##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-26802
 CHECKFREE CORPORATION
  Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    58-2360335
(I.R.S. Employer
Identification No.)
 4411 East Jones Bridge Road, Norcross, Georgia 30092
 (678) 375-3000
 Not Applicable
 þ o
  þ o o
 o þ




---



##### 



FORM 10-Q
 CHECKFREE CORPORATION
 Table of Contents
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsUnaudited Consolidated Balance Sheets
As of December 31, 2006 and June 30, 2006
    
    
    3Unaudited Consolidated Statements of Operations
For the Three and Six Months Ended December 31, 2006 and 2005
    
    
    4Unaudited Consolidated Statements of Cash Flows
For the Six Months Ended December 31, 2006 and 2005
    
    
    5Notes to the Interim Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    34PART II. OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 4. Submission of Matters to a Vote of Security Holders
    
    
    36Item 6. Exhibits
    
    
    37Signatures
    
    
    38EX-3EX-10(A)EX-31AEX-31BEX-32AEX-32B
  2




---



##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 CHECKFREE CORPORATION AND SUBSIDIARIES
 
 Unaudited Consolidated Balance Sheets
 December 31,
    
    
    June 30,2006
    
    
    2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    153,708
    
    
    $
    173,083Settlement assets
    
    
    130,513
    
    
    
    107,128Investments
    
    
    106,445
    
    
    
    144,530Accounts receivable, net
    
    
    167,340
    
    
    
    146,605Prepaid expenses and other assets
    
    
    37,324
    
    
    
    39,810Deferred income taxes
    
    
    6,779
    
    
    
    7,311Total current assets
    
    
    602,109
    
    
    
    618,467PROPERTY AND EQUIPMENT, NET
    
    
    115,280
    
    
    
    100,217OTHER ASSETS:Capitalized software, net
    
    
    3,717
    
    
    
    3,755Goodwill
    
    
    734,937
    
    
    
    734,591Strategic agreements, net
    
    
    93,534
    
    
    
    106,005Other intangible assets, net
    
    
    53,867
    
    
    
    62,416Investments and restricted cash
    
    
    70,267
    
    
    
    78,559Other noncurrent assets
    
    
    9,433
    
    
    
    8,372Deferred income taxes
    
    
    47,347
    
    
    
    45,240Investment in joint venture
    
    
    
    
    
    
    407Total other assets
    
    
    1,013,102
    
    
    
    1,039,345Total assets
    
    $
    1,730,491
    
    
    $
    1,758,029LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    13,970
    
    
    $
    16,967Settlement obligations
    
    
    127,209
    
    
    
    103,732Accrued liabilities
    
    
    70,042
    
    
    
    74,366Current portion of long-term obligations
    
    
    2,120
    
    
    
    767Deferred revenue
    
    
    50,473
    
    
    
    40,301Total current liabilities
    
    
    263,814
    
    
    
    236,133ACCRUED RENT AND OTHER
    
    
    4,321
    
    
    
    3,844DEFERRED INCOME TAXES
    
    
    1,408
    
    
    
    2,964DEFERRED REVENUE
    
    
    3,708
    
    
    
    3,021CAPITAL
LEASE AND LONG-TERM OBLIGATIONS  LESS CURRENT PORTION
    
    
    42,404
    
    
    
    28,432STOCKHOLDERS EQUITY:Preferred stock  50,000,000 authorized shares, $0.01 par value;
no amounts issued or outstanding
    
    
    
    
    
    
    Common stock  500,000,000 authorized shares, $0.01 par value;
issued and outstanding 87,260,016 and 90,867,834 shares, respectively
    
    
    873
    
    
    
    909Additional paid-in-capital
    
    
    2,345,608
    
    
    
    2,482,309Accumulated other comprehensive loss
    
    
    (149
    )
    
    
    (1,593
    )Accumulated deficit
    
    
    (931,496
    )
    
    
    (997,990
    )Total stockholders equity
    
    
    1,414,836
    
    
    
    1,483,635Total liabilities and stockholders equity
    
    $
    1,730,491
    
    
    $
    1,758,029
  3




---



##### Table of Contents



CHECKFREE CORPORATION AND SUBSIDIARIES
 
 Unaudited Consolidated Statements of Operations
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005REVENUES:Processing and servicing:Third parties
    
    $
    200,775
    
    
    $
    176,716
    
    
    $
    396,253
    
    
    $
    352,356Related parties
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    18,000Total processing and servicing
    
    
    200,775
    
    
    
    185,716
    
    
    
    396,253
    
    
    
    370,356License fees
    
    
    12,321
    
    
    
    7,822
    
    
    
    21,395
    
    
    
    15,380Maintenance fees
    
    
    11,924
    
    
    
    9,966
    
    
    
    23,454
    
    
    
    19,629Professional fees
    
    
    12,140
    
    
    
    10,340
    
    
    
    24,677
    
    
    
    22,172Total revenues
    
    
    237,160
    
    
    
    213,844
    
    
    
    465,779
    
    
    
    427,537EXPENSES:Cost of processing, servicing and support
    
    
    93,910
    
    
    
    81,507
    
    
    
    186,759
    
    
    
    161,675Research and development
    
    
    26,323
    
    
    
    23,770
    
    
    
    53,061
    
    
    
    46,828Sales and marketing
    
    
    24,270
    
    
    
    20,742
    
    
    
    45,545
    
    
    
    39,164General and administrative
    
    
    17,429
    
    
    
    16,292
    
    
    
    35,178
    
    
    
    32,558Depreciation and amortization
    
    
    21,307
    
    
    
    19,927
    
    
    
    43,112
    
    
    
    55,399Total expenses
    
    
    183,239
    
    
    
    162,238
    
    
    
    363,655
    
    
    
    335,624INCOME FROM CONTINUING OPERATIONS BEFORE OTHERINCOME AND EXPENSES
    
    
    53,921
    
    
    
    51,606
    
    
    
    102,124
    
    
    
    91,913OTHER:Equity in net loss of joint venture
    
    
    (464
    )
    
    
    (807
    )
    
    
    (922
    )
    
    
    (1,474
    )Interest income
    
    
    3,152
    
    
    
    3,156
    
    
    
    6,733
    
    
    
    5,848Interest expense
    
    
    (456
    )
    
    
    (240
    )
    
    
    (743
    )
    
    
    (476
    )INCOME FROM CONTINUING OPERATIONS BEFORE INCOMETAXES
    
    
    56,153
    
    
    
    53,715
    
    
    
    107,192
    
    
    
    95,811INCOME TAX EXPENSE
    
    
    20,876
    
    
    
    20,345
    
    
    
    40,698
    
    
    
    36,460INCOME FROM CONTINUING OPERATIONS
    
    
    35,277
    
    
    
    33,370
    
    
    
    66,494
    
    
    
    59,351Income from discontinued operations before income taxes
    
    
    
    
    
    
    646
    
    
    
    
    
    
    
    1,254Income tax expense on discontinued operations
    
    
    
    
    
    
    251
    
    
    
    
    
    
    
    483Income from discontinued operations
    
    
    
    
    
    
    395
    
    
    
    
    
    
    
    771NET INCOME
    
    $
    35,277
    
    
    $
    33,765
    
    
    $
    66,494
    
    
    $
    60,122BASIC EARNINGS PER SHARE:Continuing operations
    
    $
    0.40
    
    
    $
    0.37
    
    
    $
    0.75
    
    
    $
    0.65Discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.01Total basic
    
    $
    0.40
    
    
    $
    0.37
    
    
    $
    0.75
    
    
    $
    0.66Weighted-average number of shares
    
    
    87,976
    
    
    
    90,820
    
    
    
    88,969
    
    
    $
    90,699DILUTED EARNINGS PER SHARE:Continuing operations
    
    $
    0.39
    
    
    $
    0.36
    
    
    $
    0.73
    
    
    $
    0.64Discontinuing operations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.01Total diluted
    
    $
    0.39
    
    
    $
    0.36
    
    
    $
    0.73
    
    
    $
    0.65Weighted-average number of shares
    
    
    90,624
    
    
    
    93,589
    
    
    
    91,612
    
    
    
    93,203
  4




---



##### Table of Contents



CHECKFREE CORPORATION AND SUBSIDIARIES
 
 Unaudited Consolidated Statements of Cash Flows
 Six Months EndedDecember 31,2006
    
    
    2005OPERATING ACTIVITIES:Net income
    
    $
    66,494
    
    
    $
    60,122Adjustments to reconcile net income to net cash provided by operating activities:Equity in net loss of joint venture
    
    
    921
    
    
    
    1,474Depreciation and amortization
    
    
    43,112
    
    
    
    55,809Expenses related to data center
    
    
    1,021
    
    
    
    Deferred income tax benefit
    
    
    (3,132
    )
    
    
    (6,571
    )Equity-based compensation
    
    
    8,753
    
    
    
    8,092Net loss on disposition of property and equipment
    
    
    36
    
    
    
    220Change in certain assets and liabilities (net of acquisitions):Settlement assets and obligations
    
    
    92
    
    
    
    (2,262
    )Accounts receivable
    
    
    (20,186
    )
    
    
    (15,525
    )Prepaid expenses and other
    
    
    7,404
    
    
    
    (9,837
    )Accounts payable
    
    
    (3,194
    )
    
    
    1,719Accrued liabilities and other
    
    
    (5,126
    )
    
    
    (2,885
    )Deferred revenue
    
    
    10,287
    
    
    
    9,906Net cash provided by operating activities
    
    
    106,482
    
    
    
    100,262INVESTING ACTIVITIES:Purchase of property and software
    
    
    (21,345
    )
    
    
    (23,642
    )Purchase of property and software for data center facility
    
    
    (4,190
    )
    
    
    Capitalization of software development costs
    
    
    (362
    )
    
    
    (276
    )Purchase of businesses, net of cash acquired
    
    
    
    
    
    
    (36,144
    )Purchase of
investments  Available-for-sale
    
    
    (137,578
    )
    
    
    (173,674
    )Proceeds
from sales and maturities of investments  Available-for-sale
    
    
    187,531
    
    
    
    229,744Purchase of other investments
    
    
    (1,761
    )
    
    
    (443
    )Proceeds from other investments
    
    
    17
    
    
    
    163Increase in restricted cash
    
    
    (4
    )
    
    
    (450
    )Investment in joint venture
    
    
    
    
    
    
    (2,367
    )Change in other assets
    
    
    (6,743
    )
    
    
    (976
    )Net cash provided by (used in) investing activities
    
    
    15,565
    
    
    
    (8,065
    )FINANCING ACTIVITIES:Principal payments under capital lease and other long-term obligations
    
    
    (652
    )
    
    
    (1,596
    )Proceeds from stock options exercised
    
    
    1,345
    
    
    
    11,334Excess tax benefit from equity-based compensation
    
    
    625
    
    
    
    1,486Purchase of treasury stock
    
    
    (150,000
    )
    
    
    Proceeds from associate stock purchase plan
    
    
    2,237
    
    
    
    2,090Proceeds from data center facility
    
    
    4,262
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (142,183
    )
    
    
    13,314Effect of exchange rate changes on cash and cash equivalents
    
    
    761
    
    
    
    (158
    )NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (19,375
    )
    
    
    105,353CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    173,083
    
    
    
    101,272End of period
    
    $
    153,708
    
    
    $
    206,625
  5




---



##### Table of Contents



CHECKFREE CORPORATION AND SUBSIDIARIES
 
 NOTES TO THE INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation and Summary of Significant Accounting Policies
 Unaudited Interim Financial Information
   Recent Accounting Pronouncements
    6




---



##### Table of Contents



2. Investments
  December 31,
    
    
    June 30,2006
    
    
    2006Available-for-sale
    
    $
    311,074
    
    
    $
    378,678Other investments
    
    
    3,645
    
    
    
    1,329Restricted cash
    
    
    457
    
    
    
    453Less: amounts classified as cash equivalents
    
    
    (138,464
    )
    
    
    (157,371
    )Total investments
    
    $
    176,712
    
    
    $
    223,089
   3 Goodwill and Other Intangible Assets
  Electronic
    
    
    
    
    
    
    InvestmentCommerce
    
    
    Software
    
    
    Services
    
    
    TotalBalance as of June 30, 2006
    
    $
    659,705
    
    
    $
    62,730
    
    
    $
    12,156
    
    
    $
    734,591Goodwill adjustments
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    346Balance as of December 31, 2006
    
    $
    660,051
    
    
    $
    62,730
    
    
    $
    12,156
    
    
    $
    734,937
 7




---



##### Table of Contents



December 31,
    
    
    June 30,2006
    
    
    2006Capitalized software:Product technology from acquisitions and strategic agreement
    
    $
    167,108
    
    
    $
    167,108Internal development costs
    
    
    34,155
    
    
    
    32,970Total
    
    
    201,263
    
    
    
    200,078Less: accumulated amortization
    
    
    (197,546
    )
    
    
    (196,323
    )Capitalized software, net
    
    $
    3,717
    
    
    $
    3,755Strategic agreements:Strategic agreements (1)
    
    $
    744,423
    
    
    $
    744,423Less: accumulated amortization
    
    
    (650,889
    )
    
    
    (638,418
    )Strategic agreements, net
    
    $
    93,534
    
    
    $
    106,005Other intangible assets:Tradenames
    
    $
    52,226
    
    
    $
    53,176Customer base
    
    
    89,639
    
    
    
    89,639Current technology
    
    
    10,290
    
    
    
    10,290Money transfer license
    
    
    1,700
    
    
    
    1,700Covenants not to compete
    
    
    5,670
    
    
    
    5,670Total
    
    
    159,525
    
    
    
    160,475Less: accumulated amortization
    
    
    (105,658
    )
    
    
    (98,059
    )Other intangible assets, net
    
    $
    53,867
    
    
    $
    62,416
 
 (1)
    
    Strategic agreements primarily include certain entity-level covenants not to compete.  4. Discontinued Operations
  5. Common Stock
  8




---



##### Table of Contents



6. Equity-Based Compensation
   9




---



##### Table of Contents



Stock Options
  Weighted Average
    
    
    
    
    
    AggregateNumber of
    
    Remaining
    
    Weighted Average
    
    IntrinsicOptions
    
    Contractual Term
    
    Exercise Price
    
    ValueOutstanding  Beginning of year
    
    
    3,604,750
    
    
    
    
    
    
    $
    28.84Granted
    
    
    126,584
    
    
    
    
    
    
    $
    37.27Exercised
    
    
    (82,849
    )
    
    
    
    
    
    $
    16.27
    
    
    $
    5,800,000Cancelled
    
    
    (128,486
    )
    
    
    
    
    
    $
    36.31Outstanding  End of period
    
    
    3,519,999
    
    
    4.5 years
    
    $
    29.04
    
    
    $
    39,200,000Options exercisable at end of period
    
    
    3,103,551
    
    
    4.5 years
    
    $
    28.81
    
    
    $
    35,300,000Weighted average per-share fair value of
options granted during the period
    
    $
    20.56
   Restricted Stock
  Number of
    
    WeightedRestricted
    
    Average Grant
    
    AggregateStock
    
    Date Fair Value
    
    Intrinsic ValueOutstanding  Beginning of year
    
    
    603,881
    
    
    $
    31.49Granted
    
    
    321,372
    
    
    $
    37.07Vested
    
    
    (57,217
    )
    
    $
    30.22
    
    
    $
    2,500,000Cancelled
    
    
    (88,770
    )
    
    $
    32.64Outstanding  End of period
    
    
    779,266
    
    
    $
    33.97
 10




---



##### Table of Contents



7. Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Numerator:Income from continuing operations
    
    $
    35,277
    
    
    $
    33,370
    
    
    $
    66,494
    
    
    $
    59,351Income (loss) from discontinued operations
    
    
    
    
    
    
    395
    
    
    
    
    
    
    
    771Numerator for basic and diluted earnings per share
    
    $
    35,277
    
    
    $
    33,765
    
    
    $
    66,494
    
    
    $
    60,122Denominator:Basic
earnings per share  weighted average
shares outstanding
    
    
    87,976
    
    
    
    90,820
    
    
    
    88,969
    
    
    
    90,699Effect of dilutive securities:Stock options and stock awards
    
    
    2,648
    
    
    
    2,769
    
    
    
    2,643
    
    
    
    2,504Diluted
earnings per share  weighted average
shares outstanding
    
    
    90,624
    
    
    
    93,589
    
    
    
    91,612
    
    
    
    93,203Basic earnings per shareContinuing operations
    
    $
    0.40
    
    
    $
    0.37
    
    
    $
    0.75
    
    
    $
    0.65Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Net income
    
    $
    0.40
    
    
    $
    0.37
    
    
    $
    0.75
    
    
    $
    0.66Diluted earnings per shareContinuing operations
    
    $
    0.39
    
    
    $
    0.36
    
    
    $
    0.73
    
    
    $
    0.64Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Net income
    
    $
    0.39
    
    
    $
    0.36
    
    
    $
    0.73
    
    
    $
    0.65
  11




---



##### Table of Contents



8. Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    35,277
    
    
    $
    33,765
    
    
    $
    66,494
    
    
    $
    60,122Other comprehensive income (loss):Foreign currency translation adjustments
    
    
    541
    
    
    
    (343
    )
    
    
    540
    
    
    
    (137
    )Unrealized holding gains (losses) on investments,
net of tax
    
    
    125
    
    
    
    484
    
    
    
    904
    
    
    
    (227
    )Comprehensive income
    
    $
    35,943
    
    
    $
    33,906
    
    
    $
    67,938
    
    
    $
    59,758
 9. Supplemental Disclosure of Cash Flow Information (in thousands)
 Six Months EndedDecember 31,2006
    
    
    2005Interest paid
    
    $
    129
    
    
    $
    249Income taxes paid
    
    $
    32,440
    
    
    $
    33,333Supplemental disclosure of non-cash investing and financing activities:Capital lease and other long-term asset additions
    
    $
    4,671
    
    
    $
    1,819Stock funding of 401(k) match
    
    $
    2,699
    
    
    $
    2,994Stock funding of Associate Stock Purchase Plan
    
    $
    2,237
    
    
    $
    1,946Data center facilities advances
    
    $
    8,404
    
    
    $
    
 10. Business Segments
  12




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Electronic Commerce
    
    $
    176,413
    
    
    $
    163,298
    
    
    $
    347,442
    
    
    $
    326,749Investment Services
    
    
    29,637
    
    
    
    28,448
    
    
    
    59,259
    
    
    
    54,869Software
    
    
    31,110
    
    
    
    24,194
    
    
    
    59,078
    
    
    
    50,079Impact of
discontinued operations
    
    
    
    
    
    
    (2,096
    )
    
    
    
    
    
    
    (4,160
    )Total
    
    $
    237,160
    
    
    $
    213,844
    
    
    $
    465,779
    
    
    $
    427,537Segment operating income (loss):Electronic Commerce
    
    $
    61,357
    
    
    $
    64,070
    
    
    $
    121,037
    
    
    $
    132,543Investment Services
    
    
    5,711
    
    
    
    5,052
    
    
    
    11,239
    
    
    
    9,450Software
    
    
    7,515
    
    
    
    3,308
    
    
    
    13,869
    
    
    
    8,473Corporate
    
    
    (10,187
    )
    
    
    (9,281
    )
    
    
    (21,875
    )
    
    
    (19,504
    )Impact of
discontinued operations
    
    
    
    
    
    
    (646
    )
    
    
    
    
    
    
    (1,254
    )Total
    
    
    64,396
    
    
    
    62,503
    
    
    
    124,270
    
    
    
    129,708Purchase accounting amortization
    
    
    (10,156
    )
    
    
    (9,655
    )
    
    
    (21,123
    )
    
    
    (35,197
    )SFAS 123(R)
 Stock options issued before July 1, 2004 (1)
    
    
    (319
    )
    
    
    (1,242
    )
    
    
    (1,023
    )
    
    
    (2,598
    )Equity in net loss of joint venture
    
    
    (464
    )
    
    
    (807
    )
    
    
    (922
    )
    
    
    (1,474
    )Interest, net
    
    
    2,696
    
    
    
    2,916
    
    
    
    5,990
    
    
    
    5,372Total income before income taxes
    
    $
    56,153
    
    
    $
    53,715
    
    
    $
    107,192
    
    
    $
    95,811
 
 (1)
    
    At the beginning of our fiscal year 2005, we implemented a new long-term incentive
compensation philosophy, which significantly reduced overall participation and focused on
restricted stock with limited stock options. As a result, we recorded the cost of restricted
stock throughout our fiscal year 2005. In fiscal year 2006, we adopted SFAS 123(R), and are
consequently recording all long-term incentive grants, both restricted stock and stock
options, as an expense in our consolidated statement of operations. The adjustment for SFAS
123(R) represents the charge associated with the current vesting of options that were unvested
as of July 1, 2004 under our previous compensation philosophy, which were originally accounted
for utilizing APB 25. 11. Pending Acquisition
   13




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
   
    
    Electronic Commerce;
    
    Investment Services; and
    
    Software.
   
    
    receive e-bills through the Internet;
    
    pay any bill  whether it arrives over the Internet or through traditional mail  to anyone; and
    
    make payments not related to bills  to anyone.
 SM
  Executive Summary
  
    
    The expiration of our agreements with First Data Corporation (FDC) in August 2005
and Microsoft Corporation (Microsoft) in December 2005 and the related cessation of
amortization of intangible assets in September 2005 resulting from our September 2000
acquisition of MSFDC, L.L.C. (TransPoint);
    
    The negative impact on interest-based revenue from our largest bank customer
migrating from a processing model that guarantees funds to our standard risk-based
processing model during the quarter ended March 31, 2006;
    
    Our acquisition of PhoneCharge, Inc. (PhoneCharge) for $100 million in cash in
January 2006;
 14




---



##### Table of Contents




    
    Our purchase of substantially all of the assets of Integrated Decision Systems, Inc.
(IDS) for $18.0 million in cash in September 2005;
    
    Our purchase of substantially all of the assets of Aphelion, Inc. (Aphelion) for
$18.1 million in cash in October 2005;
    
    The divestiture of our M-Solutions business unit for $18.6 million in February 2006,
which was accounted for as a discontinued operation; and
    
    Slower than expected transaction growth in the quarters ended June 30, 2006 and
September 30, 2006.
   Quarter Ended
    
    Microsoft
    
    
    FDC
    
    
    TotalSeptember 30, 2005
    
    $
    9,000
    
    
    $
    3,000
    
    
    $
    12,000December 31, 2005
    
    
    9,000
    
    
    
    
    
    
    
    9,000Total
    
    $
    18,000
    
    
    $
    3,000
    
    
    $
    21,000
  15




---



##### Table of Contents



16




---



##### Table of Contents



Three Months Ended
    
    Six Months EndedDecember 31,
    
    December 31,2006
    
    2005
    
    2006
    
    2005Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Expenses:Cost of processing, servicing and support
    
    
    39.6
    
    
    
    38.1
    
    
    
    40.1
    
    
    
    37.8Research and development
    
    
    11.1
    
    
    
    11.1
    
    
    
    11.4
    
    
    
    11.0Sales and marketing
    
    
    10.2
    
    
    
    9.7
    
    
    
    9.8
    
    
    
    9.2General and administrative
    
    
    7.4
    
    
    
    7.6
    
    
    
    7.5
    
    
    
    7.6Depreciation and amortization
    
    
    9.0
    
    
    
    9.3
    
    
    
    9.3
    
    
    
    13.0Total expenses
    
    
    77.3
    
    
    
    75.9
    
    
    
    78.1
    
    
    
    78.5Income from
continuing operations
    
    
    22.7
    
    
    
    24.1
    
    
    
    21.9
    
    
    
    21.5Equity in net loss of joint venture
    
    
    (0.2
    )
    
    
    (0.4
    )
    
    
    (0.2
    )
    
    
    (0.4
    )Interest, net
    
    
    1.1
    
    
    
    1.4
    
    
    
    1.3
    
    
    
    1.3Income from continuing operations before
income taxes
    
    
    23.7
    
    
    
    25.1
    
    
    
    23.0
    
    
    
    22.4Income tax expense
    
    
    8.8
    
    
    
    9.5
    
    
    
    8.7
    
    
    
    8.6Income from continuing operations
    
    
    14.9
    
    
    
    15.6
    
    
    
    14.3
    
    
    
    13.9Earnings from discontinued operations
before income taxes
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    0.3Income tax expense on discontinued
operations
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Income from discontinued operations
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2Net income
    
    
    14.9
    %
    
    
    15.8
    %
    
    
    14.3
    %
    
    
    14.1
    %
 Results of Operations
  Total Revenues (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    237,160
    
    
    $
    213,844
    
    
    $
    23,316
    
    
    
    10.9
    %Six months ended
    
    $
    465,779
    
    
    $
    427,537
    
    
    $
    38,242
    
    
    
    8.9
    %
 17




---



##### Table of Contents



Processing and Servicing (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    200,775
    
    
    $
    185,716
    
    
    $
    15,059
    
    
    
    8.1
    %Six months ended
    
    $
    396,253
    
    
    $
    370,356
    
    
    $
    25,897
    
    
    
    7.0
    %
  18




---



##### Table of Contents



License Fees (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    12,321
    
    
    $
    7,822
    
    
    $
    4,499
    
    
    
    57.5
    %Six months ended
    
    $
    21,395
    
    
    $
    15,380
    
    
    $
    6,015
    
    
    
    39.1
    %
  Maintenance Fees (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    11,924
    
    
    $
    9,966
    
    
    $
    1,958
    
    
    
    19.7
    %Six months ended
    
    $
    23,454
    
    
    $
    19,629
    
    
    $
    3,825
    
    
    
    19.5
    %
  19




---



##### Table of Contents



Professional Fees (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    12,140
    
    
    $
    10,340
    
    
    $
    1,800
    
    
    
    17.4
    %Six months ended
    
    $
    24,677
    
    
    $
    22,172
    
    
    $
    2,505
    
    
    
    11.3
    %
  Cost of Processing, Servicing and Support (000s)
 December 31,2006
    
    2005%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    93,910
    
    
    
    39.6
    %
    
    $
    81,507
    
    
    
    38.1
    %Six months ended
    
    $
    186,759
    
    
    
    40.1
    %
    
    $
    161,675
    
    
    
    37.8
    %
  Research and Development (000s)
 December 31,2006
    
    2005%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    26,323
    
    
    
    11.1
    %
    
    $
    23,770
    
    
    
    11.1
    %Six months ended
    
    $
    53,061
    
    
    
    11.4
    %
    
    $
    46,828
    
    
    
    11.0
    %
  20




---



##### Table of Contents



Sales and Marketing (000s)
 December 31,2006
    
    2005%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    24,270
    
    
    
    10.2
    %
    
    $
    20,742
    
    
    
    9.7
    %Six months ended
    
    $
    45,545
    
    
    
    9.8
    %
    
    $
    39,164
    
    
    
    9.2
    %
  General and Administrative (000s)
 December 31,2006
    
    2005%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    17,429
    
    
    
    7.4
    %
    
    $
    16,292
    
    
    
    7.6
    %Six months ended
    
    $
    35,178
    
    
    
    7.5
    %
    
    $
    32,558
    
    
    
    7.6
    %
  Depreciation and Amortization (000s)
 December 31,2006
    
    2005%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    21,307
    
    
    
    9.0
    %
    
    $
    19,927
    
    
    
    9.3
    %Six months ended
    
    $
    43,112
    
    
    
    9.3
    %
    
    $
    55,399
    
    
    
    13.0
    %
   21




---



##### Table of Contents



Equity in Net Loss of Joint Venture (000s)
 December 31,2006
    
    2005%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    (464
    )
    
    
    (0.2
    )%
    
    $
    (807
    )
    
    
    (0.4
    )%Six months ended
    
    $
    (922
    )
    
    
    (0.2
    )%
    
    $
    (1,474
    )
    
    
    (0.4
    )%
  Net Interest (000s)
 December 31,2006
    
    
    2005%
    
    
    
    
    
    
    %$
    
    
    Revenue
    
    
    $
    
    
    RevenueThree months ended:Interest income
    
    $
    3,152
    
    
    
    
    
    
    $
    3,156Interest expense
    
    
    (456
    )
    
    
    
    
    
    
    (240
    )Net interest
    
    $
    2,696
    
    
    
    1.1
    %
    
    $
    2,916
    
    
    
    1.4
    %Six months ended:Interest income
    
    $
    6,733
    
    
    
    
    
    
    $
    5,848Interest expense
    
    
    (743
    )
    
    
    
    
    
    
    (476
    )Net interest
    
    $
    5,990
    
    
    
    1.3
    %
    
    $
    5,372
    
    
    
    1.3
    %
   22




---



##### Table of Contents



Income Tax Expense (000s)
 December 31,2006
    
    2005Effective
    
    
    
    
    
    Effective$
    
    Rate
    
    $
    
    RateThree months ended
    
    $
    20,876
    
    
    
    37.2
    %
    
    $
    20,345
    
    
    
    37.9
    %Six months ended
    
    $
    40,698
    
    
    
    38.0
    %
    
    $
    36,460
    
    
    
    38.0
    %
   Earnings from Discontinued Operations (000s)
 December 31,2006
    
    2005%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    
    
    
    
    
    
    
    $
    646
    
    
    
    0.3
    %Six months ended
    
    $
    
    
    
    
    
    
    
    $
    1,254
    
    
    
    0.3
    %
  Income Tax Expense on Discontinued Operations (000s)
 December 31,2006
    
    2005Effective
    
    
    
    
    
    Effective$
    
    Rate
    
    $
    
    RateThree months ended
    
    $
    
    
    
    
    
    
    
    $
    251
    
    
    
    38.9
    %Six months ended
    
    $
    
    
    
    
    
    
    
    $
    483
    
    
    
    38.5
    %
  23




---



##### Table of Contents



Segment Information
   Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(in thousands)Revenues:Electronic Commerce
    
    $
    176,413
    
    
    $
    163,298
    
    
    $
    347,442
    
    
    $
    326,749Investment Services
    
    
    29,637
    
    
    
    28,448
    
    
    
    59,259
    
    
    
    54,869Software
    
    
    31,110
    
    
    
    24,194
    
    
    
    59,078
    
    
    
    50,079Impact of discontinued operations
    
    
    
    
    
    
    (2,096
    )
    
    
    
    
    
    
    (4,160
    )Total revenues
    
    $
    237,160
    
    
    $
    213,844
    
    
    $
    465,779
    
    
    $
    427,537Segment operating income (loss):Electronic Commerce
    
    $
    61,357
    
    
    $
    64,070
    
    
    $
    121,037
    
    
    $
    132,543Investment Services
    
    
    5,711
    
    
    
    5,052
    
    
    
    11,239
    
    
    
    9,450Software
    
    
    7,515
    
    
    
    3,308
    
    
    
    13,869
    
    
    
    8,473Corporate
    
    
    (10,187
    )
    
    
    (9,281
    )
    
    
    (21,875
    )
    
    
    (19,504
    )Impact of discontinued operations
    
    
    
    
    
    
    (646
    )
    
    
    
    
    
    
    (1,254
    )Purchase accounting amortization:Electronic Commerce
    
    
    (8,867
    )
    
    
    (7,352
    )
    
    
    (18,494
    )
    
    
    (30,927
    )Investment Services
    
    
    (484
    )
    
    
    (648
    )
    
    
    (968
    )
    
    
    (961
    )Software
    
    
    (805
    )
    
    
    (1,655
    )
    
    
    (1,661
    )
    
    
    (3,309
    )SFAS 123(R)
 Options issued
before July 1, 2004(1):Electronic Commerce
    
    
    (232
    )
    
    
    (901
    )
    
    
    (744
    )
    
    
    (1,886
    )Investment Services
    
    
    (33
    )
    
    
    (128
    )
    
    
    (105
    )
    
    
    (267
    )Software
    
    
    (14
    )
    
    
    (55
    )
    
    
    (45
    )
    
    
    (115
    )Corporate
    
    
    (40
    )
    
    
    (158
    )
    
    
    (129
    )
    
    
    (330
    )Total income from operations
    
    $
    53,921
    
    
    $
    51,606
    
    
    $
    102,124
    
    
    $
    91,913
 
 (1)
    
    At the beginning of our fiscal year 2005, we implemented a new long-term incentive
compensation philosophy, which significantly reduced overall participation and focused on
restricted stock with limited stock options. As a result, we recorded the cost of restricted stock
throughout our fiscal year 2005. In fiscal year 2006, we adopted SFAS 123(R), and are consequently
recording all long-term incentive grants, both restricted stock and stock options, as an expense in
our consolidated statement of operations. The adjustment for SFAS 123(R) represents the charge
associated with the current vesting of options that were unvested as of July 1, 2004 under our
previous compensation philosophy, which were originally accounted for utilizing APB 25. 24




---



##### Table of Contents



Electronic Commerce Segment Information:
 Electronic Commerce Revenues (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    176,413
    
    
    $
    163,298
    
    
    $
    13,115
    
    
    
    8.0
    %Six months ended
    
    $
    347,442
    
    
    $
    326,749
    
    
    $
    20,693
    
    
    
    6.3
    %
    Three Months Ended12/31/06
    
    9/30/06
    
    6/30/06
    
    3/31/06
    
    12/31/05(in millions, except revenue per transaction and revenueper e-bill delivered)TransactionsCSP:Revenue
    
    $
    116.8
    
    
    $
    114.2
    
    
    $
    111.8
    
    
    $
    113.8
    
    
    $
    120.5Revenue per transaction
    
    $
    0.46
    
    
    $
    0.48
    
    
    $
    0.49
    
    
    $
    0.52
    
    
    $
    0.60Transactions processed
    
    
    251.5
    
    
    
    235.7
    
    
    
    227.5
    
    
    
    217.3
    
    
    
    199.9Non-CSP:Revenue
    
    $
    38.3
    
    
    $
    36.2
    
    
    $
    34.4
    
    
    $
    36.0
    
    
    $
    24.4Revenue per transaction
    
    $
    0.54
    
    
    $
    0.48
    
    
    $
    0.46
    
    
    $
    0.47
    
    
    $
    0.34Transactions processed
    
    
    70.5
    
    
    
    76.0
    
    
    
    74.7
    
    
    
    76.0
    
    
    
    70.8Total Transactions:Revenue
    
    $
    155.1
    
    
    $
    150.4
    
    
    $
    146.2
    
    
    $
    149.8
    
    
    $
    144.9Transactions processed
    
    
    322.0
    
    
    
    311.7
    
    
    
    302.2
    
    
    
    293.3
    
    
    
    270.7e-bill DeliveryRevenue
    
    $
    8.7
    
    
    $
    8.5
    
    
    $
    8.0
    
    
    $
    7.4
    
    
    $
    7.2Revenue per e-bill delivered
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16e-bills delivered
    
    
    54.9
    
    
    
    51.8
    
    
    
    50.0
    
    
    
    46.7
    
    
    
    45.2Other Electronic Commerce(1)Revenue
    
    $
    12.6
    
    
    $
    12.1
    
    
    $
    12.3
    
    
    $
    12.2
    
    
    $
    11.2Other Performance MetricsActive subscribers(2)
    
    
    11.1
    
    
    
    10.5
    
    
    
    10.0
    
    
    
    9.7
    
    
    
    9.0
 25




---



##### Table of Contents



(1)
    
    Other Electronic Commerce includes our Health & Fitness products and other
ancillary revenue sources such as implementation and consulting services.(2)
    
    Active refers to subscribers who have viewed or paid a bill in the last 90 days at
a Consumer Service Provider that outsources essentially all of its electronic billing and payment
(EBP) functions to CheckFree.     26




---



##### Table of Contents



Electronic Commerce Operating Income (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    61,357
    
    
    $
    64,070
    
    
    $
    (2,713
    )
    
    
    (4.2
    )%Six months ended
    
    $
    121,037
    
    
    $
    132,543
    
    
    $
    (11,056
    )
    
    
    (8.7
    )%
  Investment Services Segment Information:
 Investment Services Revenues (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    29,637
    
    
    $
    28,448
    
    
    $
    1,189
    
    
    
    4.2
    %Six months ended
    
    $
    59,259
    
    
    $
    54,869
    
    
    $
    4,390
    
    
    
    8.0
    %
  27




---



##### Table of Contents



Investment Services Operating Income (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    5,711
    
    
    $
    5,052
    
    
    $
    659
    
    
    
    13.0
    %Six months ended
    
    $
    11,239
    
    
    $
    9,450
    
    
    $
    1,789
    
    
    
    18.9
    %
 SM SM
 Software Segment Information:
 Software Revenues (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    31,110
    
    
    $
    24,194
    
    
    $
    6,916
    
    
    
    28.6
    %Six months ended
    
    $
    59,078
    
    
    $
    50,079
    
    
    $
    8,999
    
    
    
    18.0
    %
  Software Operating Income (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    7,515
    
    
    $
    3,308
    
    
    $
    4,207
    
    
    
    127.2
    %Six months ended
    
    $
    13,869
    
    
    $
    8,473
    
    
    $
    5,396
    
    
    
    63.7
    %
  Corporate Segment Information:
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    (10,187
    )
    
    $
    (9,281
    )
    
    $
    (906
    )
    
    
    (9.8
    )%Six months ended
    
    $
    (21,875
    )
    
    $
    (19,504
    )
    
    $
    (2,371
    )
    
    
    (12.2
    )%
  28




---



##### Table of Contents



Purchase Accounting Amortization (000s):
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    10,156
    
    
    $
    9,655
    
    
    $
    501
    
    
    
    5.2
    %Six months ended
    
    $
    21,123
    
    
    $
    35,197
    
    
    $
    (14,074
    )
    
    
    (40.0)
    %
  SFAS
123(R)  Options Issued Before July 1, 2004 (000s):
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    319
    
    
    $
    1,242
    
    
    $
    (923
    )
    
    
    (74.3
    )%Six months ended
    
    $
    1,023
    
    
    $
    2,598
    
    
    $
    (1,575
    )
    
    
    (60.6
    )%
  Impact of Discontinued Operations:
 M-Solutions Operating Income (000s)
 December 31,
    
    Change2006
    
    2005
    
    $
    
    %Three months ended
    
    $
    
    
    
    $
    646
    
    
    $
    (646
    )
    
    
    (100.0
    )%Six months ended
    
    $
    
    
    
    $
    1,254
    
    
    $
    (1,254
    )
    
    
    (100.0
    )%
  Cyclicality and Seasonality
   29




---



##### Table of Contents



Inflation
  Liquidity and Capital Resources
  Six MonthsThree Months Ended
    
    
    EndedSeptember 30,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2006
    
    
    2006(in thousands)Net cash provided by operating activities
    
    $
    47,564
    
    
    $
    58,918
    
    
    $
    106,482Net cash provided by (used in) investing activities
    
    
    58,583
    
    
    
    (43,018
    )
    
    
    15,565Net cash (used in) financing activities
    
    
    (97,047
    )
    
    
    (45,136
    )
    
    
    (142,183
    )Effect of exchange rate changes
    
    
    426
    
    
    
    335
    
    
    
    761Net increase (decrease) in cash and cash equivalents
    
    $
    9,526
    
    
    $
    (28,901
    )
    
    $
    (19,375
    )
    30




---



##### Table of Contents



Use of Non-GAAP Financial Information
     31




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net cash provided by operating activities
    
    $
    58,918
    
    
    $
    56,787
    
    
    $
    106,482
    
    
    $
    100,262Excluding: Net change in settlement accounts
    
    
    (1,166
    )
    
    
    (2,646
    )
    
    
    (92
    )
    
    
    2,262Less: Capital expenditures
    
    
    (13,436
    )
    
    
    (16,476
    )
    
    
    (25,535
    )
    
    
    (23,642
    )Plus: Data Center Reimbursements
    
    
    3,664
    
    
    
    
    
    
    
    4,190
    
    
    
    Free cash flow
    
    $
    47,980
    
    
    $
    37,665
    
    
    $
    85,045
    
    
    $
    78,882
   Recent Accounting Pronouncements
    Pending Acquisition
  32




---



##### Table of Contents



Application of Critical Accounting Policies
  Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   33




---



##### Table of Contents



Item 4. Controls and Procedures
 Disclosure Controls and Procedures.
   Internal Controls.
 34




---



##### Table of Contents



Part II. Other Information
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  (d)(c)
    
    
    Approximate DollarTotal Number of
    
    
    Value of Shares that(a)
    
    
    (b)
    
    
    Shares Purchased
    
    
    May Yet BeTotal Number
    
    
    Average
    
    
    as Part of Publicly
    
    
    Purchased Underof Shares
    
    
    Price Paid
    
    
    Announced Plans or
    
    
    the Plans orPeriod
    
    Purchased
    
    
    per Share
    
    
    Programs
    
    
    ProgramsOctober 1, 2006 to October 31, 2006
    
    
    
    
    
    na
    
    
    
    
    
    $
    100,000,000November 1, 2006 to November 30, 2006
    
    
    1,273,807
    
    
    $
    39.25
    
    
    
    1,273,807
    
    
    $
    50,000,000December 1, 2006 to December 31, 2006(1)
    
    
    
    
    
    na
    
    
    
    
    
    $
    50,000,000Total
    
    
    1,273,807
    
    
    $
    39.25
    
    
    
    1,273,807
    
    
    $
    50,000,000
 
 (1)
    
    Last repurchase date was November 26, 2006. 35




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  Proposal 1:
 Number of Shares VotedDirector Nominees
    
    For
    
    Withhold Authority
    
    TotalMark A. Johnson
    
    
    80,965,697
    
    
    
    830,744
    
    
    
    81,796,441Eugene F. Quinn
    
    
    80,556,442
    
    
    
    1,239,999
    
    
    
    81,796,441
   Proposal 2
 Number of Shares VotedFor
    
    Against
    
    Abstain
    
    Total74,546,840
    
    261,251
    
    62,899
    
    74,870,990
 36




---



##### Table of Contents



Item 6.
Exhibits
 Exhibit
    
    ExhibitNumber
    
    Description3*
    
    Amended and Restated By-Laws of CheckFree Corporation, as of February 8, 2007.10(a)*
    
    CheckFree Services Corporation 401(k) Plan Adoption Agreement (restatement as of July 1,
2006).10(b)
    
    CheckFree Corporation 2006 Associate Stock Purchase Plan (Reference is made to Exhibit
4(a) to the Companys Registration Statement on Form S-8 (Registration No. 333-138845),
filed with the Securities and Exchange Commission on November 20, 2006, and incorporated
herein by reference).31(a)*
    
    Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Chief
Executive Officer.31(b)*
    
    Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Chief
Financial Officer.32(a)+
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer.32(b)+
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer.
 
 *
    
    Filed with this report.+
    
    Furnished with this report. 37




---



##### Table of Contents



Signatures
  CHECKFREE CORPORATIONDate:  February 8, 2007
    By:
    /s/ David E. MangumDavid E. Mangum, Executive VicePresident  and Chief Financial Officer*
(Principal Financial Officer)Date:  February 8, 2007
    By:
    /s/ Samuel R. SchwartzSamuel R. Schwartz, Senior Vice President,Controller, and Chief Accounting Officer*
(Principal Accounting Officer) 
 *
    
    In their capacities as Executive Vice President and Chief Financial Officer, and as Senior
Vice President, Controller, and Chief Accounting Officer, Mr. Mangum and Mr. Schwartz are each
duly authorized to sign this report on behalf of the Registrant. 38




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    ExhibitNumber
    
    Description3*
    
    Amended and restated By-Laws of CheckFree Corporation, as of February 8, 2007.10(a)*
    
    CheckFree Services Corporation 401(k) Plan Adoption Agreement (restatement as of July 1,
2006).10(b)
    
    CheckFree Corporation 2006 Associate Stock Purchase Plan (Reference is made to Exhibit
4(a) to the Companys Registration Statement on Form S-8 (Registration No. 333-138845),
filed with the Securities and Exchange Commission on November 20, 2006, and incorporated
herein by reference).31(a)*
    
    Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Chief
Executive Officer.31(b)*
    
    Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Chief
Financial Officer.32(a)+
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer.32(b)+
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer.
 
 *
    
    Filed with this report.+
    
    Furnished with this report.