CheckFree Closes Acquisition of American Payment Systems
Tuesday June 22, 4:01 pm ET
ATLANTA, June 22 /PRNewswire-FirstCall/ -- CheckFree Corporation (Nasdaq: CKFR - News), a provider of financial electronic commerce services and products, today announced that it has closed the acquisition of American Payment Systems, Inc. (APS), a subsidiary of UIL Holdings Corporation (NYSE: UIL - News). CheckFree has purchased all of the outstanding shares of APS for approximately $110 million in cash, subject to certain post closing adjustments. The closing was effective on June 22, 2004.
APS enables 7 million households to pay for services in-person through a national network of about 10,000 retail and agent locations. The new bill payment channel extends CheckFree's reach in electronic billing and payment by reaching 70 percent of consumers in the top 75 metropolitan markets who pay their bills in person at retail locations. In addition, APS serves hundreds of billers with contracted payment services and manages a growing network of non-contracted billers for electronic transaction processing. The acquisition combines the APS footprint with CheckFree's current electronic billing and payment infrastructure to offer billing organizations a wider number of payment processing services from a single company.
"This new bill payment channel significantly broadens our leadership in electronic billing and payment particularly in the efficiencies we can bring to billers and consumers," said Pete Kight, chairman and chief executive officer of CheckFree. "The combination of APS and our electronic billing and payment services enables us to leverage the quality and economies of scale of our end-to-end payment processing platform."
"For the remainder of the month of June, we expect APS to add approximately $1.0 million to CheckFree revenue. For the fourth quarter of fiscal 2004, the acquisition is expected to be less than one cent dilutive to GAAP earnings per share due to charges associated with closing the transaction, and is expected to be modestly accretive to underlying earnings per share," said David Mangum, chief financial officer, CheckFree. "We are now projecting fourth quarter revenue in the range of $156 to $161 million. GAAP earnings per share are projected in the range of $0.06 to $0.10, while underlying earnings per share are expected to be $0.28 to $0.30. These projections for GAAP and underlying earnings per share in the fourth quarter are essentially unchanged from our prior announcement of fourth quarter expectations on April 20, 2004. The APS business operations and financial results will be reported as part of the Electronic Commerce Division. We will discuss further details regarding APS at our fourth quarter earnings conference call, which is scheduled to be held on August 3, 2004."
The difference between GAAP (Generally Accepted Accounting Principles) earnings and underlying earnings expected in the fourth quarter is due to acquisition-related 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, which the Company defines as GAAP net cash from operating activities less capital expenditures. 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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