CheckFree Announces Fiscal 2006 Second Quarter Results and Raises Full-Year Expectations

ATLANTA, Jan. 24 /PRNewswire-FirstCall/ -- CheckFree Corporation (Nasdaq: CKFR) today announced second quarter revenue of $215.9 million. The Company's GAAP (Generally Accepted Accounting Principles) net income for the quarter was $33.8 million, or $0.36 per share, and underlying net income was $41.0 million, or $0.44 per share. Free cash flow was $37.7 million for the quarter, as outlined in Attachment A.

GAAP Results: Net income for the second quarter was $33.8 million, compared to net income of $13.0 million for the same quarter last year. Earnings per share were $0.36 for the second quarter of fiscal 2006, compared to earnings per share of $0.14 for the second quarter of last year. Net cash provided by operating activities was $56.8 million for the second quarter of fiscal 2006, compared to $65.9 million for the same period last year.

Underlying Results: Underlying net income for the second quarter was $41.0 million, compared to $33.7 million for the same quarter of last year. Underlying earnings per share were $0.44 for the second quarter of fiscal 2006, compared to $0.36 for the second quarter of last year. Underlying net income and earnings per share for the second quarter exclude the amortization of acquisition-related intangible assets, the SFAS 123(R) impact of options issued prior to July 1, 2004 and the related tax benefits of both. A reconciliation of CheckFree's underlying results to its GAAP results is included in Attachment A.

"CheckFree's divisions delivered solid results in the second quarter to complete a good first half of the fiscal year," said Pete Kight, Chairman and Chief Executive Officer of CheckFree. "Transaction growth in the Electronic Commerce division was in line with our expectations while both portfolio growth in Investment Services and license sales in the Software business were strong."

Second Quarter Highlights

For the second quarter, the Company reported that its Electronic Commerce division processed 270.7 million transactions, a 2 percent sequential increase over the first quarter of fiscal 2006, and delivered 45.2 million e-Bills, a sequential increase of 6 percent over the first quarter of fiscal 2006. CheckFree Investment Services reached 2.1 million portfolios under management, which compares to almost 1.7 million portfolios under management in the second quarter of fiscal 2005, representing 22 percent annual growth. The Software division delivered solid performance in the second quarter, with revenue growth of 23 percent over the second quarter of fiscal 2005.

Refer to Attachment B for details on the financial performance of CheckFree's divisions in the second quarter of fiscal 2006, and Attachment C for electronic billing and payment metrics.

Financial Outlook for the Third Quarter and the Fiscal Year

"Strong financial results through the mid-point of the fiscal year put the Company on track to exceed its previously announced fiscal year expectations," said CheckFree Chief Financial Officer David Mangum. "We now expect full-year earnings per share in the range of $1.19 to $1.24 on a GAAP basis and $1.62 to $1.66 on an underlying basis. Free cash flow remains targeted for about $170 million for fiscal 2006."

"For the third quarter of fiscal 2006, we expect revenue in the range of $217 million to $222 million, and GAAP earnings per share in the range of $0.27 to $0.30," Mangum continued. "This expectation equates to underlying earnings per share in the range of $0.36 to $0.38 for the quarter."

The difference between GAAP and underlying earnings expectations for fiscal 2006 and the third quarter of fiscal 2006 is due to expected acquisition-related intangible amortization expense, the SFAS 123(R) impact of options issued prior to July 1, 2004 and the related tax benefits of both.....for full financials and more of the story from CheckFree