CheckFree Exceeds Revenue and Earnings Expectations for the First Quarter Of Fiscal 2003
Tuesday October 22, 4:30 pm ET
Electronic Commerce Division Posts Stronger Than Anticipated Revenues, And Derives Greater-Than-Expected Efficiency Gains
ATLANTA, Oct. 22 /PRNewswire-FirstCall/ -- CheckFree Corporation (Nasdaq: CKFR - News) today announced
first quarter revenues of $129.6 million and net income of $14.1 million, or 16 cents per share, on a pro forma basis. Both measures exceeded the Company's expectations, due to stronger-than-expected performance from
the Company's Electronic Commerce division.
Pro forma revenues for the quarter ended September 30, 2002 were up 11 percent over the $116.7 million
reported for the same period last year. Underlying pro forma revenues for the first quarter are reduced to
reflect non-cash revenue of $0.6 million related to warrants issued to a third party in 1999, which vested during
the quarter. This revenue is reflected in the Company's reported GAAP basis revenue for the quarter of $130.2
million.
Pro forma net income of $14.1 million compares to a pro forma loss of $1.9 million, or a two-cent loss per share,
for the first quarter of fiscal 2002. On a GAAP basis for the quarter, CheckFree reported a net loss of $16.2
million, or a loss per share of 18 cents, compared to a net loss of $88.9 million, or a loss per share of $1.02, for
the first quarter of fiscal 2002. Pro forma results for the quarter ended September 30, 2002, exclude: the
cumulative effect of an accounting change of $2.9 million related to the Company's July 1 adoption of Statement
of Financial Accounting Standards No. 142 (SFAS 142) regarding accounting for goodwill; $46.2 million of
acquisition-related amortization; and the previously mentioned $0.6 million non-cash adjustment to revenue
associated with the vesting of warrants; offset by $18.1 million of related tax benefits. This compares to pro
forma results for the first quarter of fiscal 2002 that excluded $109.6 million of acquisition-related amortization,
offset by $22.5 million of related income tax benefits. With the adoption of SFAS 142, CheckFree has
discontinued amortizing its remaining balance of goodwill of $529.2 million associated with all previous
acquisitions. Had CheckFree adopted SFAS 142 in the prior year and eliminated goodwill amortization at that
time, the Company's comparative GAAP net loss would have been $39.2 million, and its net loss per share
would have been $0.45 per share, for the quarter ended September 30, 2001.
CheckFree Chairman and CEO Pete Kight said, "We continue to derive economic benefits from the investments
we have made in scale and operating efficiency in our Electronic Commerce division, which drove the earnings
per share results we posted this quarter. While our top line was helped by timing-related factors that led to the
retention of some revenue and transactions from a Consumer Service Provider that we had forecasted to
decline, we are encouraged by the continued steady market acceptance of viewing and paying bills online. We
had strong growth at our large strategic bank clients, and particularly across the board among our regional
financial service clients, which shows an increasing interest across the U.S. consumer market."
"Looking forward, we expect continuing market challenges for our Investment Services and Software divisions,
and underlying performance roughly similar to what we experienced in the first quarter in our Electronic
Commerce division," Kight added. "Even given the challenging overall environment, we expect to continue to
improve our ability to provide increasing value for our customers while improving our margins across each of
our divisions, which will drive our ability to deliver improved returns to shareholders," he concluded. . .
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