Exhibit 99.1
[CHECKFREE LOGO] Media relations contact: Investor relations contact:
Judy DeRango Wicks Tina Moore
(678) 375-1595 (678) 375-1278
jdwicks@checkfree.com tmoore@checkfree.com
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
CHECKFREE ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS
--Increase in electronic billing and payment access points boosts
consumer adoption metrics--
--Transaction growth modestly ahead of expectations--
ATLANTA (October 21, 2003) - CheckFree Corporation (NASDAQ: CKFR)
today announced first quarter revenue growth of 9 percent to $141.3 million
as compared to the same period last year. The Company's GAAP (Generally
Accepted Accounting Principles) net loss was $6.7 million or a loss per
share of $0.07, and underlying net income was $19.4 million, or $0.21 per
share. Free cash flow was $21.6 million for the quarter, a 50 percent
increase over the same period last year, as outlined in Attachment A.
GAAP Results: Net loss for the first quarter was $6.7 million,
compared to $16.2 million for the same quarter last year. Loss per share
was $0.07 for the first quarter of fiscal 2004, compared to a loss per
share of $0.18 for the first quarter of last year. GAAP net cash provided
by operating activities was $27.0 million for the first quarter of fiscal
2004, a 12 percent increase over the same quarter last year.
Underlying Results: Underlying net income for the first quarter was
$19.4 million, compared to $14.1 million for the same quarter of last year.
Underlying earnings per share were $0.21 for the first quarter of fiscal
2004, compared to $0.16 for the first quarter of last year. Underlying net
income and earnings per share exclude revenue associated with warrants
issued to a third party, the amortization of acquisition-related intangible
assets, the cumulative effect upon adoption of SFAS 142, and related income
tax benefits. A reconciliation of CheckFree's underlying results to its
GAAP results is included in Attachment A.
"We experienced consistent performance across all business units this
quarter, with each contributing according to plan," said Pete Kight,
CheckFree Chairman and Chief Executive Officer. "Specifically, in our
Electronic Commerce division we saw all of our distribution channels
contribute to the growth of key payment processing and electronic bill
delivery metrics. Accelerated growth in both access points and consumer
adoption reflects the strength of these results. In our Investment Services
business, we saw a slight lift in portfolios under management for the first
time in some time -- a good sign for a market that has been challenged by a
weakened economy in recent years."
"Our expanded international presence for enterprise reconciliation
solutions and growing interest in our electronic check conversion solution
contributed to our execution in a traditionally slow sales quarter for our
Software business," Knight continued. "These collective results position us
well for the remainder of fiscal 2004 and set a solid foundation on which
to build and strengthen our market position as the financial e-commerce
leader."
-more-
CHECKFREE ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS -- PAGE 2 OF 9
The Company also reported that its Electronic Commerce unit processed
126.7 million transactions for the quarter, a 5 percent increase over the
previous quarter; delivered 14.7 million electronic bills, an increase of
27 percent over the previous quarter; and increased the number of fully
enabled electronic billing and payment distribution points to more than
1,000. In its Investment Services unit, CheckFree signed three clients to
its Multiple Strategy Portfolios solution, and increased portfolios under
management from more than 1.2 million to 1.3 million during the quarter. In
its Software business, CheckFree expanded its U.K.-based sales presence to
include enterprise reconciliation through its RECON-Plus Frontier solution.
Refer to Attachment B for details on the financial performance of
CheckFree's divisions in the first quarter of fiscal 2004, and Attachment C
for core electronic billing and payment metrics.
EXPECTATIONS FOR SECOND QUARTER AND FISCAL YEAR
"For the second quarter of 2004, we project revenue in the range of
$143 to $148 million, and GAAP earnings per share in the range of $0.01 to
$0.04," said CheckFree Chief Financial Officer David Mangum, "This equates
to underlying earnings per share in the range of $0.22 to $0.24."
"Sequential quarterly transaction growth for the second quarter should
be in the range of 4 to 6 percent, reflecting solid growth across all
distribution points and expected additional in-house runoff," Mangum
continued. "We anticipate improved seasonal performance from our Software
division and incremental progress from our Investment Services unit."
"Our full-year guidance on earnings per share remains unchanged at
breakeven to modestly positive on a GAAP basis, or $0.93 to $0.97 on an
underlying basis; and we expect free cash flow to continue on track, with
growth approaching 20 percent," Mangum concluded.
The difference between GAAP and underlying earnings is due to
acquisition-related intangible amortization expense.
USE OF NON-GAAP FINANCIAL INFORMATION
Management evaluates the operations of the Company using the metrics
of underlying income, underlying earnings per share, and free cash flow.
These non-GAAP financial measures exclude or include items that represent
either non-cash charges that do not impact the Company's free cash flow, or
other items, which are evaluated separately as they arise. Therefore, the
Company believes that its underlying results and free cash flow
calculations provide useful information to investors because they are
consistent with its internal performance measurements. Further, the Company
considers free cash flow to be a measure of liquidity and believes that it
provides useful information to management and investors about the amount of
cash generated by the Company after the acquisition of property and
equipment, which can be used for strategic and other purposes. CheckFree's
underlying results and free cash flow are not prepared in accordance with
GAAP. These measures should be considered in addition to, and not as a
substitute for, our GAAP results.
-more-
CHECKFREE ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS -- PAGE 3 OF 9
CONFERENCE CALL ON THE INTERNET
CheckFree will broadcast its first quarter conference call at 5:30
p.m. (EDT) today. To phone into the conference call, dial 1-800-243-6403
anytime after 5:15 p.m. (EDT) and ask for the conference call hosted by
Peter Kight. CheckFree will also broadcast the call on the Internet. The
live conference call will be accessible through the Investor Center section
of the CheckFree corporate Web site at http://www.checkfreecorp.com. A
digital replay of the call will be available on the same Web site after
7:30 p.m. (EDT).
ABOUT CHECKFREE (www.checkfreecorp.com)
CheckFree (NASDAQ: CKFR) is the leading provider of financial electronic
commerce services and products. Founded in 1981 and celebrating its 23rd
year in e-commerce, CheckFree is comprised of three divisions: Electronic
Commerce, Software, and Investment Services. CheckFree launched the first
fully integrated electronic billing and payment solution in 1997. In the
quarter ended September 30, 2003, more than 11 million consumers initiated
online payments through services offered by CheckFree's ELECTRONIC
COMMERCE division. Electronic billing and payment is available through
more than a thousand financial services organizations, including banks,
brokerage firms, Internet portals and personal financial management (PFM)
software. At these sites, consumers are able to electronically receive and
pay about 300 bills, representing the bills most common to a U.S.
household. CheckFree delivers nearly 15 million e-bills each quarter.
CheckFree INVESTMENT SERVICES provides a broad range of investment
management services to thousands of financial institutions nationwide. The
division's clients manage more than 1.3 million portfolios totaling more
than $700 billion in assets.
CheckFree's SOFTWARE division provides solutions through three operating
units: CheckFree ACH Solutions, CheckFree Financial and Compliance
Solutions (CFACS), and CheckFree i-Solutions. CheckFree ACH Solutions
provides software and services that are used to process more than
two-thirds of the nation's nine billion Automated Clearing House payments,
while CFACS provides reconciliation and compliance software and services to
more than 500 organizations in the banking, brokerage, utility, retail,
insurance and credit card industries, among others. CheckFree i-Solutions
is the leading provider of e-billing and e-statement software and services
for both business-to-consumer and business-to-business applications, with
more billers as clients than all of its competitors have combined.
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, and include statements in this document
regarding forecasts and expectations of revenue, earnings, cash flows,
sequential transaction growth for the second quarter of fiscal 2004 and
fiscal 2004 as a whole, and consumer adoption of electronic billing and
payment services (paragraphs 4, 5, 7, 8, 9 and 10). 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
Form 10-K for the year ended June 30, 2003 (filed September 15, 2003). 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 document
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 ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS -- PAGE 4 OF 9
CHECKFREE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended
September 30,
------------------------------------
2003 2002
-------------- --------------
Revenue:
Processing and servicing $124,245 $ 114,491
License fees 4,962 4,209
Maintenance fees 6,701 6,186
Other 5,356 5,349
-------------- --------------
Total revenue 141,264 130,235
Expenses:
Cost of processing, servicing and support 59,288 58,767
Research and development 14,903 12,235
Sales and marketing 12,325 13,206
General and administrative 11,523 10,300
Depreciation and amortization 50,613 56,878
-------------- --------------
Total expenses 148,652 151,386
-------------- --------------
Loss from operations (7,388) (21,151)
Interest, net (1,624) (1,216)
-------------- --------------
Loss before income taxes and cumulative
effect of accounting change (9,012) (22,367)
Income tax benefit (2,343) (9,085)
-------------- --------------
Loss before cumulative effect of accounting change (6,669) (13,282)
Cumulative effect of accounting change - (2,894)
-------------- --------------
Net loss $ (6,669) $ (16,176)
============== ==============
Basic and diluted loss per share:
Basic and diluted net loss per share before
cumulative effect of accounting change $ (0.07) $ (0.15)
Cumulative effect of accounting change - (0.03)
-------------- --------------
Net loss per common share $ (0.07) $ (0.18)
============== ==============
Equivalent number of shares 89,463 88,378
============== ==============
CHECKFREE ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS -- PAGE 5 OF 9
CHECKFREE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
(In thousands)
September 30, June 30,
2003 2003
-------------------- ---------------------
Current assets:
Cash, cash equivalents and investments $ 312,391 $ 282,032
Accounts receivable, net 86,592 81,626
Deferred income taxes 41,657 41,202
Other current assets 9,995 12,243
-------------------- ---------------------
Total current assets 450,635 417,103
Property and equipment, net 91,569 94,853
Capitalized software and intangible assets, net 906,026 946,976
Investments 112,036 121,615
Other 8,721 6,723
-------------------- ---------------------
Total assets $ 1,568,987 $ 1,587,270
==================== =====================
Current liabilities:
Accounts payable, accrued liabilities and other $ 63,989 $ 73,739
Deferred revenues 37,744 36,543
-------------------- ---------------------
Total current liabilites 101,733 110,282
Accrued rent and other 3,354 3,419
Long-term obligations, less current portion 3,774 4,192
Deferred income taxes 21,011 28,728
Convertible subordinated notes 172,500 172,500
Net stockholders' equity 1,266,615 1,268,149
-------------------- ---------------------
Total liabilities and stockholders' equity $ 1,568,987 $ 1,587,270
==================== =====================
CHECKFREE ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS -- PAGE 6 OF 9
Attachment A
CALCULATION OF FREE CASH FLOW
Three Months Ended
September 30,
2003 2002
------------- -------------
(in millions)
Cash provided by operating activities $ 27.0 $ 24.0
Less: capital expenditures 5.4 9.6
------------- -------------
Free cash flow $ 21.6 $ 14.4
============= =============
The Company defines free cash flow as GAAP net cash from operating activities
less capital expenditures.
RECONCILIATION OF GAAP NET LOSS TO UNDERLYING NET INCOME
AND EARNINGS (LOSS) PER SHARE
Three Months Ended
September 30,
----------------------------
2003 2002
------------- ------------
(in thousands, except per share data)
Total revenue per GAAP $ 141,264 $ 130,235
Warrants issued to third party - (644)
------------- ------------
Total underlying revenue $ 141,264 $ 129,591
============= ============
Net loss per GAAP $ (6,669) $ (16,176)
Warrants issued to third party - (644)
Amortization of intangible assets 40,494 46,157
Tax benefit of underlying adjustments (14,467) (18,130)
Cumulative effect of accounting change (1) - 2,894
------------- ------------
Underlying net income $ 19,358 $ 14,101
============= ============
GAAP basic and diluted weighted average shares outstanding 89,463 88,378
Impact of dilutive options and warrants 1,895 196
------------- ------------
Underlying diluted weighted average shares outstanding 91,358 88,574
============= ============
GAAP basic and diluted loss per share $ (0.07) $ (0.18)
============= ============
Underlying diluted earnings per share $ 0.21 $ 0.16
============= ============
(1) Effective July 1, 2002, the Company adopted SFAS No. 142 - Accounting for
Goodwill and Other Intangible Assets. Upon adoption of SFAS No. 142 the
Company no longer amortizes goodwill.
(CONTINUED)
CHECKFREE ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS -- PAGE 7 OF 9
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,
-------------------------------
2003 2002
-------------- --------------
Revenue:
Processing and servicing $ 124,245 $ 113,847
License fees 4,962 4,209
Maintenance fees 6,701 6,186
Other 5,356 5,349
-------------- --------------
Total revenue 141,264 129,591
Expenses:
Cost of processing, servicing and support 59,288 58,767
Research and development 14,903 12,235
Sales and marketing 12,325 13,206
General and administrative 11,523 10,300
Depreciation and amortization 10,119 10,721
-------------- --------------
Total expenses 108,158 105,229
-------------- --------------
Income from operations 33,106 24,362
Interest, net (1,624) (1,216)
-------------- --------------
Income before income taxes 31,482 23,146
Income tax expense 12,124 9,045
-------------- --------------
Net income $ 19,358 $ 14,101
============== ==============
Basic income per share:
Net income per common share $ 0.22 $ 0.16
============== ==============
Equivalent number of shares 89,463 88,378
============== ==============
Diluted income per share:
Net income per common share $ 0.21 $ 0.16
============== ==============
Equivalent number of shares 91,358 88,574
============== ==============
CHECKFREE ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS -- PAGE 8 OF 9
Attachment B
RECONCILIATION OF GAAP RESULTS TO UNDERLYING RESULTS BY SEGMENT
Three Months Ended
September 30,
2003 2002
------------ ------------
(in thousands)
ELECTRONIC COMMERCE:
Total revenue per GAAP $106,555 $ 96,643
Warrants issued to third party - (644)
------------ ------------
Total underlying revenue $106,555 $ 95,999
============ ============
Operating loss per GAAP $ (5,599) $(16,661)
Warrants issued to third party - (644)
Amortization of intangible assets 39,521 43,757
------------ ------------
Underlying operating income $ 33,922 $ 26,452
============ ============
INVESTMENT SERVICES:
Revenue (GAAP and underlying) $ 20,293 $ 20,523
============ ============
Operating income per GAAP $ 4,686 $ 4,099
Amortization of intangible assets 232 745
------------ ------------
Underlying operating income $ 4,918 $ 4,844
============ ============
SOFTWARE:
Revenue (GAAP and underlying) $ 14,416 $ 13,069
============ ============
Operating income (loss) per GAAP $ 1,487 $ (566)
Amortization of intangible assets 741 1,655
------------ ------------
Underlying operating income $ 2,228 $ 1,089
============ ============
CORPORATE:
Operating (loss) per GAAP $ (7,962) $ (8,023)
------------ ------------
Underlying operating loss $ (7,962) $ (8,023)
============ ============
# # #
CHECKFREE ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS -- PAGE 9 OF 9
Attachment C
CORE ELECTRONIC BILLING AND PAYMENT METRICS
Quarter Ended
9/30/03 6/30/03 3/31/03 12/31/02 9/30/02
---------------------------------------------------------------
(in millions, except revenue/transaction, percentages and distribution points)
TRANSACTIONS
FULL SERVICE TRANSACTIONS
Revenue $85.5 $82.6 $81.5 $75.1 $71.6
Active Subscribers(1) 4.6 4.2 3.9 3.5 3.2
Transactions 94.3 87.5 80.3 74.9 67.2
Revenue/Transaction(2) $0.91 $0.94 $1.01 $1.00 $1.07
PAYMENT SERVICES TRANSACTIONS
Revenue $11.9 $12.3 $12.8 $13.9 $14.7
Transactions 32.4 32.7 31.6 30.1 29.5
Revenue/Transaction(2) $0.37 $0.37 $0.41 $0.46 $0.50
TOTAL TRANSACTIONS 126.7 120.2 111.9 105.0 96.7
OTHER REVENUE $9.2 $11.2 $10.3 $9.2 $9.7(3)
e-BILL DELIVERY
Electronic bills distributed 14.7 11.5 8.8 6.8 4.8
Quarterly sequential growth 27% 31% 30% 41% 26%
ELECTRONIC RATE
Electronic payment rate 76% 75% 74% 73% 73%
CONSUMER ONLINE ACCESS
Distribution points for EBP 1,028 949 842 784 657
CUSTOMER REACH(4)
Consumers initiating payments 11 10 9 8 7
(1) "Active" refers to subscribers who have viewed or paid a bill in the last
90 days at a Consumer Service Provider that outsources essentially all of
its EBP functions to CheckFree.
(2) Revenue/Transaction is derived by dividing all services and transaction
revenue earned in the category by the number of transactions tracked in the
category.
(3) Excludes a $0.6 million non-cash increase to GAAP Other Revenue of $10.3
million for warrants issued to a third party.
(4) Represents the consumers initiating payments through CheckFree-managed
services.
# # #