CheckFree Announces Fiscal 2004 Third Quarter Results
Tuesday April 20, 4:03 pm ET
ATLANTA, April 20 /PRNewswire-FirstCall/ -- CheckFree Corporation (Nasdaq: CKFR - News) today announced third quarter revenue of $155.2 million, representing 10 percent growth over the same period last year. The Company's GAAP (Generally Accepted Accounting Principles) net income was $7.7 million or $0.08 per share, and underlying net income was $26.5 million, or $0.29 per share. Free cash flow was $41.0 million for the quarter as outlined in Attachment A.
GAAP Results: Net income for the third quarter was $7.7 million, compared to a net loss of $7.8 million for the same quarter last year. Earnings per share were $0.08 for the third quarter of fiscal 2004, compared to a loss per share of $0.09 for the third quarter of last year. GAAP net cash provided by operating activities was $48.8 million for the third quarter of fiscal 2004, compared to $44.8 million for the same period last year.
Underlying Results: Underlying net income for the third quarter was $26.5 million, compared to $20.5 million for the same quarter of last year. Underlying earnings per share were $0.29 for the third quarter of fiscal 2004, compared to $0.23 for the third quarter of last year. Underlying net income and earnings per share exclude the amortization of acquisition-related intangible assets, a loss on investments, and related income tax benefits. A reconciliation of CheckFree's underlying results to its GAAP results is included in Attachment A.
"The Company's results this quarter and throughout the year reflect focused execution on our core competencies of electronic billing and payment, investment services, and transaction management software. Our performance in these markets has enabled us to strengthen our leadership role in all three areas. As we finish out the year, CheckFree will continue to leverage and expand on its existing infrastructures, providing high-quality, state-of-the- art products and services for businesses and consumers," said CheckFree Chairman and Chief Executive Officer Pete Kight.
Third Quarter Highlights
The Company reported that its Electronic Commerce unit processed more than 152.2 million transactions for the quarter, a 9 percent increase over the previous quarter; and delivered 22.5 million electronic bills, an increase of 22 percent over the previous quarter. Refer to Attachment B for details on the financial performance of CheckFree's divisions in the third quarter of fiscal 2004 and Attachment C for core electronic billing and payment metrics.
The Company also recently announced a joint venture with BACS Limited, a United Kingdom-based payment network, that will utilize CheckFree i-Series software and the commercial application BACS offers through the UK banking network to develop and promote consolidated bill payment and presentment to the millions of online consumers in the UK.
Expectations for Fourth Quarter and Fiscal Year
"For the fourth quarter of 2004, we project revenue in the range of $155 to $160 million, and GAAP earnings per share in the range of $0.06 to $0.10," said CheckFree Chief Financial Officer, David Mangum. "This equates to underlying earnings per share in the range of $0.28 to $0.30 for the quarter. We now expect full year earnings per share of $0.05 to $0.09 on a GAAP basis, or $1.04 to $1.06 on an underlying basis, and continue to expect free cash flow for the year to approach 15 percent over the $133.5 million posted last year."
"Our expectations for the fourth quarter are based on an outlook for essentially steady performance from Investment Services and Software, and sequential quarterly transaction growth of 8 to 10 percent in Electronic Commerce," he continued.
"Our expectations do not include any financial projections for American Payment Systems. We will share further details with the closure of that transaction later in this fiscal year," Mangum concluded.
The difference between GAAP and underlying earnings expected in the fourth quarter is due to acquisition-related intangible amortization expense.
Use of Non-GAAP Financial Information
Management evaluates the Company's operations using measures of underlying income, underlying earnings per share, and free cash flow. These financial measures are not prepared in accordance with GAAP and they exclude or include items that represent either non-cash charges that do not impact the Company's free cash flow or other items that are evaluated separately as they arise. The Company believes these measures are useful to investors because they reflect the performance of the Company's core operations and are consistent with the Company's internal performance measures. Further, the Company considers free cash flow to be a measure of liquidity that 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 should be considered in addition to, and not as a substitute for, our GAAP results. . .
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