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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: APRIL 28, 1998
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CHECKFREE HOLDINGS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Delaware 0-26802 58-2360335
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(STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
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4411 East Jones Bridge Road
Norcross, Georgia 30092
(770) 441-3387
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
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Not Applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS
On April 28, 1998, CheckFree Holdings Corporation, a Delaware
corporation ("CheckFree"), issued a news release announcing its earnings for the
third quarter ended March 31, 1998. The information contained in the news
release, which is attached as an exhibit to this report, is incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
99 Press release of CheckFree Holdings Corporation
issued April 28, 1998, regarding third quarter
earnings.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHECKFREE HOLDINGS CORPORATION
Date: May 4, 1998 By: /s/ James S. Douglass
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James S. Douglass, Executive Vice
President and Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
99 Press release of CheckFree Holdings
Corporation issued April 28, 1998, regarding
third quarter earnings.
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Exhibit 99
Media contacts: Investor Relations:
CheckFree Corporation CheckFree Corporation
Laurinda Wilson Jim Douglass
(770) 840-1608 (770) 840-1217
[email protected] [email protected]
CHECKFREE ANNOUNCES RECORD REVENUE AND
OPERATING RESULTS FOR THIRD QUARTER
ATLANTA (April 28, 1998) CheckFree Holdings Corporation (NASDAQ:CKFR) today
announced quarterly revenues of $61.8 million for the third quarter ended March
31, 1998 compared to $50.2 million for the same period in the prior year. For
the nine months ended March 31, 1998, the Company reported revenues of $170.4
million, compared to $121.4 million for the same period in the prior year.
Excluding a non-cash charge related to the vesting of warrants issued in
connection with the Integrion alliance and a gain on disposition of assets
related to the sale of the Item Processing software business, the Company
reported net income of $57,000 for the quarter, or zero cents per share,
compared to a net loss of $4.8 million, or ten cents per share for the same
period in the prior year. Including the non-cash charge related to the Integrion
warrants and the gain on disposition of assets, the Company reported a net loss
for the quarter of $17.5 million, or 32 cents per share, compared to a net loss
of $142.9 million, or $2.83 per share for the same period in the prior year.
For the nine months ended March 31, 1998, excluding the non-cash charge related
to the Integrion warrants, a gain on asset dispositions, exclusivity
amortization and a charge for purchased in-process research and development, the
Company reported a net loss of $4.4 million, or eight cents per share, compared
to a net loss of $17.9 million, or 40 cents per share for the same period in the
prior year. Including the non-cash Integrion warrant charge, the gain on
dispositions, exclusivity amortization and purchased in-process research and
development, the Company reported a net loss on a year-to-date basis of $9.5
million, or 17 cents per share, compared to a net loss of $155.9 million, or
$3.50 per share for the same period in the prior year.
"I am extremely pleased with the financial results we've been able to achieve
this quarter," said Peter J. Kight, chairman and chief executive officer of
CheckFree. "We hit our first profitable quarter as a publicly held company right
on schedule, and we believe it is just the beginning of the rewards our
employees and shareholders can expect as we prepare for the next generation of
financial electronic commerce services." Mr. Kight added, "During the quarter,
we completed our fiscal 1999 planning process and expect to achieve revenue of
$265 to $270 million, and earnings per share of 32 cents for fiscal year 1999.
The 1999 plan assumes the completion of the previously announced software
divestiture by June 30, 1998, and revenue growth of 35 percent over fiscal year
1998."
CheckFree currently has agreements with more than 350 financial institutions to
provide banking and electronic billing and payment processing services. At March
31, 1998, with the Integrion alliance, more than 2.4 million home banking and
bill payment subscribers were relying on CheckFree for behind-the-scenes
processing, an increase of 60 percent over the prior year and an eight percent
sequential increase over December 31, 1997.
CHECKFREE EXPANDS RELATIONSHIP WITH INTUIT TO BECOME THE EXCLUSIVE PROVIDER OF
BILL PRESENTMENT AND PAYMENT FOR QUICKEN SOFTWARE AND WEB SITE
Through an 18-month agreement, CheckFree will be the exclusive provider of
electronic bill presentment and payment processing for Intuit's Quicken personal
financial management software and Quicken.com Web site. Since December 1997,
Quicken 98 for Windows customers have been able to both receive and pay their
bills with a click of the mouse, enabled by CheckFree's behind-the-scenes
processing. Later this year, electronic bill presentment will also be
incorporated into Quicken.com (www.quicken.com), a leading personal finance Web
site. After receiving and processing billing information from its corporate
customers, CheckFree will forward bill summary data to Quicken.com subscribers
via the World Wide Web. Customers will log on to the site directly, or be
directed there by their bank-branded Quicken 98 software package, and view and
pay their bills electronically.
"A year and a half ago, we began our relationship with Intuit with the purchase
of their processing business," said Kight. "This acquisition marked a milestone
in CheckFree's history - making us the leading provider of payment processing to
financial institutions. With the recent announcement to be the exclusive
provider of electronic bill presentment and payment processing for Quicken, we
are now clearly leading the emerging market of bill presentment."
INTEGRION UPDATE
In March, CheckFree completed the Integrion outsourcing agreement that results
in CheckFree processing for the former Visa Interactive business acquired by
Integrion. In addition, Integrion continues to migrate banks to its IFS platform
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while it completes the seamless integration with CheckFree's processing engine.
Currently, NationsBank and Bank One are live with customers on the IFS system.
PNC, Michigan National and Washington Mutual are in implementation and will be
live later this year, as well as another 4 Integrion banks that have committed
to full implementation in 1998. Banks using IFS will be the first to offer their
customers fully integrated electronic banking, billing, and payment services
developed by CheckFree and Integrion.
GENESIS PLATFORM CONSOLIDATION
Genesis is a three-phase infrastructure project to maximize operating
effectiveness for remittance processing, data center costs and electronic
banking and bill payment. Completed ahead of schedule, the newly developed
processing engine is in production at high volumes with traffic from numerous
sources including NationsBank, Chase and Key Bank.
The second phase of the Genesis project -- creating a single, centralized,
state-of-the-art data center is nearly complete. Most recently, the Austin data
center was moved to the new Atlanta center, moving nearly one million customers
950 miles. By June 30, Columbus will be moved to the new center, completing the
data consolidations approximately three months ahead of schedule.
During the quarter, the company also completed development of the new online
systems for banking and bill payment. Beta testing for these applications will
be conducted during the fourth quarter and customers will begin to be migrated
to the new platform in the second half of the calendar year.
HIGHLIGHTS OF THE QUARTER
April 20, 1998 - CheckFree sells cash management and wire transfer business
units to Fundtech Ltd. for $18.25 million.
April 1, 1998 - CheckFree announces plans to divest seven of its software
products to enhance the company's focus on core businesses in electronic
commerce products and services. The products include: cash management, wire
transfer, leasing, item processing, imaging, mortgage and safe box accounting.
March 24, 1998 - CheckFree sells item processing unit to Houston-based CONIX
Systems, Inc.
March 11, 1998 - Integrion and CheckFree sign agreement for processing
partnership, whereby CheckFree assumed management of the Herndon, Va.-based
company's operations to handle bill payment fulfillment and customer service to
approximately 50 of Integrion's financial institution customers.
March 4, 1998 - CheckFree launches CheckFree Trade RECONTM, a Windows-based
client/server solution for global cash and securities reconciliation.
February 23, 1998 - CheckFree E-Bill receives 1998 Marketing Award for
Excellence (MAX), sponsored by Georgia State University's College of Business
Administration and the Atlanta Business Chronicle. The award honors the
outstanding product, service and marketing innovations developed in Georgia
during the previous year.
January 29, 1998 - CheckFree and Harris Bank of Chicago form strategic ACH
business alliance to process the bank's 45 million ACH transactions conducted
per year.
January 28, 1998 - Home Depot replaces its reconciliation system with CheckFree
RECON-PlusTM for Windows for automating reconciliation for its 609 stores
nationwide.
January 13, 1998 - CheckFree and CUNA Mutual Group launch electronic billing and
payment program to allow CUNA Mutual's policyholders to receive and pay their
premiums on the Internet via CheckFree E-BillSM.
Founded in 1981, CheckFree (www.checkfree.com) is the leading provider of
electronic commerce services, software and related products for more than 2.4
million consumers, 1,000 businesses and 850 financial institutions. CheckFree
designs, develops and markets services that enable its customers to make
electronic payments and collections, automate paper-based recurring financial
transactions and conduct secure transactions on the Internet.
Certain of the Company's statements in this news release contain forward-looking
statements, including the statements regarding projections of future revenues
and profitability (4th paragraph), incorporation of CheckFree's bill presentment
technology into quicken.com (6th paragraph), CheckFree's lead in the emerging
market of bill presentment (7th paragraph), implementation of additional
Integrion clients (8th paragraph) and expected completion of the Genesis project
(10th paragraph). These forward-looking statements involve risks and
uncertainties, including without limitation the timely implementation of
existing bank processing agreements, the ability of the Company to sell its
processing services to additional banks, the acceptance of the Company's
electronic banking and bill payment services by financial institutions,
businesses and their customers, the acceptance of the Company's applications
software, services and related products by financial institutions, the impact of
competitive services and products, the effect of any future acquisitions
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or divestitures, and the timely development and acceptance of new electronic
commerce services and products, as well as 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 Form 10-K for the year ended June 30, 1997. 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. 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.
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<TABLE>
CHECKFREE HOLDINGS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Results of Operations
(Unaudited)
(In thousands, except per share data)
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Processing and servicing $ 42,147 $ 30,293 $115,093 $ 72,658
License fees 8,116 8,181 21,411 21,675
Maintenance fees 6,644 7,300 19,904 15,654
Other 4,843 4,414 13,945 11,368
Total Revenues 61,750 50,188 170,353 121,355
Expenses:
Cost of processing, servicing and support 34,213 30,357 94,332 75,784
Research and development 9,360 8,556 26,157 22,527
Sales, marketing and royalties 6,692 8,868 22,002 21,278
General and administrative 5,215 3,923 15,748 12,924
Depreciation and amortization 6,264 6,697 19,380 18,013
In process research and development -- 140,000 719 140,000
Charge for stock warrants 32,409 -- 32,409 --
Exclusivity amortization -- 2,994 2,963 2,994
Total Expenses 94,153 201,395 213,710 293,520
Net gain on disposition of assets 3,080 6,250 28,449 6,250
Loss from operations (29,323) (144,957) (14,908) (165,915)
Interest, net 752 250 1,866 1,132
Loss before income taxes (28,571) (144,707) (13,042) (164,783)
Income tax benefit (11,031) (1,851) (3,581) (8,876)
Net loss $(17,540) $(142,856) $ (9,461) $(155,907)
Basic and diluted earnings per share:
Net loss per common share $ (0.32) $ (2.83) $ (0.17) $ (3.50)
Weighted average number of shares 55,281 50,499 54,989 44,511
Supplemental reconciliation of net
income (loss) and income (loss)
per share:
Loss before income taxes $(28,571) $(144,707) $(13,042) $(164,783)
Exclusivity amortization -- 2,994 2,963 2,994
In process research and development -- 140,000 719 140,000
Charge for stock warrants 32,409 -- 32,409 --
Net gain on disposition of assets (3,080) (6,250) (28,449) (6,250)
Adjusted income (loss) before
income taxes 758 (7,963) (5,400) (28,039)
Income tax expense (benefit) 701 (3,153) (1,011) (10,178)
Net Income (loss) excluding
exclusivity amortization, in process
research and development, charge for
stock warrants and net gain on
disposition of assets $ 57 $ (4,810) $ (4,389) $ (17,861)
Net income (loss) per
common share, excluding exclusivity
amortization, in process research and
development, charge for stock warrants
and net gain on disposition of assets $ 0.00 $ (0.10) $ (0.08) $ (0.40)
</TABLE>
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CHECKFREE HOLDINGS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
(In thousands)
March 31, June 30,
1998 1997
Current assets:
Cash, cash equivalents, and investments $ 63,973 $ 36,516
Accounts receivable, net 31,285 44,507
Assets held for sale 25,216 --
Other current assets 9,854 5,200
Total current assets 130,328 86,223
Deferred income taxes 11,105 3,063
Property and equipment, net 45,965 44,027
Capitalized software and intangible assets, net 43,414 83,540
Other 7,066 6,983
Total assets $237,878 $223,836
Current liabilities:
Accounts payable, accrued
liabilities and other $ 28,469 $ 40,293
Deferred revenues 25,358 26,498
Total current liabilities 53,827 66,791
Long-term obligations, less current portion 6,748 8,401
Net stockholders' equity 177,303 148,644
Total liabilities and stockholders' equity $237,878 $223,836
