------------           ------------
Net cash provided by (used in) investing activities                                             300                (60,014)
                                                                                       ------------           ------------

Cash flows from financing activities:
   Short-term borrowings, net                                                               (66,000)                28,000
   Proceeds from exercise of stock options                                                    3,543                  5,547
   Repurchases of common stock                                                              (15,816)               (53,244)
   Repayment of notes receivable from stockholders                                            4,398                      -
                                                                                       ------------           ------------
Net cash used in financing activities                                                       (73,875)               (19,697)
                                                                                       ------------           ------------

Net increase in cash and cash equivalents                                                     4,734                  5,496

Cash and cash equivalents at beginning of period                                            139,872                 79,558
                                                                                       ------------           ------------

Cash and cash equivalents at end of period                                             $    144,606           $     85,054
                                                                                       ============           ============
</TABLE>

            The accompanying notes are an integral part of condensed
                       consolidated financial statements.

                                       5

<PAGE>

                     THE BISYS GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (UNLESS OTHERWISE NOTED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

1.    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      THE COMPANY

      The BISYS Group, Inc. and subsidiaries (the "Company") is a leading
      provider of outsourcing solutions for the financial services sector.

      BASIS OF PRESENTATION

      The condensed consolidated financial statements include the accounts of
      The BISYS Group, Inc. and its subsidiaries and have been prepared
      consistent with the accounting policies reflected in the 2004 Annual
      Report on Form 10-K filed with the Securities and Exchange Commission and
      should be read in conjunction therewith. The condensed consolidated
      financial statements include all adjustments (consisting of normal
      recurring adjustments) which are, in the opinion of management, necessary
      to fairly state this information.

      RECLASSIFICATION

      Certain reclassifications have been made to the fiscal 2004 financial
      statements to conform to the fiscal 2005 presentation.

      RESTRICTED CASH

      Unremitted insurance premiums are held in a fiduciary capacity and
      approximated $49.0 million and $67.1 million at December 31, 2004 and June
      30, 2004, respectively. The period for which the Company holds such funds
      is dependent upon the date the agent or broker remits the payment of the
      premium to the Company and the date the Company is required to forward
      such payment to the insurer.

      INSURANCE PREMIUMS AND COMMISSIONS RECEIVABLE AND PAYABLE

      The Company has separately reflected receivables and payables arising from
      its insurance-related businesses on the accompanying condensed
      consolidated balance sheets. The captions "insurance premiums and
      commissions receivable" and "insurance premiums and commissions payable"
      include insurance premiums and commissions in the Company's commercial
      insurance services division and net commissions receivable in the
      Company's life insurance brokerage division. In its capacity as a
      commercial property and casualty wholesale distributor, the Company
      collects premiums from other agents and brokers and, after deducting its
      commissions, remits the premiums to the respective insurers.

      INVESTMENTS

      Management determines the appropriate classification of investments in
      equity securities at the time of purchase. Marketable equity securities
      available for sale are carried at market value based upon quoted market
      prices. Unrealized gains or losses on available for sale securities are
      accumulated as an adjustment to stockholders' equity, net of related
      deferred income taxes. Realized gains or losses are computed based on
      specific identification of the securities sold. Net realized gains from
      securities sold during the three and six months ended December 31, 2004
      were $4.3 million and $8.5 million, respectively.

      STOCK-BASED COMPENSATION

      The Company accounts for its stock option, restricted stock and stock
      purchase plans under the recognition and measurement principles of APB
      Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25").
      Accordingly, compensation expense has been recorded for restricted stock
      awards, and no expense has been recorded for the Company's other
      stock-based plans. The following table presents the effect on net income
      and earnings per share if the Company had applied the fair value
      recognition provisions of FAS No. 123, "Accounting for Stock-Based
      Compensation":

                                       6

<PAGE>

<TABLE>
<CAPTION>
                                                                Three Months Ended                 Six Months Ended
                                                                   December 31,                       December 31,
                                                         ------------------------------       ---------------------------
                                                            2004                2003             2004             2003
                                                         ---------           ----------       ----------       ----------
<S>                                                      <C>                 <C>              <C>              <C>
Net income, as reported                                  $  21,875           $   20,314       $   43,606       $   26,157

Add: Stock-based employee compensation expense
   included in reported net income, net of related
   tax effects                                                 706                  298            1,166              463

Deduct: Total stock-based employee compensation
   expense determined under fair value based method,
   net of related tax effects                               (4,813)              (4,000)          (9,151)          (8,096)
                                                         ---------           ----------       ----------       ----------
Pro forma net income                                     $  17,768           $   16,612       $   35,621       $   18,524
                                                         =========           ==========       ==========       ==========
Earnings per share:
   Basic, as reported                                    $    0.18           $     0.17       $     0.36       $     0.22
                                                         =========           ==========       ==========       ==========
   Basic, pro forma                                      $    0.15           $     0.14       $     0.30       $     0.15
                                                         =========           ==========       ==========       ==========
   Diluted, as reported                                  $    0.18           $     0.17       $     0.36       $     0.22
                                                         =========           ==========       ==========       ==========
   Diluted, pro forma                                    $    0.15           $     0.14       $     0.30       $     0.15
                                                         =========           ==========       ==========       ==========
</TABLE>

      RECENT ACCOUNTING PRONOUNCEMENTS

      In December 2004, the Financial Accounting Standards Board (FASB) issued
      FAS123R, "Share Based Payment," a revision of FAS123, "Accounting for
      Stock-Based Compensation." FAS123R requires companies to expense the fair
      value of employee stock options and similar awards, is effective for
      periods beginning after June 15, 2005, and supersedes APB 25. Management
      plans to adopt FAS123R effective July 1, 2005 and is presently analyzing
      the alternative transition methods and option pricing models that are
      available under the new standard.

2.    USE OF ESTIMATES

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make certain
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the
      date of the financial statements and the reported amounts of revenue and
      expenses during the reporting period. The most significant estimates are
      related to insurance commissions receivable, goodwill, intangible assets,
      income taxes, and revenue recognition.

      The Company bases its estimates on historical experience and on various
      other assumptions that are believed to be reasonable under the
      circumstances, the results of which form the basis for making judgments
      about the carrying value of assets and liabilities that are not readily
      apparent from other sources. Actual results may differ from these
      estimates in the near term.

                                       7
<PAGE>

3.    COMPREHENSIVE INCOME

      The components of comprehensive income are as follows:

<TABLE>
<CAPTION>
                                                      Three Months Ended        Six Months Ended
                                                          December 31,            December 31,
                                                    ----------------------   ----------------------
                                                       2004        2003         2004        2003
                                                    ---------   ----------   ---------   ----------
<S>                                                 <C>         <C>          <C>         <C>
Net income                                          $  21,875   $   20,314   $  43,606   $   26,157
Unrealized gain on investments, net of tax                  2        3,126          29        3,138
Reclassification adjustment for gains included in
   net income, net of tax                              (2,742)           -      (5,817)           -
Foreign currency translation adjustment                   123          360        (102)         617
                                                    ---------   ----------   ---------   ----------
   Total comprehensive income                       $  19,258   $   23,800   $  37,716   $   29,912
                                                    =========   ==========   =========   ==========
</TABLE>

4.    EARNINGS PER SHARE

      Basic and diluted EPS computations for the three and six months ended
      December 31, 2004 and 2003 are as follows:

<TABLE>
<CAPTION>
                                                  Three Months Ended         Six Months Ended
                                                      December 31,              December 31,
                                                -----------------------   -------------------------
                                                   2004         2003          2004          2003
                                                -----------   ---------   -----------   -----------
<S>                                             <C>           <C>         <C>           <C>
Basic EPS

Net income                                      $    21,875   $  20,314   $    43,606   $    26,157
                                                ===========   =========   ===========   ===========

Weighted average common shares outstanding          119,698     119,350       119,797       119,578
                                                ===========   =========   ===========   ===========

Basic earnings per share                        $      0.18   $    0.17   $      0.36   $      0.22
                                                ===========   =========   ===========   ===========

Diluted EPS

Net income                                      $    21,875   $  20,314   $    43,606   $    26,157
                                                ===========   =========   ===========   ===========

Weighted average common shares outstanding          119,698     119,350       119,797       119,578

Assumed conversion of common shares issuable
  under stock-based compensation plans                  863         741           710         1,152
                                                -----------   ---------   -----------   -----------

Weighted average common and common equivalent
  shares outstanding                                120,561     120,091       120,507       120,730
                                                ===========   =========   ===========   ===========
Diluted earnings per share                      $      0.18   $    0.17   $      0.36   $      0.22
                                                ===========   =========   ===========   ===========
</TABLE>

      The effect of the assumed conversion of the convertible subordinated notes
      into common stock would be antidilutive and therefore is excluded from the
      computation of diluted earnings per share.

                                        8
<PAGE>

      Certain stock options were not included in the computation of diluted EPS
      because the options' exercise prices were greater than the average market
      price of common shares during the period, as follows:

<TABLE>
<CAPTION>
                                               Three Months Ended                      Six Months Ended
                                                   December 31,                           December 31,
                                        -----------------------------------   -----------------------------------
                                              2004               2003               2004               2003
                                        ----------------   ----------------   ----------------   ----------------
<S>                                     <C>                <C>                <C>                <C>
Number of options excluded                         8,620             10,365              9,257              8,922

Option price per share                  $15.24 to $35.30   $14.21 to $35.30   $14.71 to $35.30   $16.22 to $35.30

Average market price of common shares
for the period                          $          15.24   $          14.21   $          14.58   $          16.02
</TABLE>

5.    RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES

      FISCAL 2005

      During the three and six months ended December 31, 2004, the Company
      recorded pre-tax restructuring, impairment and other charges of $2.4
      million and $2.8 million, respectively, as follows:

<TABLE>
<CAPTION>
                                                      Three Months Ended   Six Months Ended
                                                       December 31, 2004   December 31, 2004
                                                      ------------------   -----------------
<S>                                                   <C>                  <C>
Restructuring charges                                     $    1,103           $   1,210
Impairment charges                                             1,025               1,025
Litigation and other charges                                     222                 603
                                                          ----------           ---------
  Total restructuring, impairment and other charges       $    2,350           $   2,838
                                                          ==========           =========
</TABLE>

      Restructuring charges of $1.2 million during the six months ended December
      31, 2004 were related to the completion of the restructuring of the
      European mutual fund services operations and were comprised of severance
      totaling $0.2 million and lease termination costs of $1.2 million, offset
      by reversals and currency translation gains of $0.2 million. The following
      summarizes activity with respect to the Company's restructuring activities
      for the six months ended December 31, 2004:

<TABLE>
<S>                                       <C>
Restructuring accrual at June 30, 2004    $  3,849
                                          --------
Expense provision:
   Employee severance                          263
   Facilities                                1,190
   Reversals                                  (133)
   Currency translation gain                  (110)
                                          --------
       Total                                 1,210
                                          --------

Cash payments and other                      3,401
                                          --------
Remaining accrual at December 31, 2004:
Employee severance                              90
Facility closure                             1,568
                                          --------
       Total                              $  1,658
                                          ========
</TABLE>

      The Company recorded asset impairment charges of $1.0 million during the
      three months ended December 31, 2004 related to other than temporary
      declines in the value of memberships in the New York and Boston Stock
      exchanges included in other assets on the accompanying condensed
      consolidated balance sheets.

                                       9
<PAGE>

      FISCAL 2004

      During the three and six months ended December 31, 2003, the Company
      recorded pre-tax restructuring, impairment and other charges of $2.2
      million and $14.8 million, respectively, as follows:

<TABLE>
<CAPTION>
                                                       Three Months Ended    Six Months Ended
                                                        December 31, 2003    December 31, 2003
                                                       ------------------    -----------------
<S>                                                    <C>                   <C>
Restructuring charges                                       $   1,950             $  7,413
Impairment charges                                                  -                4,515
Litigation and other charges                                      201                2,847
                                                            ---------             --------
  Total restructuring, impairment and other charges         $   2,151             $ 14,775
                                                            =========             ========
</TABLE>

      The charges relate to the integration, consolidation, and reorganization
      of certain business operations, particularly in the Company's European
      Fund Services division and the Insurance Services group, and the recording
      of an estimated charge for litigation expenses.

      For the six months ended December 31, 2003, restructuring charges of $7.4
      million were comprised of severance totaling $6.1 million and lease
      termination costs of $1.3 million. Severance charges resulted from the
      termination of approximately 330 employees representing all levels of
      staffing. In connection with its restructuring activities, the Company
      recorded asset impairment charges of $4.5 million. Of these charges, $3.9
      million relates to impairment of an intangible asset and other long-lived
      assets as a result of the Company's plan to restructure its European
      mutual fund services operations and to exit certain European locations
      following the acquisition of two of the Company's significant customers by
      acquirers with existing fund services capabilities. The Company also
      recorded an additional tax valuation allowance of $5.2 million for
      deferred tax assets associated with tax loss carryforwards arising from
      the European mutual fund services operations as the Company believes the
      deferred tax assets will not be realized.

      Based on internal analysis and discussions with counsel on the status of
      various litigation matters and contract disputes, the Company recorded a
      charge of approximately $2.8 million during the six months ended December
      31, 2003 related to breach of contract claims in the life insurance
      services business. The total amount of the charge includes an estimated
      resolution amount and actual legal fees incurred. The Company intends to
      continue to vigorously defend the claims asserted and has asserted a
      number of counterclaims.

6.    GOODWILL AND INTANGIBLE ASSETS

      GOODWILL

      The changes in carrying amount of goodwill by business segment for the six
      months ended December 31, 2004 were as follows:

<TABLE>
<CAPTION>
                                       Investment    Insurance    Information
                                        Services     Services      Services        Total
                                       ----------   ----------   -------------   ----------
<S>                                    <C>          <C>          <C>             <C>
Balance, June 30, 2004                 $  311,191   $  455,597   $      35,390   $  802,178

Additions                                       -            -               -            -

Adjustments to previous acquisitions            -            -               -            -
                                       ----------   ----------   -------------   ----------
Balance, December 31, 2004             $  311,191   $  455,597   $      35,390   $  802,178
                                       ==========   ==========   =============   ==========
</TABLE>

                                       10
<PAGE>

      INTANGIBLE ASSETS

      At December 31, 2004, acquired intangible assets were comprised of the
      following:

<TABLE>
<CAPTION>
                        Gross Carrying    Accumulated
                            Amount       Amortization   Net Book Value
                        --------------   ------------   --------------
<S>                     <C>              <C>            <C>
Customer related          $  213,421       $  (57,099)    $  156,322
Noncompete agreements         46,504          (19,808)        26,696
Other                         22,695           (8,851)        13,844
                          ----------       ----------     ----------
   Total                  $  282,620       $  (85,758)    $  196,862
                          ==========       ==========     ==========
</TABLE>

      At June 30, 2004, acquired intangible assets were comprised of the
      following:

<TABLE>
<CAPTION>
                        Gross Carrying    Accumulated
                            Amount       Amortization   Net Book Value
                        --------------   ------------   --------------
<S>                     <C>              <C>            <C>
Customer related          $  218,621       $  (51,571)    $  167,050
Noncompete agreements         46,504          (17,066)        29,438
Other                         22,695           (7,885)        14,810
                          ----------       ----------     ----------
   Total                  $  287,820       $  (76,522)    $  211,298
                          ==========       ==========     ==========
</TABLE>

      All of the Company's acquired intangible assets are subject to
      amortization. Amortization expense for acquired intangible assets was $7.0
      million and $14.1 million for the three and six months ended December 31,
      2004 and $27.0 million for the year ended June 30, 2004. Estimated annual
      amortization expense is $28.1 million in fiscal 2005, $27.0 million in
      fiscal 2006, $25.7 million in fiscal 2007, $24.9 million in fiscal 2008,
      and $22.8 million in fiscal 2009.

7. BORROWINGS

      In March 2004, the Company entered into a senior unsecured credit
      facility. The $400 million facility contains a $300 million revolving line
      of credit facility and a $100 million term loan. The facility, which
      expires March 31, 2008, supports working capital requirements, repurchases
      of the Company's common stock, and the funding of future acquisitions.

      Outstanding borrowings under the credit facility bear interest at prime
      or, at the Company's option, LIBOR plus a margin. The margin will not
      exceed 1.45% on the revolving component and 1.75% on the term loan
      component based upon the ratio of the Company's consolidated indebtedness
      to consolidated earnings before interest expense, taxes, depreciation, and
      amortization. The credit agreement requires the Company to pay an annual
      facility fee on the $300 million revolving credit, not to exceed 0.30% or
      $900,000. The facility is guaranteed by certain subsidiaries of The BISYS
      Group, Inc.

      The credit agreement requires the Company to maintain certain financial
      covenants and limits the Company's ability to incur future indebtedness
      and to pay dividends. As of December 31, 2004, no amounts were permitted
      for the payment of cash dividends.

      The Company may borrow under the revolving credit facility through March
      2008 up to $300 million, reduced by any outstanding letters of credit
      ($2.6 million at December 31, 2004). The $100 million term loan has
      quarterly principal payments commencing on June 30, 2005 with a final
      maturity of March 31, 2008. Interest is payable quarterly for prime rate
      borrowings or at maturity for LIBOR borrowings, which range from 30 to 180
      days. At December 31, 2004, the weighted average interest rate of the
      credit facility borrowings was 3.44%.

      Long-term debt also includes $300 million of 4% convertible subordinated
      notes due March 2006.

                                       11
<PAGE>

      Debt outstanding at December 31, 2004 and June 30, 2004 is as follows:

<TABLE>
<CAPTION>
                                               December 31, 2004   June 30, 2004
                                               -----------------   -------------
<S>                                            <C>                 <C>
Senior credit facility, term loan, at a rate
of 3.438% and 2.625%, respectively             $         100,000   $     100,000

Senior credit facility, revolving line of
credit, at a rate of 2.275%                                    -          66,000

Convertible subordinated 4% notes                        300,000         300,000
                                               -----------------   -------------
                                                         400,000         466,000

Less amounts due within one year                          18,750          72,250
                                               -----------------   -------------
Long-term debt                                 $         381,250   $     393,750
                                               =================   =============
</TABLE>

      Long-term debt repayments at December 31, 2004 are due as follows:

<TABLE>
<S>     <C>
2006    $ 312,500
2007       31,250
2008       37,500
        ---------
        $ 381,250
        =========
</TABLE>

8.    SEGMENT INFORMATION

      The Company's segments are separately managed strategic business units
      that offer different products and services. The Investment Services
      segment provides outsourcing services, including administration and
      distribution, to domestic and offshore mutual fund complexes, hedge funds
      and private equity funds and retirement plan services to small to mid-size
      retirement plans. The Insurance Services segment provides distribution
      solutions for commercial property and casualty, annuities, life, long-term
      care, disability and special risk insurance products; offers certification
      and continuing education training for insurance and investment
      professionals; and provides licensing-related software products and
      services. The Information Services segment provides information
      processing, imaging, and corporate financial solutions to banks, insurance
      companies and corporate clients.

      The following table sets forth revenue and operating income by business
      segment for the three and six months ended December 31, 2004 and 2003.
      Measures used to assess segment performance include revenues and operating
      earnings, exclusive of restructuring, impairment and other charges.
      Segment operating earnings exclude restructuring, impairment and other
      charges since they are not allocated to the segments for internal
      evaluation purposes. While these items are identifiable to the business
      segments, they are not included in the measurement of segment operating
      earnings provided to the chief operating decision maker for purposes of
      assessing segment performance and decision making with respect to resource
      allocation.

                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                   Three Months Ended          Six Months Ended
                                                      December 31,                December 31,
                                                -----------------------     -----------------------
                                                  2004          2003          2004          2003
                                                ---------     ---------     ---------     ---------
<S>                                             <C>           <C>           <C>           <C>
Revenue:
Investment Services                             $ 149,195     $ 138,211     $ 298,630     $ 266,382
Insurance Services                                 73,323        66,488       139,959       122,666
Information Services                               53,820        56,682       105,878       108,767
                                                ---------     ---------     ---------     ---------
   Total revenue                                $ 276,338     $ 261,381     $ 544,467     $ 497,815
                                                =========     =========     =========     =========
Segment operating income:
Investment Services                             $  18,500     $  16,457     $  36,768     $  32,870
Insurance Services                                 14,275        13,841        26,266        24,301
Information Services                               12,258        14,839        23,832        27,726
                                                ---------     ---------     ---------     ---------
   Total segment operating income               $  45,033     $  45,137     $  86,866     $  84,897
                                                =========     =========     =========     =========

Corporate expenses                              $  (8,935)    $  (6,160)    $ (15,608)    $ (11,340)
                                                =========     =========     =========     =========
Restructuring, impairment and other charges:
Investment Services                             $   2,143     $     968     $   2,255     $   6,406
Insurance Services                                    222           755           603         6,931
Information Services                                    -           353             -           498
Corporate                                             (15)           75           (20)          940
                                                ---------     ---------     ---------     ---------
   Total restructuring, impairment and
      other charges                             $   2,350     $   2,151     $   2,838     $  14,775
                                                =========     =========     =========     =========

   Total consolidated operating earnings        $  33,748     $  36,826     $  68,420     $  58,782
                                                =========     =========     =========     =========
</TABLE>

9.    REGULATORY INVESTIGATIONS

      On May 17, 2004, the Company announced that it would restate its financial
      results for the fiscal years ended June 30, 2003, 2002, and 2001 and for
      the quarters ended December 31 and September 30, 2003 in order to record
      adjustments for correction of errors resulting from various accounting
      matters in the Life Insurance Services division. An amended Annual Report
      on Form 10-K for the fiscal year ended June 30, 2003 was filed with the
      Securities and Exchange Commission ("SEC") on August 10, 2004 along with
      amended Quarterly Reports on Form 10-Q for the quarters ended December 31
      and September 30, 2003 to reflect the restated financial results. All
      referenced amounts and comparisons in the accompanying condensed
      consolidated financial statements, notes and management's discussion and
      analysis reflect the balances and amounts on a restated basis. The Audit
      Committee of the Company's Board of Directors conducted an independent
      investigation into the events and circumstances that resulted in the
      restatement and retained independent counsel to assist in such
      investigation. The Company notified the SEC in May 2004 of its intention
      to restate prior period financial results. Subsequently, the SEC advised
      the Company that the SEC is conducting an investigation into the facts and
      circumstances related to the restatement. That investigation is ongoing.
      The Company has cooperated and intends to continue to cooperate with the
      SEC's investigation.

      The Company also is responding to SEC investigations and requests for
      information related to marketing and distribution arrangements,
      performance fees and redemption fees, and an NASD request for information
      into market timing and late trading in the mutual fund services business.
      Additionally, the Company recently received and is responding to a Letter
      of Inquiry from the California Department of Insurance requesting
      information on practices related to compensation arrangements with brokers
      in the commercial insurance services industry.

10.   LEGAL PROCEEDINGS

      Following the Company's May 17, 2004 announcement regarding the
      restatement of its financial results, seven putative class action and two
      derivative lawsuits were filed against the Company and certain of its
      current and

                                       13
<PAGE>

      former officers in the United States District Court for the Southern
      District of New York. By order of the Court, all but one of the putative
      class actions have been consolidated into a single action, and on October
      25, 2004, plaintiffs filed a consolidated amended complaint. The complaint
      purports to be brought on behalf of all shareholders who purchased the
      Company's securities between October 23, 2000 and May 17, 2004 and
      generally asserts that the Company, certain of its officers, and its
      independent auditors allegedly violated the federal securities laws in
      connection with the purported issuance of false and misleading information
      concerning the Company's financial condition. The complaint seeks damages
      in an unspecified amount as well as unspecified equitable/injunctive
      relief. On December 23, 2004, the Company and the individual defendants
      filed separate motions to dismiss the complaint.

      The remaining putative class action purports to be brought on behalf of
      all persons who acquired non-publicly traded BISYS securities from the
      Company as part of private equity transactions during the period October
      23, 2000 to May 17, 2004. The complaint generally asserts that the Company
      and certain of its officers allegedly violated the federal securities laws
      in connection with the purported issuance of false and misleading
      information concerning the Company's financial condition, and seeks
      damages in an unspecified amount. On November 29, 2004, plaintiffs filed
      an amended complaint. By order of the Court, the defendants' time to
      answer the complaint has been extended until resolution of the motion to
      dismiss the complaint described in the previous paragraph.

      The derivative complaints purport to be brought on behalf of the Company
      and generally assert that certain officers and directors are liable for
      alleged breaches of fiduciary duties, abuse of control, gross
      mismanagement, waste, and unjust enrichment that purportedly occurred
      between October 23, 2000 and the present. The derivative complaints seek
      disgorgement, constructive trust, and damages in an unspecified amount.
      The Court has ordered that the derivative actions be consolidated into a
      single action. On November 24, 2004, plaintiffs filed a consolidated
      amended complaint. On January 24, 2005, the Company and the individual
      defendants filed separate motions to dismiss the complaint.

      The Company intends to defend itself vigorously against these claims but
      is unable to determine the ultimate outcome.

11.   SUBSEQUENT EVENTS

      On January 7, 2005, the Company acquired RK Consulting, a New Jersey-based
      provider of investment fund administration services to the hedge fund and
      private equity industries. The acquisition of RK Consulting complements
      and expands the Company's Alternative Investment businesses. The Company
      purchased the assets of RK Consulting for cash consideration of
      approximately $83 million.

                                       14
<PAGE>

ITEM  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

BUSINESS OVERVIEW

      We provide outsourcing solutions that enable investment firms, insurance
      companies, and banks to more efficiently serve their customers, grow their
      businesses, and respond to evolving regulatory requirements. We currently
      support over 1,000 clients in the financial services industry through
      three business segments: Investment Services, Insurance Services, and
      Information Services.

      Our segments are separately managed strategic business units that offer
      different products and services. The Investment Services segment provides
      outsourcing services, including administration and distribution, to
      domestic and offshore mutual fund complexes, hedge funds and private
      equity funds and retirement plan services to small to mid-size retirement
      plans. The Insurance Services segment provides distribution solutions for
      commercial property and casualty, annuities, life, long-term care,
      disability and special risk insurance products; offers certification and
      continuing education training for insurance and investment professionals;
      and provides licensing-related software products and services. The
      Information Services segment provides information processing, imaging, and
      corporate financial solutions to banks, insurance companies and corporate
      clients.

      Our growth strategy emphasizes internal revenue growth, supplemented by
      acquisitions of complementary businesses. Our objectives in the near term
      are to focus on internal revenue growth and margin expansion, improve
      customer service performance to achieve higher retention, and further
      invest in the development of our associates. We endeavor to expand the
      scope of our services through focused account management, emphasizing
      services with recurring revenues and long-term contracts. We achieve
      internal revenue growth and expand our business base through organic
      growth of our clients, sales of additional products and services to
      existing clients, and direct sales to new clients.

RESULTS OF OPERATIONS

      The following table presents the percentage of revenues represented by
      each item in our condensed consolidated statements of income for the
      periods indicated:

<TABLE>
<CAPTION>
                                                 Three Months Ended               Six Months Ended
                                                    December 31,                     December 31,
                                                 ------------------               ----------------
                                                  2004       2003                  2004      2003
                                                 -------    -------               -----    -------
<S>                                              <C>        <C>                   <C>      <C>
Revenues                                           100.0%     100.0%              100.0%     100.0%

Operating costs and expenses:
   Service and operating                            64.3       63.6                64.7       63.5
   Selling, general and administrative              20.1       18.9                19.6       19.2
   Amortization of intangible assets                 2.5        2.6                 2.6        2.5
   Restructuring, impairment and other charges       0.9        0.8                 0.5        3.0
                                                    ----       ----                ----      -----
Total operating costs and expenses                  87.8       85.9                87.4       88.2
                                                    ----       ----                ----      -----
Operating earnings                                  12.2       14.1                12.6       11.8
Interest income                                      0.2        0.1                 0.2        0.1
Interest expense                                    (1.6)      (1.8)               (1.8)      (1.9)
Investment gains                                     1.6          -                 1.6          -
                                                    ----       ----                ----      -----
Income before income taxes                          12.4       12.4                12.6       10.0
Income taxes                                         4.5        4.6                 4.6        4.8
                                                    ----       ----                ----      -----
Net income                                           7.9%       7.8%                8.0%       5.2%
                                                    ====       ====                ====      =====
</TABLE>

COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2004 WITH THE THREE MONTHS
ENDED DECEMBER 31, 2003

      Revenues increased 6% from $261.4 million for the three months ended
      December 31, 2003 to $276.3 million for the three months ended December
      31, 2004. This growth was derived from sales to new clients, existing
      client growth, cross sales to existing clients, and recently acquired
      businesses. Internal revenue growth approximated 5% for the three months
      ended December 31, 2004 over the same period last year.

                                       15
<PAGE>

      Service and operating expenses increased 7% from $166.3 million for the
      three months ended December 31, 2003 to $177.8 million for the three
      months ended December 31, 2004 and increased as a percentage of revenues
      from 63.6% to 64.3%. The dollar and percentage increases resulted from
      additional costs associated with greater revenues, lower margins in the
      Information Services segment and changes in the mix of our business.

      Selling, general and administrative expenses increased 12% from $49.4
      million for the three months ended December 31, 2003 to $55.5 million for
      the three months ended December 31, 2004 and increased as a percentage of
      revenues from 18.9% to 20.1%. The percentage increase was primarily due to
      additional expenses of over $2.0 million related to the ongoing SEC
      investigation in our Fund Services business, Sarbanes Oxley implementation
      costs, and other legal and accounting fees.

      Investment gains of $4.3 million were realized during the three months
      ended December 31, 2004 from the sale of the remaining portion of an
      investment we held in the common stock of another publicly traded company.

      The income tax provision of $12.3 million for the three months ended
      December 31, 2004 increased from $12.1 million for the three months ended
      December 31, 2003, due to higher taxable income. The provision represents
      an effective tax rate, excluding the impact of restructuring, impairment
      and other charges, of 36.0% and 37.25% for the periods ended December 31,
      2004 and 2003, respectively. The decrease in the effective tax rate is
      primarily due to the mix of business in foreign tax jurisdictions, which
      have lower tax rates. At December 31, 2004, deferred income taxes of $7.7
      million have not been provided on the undistributed earnings of foreign
      subsidiaries as such earnings will continue to be reinvested in the
      foreseeable future. However, the Company is presently evaluating the
      provisions of the recently enacted American Jobs Creation Act of 2004,
      which includes a temporary incentive for U.S. multinationals to repatriate
      foreign earnings at a substantially reduced effective tax rate. At this
      time, management is not in a position to determine if, and to what extent,
      foreign earnings will be repatriated. Management expects to complete its
      evaluation by the end of the current fiscal year.

      Operating earnings, before restructuring, impairment and other charges,
      resulted in margins of 13.1% and 14.9% for the three months ended December
      31, 2004 and 2003, respectively. The margin decrease was primarily the
      result of a margin decline in the Information Services segment due to an
      acquisition-related client loss and additional corporate expenses
      attributable to an SEC investigation, Sarbanes Oxley implementation costs,
      and other legal and accounting fees.

COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 2004 WITH THE SIX MONTHS ENDED
DECEMBER 31, 2003

      Revenues increased 9% from $497.8 million for the six months ended
      December 31, 2003 to $544.5 million for the six months ended December 31,
      2004. This growth was derived from sales to new clients, existing client
      growth, cross sales to existing clients and recently acquired businesses.
      Internal revenue growth approximated 8% for the six months ended December
      31, 2004 over the same period last year.

      Service and operating expenses increased 11% from $316.2 million for the
      six months ended December 31, 2003 to $352.1 million for the six months
      ended December 31, 2004 and increased as a percentage of revenues from
      63.5% to 64.7%. The dollar and percentage increase resulted from
      additional costs associated with greater revenues, lower margins in the
      Information Services segment, expenses associated with adding new clients,
      and changes in the mix of our business.

      Selling, general and administrative expenses increased 12% from $95.5
      million for the six months ended December 31, 2003 to $106.9 million for
      the six months ended December 31, 2004 and increased as a percentage of
      revenues from 19.2% to 19.6%. The dollar and percentage increases resulted
      from additional costs associated with greater revenues and additional
      corporate expense of more than $3 million attributable to the ongoing SEC
      investigation in our Fund Services division, Sarbanes Oxley implementation
      costs, and other legal and accounting fees.

      Amortization of intangible assets increased $1.6 million for the six
      months ended December 31, 2004 over the same period last year due to a
      higher level of intangible assets associated with recently acquired
      businesses and customer contracts.

                                       16
<PAGE>

      Investment gains of $8.5 million were realized during the six months ended
      December 31, 2004 from the sale of an investment we held in the common
      stock of another publicly traded company.

      The income tax provision of $25.1 million for the six months ended
      December 31, 2004 increased from $23.8 million for the six months ended
      December 31, 2003. The provision represents an effective tax rate,
      excluding the impact of restructuring, impairment and other charges, of
      36.5% and 37.25% for the six months ended December 31, 2004 and 2003,
      respectively. The decrease in the effective tax rate is primarily due to
      the mix of business in foreign tax jurisdictions, which have lower tax
      rates.

      Operating earnings, before restructuring, impairment and other charges,
      resulted in margins of 13.1% and 14.8% for the six months ended December
      31, 2004 and 2003, respectively. The margin decrease was primarily the
      result of a margin decline in the Information Services segment due to an
      acquisition-related client loss and additional corporate expenses.

RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES

      FISCAL 2005
      During the three and six months ended December 31, 2004, we recorded
      pre-tax restructuring, impairment and other charges of $2.4 million and
      $2.8 million, respectively, as follows:

<TABLE>
<CAPTION>
                                                       Three Months Ended        Six Months Ended
                                                        December 31, 2004        December 31, 2004
                                                       ------------------        -----------------
<S>                                                    <C>                       <C>
Restructuring charges                                     $     1,103               $     1,210
Impairment charges                                              1,025                     1,025
Litigation and other charges                                      222                       603
                                                          -----------               -----------
  Total restructuring, impairment and other charges       $     2,350               $     2,838
                                                          ===========               ===========
</TABLE>

      Restructuring charges of $1.2 million during the six months ended December
      31, 2004 were related to the completion of the restructuring of the
      European mutual fund services operations and were comprised of severance
      totaling $0.2 million and lease termination costs of $1.2 million, offset
      by reversals and currency translation gains of $0.2 million. The following
      summarizes activity with respect to restructurings for the six months
      ended December 31, 2004:

<TABLE>
<S>                                                <C>
Restructuring accrual at June 30, 2004             $  3,849
                                                   --------

Expense provision:
   Employee severance                                   263
   Facilities                                         1,190
   Reversals                                           (133)
   Currency translation gain                           (110)
                                                   --------
      Total                                           1,210
                                                   --------
Cash payments and other                               3,401
                                                   --------
Remaining accrual at December 31, 2004:
   Employee severance                                    90
   Facility closure                                   1,568
                                                   --------
      Total                                        $  1,658
                                                   --------
</TABLE>

      We recorded asset impairment charges of $1.0 million during the three
      months ended December 31, 2004 related to other than temporary declines in
      the value of memberships in the New York and Boston Stock exchanges
      included in other assets on the accompanying condensed consolidated
      balance sheets.

                                       17
<PAGE>

      FISCAL 2004

      During the three and six months ended December 31, 2003, we recorded
      pre-tax restructuring, impairment and other charges of $2.2 million and
      $14.8 million, respectively, as follows:

<TABLE>
<CAPTION>
                                                       Three Months Ended        Six Months Ended
                                                        December 31, 2003        December 31, 2003
                                                       ------------------        -----------------
<S>                                                    <C>                       <C>
Restructuring charges                                      $   1,950                $   7,413
Impairment charges                                                 -                    4,515
Litigation and other charges                                     201                    2,847
                                                           ---------                ---------
  Total restructuring, impairment and other charges        $   2,151                $  14,775
                                                           =========                =========
</TABLE>

      The charges relate to the integration, consolidation, and reorganization
      of certain business operations, particularly in the Company's European
      Fund Services division and the Insurance Services group, and the recording
      of an estimated charge for litigation expenses.

      For the six months ended December 31, 2003, restructuring charges of $7.4
      million were comprised of severance totaling $6.1 million and lease
      termination costs of $1.3 million. Severance charges resulted from the
      termination of approximately 330 employees representing all levels of
      staffing. In connection with our restructuring activities, we recorded
      asset impairment charges of $4.5 million in the second quarter of fiscal
      2004. Of these charges, $3.9 million relates to impairment of an
      intangible asset and other long-lived assets as a result of our plan to
      restructure our European mutual fund services operations and to exit
      certain European locations following the acquisition of two of our
      significant customers by acquirers with existing fund services
      capabilities. We also recorded an additional tax valuation allowance of
      $5.2 million for deferred tax assets associated with tax loss
      carryforwards arising from the European mutual fund services operations as
      we believe the deferred tax assets will not be realized.

      Based on internal analysis and discussions with counsel on the status of
      various litigation matters and contract disputes, we recorded a charge of
      approximately $2.8 million during the six months ended December 31, 2003
      related to breach of contract claims in the life insurance services
      business. The total amount of the charge includes an estimated resolution
      amount and actual legal fees incurred. We intend to continue to vigorously
      defend the claims asserted and have asserted a number of counterclaims.

SEGMENT INFORMATION

      The following table sets forth revenue and operating income by business
      segment and for corporate operations for the three and six months ended
      December 31, 2004 and 2003. Measures used to assess segment performance
      include revenues and operating earnings, exclusive of restructuring,
      impairment and other charges. Segment operating earnings exclude
      restructuring, impairment and other charges since they are not allocated
      to the segments for internal evaluation purposes. While these items are
      identifiable to the business segments, they are not included in the
      measurement of segment operating earnings provided to the chief operating
      decision maker for purposes of assessing segment performance and decision
      making with respect to resource allocation.

                                       18

<PAGE>

<TABLE>
<CAPTION>
                                                  Three Months Ended           Six Months Ended
                                                     December 31,                December 31,
                                                -----------------------     -----------------------
                                                  2004          2003          2004          2003
                                                ---------     ---------     ---------     ---------
<S>                                             <C>           <C>           <C>           <C>
Revenue:
   Investment Services                          $ 149,195     $ 138,211     $ 298,630     $ 266,382
   Insurance Services                              73,323        66,488       139,959       122,666
   Information Services                            53,820        56,682       105,878       108,767
                                                ---------     ---------     ---------     ---------
     Total revenue                              $ 276,338     $ 261,381     $ 544,467     $ 497,815
                                                =========     =========     =========     =========

Operating income (loss):
   Investment Services                          $  18,500     $  16,457     $  36,768     $  32,870
   Insurance Services                              14,275        13,841        26,266        24,301
   Information Services                            12,258        14,839        23,832        27,726
   Corporate                                       (8,935)       (6,160)      (15,608)      (11,340)
                                                ---------     ---------     ---------     ---------
     Total operating income                     $  36,098     $  38,977     $  71,258     $  73,557
                                                =========     =========     =========     =========

Restructuring, impairment and other charges:
Investment Services                             $   2,143     $     968     $   2,255     $   6,406
Insurance Services                                    222           755           603         6,931
Information Services                                    -           353             -           498
Corporate                                             (15)           75           (20)          940
                                                ---------     ---------     ---------     ---------
   Total restructuring, impairment and other
     charges                                    $   2,350     $   2,151     $   2,838     $  14,775
                                                =========     =========     =========     =========

   Total consolidated operating earnings        $  33,748     $  36,826     $  68,420     $  58,782
                                                =========     =========     =========     =========
</TABLE>

      Internal revenue growth (excluding acquisitions) for Investment Services,
      Insurance Services, and Information Services approximated 8%, 9%, and
      (5)%, respectively, during the three months ended December 31, 2004 over
      the same period last year. A substantial portion of our revenues,
      especially in the Investment and Information Services business segments,
      are recurring in nature and are derived from long-term customer contracts
      with terms that generally average from three to five years.

      Revenue in the Investment Services business segment increased $11.0
      million, or 8.0%, during the three months ended December 31, 2004, over
      the same period last year. The revenue increase was primarily due to the
      addition of several new clients and increased assets under administration.
      Operating income in the Investment Services business segment increased
      $2.0 million, or 12.4%, during the fiscal second quarter. Operating
      margins were 12.4% and 11.9% for the three months ended December 31, 2004
      and 2003, respectively. The margin increased primarily due to faster
      growth in the higher margin Hedge Fund and Private Equity businesses. For
      fiscal year 2005, margins in the Investment Services segment are expected
      to expand modestly and internal revenue growth is expected to be in the
      range of 6% to 9%. The projected rate of internal revenue growth reflects
      the loss of a significant Fund Services client in the second half of the
      fiscal year representing approximately $30 million of annualized revenue.
      The loss of the customer was the result of the acquiring entity's decision
      to use its in-house solution to service the acquired client.

      Revenue in the Insurance Services business segment increased $6.8 million,
      or 10.3%, during the three months ended December 31, 2004, over the same
      period last year. The revenue increase was primarily from strong growth in
      the Commercial Insurance business and from the acquisition of USA
      Insurance Group in November 2003. Operating income in the Insurance
      Services business segment increased $0.4 million, or 3.1%, during the
      fiscal second quarter. Operating margins were 19.5% and 20.8% for the
      three months ended December 31, 2004 and 2003, respectively. The margin
      decrease was primarily due to additional investments in sales support,
      customer service, finance, and IT resources. For fiscal year 2005,
      internal revenue growth is expected to be positive, and margins in the
      Insurance Services business segment are expected to be in the range of 17%
      to 19%.

      Revenue in the Information Services business segment decreased $2.9
      million, or 5.1%, during the three months ended December 31, 2004, over
      the same period last year. The revenue decrease was due to an
      acquisition-related loss of a major customer in the latter half of fiscal
      2004, offset by existing client growth, cross sales of ancillary products
      and services to existing clients, and sales to new clients. Operating
      income in

                                       19
<PAGE>

      the Information Services business segment decreased $2.6 million, or
      17.4%, during the fiscal second quarter. Operating margins were 22.8% and
      26.2% for the three months ended December 31, 2004 and 2003, respectively.
      The margin decrease was primarily due to decreasing revenue and ongoing
      investments in the growth of several new products. For fiscal year 2005,
      margins in the Information Services business segment are expected to
      decline by approximately 400 basis points, and revenue is expected to be
      lower than fiscal 2004 due to the loss of a major customer that was
      acquired and deconverted in the latter half of fiscal 2004.

      Corporate operations represent charges for our human resources, legal,
      accounting and finance functions, and various other unallocated overhead
      charges. Corporate expenses of $8.9 million for the three months ended
      December 31, 2004 increased from $6.2 million in the same period last year
      primarily due to additional expenses of more than $2 million related to
      the ongoing SEC investigation in our Fund Services division, Sarbanes
      Oxley implementation costs, and other legal and accounting fees. We
      anticipate incurring additional legal expenses for investigatory matters
      of approximately $6 million to $9 million during the second half of the
      fiscal year.

FINANCIAL CONDITION

      At December 31, 2004 and June 30, 2004, we had cash and cash equivalents
      of $144.6 million and $139.9 million, respectively. Cash and cash
      equivalents held outside the U.S. at December 31, 2004 and June 30, 2004
      amounted to $51.0 million and $50.9 million, respectively. Stockholders'
      equity was $818.7 million and $785.0 million at December, 2004 and June
      30, 2004, respectively.

      Capital expenditures were $14.8 million for the six months ended December
      31, 2004 and are expected to approximate $30 to $35 million for fiscal
      year 2005.

LIQUIDITY AND CAPITAL RESOURCES

      At December 31, 2004, we had no outstanding borrowings against our $300
      million revolving credit facility and a $100 million term loan outstanding
      under the credit facility. The term loan bears interest at LIBOR plus a
      margin of 1.00%, resulting in a weighted average interest rate of 3.44%
      under the facility at December 31, 2004. The facility is used to support
      our working capital requirements, repurchase our common stock, and fund
      our future acquisitions. At December 31, 2004, we had $2.6 million
      outstanding in letters of credit and $300 million of outstanding 4%
      convertible subordinated notes due March 2006. Our debt ratio (total
      debt/total debt plus equity) is 0.33 at December 31, 2004, and our maximum
      debt ratio may not exceed 0.50 under the terms of the revolving credit
      facility. At December 31, 2004, we were in compliance with all financial
      covenants required by the credit facility.

      We manage our debt structure and interest rate risk through the use of
      fixed- and floating-rate debt. While changes in interest rates could
      decrease interest income or increase interest expense, we do not believe
      that it has a material exposure to changes in interest rates based on the
      relative size of our interest bearing assets and liabilities. We do not
      undertake any specific actions concerning exposure to interest rate risk,
      and we are not party to any interest rate management transactions.

      Our strategy includes the acquisition of complementary businesses financed
      by a combination of internally generated funds, borrowings from the
      revolving credit facility, long-term debt and common stock. Our policy is
      to retain earnings to support future business opportunities, rather than
      to pay dividends. We have historically used a significant portion of our
      cash flow from operations to fund acquisitions and capital expenditures,
      with any remainder used to reduce outstanding borrowings under the credit
      facility or repurchase our own common stock. We believe that our cash flow
      from operations, together with other available sources of funds, will be
      adequate to meet our funding requirements. In the event that we make
      significant future acquisitions, however, we may raise funds through
      additional borrowings or the issuance of securities.

      Accounts receivable represented 43 and 42 days sales outstanding (DSO) at
      December 31, 2004 and 2003, respectively, based on quarterly revenues. The
      calculation of DSO for accounts receivable excludes insurance premiums and
      commissions receivable arising from our insurance-related businesses. DSO
      is less relevant for this type of receivable because it includes premiums
      that are ultimately remitted to the insurer and not recognized as revenue.
      Additionally, certain life insurance commissions due from insurance
      carriers have customary payment terms of up to twelve months. We regularly
      evaluate our accounts receivable position relative to our revenues and
      monitor our accounts receivable aging as part of managing our receivable
      portfolio. Credit risk is generally mitigated by reasonably short payment
      terms, the nature of our customers

                                       20
<PAGE>

      (i.e., commercial banks, mutual funds, and insurance carriers) and our
      large and diverse customer base. We generally do not require collateral
      for accounts receivable.

      For the six months ended December 31, 2004, operating activities provided
      cash of $78.3 million, primarily as a result of net income of $43.6
      million, depreciation and amortization of $32.0 million, and deferred
      income taxes of $13.9 million, offset by investment gains of $8.5 million
      and changes in working capital items of $5.4 million. Investing activities
      provided cash of $0.3 million, including $14.8 million of proceeds from
      the sale of investments, offset by capital expenditures of $14.8 million.
      Financing activities used cash of $73.9 million, comprised of repurchases
      of our stock of $15.8 million and net payments of short-term borrowings of
      $66.0 million, offset by proceeds from exercise of stock options of $3.5
      million and repayment of notes receivable from shareholders of $4.4
      million.

      Repurchases of the Company's common stock have occurred and are expected
      to continue to occur from time to time in the open market to offset the
      possible dilutive effect of shares issued under employee benefit plans,
      for possible use in future acquisitions, and for general and other
      corporate purposes. The following table presents stock repurchase activity
      during the six months ended December 31, 2004 and the year ended June 30,
      2004 under programs authorized by the Board of Directors, disclosing total
      shares repurchased under each program and the associated cost. Upon
      authorization of each new stock repurchase program, the former program is
      superseded and replaced.

<TABLE>
<CAPTION>
                                                   Six Months Ended               Year Ended
                                                   December 31, 2004             June 30, 2004
                                                -----------------------     ----------------------
                                                 Shares         Cost         Shares         Cost
                                                --------      ---------     --------      --------
<S>                                             <C>           <C>           <C>           <C>
Share Repurchase Programs:
$100 million, authorized August 2002                 -        $       -      3,158        $ 46,153
$100 million, authorized November 2003           1,135           15,820        869          13,565
                                                 -----        ---------      -----        --------
Total Stock Repurchases                          1,135        $  15,820      4,027        $ 59,718
                                                 =====        =========      =====        ========
</TABLE>

FORWARD-LOOKING STATEMENTS

      This Management's Discussion and Analysis of Financial Condition and
      Results of Operations and other sections of this report contain
      forward-looking statements that are based on management's current
      expectations, estimates, forecasts and assumptions concerning future
      events. In addition, other written or oral statements that constitute
      forward-looking statements may be made by or on behalf of management.
      These statements are subject to numerous known and unknown risks,
      uncertainties and assumptions that could cause actual events or results to
      differ materially from those projected. Words such as "believes,"
      "anticipates," "expects," "intends," "estimates, "projects," "plans,"
      "targets," and variations of such words and similar expressions are
      intended to identify such forward-looking statements. Except as required
      under the federal securities laws and the rules and regulations of the
      Securities and Exchange Commission (SEC), we do not undertake any
      obligation to update or revise publicly any forward-looking statements,
      whether as a result of new information, future events, changes in
      assumptions or otherwise. Although we believe that its plans, intentions,
      and expectations reflected in or suggested by the forward-looking
      statements made in this report are reasonable, there can be no assurance
      that such plans, intentions or expectations will be achieved.

      The risks, uncertainties and assumptions include: achieving planned
      revenue growth in each of our business units; renewal of material
      contracts in our business units consistent with past experience;
      successful and timely integration of significant businesses acquired by us
      and realization of anticipated synergies; increasing price, products, and
      services competition by U.S. and non-U.S. competitors, including new
      entrants; changes in U.S. and non-U.S. governmental regulations; the
      timely implementation of our restructuring programs and financial plans;
      general U.S. and non-U.S. economic and political conditions, including the
      global economic environment and interest rate and currency exchange rate
      fluctuation; continuing development and maintenance of appropriate
      business continuity plans for our processing systems; absence of
      consolidation among client financial institutions or other client groups;
      timely conversion of new customer data to our platforms; attracting and
      retaining qualified key employees; no material breach of security of any
      of our systems; control of costs and expenses; continued availability of
      financing, and financial resources on the terms required to support our
      future business endeavors; the mix of products and services; compliance
      with the covenants and restrictions of our bank credit facility and
      convertible subordinated notes indenture; and the outcome of pending and
      future litigation and governmental or regulatory proceedings.

                                       21

<PAGE>

      These are representative of the risks, uncertainties and assumptions that
      could affect the outcome of the forward-looking statements. In addition,
      such statements could be affected by general industry and market
      conditions and growth rates, and other future events.

                                       22

<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

As previously disclosed, we engaged in a review and analysis of estimates used
in determining the level of commissions receivable in our Life Insurance
Services division. As a result of our efforts, we determined that an adjustment
to commissions receivable in our Life Insurance division, together with
corresponding adjustments to revenues and expenses, should be recorded and
reflected in a restatement of our prior period financial results. In connection
with the aforementioned review, we also identified adjustments relating to
acquisition accounting for certain acquired entities in the Life Insurance
business, resulting in a reduction in goodwill and deferred tax liabilities over
the affected periods, and adjustments to commissions payable as a result of an
understatement in agent commissions payable. These adjustments were also
reflected in the restatement of our prior period financial results. In addition,
in reviewing our past practices, procedures and processes, we have determined
that there needs to be revisions to such practices, procedures and processes. In
this regard, we concluded there was a material weakness in our internal controls
over financial reporting relating to the validation and monitoring of
assumptions underlying the estimates used to compute certain first year, bonus
and renewal commissions receivable and with respect to related documentation and
review processes for significant accounting entries, including entries relating
to acquisition accounting.

To date, we have taken steps to improve our internal controls at our Life
Insurance Services division, including the following:

      -     Added personnel to the accounts receivable department to allow for
            more timely reconciliation and adjustment of aged accounts
            receivable and related agent payable accounts;

      -     Added senior management personnel to the finance staff focused on
            financial accounting, financial reporting and financial controls;

      -     Enhanced processes for reviewing and monitoring reserves for
            commissions receivable;

      -     Augmented review of commission revenue transactions to ensure
            adherence to our revenue recognition policies;

      -     Improved process for documentation and review of significant
            accounting entries and balance sheet account reconciliations;

      -     Initiated system enhancements to further automate processes
            associated with cash receipts, accounts receivable and revenue
            recognition; and

      -     Implemented systematic review of data quality and control.

We intend to continue to monitor our internal controls, and if further
improvements or enhancements are identified, we will take steps to implement
such improvements or enhancements. Except as set forth above, there have been no
changes in our internal controls over financial reporting, which have materially
affected, or are reasonably likely to materially affect, such internal controls.

We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports, filed pursuant to the
Securities Exchange Act of 1934, is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.

We carried out an evaluation as of the end of the period covered by this report
on Form 10-Q, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing and upon
taking into consideration the steps described above to remediate the noted
material weakness, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures were
effective.

It should be noted that the design of any system of controls is based upon
certain assumptions about the likelihood of future events, and there can be no
assurance that such design will succeed in achieving its stated objective under
all potential future conditions, regardless of how remote. However, the
Company's Chief Executive Officer and the Company's Chief Financial Officer
believe the Company's disclosure controls and procedures provide reasonable
assurance that the disclosure controls and procedures are effective.

                                       23
<PAGE>

                                     PART II

ITEM 2.     CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF
            EQUITY SECURITIES

            (e) Issuer Purchases of Equity Securities

<TABLE>
<CAPTION>
                                                            (c) Total Number of     (d) Approximate
                                                            Shares Purchased as     Dollar Value of
                                                              Part of Publicly    Shares that May Yet
               (a) Total Number of  (b) Average Price Paid  Announced Plans or    Be Purchased Under
Period          Shares Purchased          per Share              Programs        the Plans or Programs
-------------  -------------------  ----------------------  -------------------  ---------------------
<S>            <C>                  <C>                     <C>                  <C>
October 2004         492,829                $ 14.10              492,829             $ 70,731,750
November 2004              -                   -                       -             $ 70,731,750
December 2004          7,017                $ 16.58                7,017             $ 70,615,408
Total                499,846                $ 14.14              499,846             $ 70,615,408
</TABLE>

            Effective November 12, 2003, the Board of Directors authorized a
            stock buy-back program of up to $100 million. Purchases have
            occurred and will continue to occur from time to time in the open
            market to offset the possible dilutive effects of shares issued
            under employee benefit plans, for possible use in future
            acquisitions, and for general and other corporate purposes.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

            At the Annual Meeting of Stockholders of the Company, held on
            November 11, 2004, the Stockholders approved the following matters:

            1.    Election of the seven Directors named below to hold office
                  until the next Annual Meeting of Stockholders and until their
                  successors have been duly elected and qualified:

<TABLE>
<CAPTION>
                                    Number of
Name of Director                 Votes in Favor
----------------                 --------------
<S>                              <C>
Denis A. Bovin                     79,075,693
Robert J. Casale                  107,800,578
Thomas A. Cooper                  104,996,956
Russell P. Fradin                 108,212,838
Richard J. Haviland               107,831,231
Paula G. McInerney                105,981,585
Joseph J. Melone                  108,295,224
</TABLE>

<TABLE>
<CAPTION>
                                                       For       Against   Abstain
                                                       ---       -------   -------
<S>                                                <C>          <C>        <C>
2.   Approval of the 2005 Employee Stock
     Purchase Plan                                 95,500,363   1,554,499  27,883
</TABLE>

<TABLE>
<CAPTION>
                                                       For       Against   Abstain
                                                       ---       -------   -------
<S>                                                <C>          <C>        <C>
3.   Appointment of PricewaterhouseCoopers LLP as
     independent registered public accounting
     firm for fiscal year 2005                     104,662,934  4,415,864  114,986
</TABLE>

                                       24

<PAGE>

ITEM 5.     OTHER INFORMATION

            Legal Proceedings

            Our Insurance Services division is involved in litigation with a
            West Coast-based distributor of life insurance products, with which
            we had a former business relationship. We intend to continue to
            vigorously defend the claims asserted and have asserted a number of
            counterclaims. We believe that we have adequate defenses against
            claims arising in such litigation and that the outcome of this
            matter will not have a material adverse effect upon our financial
            position, results of operations or cash flows.

            Following the Company's May 17, 2004 announcement regarding the
            restatement of its financial results, seven putative class action
            and two derivative lawsuits were filed against the Company and
            certain of its current and former officers in the United States
            District Court for the Southern District of New York. By order of
            the Court, all but one of the putative class actions have been
            consolidated into a single action, and on October 25, 2004,
            plaintiffs filed a consolidated amended complaint. The complaint
            purports to be brought on behalf of all shareholders who purchased
            the Company's securities between October 23, 2000 and May 17, 2004
            and generally asserts that the Company, certain of its officers, and
            its independent auditors allegedly violated the federal securities
            laws in connection with the purported issuance of false and
            misleading information concerning the Company's financial condition.
            The complaint seeks damages in an unspecified amount as well as
            unspecified equitable/injunctive relief. On December 23, 2004, the
            Company and the individual defendants filed separate motions to
            dismiss the complaint.

            The remaining putative class action purports to be brought on behalf
            of all persons who acquired non-publicly traded BISYS securities
            from the Company as part of private equity transactions during the
            period October 23, 2000 to May 17, 2004. The complaint generally
            asserts that the Company and certain of its officers allegedly
            violated the federal securities laws in connection with the
            purported issuance of false and misleading information concerning
            the Company's financial condition, and seeks damages in an
            unspecified amount. On November 29, 2004, plaintiffs filed an
            amended complaint. By order of the Court, the defendants' time to
            answer the complaint has been extended until resolution of the
            motion to dismiss the complaint described in previous paragraph.

            The derivative complaints purport to be brought on behalf of the
            Company and generally assert that certain officers and directors are
            liable for alleged breaches of fiduciary duties, abuse of control,
            gross mismanagement, waste, and unjust enrichment that purportedly
            occurred between October 23, 2000 and the present. The derivative
            complaints seek disgorgement, constructive trust, and damages in an
            unspecified amount. The Court has ordered that the derivative
            actions be consolidated into a single action. On November 24, 2004,
            plaintiffs filed a consolidated amended complaint. On January 24,
            2005, the Company and the individual defendants filed separate
            motions to dismiss the complaint.

            The Company intends to defend itself vigorously against these claims
            but is unable to determine the ultimate outcome.

            Regulatory Investigations

            We notified the SEC in May 2004 of our intention to restate prior
            period financial results. Subsequently, the SEC commenced an
            investigation into the facts and circumstances related to the
            restatement. That investigation is ongoing. We have cooperated and
            intend to continue to cooperate with the SEC's investigation. We
            cannot predict when the SEC will conclude its investigation or the
            outcome or impact thereof.

            The Company also is responding to SEC investigations and requests
            for information related to marketing and distribution arrangements,
            performance fees and redemption fees, and an NASD request for
            information into market timing and late trading in the mutual fund
            services business. Additionally, the Company recently received and
            is responding to a Letter of Inquiry from the California Department
            of Insurance requesting information on practices related to
            compensation arrangements with brokers in the commercial insurance
            services industry.

                                       25

<PAGE>

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

      (a)   EXHIBITS

            Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) Certification of Chief
            Executive Officer

            Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) Certification of Chief
            Financial Officer

            Exhibit 32 - Section 1350 Certifications

      (b)   REPORTS ON FORM 8-K

            A Current Report on Form 8-K, dated November 11, 2004, was filed
            with the Securities and Exchange Commission to report on the
            retirement of Thomas E. McInerney from the Board of Directors.

                                       26

<PAGE>

                                   SIGNATURES

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

                                  THE BISYS GROUP, INC.

Date: February 9, 2005           By: /s/ James L. Fox
                                     ------------------------------------------
                                     James L. Fox
                                     Executive Vice President and Chief
                                     Financial Officer (Duly Authorized Officer)

                                       27

<PAGE>

                              THE BISYS GROUP, INC.
                                  EXHIBIT INDEX

Exhibit No.

      (31.1) Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

      (31.2) Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

      (32) Section 1350 Certifications

                                       28