CheckFree Reports Fiscal 2008 First Quarter Results

Share Name	Share Symbol	Market	Type
Checkfree Corp (MM)	NASDAQ:CKFR	NASDAQ	Common Stock

Checkfree Corp (MM) (NASDAQ:CKFR)
Historical Stock Chart

From May 2019 to May 2024

Click Here for more Checkfree Corp (MM) Charts.

ATLANTA, Oct. 25 /PRNewswire-FirstCall/ -- CheckFree Corporation (NASDAQ:CKFR) today announced first quarter underlying revenue of $296.5 million, a 30 percent increase over the same period last year, and GAAP (Generally Accepted Accounting Principles) revenues of $284.7 million, a 25 percent increase over the same period last year. The Company's GAAP net income for the quarter was $29.8 million, or $0.33 per share, and underlying net income was $49.5 million, or $0.55 per share. Free cash flow was $33.9 million for the first quarter as outlined in Attachment A. GAAP Results: Net income for the first quarter of fiscal 2008 was $29.8 million, compared to net income of $31.2 million for the same quarter last year. Earnings per share were $0.33 for the first quarter of fiscal 2008, compared to earnings per share of $0.34 for the first quarter of last year. Net cash provided by operating activities was $39.0 million for the first quarter of fiscal 2008, compared to $47.6 million for the same period last year. Underlying Results: Underlying net income for the first quarter was $49.5 million, compared to $38.4 million for the same quarter of last year. Underlying earnings per share were $0.55 for the first quarter of fiscal 2008, compared to $0.41 per share for the first quarter of last year. Underlying revenue includes $11.8 million of revenue excluded from GAAP revenue related to a deferred revenue adjustment arising from purchase accounting for acquisitions we completed in the fourth quarter of fiscal 2007. Underlying net income and earnings per share for the first quarter of fiscal 2008 include the deferred revenue adjustment and exclude the amortization of acquisition-related intangible assets, acquisition and integration costs, the SFAS 123( R ) impact of stock options issued prior to July 1, 2004, and the related combined tax effects. A reconciliation of CheckFree's quarterly underlying results to its GAAP results is included in Attachment A. "Our first quarter results reflect solid execution across our business units," said Pete Kight, CheckFree Chairman and Chief Executive Officer. "We continue to integrate our three recent acquisitions into our businesses and are pleased with the progress we have made to date." First Quarter Highlights For the first quarter of fiscal 2008, the Company reported that the Electronic Commerce Division processed 351.6 million transactions, and delivered 63.9 million electronic bills. CheckFree Investment Services reported about 2.8 million portfolios under management, and the Software Division reported solid sales results. Refer to Attachment B for details on the financial performance of CheckFree's divisions in the first quarter of fiscal 2008, and Attachment C for electronic billing and payment metrics. Company Outlook for the Second Quarter Given CheckFree's pending merger with Fiserv, Inc., the Company will not provide forward-looking financial expectations and will not be hosting an earnings conference call. About CheckFree (http://www.checkfreecorp.com/) Founded in 1981, CheckFree Corporation (NASDAQ:CKFR) provides financial electronic commerce services and products to organizations around the world. CheckFree Electronic Commerce solutions enable financial services providers to offer the convenience of online banking, and along with billers, to offer the convenience of receiving and paying household bills online, via phone or in person through retail outlets. CheckFree Investment Services provides a broad range of investment management solutions and outsourced services to hundreds of financial services organizations, which manage about $1.8 trillion in assets. CheckFree Software develops, markets and supports software applications that are used by financial institutions to process more than 75 percent of the nearly 16 billion Automated Clearing House transactions in the United States. The division also provides financial institutions and other organizations with payment processing and consulting, reconciliation and exception management, fraud and risk management, cash and logistics management, and compliance software and services. Certain of the Company's statements in this press release are not purely historical, and as such are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding management's intentions, plans, beliefs, expectations or projections of the future. Forward-looking statements involve risks and uncertainties, including without limitation, the various risks inherent in the Company's business, and other risks and uncertainties detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended June 30, 2007 (filed August 24, 2007). One or more of these factors have affected, and could in the future affect the Company's business and financial results in future periods, and could cause actual results to differ materially from plans and projections. There can be no assurance that the forward-looking statements made in this press release will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by the Company, or any other person, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to management, and the Company assumes no obligation to update any forward-looking statements. CHECKFREE CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Operations (Unaudited) (In thousands, except per share data) Three Months Ended September 30, 2007 2006 Revenues: Processing and servicing $218,114 $195,478 License fees 15,412 9,074 Maintenance fees 21,988 11,530 Professional fees 29,150 12,537 Total revenues 284,664 228,619 Expenses: Cost of processing, servicing and support 118,237 92,849 Research and development 31,975 26,738 Sales and marketing 27,869 21,275 General and administrative 30,710 17,749 Depreciation and amortization 26,868 21,805 Total expenses 235,659 180,416 Income from operations 49,005 48,203 Equity in net loss of joint venture (423) (458) Interest income (expense), net (674) 3,294 Income before income taxes 47,908 51,039 Income tax expense 18,061 19,822 Net income $29,847 $31,217 Basic income per share: Total basic income per share $0.34 $0.35 Weighted average number of shares 88,231 89,962 Diluted income per share: Total diluted income per share $0.33 $0.34 Weighted average number of shares 89,956 92,599 CHECKFREE CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Unaudited) (In thousands) September 30, June 30, 2007 2007 Current assets: Cash, cash equivalents and investments $168,766 $195,127 Settlement assets 141,182 127,661 Accounts receivable, net 220,891 221,320 Prepaid expenses and other assets 45,972 42,759 Deferred income taxes 10,189 10,189 Total current assets 587,000 597,056 Property and equipment, net 143,635 156,113 Capitalized software and intangible assets, net 1,241,148 1,253,047 Investments 44,750 47,390 Other noncurrent assets 12,149 11,426 Deferred income taxes 69,596 66,246 Total assets $2,098,278 $2,131,278 Current liabilities: Accounts payable, accrued liabilities and other $105,230 $136,812 Settlement obligations 137,772 123,302 Current portion of long-term obligations 123,915 206,022 Deferred revenue 78,252 79,391 Total current liabilities 445,169 545,527 Long-term liabilities 38,812 4,663 Deferred income taxes 2,284 2,284 Deferred revenue 4,277 3,281 Capital leases and long-term obligations, less current portion 75,300 68,021 Total stockholders' equity 1,532,436 1,507,502 Total liabilities and stockholders' equity $2,098,278 $2,131,278 Attachment A Calculation of Free Cash Flow (Unaudited) (In thousands) Three Months Ended September 30, 2007 2006 Net cash provided by operating activities $39,048 $47,564 Excluding: Net change in settlement accounts (949) 1,074 Less: Capital expenditures (16,828) (12,099) Plus: Data center reimbursements 7,813 526 Impact of operating account conversion 4,816 - Free cash flow $33,900 $37,065 Additional Information: Cash provided by investing activities $71,388 $58,583 Cash (used in) financing activities $(64,252) $(97,047) Use of Non-GAAP Financial Information We supplement our reporting of cash flow information determined in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP") by using "free cash flow" in this earnings release as a measure to evaluate our liquidity. We define free cash flow as net cash provided by operating activities, exclusive of the net change in settlement accounts and less capital expenditures, plus data center reimbursements and the impact of the operating account conversion. We believe free cash flow provides useful information to management and investors in understanding our financial results and assessing our prospects for future performance. We also use free cash flow as a factor in determining long-term incentive compensation for senior management. We exclude the net change in settlement accounts from free cash flow because we believe this facilitates management's and investors' ability to analyze operating cash flow trends. In connection with our walk-in payment business, our consolidated balance sheet reflects settlement assets and settlement obligations. The settlement assets represent payment receipts in transit to us from agents, and the settlement obligations represent scheduled but unpaid payments due to billers. Balances in settlement accounts fluctuate daily based on deposit timing and payment transaction volume. These timing differences are not reflective of our liquidity, and thus, we exclude the net change in settlement accounts from free cash flow. As a technology company, we make significant capital expenditures in order to update our technology and to remain competitive. Our free cash flow reflects the amount of cash we generated that remains, after we have met those operational needs, for the evaluation and execution of strategic initiatives such as acquisitions, stock and/or debt repurchases and other investing and financing activities, including servicing additional debt obligations. During the fourth quarter of fiscal 2006, we entered into a credit facility to finance the construction of data centers. Amounts we spend to construct these data centers are included in our capital expenditures, but will be fully reimbursed by the credit facility. The reimbursements from the credit facility are added to our free cash flow measure because these expenditures do not impact our overall liquidity. The data center reimbursements line represents a change to our definition of free cash flow as of the quarter ended June 30, 2006. We added back the impact of an ongoing conversion of an operating bank account. Previously, we deducted $9,443 in outstanding checks on the account at June 30, 2007 from free cash flow. As these checks clear we add the cash back to free cash flow. During the three months ended September 30, 2007, $4,816 cleared the account. We do not believe the processing and subsequent clearing of these checks should be included in the determination of free cash flow for the periods presented. We are funding these checks as they clear from other sources of operating cash. We expect the account will be closed in the next 90 days. Free cash flow does not solely represent residual cash flow available for discretionary expenditures, as certain of our non-discretionary obligations are also funded out of free cash flow. These consist primarily of payments on capital leases and other long-term commitments, if any, as reflected in the table entitled "Contractual Obligations" in the "Liquidity and Capital Resources" section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2007, which we filed with the Securities and Exchange Commission on August 24, 2007. The Company's free cash flow should be considered in addition to, and not as a substitute for, net cash provided by operating activities or any other amount determined in accordance with GAAP. Further, CheckFree's measure of free cash flow may not be comparable to similarly titled measures reported by other companies. Attachment A (continued) Reconciliation of GAAP Revenues and Net Income to Underlying Revenues, Net Income and Earnings Per Share (Unaudited) (In thousands, except per share data) Three Months Ended September 30, 2007 2006 Total revenues - GAAP $284,664 $228,619 Deferred revenue adjustments arising from acquisitions(1) 11,786 - Total revenues - underlying $296,450 $228,619 Net income per GAAP $29,847 $31,217 Deferred revenue adjustments arising from acquisitions(1) 11,786 - Amortization of acquisition-related intangible assets 13,727 10,967 SFAS 123( R ) - Stock options issued before July 1, 2004 137 704 Acquisition and integration costs 5,343 - Tax effect of underlying adjustments (11,369) (4,478) Underlying net income $49,471 $38,410 GAAP and underlying basic weighted average shares outstanding 88,231 89,962 GAAP and underlying impact of dilutive options and warrants 1,725 2,814 GAAP and underlying diluted weighted average shares outstanding 89,956 92,599 GAAP basic earnings per share $0.34 $0.35 GAAP diluted earnings per share $0.33 $0.34 Underlying basic earnings per share $0.56 $0.43 Underlying diluted earnings per share $0.55 $0.41 Use of Non-GAAP Financial Information We supplement our reporting of total revenues, income from operations, net income and earnings per share information determined in accordance with GAAP by using "underlying revenue," "underlying income from operations," "underlying net income " and "underlying earnings per share" in this earnings release. Management believes that certain non-cash adjustments to revenues or expenses enhance our evaluation of our performance, and are not pertinent to day-to-day operational decision making in the business. Therefore, we exclude these items from GAAP revenue, income from operations, net income and earnings per share in calculating underlying revenue, underlying income from operations, underlying net income and underlying earnings per share. Examples of such non-cash charges may include, but not be limited to deferred revenue adjustments arising from acquisitions, intangible asset amortization expense and in-process research and development costs associated with acquisitions, integration costs associated with acquisitions, charges associated with the impairment of intangible assets, the impact of discontinued operations, charges resulting from warrants issued to third parties and charges associated with reorganization activities, all offset by the cumulative tax impact of these charges. We exclude these items in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations, and our management uses underlying results to evaluate the impact of operational business decisions. We regularly report underlying results to our Chairman and Chief Executive Officer and our Chief Operating Officer, our chief operating decision makers, who use this information in allocating resources to our various business units. Additionally, as we reward our management for their decisions that increase revenues and decrease controllable costs, we use underlying earnings per share as a factor in determining long-term incentive compensation for management. Because we utilize underlying financial results in the management of our business and to determine incentive compensation for management, we believe this supplemental information is useful to investors for their independent evaluation and understanding of the performance of our management and our core business performance. Our underlying revenues, underlying income from operations, underlying net income and underlying earnings per share should be considered in addition to, and not as a substitute for, revenues, income from operations, net income and earnings per share or any other amount determined in accordance with GAAP. Our measures of underlying revenues, underlying income from operations, underlying net income and underlying earnings per share reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. (1)See Page 9, footnote 2. Attachment A (continued) CHECKFREE CORPORATION AND SUBSIDIARIES Supplemental Underlying Consolidated Condensed Statements of Operations (Unaudited) (In thousands, except per share data) Three Months Ended September 30, 2007 2006 Revenues: Processing and servicing $218,114 $195,478 License fees 17,911 9,074 Maintenance fees 25,318 11,530 Other 35,107 12,537 Total revenues 296,450 228,619 Expenses: Cost of processing, servicing and support 118,444 92,849 Research and development 32,041 26,738 Sales and marketing 27,875 21,275 General and administrative 24,951 17,045 Depreciation and amortization 13,141 10,838 Total expenses 216,452 168,745 Income from operations 79,998 59,874 Equity in net loss of joint venture (423) (458) Interest income, net (674) 3,294 Income before income taxes 78,901 62,710 Income tax expense 29,430 24,300 Net income $49,471 $38,410 Basic income per share: Net income $0.56 $0.43 Weighted average number of shares 88,231 89,962 Diluted income per share: Net income $0.55 $0.41 Weighted average number of shares 89,956 92,599 Attachment B Reconciliation of GAAP Results to Underlying Results by Segment (Unaudited) (In thousands) Three Months Ended September 30, 2007 2006 Electronic Commerce: Total revenues - GAAP $206,791 $171,029 Deferred revenue adjustments arising from acquisitions(2) 7,425 - Total revenues - underlying $214,216 $171,029 Operating income - GAAP $55,895 $49,541 Deferred revenue adjustments arising from acquisitions(2) 7,425 - Amortization of acquisition-related intangible assets 10,608 9,627 SFAS 123( R ) - Stock options issued before July 1, 2004(1) 100 512 Acquisition and integration costs 25 - Underlying operating income $74,053 $59,680 Investment Services: Total revenues - GAAP $34,667 $29,622 Deferred revenue adjustments arising from acquisitions(2) - - Total revenues - underlying $34,667 $29,622 Operating income - GAAP $9,188 $4,972 Deferred revenue adjustments arising from acquisitions(2) - - Amortization of acquisition-related intangible assets 700 484 SFAS 123( R ) - Stock options issued before July 1, 2004(1) 14 72 Acquisition and integration costs 28 - Underlying operating income $9,930 $5,528 Software: Total revenues - GAAP $43,206 $27,968 Deferred revenue adjustments arising from acquisitions(2) 4,361 - Total revenues - underlying $47,567 $27,968 Operating income - GAAP $(671) $5,467 Deferred revenue adjustments arising from acquisitions(2) 4,361 - Amortization of acquisition-related intangible assets 2,419 856 SFAS 123( R ) - Stock options issued before July 1, 2004(1) 6 31 Acquisition and integration costs (127) - Underlying operating income $5,988 $6,354 Corporate: Operating loss - GAAP $(15,407) $(11,777) SFAS 123( R ) - Stock options issued before July 1, 2004(1) 17 89 Acquisition and integration costs 5,417 - Underlying operating loss $(9,973) $(11,688) (1) At the beginning of fiscal 2005, we implemented a new long-term incentive compensation philosophy, which significantly reduced overall participation and focused on restricted stock with limited stock options. As a result, we recorded the cost of restricted stock throughout fiscal 2005 in both underlying and GAAP results. In fiscal 2006, we have adopted SFAS 123( R ), and are consequently recording all long-term incentive grants, both restricted stock and options, as an expense to both underlying and GAAP results. The adjustment from GAAP to underlying operating results in the table above reflects the SFAS 123( R ) charge associated with options granted prior to July 1, 2004 under our previous compensation philosophy, which were originally accounted for utilizing APB 25. (2) In connection with our purchase price allocations, we estimated the fair value of certain deferred revenue from license fees, support obligations and other customer payments assumed in connection with business acquisitions made during the three months ended June 30, 2007. Software licenses, license updates and product support revenue related to installations and support contracts assumed in those business acquisitions in the amount of $11,786, that would have been otherwise recorded by the acquired entities, was not recognized as revenue by CheckFree during the three months ended September 30, 2007. As customers renew support contracts over the next year, we will recognize revenue for the full contract value over the support period. Attachment C Electronic Billing and Payment Metrics (in millions, except revenue/transaction and percentages) Quarter Ended 09/30/2007 06/30/2007 03/31/2007 12/31/2006 9/30/2006 Transactions CSP: Revenue(1) $125.3 $123.8 $122.5 $116.8 $114.2 Revenue / Transaction $0.44 $0.45 $0.45 $0.46 $0.48 Transactions 282.4 275.3 269.6 251.5 235.7 Sequential Quarterly Growth 3 % 2 % 7 % 7 % 4 % Non-CSP: Revenue $38.6 $38.6 $39.6 $38.3 $36.2 Revenue / Transaction $0.56 $0.57 $0.56 $0.54 $0.48 Transactions 69.2 68.3 71.2 70.5 76.0 Sequential Quarterly Growth 1 % -4 % 1 % -7 % 2 % Total: Revenue $163.9 $162.4 $162.1 $155.1 $150.4 Transactions 351.6 343.6 340.9 322.0 311.7 Sequential Quarterly Growth 2 % 1 % 6 % 3 % 3 % e-Bill Delivery Revenue $10.8 $10.4 $9.8 $8.7 $8.5 Revenue / e-Bill $0.17 $0.17 $0.17 $0.16 $0.16 e-Bills Delivered 63.9 60.5 58.6 54.9 51.8 Sequential Quarterly Growth 6 % 3 % 7 % 6 % 3 % Other EC Revenue(2) $39.5 $31.8 $12.8 $12.6 $12.1 (1) CSP Revenue excludes the impact of warrants issued to a customer. (2) Other revenue includes Health and Fitness, Professional Services, Stored Value Products and Electronic Banking Software and Professional Services, excluding any purchase accounting deferred revenue adjustments. DATASOURCE: CheckFree Corporation CONTACT: Media, Judy DeRango Wicks, +1-678-375-1595, , or Investors, Tina Moore, +1-678-375-1278, , both of CheckFree Corporation Web site: http://www.checkfreecorp.com/

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

CKFR Checkfree Corp (MM)