<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[ X ]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF 1934

For the quarterly period ended March 31, 2001

                                       OR

[   ]  TRANSITION REPORT UNDER 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
             (Exact name of registrant as specified in its charter)

           DELAWARE                                        58-2360335
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                          Identification No.)

              4411 EAST JONES BRIDGE ROAD, NORCROSS, GEORGIA 30092
          (Address of principal executive offices, including zip code)

                                 (678) 375-3000
              (Registrant's telephone number, including area code)

                                      NONE
   (Former name, former address and former fiscal year, if changed since last
                                    report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. YES  X       NO
                                                       ---  ---
         Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 86,775,703 shares of
Common Stock, $.01 par value, were outstanding at May 9, 2001


<PAGE>   2

                                    FORM 10-Q

                              CHECKFREE CORPORATION

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                 PAGE NO.
                                                                                                 --------

<S>                                                                                             <C>
PART I.  FINANCIAL INFORMATION

         Item 1.  Financial Statements.

                      Condensed Consolidated Balance Sheets                                          3
                           June 30, 2000 and March 31, 2001

                      Condensed Consolidated Statements of                                           4
                           Operations For the Three and Nine Months Ended
                           March 31, 2000 and 2001

                      Condensed Consolidated Statements of                                           5
                           Cash Flows For the Nine Months Ended
                           March 31, 2000 and 2001

                      Notes to Interim Condensed Consolidated Unaudited                              6
                           Financial Statements For the Three and Nine Months
                           Ended March 31, 2000 and 2001

         Item 2.  Management's Discussion and Analysis of Financial
                      Condition and Results of Operations.                                         12-23

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk                        N/A

PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings.                                                                N/A

         Item 2.  Changes in Securities and Use of Proceeds.                                        N/A

         Item 3.  Defaults Upon Senior Securities.                                                  N/A

         Item 4.  Submission of Matters to a Vote of Security Holders.                              N/A

         Item 5.  Other Information.                                                                N/A

         Item 6.  Exhibits and Reports on Form 8-K.                                                 24

         Signatures.                                                                                25
</TABLE>



                                       2
<PAGE>   3


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                     CHECKFREE CORPORATION AND SUBSIDIARIES
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                          JUNE 30,            MARCH 31,
                                                                                            2000                 2001
                                                                                      -----------------    -----------------
                                                                                        (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                                                        <C>                   <C>
                                       ASSETS
Current assets:
     Cash and cash equivalents................................................             $  128,074            $  131,174
     Investments..............................................................                 56,548                48,920
     Accounts receivable, net.................................................                 58,308                81,328
     Prepaid expenses and other assets........................................                 12,813                 8,505
     Deferred income taxes....................................................                  9,733                10,137
                                                                                           ----------            ----------
         Total current assets.................................................                265,476               280,064
Property and equipment, net...................................................                 93,214                99,124
Capitalized software, net.....................................................                 37,189               206,731
Intangible assets, net........................................................                251,280             1,604,939
Investments...................................................................                 23,003                86,044
Deferred income taxes.........................................................                 29,248                    --
Other noncurrent assets.......................................................                 13,704                10,532
                                                                                           ----------            ----------
              Total...........................................................             $  713,114           $ 2,287,434
                                                                                           ==========           ===========
                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable.........................................................             $   10,158            $   14,231
     Accrued liabilities......................................................                 43,958                59,147
     Current portion of long-term obligations.................................                  5,955                 4,354
     Deferred revenue.........................................................                 26,644                42,779
                                                                                           ----------            ----------
         Total current liabilities............................................                 86,715               120,511
Accrued rent and other........................................................                  7,269                 5,414
Obligations under capital leases - less current portion.......................                    736                 4,327
Deferred income taxes.........................................................                     --               177,205
Convertible subordinated notes................................................                172,500               172,500
Stockholders' equity:
     Preferred stock- 15,000,000 and 50,000,000 authorized shares, respectively,
         $0.01 par value; no amounts issued or outstanding....................                     --                    --
     Common stock- 150,000,000 and 500,000,000 authorized shares,
         respectively, $0.01 par value:  issued 63,957,859 and 92,312,792
         shares, respectively, outstanding 58,414,035 and 86,768,968
         shares, respectively.................................................                    584                   868
     Additional paid-in-capital...............................................                771,892             2,408,577
     Other....................................................................                  (262)                 (204)
     Accumulated deficit......................................................              (326,320)             (601,764)
                                                                                           ----------            ----------
         Total stockholders' equity...........................................                445,894             1,807,477
                                                                                           ----------            ----------
              Total...........................................................             $  713,114           $ 2,287,434
                                                                                           ==========           ===========
</TABLE>



  See Notes to Interim Unaudited Condensed Consolidated Financial Statements.



                                       3
<PAGE>   4


                     CHECKFREE CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED                      NINE MONTHS ENDED
                                                               MARCH 31,                                MARCH 31,
                                                    ---------------------------------        -------------------------------
                                                        2000               2001                  2000             2001
                                                    -------------      --------------        -------------    --------------
                                                                       (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                    <C>                 <C>                  <C>               <C>
Revenues:
     Processing and servicing..................        $  68,499           $ 95,636             $ 189,430         $ 261,324
     License fees..............................            4,098              7,577                10,295            19,840
     Maintenance fees..........................            4,615              5,232                13,571            15,539
     Other.....................................            2,494              4,624                 8,399            14,845
                                                       ---------           --------             ---------         ---------
                    Total revenues.............           79,706            113,069               221,695           311,548
Expenses:
     Cost of processing, servicing and support.           46,785             68,289               133,684           187,947
     Research and development..................            9,166             13,276                24,276            41,218
     Sales and marketing.......................           10,945             16,790                29,522            71,843
     General and administrative................            9,550             12,843                28,837            37,133
     Depreciation and amortization.............            9,033            125,126                23,789           304,995
     In-process research and development.......               --                 --                    --            18,600
                                                       ---------           --------             ---------         ---------
                    Total expenses.............           85,479            236,324               240,108           661,736
                                                       ---------           --------             ---------         ---------
Loss from operations...........................          (5,773)          (123,255)              (18,413)         (350,188)
Interest, net..................................            (226)                629                  (83)             2,402
Loss on investments............................               --           (14,144)                    --          (14,144)
                                                       ---------           --------             ---------         ---------
Loss before income taxes.......................          (5,999)          (136,770)              (18,496)         (361,930)
Income tax benefit.............................          (2,126)           (35,703)               (6,718)          (86,486)
                                                       ---------           --------             ---------         ---------
Net loss.......................................        $ (3,873)         $(101,067)            $ (11,778)       $ (275,444)
                                                       ========          =========             =========        ==========

BASIC LOSS PER SHARE:
     Net loss per common share.................         $ (0.07)           $ (1.17)              $ (0.23)          $ (3.49)
                                                       ========          =========             =========        ==========
     Equivalent number of shares...............          52,716             86,682                52,246            78,909
                                                       ========          =========             =========        ==========
DILUTED LOSS PER SHARE:
     Net loss per common share.................         $ (0.07)           $ (1.17)              $ (0.23)          $ (3.49)
                                                       ========          =========             =========        ==========
     Equivalent number of shares...............          52,716             86,682                52,246            78,909
                                                       ========          =========             =========        ==========
</TABLE>


  See Notes to Interim Unaudited Condensed Consolidated Financial Statements.



                                       4
<PAGE>   5


                     CHECKFREE CORPORATION AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                  NINE MONTHS ENDED
                                                                                      MARCH 31,
                                                                           ---------------------------------
                                                                                2000              2001
                                                                           ---------------    --------------
                                                                                    (IN THOUSANDS)
<S>                                                                            <C>              <C>
Cash flows from operating activities:
     Net loss........................................................          $ (11,778)       $ (275,444)
     Adjustments to reconcile net loss to net cash provided by (used in)
       operating activities:
     In process research and development.............................                  --            18,600
     Loss on investments.............................................                  --            14,144
     Loss on disposal of property and equipment......................                  --                79
     Depreciation and amortization...................................              23,789           304,995
     Deferred income tax provision...................................             (6,718)          (86,395)
     Purchases of investments - Trading..............................            (15,202)          (12,304)
     Proceeds from maturities and sales of investments, net - Trading              18,929            19,004
     Change in certain assets and liabilities (net of acquisitions and
       dispositions):
         Accounts receivable.........................................             (7,683)          (23,020)
         Prepaid expenses and other..................................               (605)             1,745
         Other noncurrent assets.....................................               (278)             1,462
         Accounts payable............................................             (3,459)             4,072
         Accrued liabilities.........................................              15,168            17,990
         Deferred revenue............................................               9,443             8,650
         Income tax accounts.........................................                 (2)             (352)
         Accrued rent and other......................................                 943               161
                                                                                ---------         ---------
              Net cash provided by (used in) operating activities....              22,547           (6,613)
Cash flows from investing activities:
     Purchase of property and software...............................            (26,222)          (22,171)
     Proceeds from sale of property and equipment....................                  --               832
     Capitalization of software development costs....................             (5,379)           (4,063)
     Cash and cash equivalents from business acquired, net of
          acquisition costs .........................................             (1,157)            96,083
     Capitalization of strategic agreement costs ....................                  --          (10,114)
     Purchase of investments - held to maturity......................            (70,747)         (138,474)
     Proceeds from maturities and sales of investments - held to
       maturity......................................................                  --            68,450
                                                                                ---------         ---------
              Net cash used in investing activities..................           (103,505)           (9,457)
Cash flows from financing activities:
     Principal payments under capital lease obligations..............               (659)           (3,190)
     Proceeds from sale of stock and exercise of warrants............              16,093            12,562
     Proceeds from issuance of convertible subordinated notes........             166,903                --
     Proceeds from stock options exercised...........................               9,034             6,731
     Proceeds from employee stock purchase plan......................               2,184             3,067
                                                                                ---------         ---------
              Net cash provided by financing activities..............             193,555            19,170
                                                                                ---------         ---------
Net increase in cash and cash equivalents............................             112,597             3,100
Cash and cash equivalents:
     Beginning of period.............................................              12,446           128,074
                                                                                ---------         ---------
     End of period...................................................           $ 125,043         $ 131,174
                                                                                =========         =========
</TABLE>

  See Notes to Interim Unaudited Condensed Consolidated Financial Statements.




                                       5
<PAGE>   6


                     CHECKFREE CORPORATION AND SUBSIDIARIES
     NOTES TO INTERIM CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 2001

         1.       INTRODUCTION

                  The accompanying condensed consolidated financial statements
and notes thereto have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission for Form 10-Q and include
all of the information and disclosures required by generally accepted accounting
principles for interim financial reporting. The results of operations for the
nine months ended March 31, 2000 and 2001 are not necessarily indicative of the
results for the full year.

                  These financial statements should be read in conjunction with
the financial statements, accounting policies and financial notes thereto
included in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission. In the opinion of management, the accompanying
condensed consolidated unaudited financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which are necessary for a fair
representation of financial results for the interim periods presented.

         2.       EARNINGS PER SHARE

                  The following table reconciles the differences in income and
shares outstanding between basic and dilutive for the periods indicated (in
thousands except per share data):
<TABLE>
<CAPTION>

                                                        FOR THE NINE MONTHS ENDED
                     -------------------------------------------------------------------------------------------------
                                     MARCH 31, 2000                                     MARCH 31, 2001
                     -----------------------------------------------     ---------------------------------------------
                          LOSS              SHARES          PER-SHARE       LOSS             SHARES          PER-SHARE
                       (NUMERATOR)       (DENOMINATOR)       AMOUNT      (NUMERATOR)      (DENOMINATOR)       AMOUNT
                     ----------------    --------------     --------     -------------    ---------------    ---------
<S>                     <C>                 <C>             <C>           <C>                 <C>             <C>
Basic EPS..........     $(11,778)           52,246          $ (0.23)      $(275,444)          78,909          $(3.49)
                                                            ========                                         =========
Effect of dilutive
securities:
  Options and
  warrants.........        --                --                               --                --
                       --------------    --------------                  -------------    ---------------
Diluted EPS........    $(11,778)            52,246         $  (0.23)      $(275,444)          78,909          $(3.49)
                       ==============    ==============     ========     =============    ===============    =========
</TABLE>
<TABLE>
<CAPTION>

                                                        FOR THE THREE MONTHS ENDED
                     -------------------------------------------------------------------------------------------------
                                     MARCH 31, 2000                                     MARCH 31, 2001
                     -----------------------------------------------     ---------------------------------------------
                          LOSS              SHARES          PER-SHARE       LOSS             SHARES          PER-SHARE
                       (NUMERATOR)       (DENOMINATOR)       AMOUNT      (NUMERATOR)      (DENOMINATOR)       AMOUNT
                     ----------------    --------------     --------     -------------    ---------------    ---------
<S>                     <C>                 <C>             <C>           <C>                 <C>             <C>
Basic EPS..........      $(3,873)           52,716         $  (0.07)      $(101,067)          86,682          $(1.17)
                                                            ========                                         =========
Effect of dilutive
securities:
  Options and
  warrants.........        --                --                               --                --
                       --------------    --------------                  -------------    ---------------
Diluted EPS........      $(3,873)           52,716         $  (0.07)      $(101,067)          86,682          $(1.17)
                       ==============    ==============     ========     =============    ===============    =========
</TABLE>

                  Basic earnings (loss) per common share amounts were computed
by dividing income (loss) available to shareholders by the weighted average
number of shares outstanding. Diluted per-common-share amounts assume the
issuance of common stock for all potentially dilutive equivalent shares
outstanding except in loss periods when such an adjustment would be
anti-dilutive. For the periods reported herein, there were no differences
between basic and diluted earnings per share. The anti-dilutive interest charges
and number of equivalent shares excluded from the per share calculations were as
follows (in thousands):
<TABLE>
<CAPTION>

                                               MARCH 31, 2000                         MARCH 31, 2001
                                    -------------------------------------    ----------------------------------
                                         LOSS                SHARES              LOSS              SHARES
                                      (NUMERATOR)        (DENOMINATOR)       (NUMERATOR)        (DENOMINATOR)
                                    ----------------    -----------------    -------------     ----------------
<S>                                   <C>                        <C>         <C>                         <C>
       Nine Month Period Ended        $    1,499                 6,251       $      6,951                5,870
                                      ==============    =================    =============     ================
       Three Month Period Ended       $    1,100                 8,034       $      2,195                5,867
                                      ==============    =================    =============     ================
</TABLE>



                                       6
<PAGE>   7

3.       ACQUISITIONS AND DIVESTITURES

         On September 1, 2000, the Company acquired MSFDC, L.L.C. (TransPoint)
  for a total of $1.4 billion, consisting of 17,000,000 shares of common stock
  valued at $1.4 billion and $2 million of acquisition costs. The acquisition
  was treated as a purchase for accounting purposes, and, accordingly, the
  assets and liabilities were recorded based on their fair values at the date of
  the acquisition. The values ascribed to acquired intangible assets and their
  respective useful lives are as follows:

<TABLE>
<CAPTION>
                                                                   ASSET           USEFUL
                                    INTANGIBLE ASSET               VALUE            LIFE
                             -------------------------------    -------------     ---------
                                                               (In thousands)
<S>                                                              <C>                   <C>
                             Goodwill...................         $780,545              5
                             Strategic agreements.......          495,000              5
                             Existing technology........          209,300              3
                             Customer list..............           29,000              3
                             Tradename..................           28,300              1
</TABLE>

         Amortization of intangible assets is on a straightline basis over the
assets' respective useful life. TransPoint's operations are included in the
condensed consolidated statement of operations from the date of acquisition.

         At the acquisition date, TransPoint had four technologies under
development that had not demonstrated technological feasibility. These
technologies include Biller Integration System and Communications, Service
Center, Delivery Applications and Payment Systems Interface. The in-process
technologies have no alternative use in the event that the proposed technologies
do not prove to be feasible. These development efforts fall within the
definition of In-Process Research and Development ("IPR&D") contained in
Statement of Financial Accounting Standard ("SFAS") No. 2.

         BIS / Communications Technology. The Biller Integration System ("BIS")
is provided to the biller to run on-site and supplies the web-hosting for the
biller. The BIS help implement the templates and develop the look and feel for
marketing components. The BIS also includes automation interfaces, EI
interfaces, and the console. The following features of the BIS / Communications
technology are under development:

         -        remote access or the Remote BIS Console, which will allow
                  Biller operators and administrators to perform selected
                  gateway operations from remote machines using a Web-based
                  interface to the BIS;

         -        international enhancements, which are fixes to the BIS system
                  to correct incompatibilities with international currency and
                  date settings; and

         -        platform updates that will support installation of the BIS
                  gateway on the Windows 2000 Server platform.

         Service Center Technology. The Service Center connects the TransPoint
servers to the BIS on the biller site, the automated clearinghouse, other
third-party servers, and the individual consumer. The Service Center includes
the database and operational functions as well. The following features of the
Service Center are under development:

         -        E-mail notification currently uses an internal Microsoft
                  server. The system is being modified to incorporate the
                  industry standard allowing the use of any server environment
                  to send data over the Internet. In addition, service-generated
                  e-mail messages will be in HTML format (rather than plain
                  text) for a richer customer experience.

         -        SysAdmiral upgrade, in which the installation scripts for the
                  service center are being upgraded to support the latest
                  version of SysAdmiral.


                                       7
<PAGE>   8


         Delivery Applications. The Delivery Applications generate the actual
web pages through its user interface. This technology creates not only the
TransPoint consumer site, but also the operations, corporate, and support sites.
The following features of the Delivery Applications are under development:

         -        Passport Integration / Authorization, in which the security
                  and authentication systems of the TransPoint service will be
                  modified to use Microsoft Passport for user authentication. In
                  addition, the user interface will be modified to allow
                  migration of existing user accounts to Microsoft Passport.

         -        User Registration Improvement, in which consumer registration
                  is being modified significantly, with the goal of retaining
                  new consumers. Changes include sending consumers to the
                  Microsoft Passport Web site to obtain a Passport account, and
                  condensing the number of screens in registration. In addition,
                  new consumers are permitted greater access to the system and
                  features as they await identity and payment account
                  verification.

         -        Recurring Payments, whereby consumers will now be able to set
                  up automatic "pay anyone" payments recurring at set intervals,
                  and automatic rules-based handling of electronic bills by
                  payee.

         -        Batch Enabling, whereby biller operators and administrators
                  will now be able to enable statement batches directly from the
                  TransPoint Operations site. A new "Enable Batch" button will
                  be added to the Preview Statements screen on the TransPoint
                  Operations site.

         -        Reporting Upgrades, in which a variety of user-interface
                  upgrades are underway to improve performance of the reporting
                  subsystem, improve the reporting content available to billers,
                  and increase the overall reliability of the TransPoint system.

         -        Payment Center User Interface Improvements, which includes a
                  variety of user interface improvements to fix minor UI issues,
                  enhance accessibility options, and improve overall site
                  usability.

         Payment / Interface. The Payment Interface technology connects the
Service Center to the ACH, Original Depository Financial Institutions, and other
third-party servers as well as processing all payment and settlement
information. The following features of the Payment / Interface technology are
under development:

         -        Microsoft Money Download, in which this feature is being
                  rearchitected and reimplemented in its entirety to correct
                  incompatibilities between the existing Microsoft Money
                  download feature and the newest version of Microsoft Money.

         -        Credit Card Payments, which provides code that allows the
                  TransPoint system to support the use of credit cards for
                  payment settlement.

         There are risks and uncertainties associated with the completion of
these in-process technologies. These risks include:

         -        Not Technologically Feasible.

                  The acquired IPR&D had not demonstrated technological or
         commercial feasibility as of the transaction date for TransPoint.
         Significant risks exist because TransPoint is unsure of the obstacles
         it will encounter in the form of market acceptance, time and cost
         necessary to produce a technologically feasible product. SFAS No. 2
         does not specifically require an analysis of the development effort
         expended relative to an acquisition date. It is reasonable to assume,
         however, that an IPR&D project would require a significant amount of
         time and cost in order to modify for the Company's use in the
         marketplace. Should the proposed technology fail to become viable, it
         is unlikely that the Company would realize any value from the sale of
         the technology to another party.

         -        No Alternative Future Use.

                  The acquired IPR&D consists of TransPoint's work to date on
         its products. The products are very specific to the tasks and markets
         for which it is intended. As is typically the case with software, there
         are


                                       8
<PAGE>   9

         no alternative use for the in-process work in the event that the
         product does not become feasible for the Company. The development
         effort for the acquired IPR&D does not possess an alternative future
         use for the Company under the terms of SFAS No. 2.

                  If the TransPoint project underway fails, there will be very
         limited life to the existing product because the continuing pace of
         technological developments in the marketplace will have rendered them
         non-competitive. In the event of a failure, the technology acquired, as
         embodied in either current or in-process products, will have no
         alternative use and would be written off as a loss by the Company.

         The following table represents information regarding the status of the
various in-process research and development projects acquired:
<TABLE>
<CAPTION>

                                            ESTIMATED                                            EXPECTED
                                             STAGE OF                  ESTIMATED                  COST TO
                                            COMPLETION              COMPLETION DATE              COMPLETE         VALUATION
                                          ---------------        ----------------------          ----------       ----------
                                                                                                       (In thousands)
<S>                                            <C>                   <C>                       <C>                <C>
BIS / Communications...............            80%                   October 2000                 $100             $ 1,200
Service Center.....................            80%                   October 2000                  121               5,900
Delivery Applications..............            80%                   October 2000                  396               9,500
Payment / Interface................            80%                   October 2000                  100               2,000
                                                                                                  ------           -------
      Total........................                                                               $717             $18,600
                                                                                                  ======           =======
</TABLE>


         The method used to allocate the purchase consideration to IPR&D was the
modified income approach. Under the income approach, fair value reflects the
present value of the projected free cash flows that will be generated by the
IPR&D projects and that is attributable to the acquired technology, if
successfully completed. The modified income approach takes the income approach,
modified to include the following factors:

         -        analysis of the stage of completion of each project;

         -        exclusion of value related to research and development
                  yet-to-be completed as part of the on-going IPR&D projects;
                  and

         -        the contribution of existing technologies and applications.

         The projected revenues used in the income approach are based upon the
incremental revenues associated with a portion of the project related to
TransPoint's technology likely to be generated upon completion of the project
and the beginning of commercial sales, as estimated by management. The
projections assume that the projects will be successful and the projects'
development and commercialization are as set forth by management. The discount
rate used in this analysis is an after tax rate of 24%.

         The following unaudited pro forma information presents the results of
operations of the Company as if the acquisition had taken place on July 1, 1999,
and excludes the write-off of purchased research and development of $18.6
million (in thousands, except per share data):
<TABLE>
<CAPTION>

                                                  NINE MONTHS        NINE MONTHS
                                                     ENDED              ENDED
                                                 MARCH 31, 2000     MARCH 31, 2001
                                                 --------------     --------------
<S>                                            <C>                    <C>
Revenues ................................      $         221,702      $ 311,557
                                               =================      =========
Net Loss ................................      $        (264,343)     $(299,721)
                                               =================      =========
Basic loss per share:
   Net loss per common share ............      $           (3.82)     $   (3.62)
                                               =================      =========
   Equivalent number of shares ..........                 69,246         82,818
                                               =================      =========
Diluted loss per share:
   Net loss per common share ............      $           (3.82)     $   (3.62)
                                               =================      =========
   Equivalent number of shares ..........                 69,246         82,818
                                               =================      =========
</TABLE>


                                       9
<PAGE>   10

4.       STRATEGIC AGREEMENT

         Effective October 1, 2000, the Company completed a 10-year strategic
agreement with Bank of America ("BofA"), whereby the Company acquired the
electronic billing and payment assets of BofA and will provide electronic
billing and payment services to BofA's customer base in exchange for 10 million
shares of the Company's common stock valued at approximately $253 million and
$35 million of cash. The agreement provides for a revenue guarantee of $500
million to the Company over the next 10 years. BofA has the ability to earn
warrants on up to 10 million additional shares, eight million of which vest
incrementally upon achievement of specific levels of subscriber adoption of
electronic billing and payment services and separately, and the other two
million upon achievement of specific levels of electronic bills presented to
those subscribers. Upon vesting of the warrants, the Company will record a
charge for the fair value of the warrants, based on a Black-Scholes valuation
which will take into consideration the market value of our stock, the $32.50
strike price of the warrants, the volatility of our stock and the applicable
risk-free interest rate at that time. Of the cash portion of the purchase price,
$25 million is to be invested into a joint marketing development fund designed
to accelerate adoption of electronic billing and payment services through BofA's
customer base, and the Company included a charge for the full $25 million in the
quarter ended December 31, 2000.


5.       COMMON STOCK AND WARRANTS

         The Company has issued stock for various employee benefit programs
during the current fiscal year. In the quarter ended September 30, 2000, the
Company issued 51,834 shares to fund its 401(k) match, the cost of which was
accrued in the year ended June 30, 2000. In the quarters ended September 30,
2000 and March 31, 2001, the Company issued 34,941 and 56,905 shares,
respectively, of common stock in conjunction with the employee stock purchase
plan, which was funded through employee payroll deductions in the immediately
preceding six-month periods.

         On September 1, 2000, the Company completed the previously announced
agreement to purchase MSFDC, L.L.C. ("TransPoint") in exchange for 17 million
shares of the Company's common stock. Please refer to Note 3 for additional
information regarding this acquisition.

         During the nine months ended March 31, 2001, the Company received
notification of and payment for the exercise of warrants for 600,000 shares of
the Company's common stock at an exercise price of $20.9375.

         Effective October 1, 2000, the Company completed the previously
announced agreement to acquire various electronic billing and payment assets
from BofA in exchange for 10 million shares of the Company's common stock. BofA
has the ability to earn warrants on up to 10 million additional shares with a
strike price of $32.50, contingent upon achievement of certain growth
objectives. Please refer to note 4 for additional information regarding this
transaction.

         On November 1, 2000, the Company's stockholders approved an increase in
the number of authorized shares of the Company from 165,000,000 to 550,000,000,
consisting of 500,000,000 shares of common stock, $.01 pare value, 48,500,000
shares of preferred stock, $.01 par value, and 1,500,000 shares of Series A
Junior Participating Cumulative Preferred Stock, $.01 par value. Additionally,
the Company's stockholders approved an increase in the number of shares of the
Company's common stock issuable upon exercise of stock options under the 1995
Stock Option Plan from 8,000,000 shares to 12,000,000 shares.


6.       INVESTMENTS

         The Company has certain investments which are accounted for under the
cost method. The Company periodically evaluates these investments to determine
if any decline in value is other-than-temporary. In performing this evaluation
the Company considers various factors including any decline in market price,
where available, the investee's financial condition, results of operations,
operating trends and other financial ratios. During the quarter ended March 31,
2001, the Company recorded a loss of $14,114,000 related to other-than-temporary
declines in certain of these investments.



                                       10
<PAGE>   11

7.       GUARANTOR FINANCIAL INFORMATION

         CheckFree Management Corporation is a guarantor of the Company's $172.5
million convertible subordinated notes that were issued in November 1999.
CheckFree Management Corporation was formed as a medical claims management
subsidiary in order to appropriately minimize, control, and manage the medical
claims liabilities of the Company and its subsidiaries. As of March 31, 2001,
the Company and its subsidiaries own approximately 89% of CheckFree Management
Corporation. In previous quarters, due to the relative value of the total assets
of CheckFree Management Corporation to the total consolidated assets of the
Company, we were required to provide separate financial statements for and
disclose certain financial information about CheckFree Management Corporation.
As of March 31, 2001, the assets of CheckFree Management Corporation represent
less than 2% of the total consolidated assets of the Company, and therefore,
separate financial statements and financial disclosures are no longer required.

8.       SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>

                                               NINE MONTHS       NINE MONTHS
                                                  ENDED             ENDED
                                             MARCH 31, 2000    MARCH 31, 2001
                                             --------------    --------------
<S>                                           <C>               <C>
Interest paid .............................   $       145        $     6,293
                                              ===========        ===========
Income taxes paid (received) ..............   $        56        $    (1,150)
                                              ===========        ===========
Capital lease additions and purchases
   other long term assets .................   $     4,964        $     4,953
                                              ===========        ===========
Stock funding of 401(k) match .............   $     1,059        $     2,484
                                              ===========        ===========
Purchase price of business acquisitions ...   $        --        $(1,352,165)
Less:  issuance of common stock pursuant
    to acquisitions .......................            --          1,350,083
Cash acquired in acquisition ..............            --             97,200
Acquisition costs paid in prior
  period ..................................            --                965
                                              -----------        -----------
         Net cash received ................   $        --        $    96,083
                                              ===========        ===========
</TABLE>

9.       RECENT ACCOUNTING PRONOUNCEMENTS

         In the quarter ended September 30, 2000, the Company adopted SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended by
SFAS 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of SFAS 133" and by SFAS 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities." SFAS 133, as
amended, requires the Company to recognize all derivatives on the balance sheet
at fair value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of derivatives are either offset against the
change in fair value of assets, liabilities, or firm commitments through
earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of the derivative's change in
fair value is immediately recognized in earnings.

         The Company's Investment Policy currently prohibits the use of
derivatives for trading or hedging purposes. Additionally, the Company completed
a review of its contracts and determined that they contained no "imbedded
derivatives" that require separate reporting and disclosure under SFAS 133, as
amended. As such, the adoption of SFAS 133, did not have a material impact on
the Company's results of operations or other comprehensive income.

         In 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements." The SAB provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. Although SAB No. 101 does not change any of the existing
standards on revenue recognition, it draws upon existing guidance and explains
how the SEC staff applies these rules, by analogy, to other transactions that
existing rules do not specifically address. SAB No. 101, as amended by SAB No.
101B, becomes effective for the fourth quarter of our fiscal year 2001. The
Company is in the process of assessing the impact of SAB No. 101 on its
financial statements; however, the adoption of SAB No. 101 is not expected to
have a material impact on results of operations or financial position.


                                       11
<PAGE>   12


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

         We are the leading provider of electronic billing and payment services.
We operate our business through three independent but inter-related divisions:

         -        Electronic Commerce;

         -        Investment Services; and

         -        Software.

         Our Electronic Commerce business provides services that allow consumers
to:

         -        receive electronic bills through the Internet;

         -        pay any bill--electronic or paper--to anyone; and

         -        perform customary banking transactions, including balance
                  inquiries, transfers between accounts and on-line statement
                  reconciliations.

         We currently provide electronic billing and payment services for about
4.8 million consumers as of March 31, 2001. Our services reach hundreds of
sources, either directly or through reseller relationships, including:

         -        9 of the 10 largest U.S. banks;

         -        8 of the top 10 U.S. brokerage firms;

         -        Internet portals;

         -        Internet-based banks;

         -        Internet financial sites like Quicken.com; and

         -        personal financial management software like Quicken and
                  Microsoft Money.

         We have developed contracts with over 1,100 merchants nationwide that
allows us to remit approximately 62% of all of our bill payments electronically.
We processed a record high of about 21 million transactions for the month of
March 2001 and, for the year ended June 30, 2000, we processed nearly 170
million transactions.

         In March 1997, we introduced electronic billing -"E-Bill"-- which
enables merchants to deliver billing as well as marketing materials
interactively to their customers over the Internet. In March 2001, we introduced
the latest version of our electronic billing and payment products, "WebPay for
Consumers" (or WebPay 3.2), which provides consumers the ability to receive and
pay e-bills over e-mail and to exchange money with each other using e-mail
"invitations" to send or receive money. As of March 31, 2001, we have 156
billers in production and are delivering over 350,000 electronic bills monthly.

         When a customer instructs us to pay a bill, we have the ability to
process the payment either by electronic funds transfer, by paper check, or by
draft drawn on the customer's account. Our patented bill payment processing
system in Norcross, Georgia determines the preferred method of payment based on
a credit analysis of the customer, assessing the customer's payment history, the
amount of the bill to be paid and other relevant factors. If the results of the
credit analysis are favorable, we will assume the risk of collection of the
funds from the customer's account, and if we have an electronic connection to
the merchant, the remittance will be sent electronically, otherwise, it will be
sent by check. If the results are not favorable, the remittance will be sent to
the merchant by a draft drawn directly on the customer's checking account. In an
electronic remittance, the funds are transmitted electronically to the merchant
with the customer's account number included as an addenda record. For a paper
draft, the customer's name, address, and account number is printed on the face
of the check. In addition, our processing system provides the ability to
aggregate multiple electronic and paper remittances due to merchants. Thus, if
multiple payments are going to the same merchant on the same day, we may send
one check for the sum of these payments and include a remittance statement that
provides the customers' names, addresses, account numbers, and payment amounts.
Our strategy is to drive operational efficiency and improve profitability by
increasing the percentage of transactions we process electronically. Since June
1998, we have increased our electronic payments ratio from 32% of total payments
processed electronically to approximately 62% by March 2001.


                                       12
<PAGE>   13

         We are also a leading provider of institutional portfolio management
and information services and financial application software. Our Investment
Services business offers portfolio accounting and performance measurement
services to investment advisors, brokerage firms, banks and insurance companies
and financial planning application software to financial planners. Our portfolio
management system solution includes:

         -        data conversion;

         -        personnel training;

         -        trading system;

         -        graphical client reporting;

         -        performance measurement;

         -        technical network support and interface setup; and

         -        Depository Trust Corporation interfacing.

         Our financial planning software applications include:

         -        retirement and estate planning modules;

         -        cash flow, tax and education planning modules;

         -        asset allocation module; and

         -        investment manager performance database system.

Our fee-based money manager clients are typically sponsors or managers of wrap
money management products or traditional money managers, managing investments of
institutions and high net worth individuals. Our portfolios under management
have grown to about 1.1 million as of March 31, 2001.

         Our Software businesses provide electronic commerce and financial
applications software and services for businesses and financial institutions. We
design, market, license and support the following software applications, among
others:

         -        i-Solutions.

                  The i-Solutions product line, which is a set of electronic
              billing software products developed for various industry segments,
              was added through the acquisition of BlueGill Technologies, Inc.
              in April 2000. These products allow billers to install and launch
              an electronic billing product, send e-mail notifications and
              present electronic bills through the Internet, and connect to a
              variety of bill aggregators and payment methods. Each product
              includes an electronic billing web site template that is unique to
              a specific industry segment. Using the template as a sample design
              of their Internet billing site, our customers spend less time
              developing and designing the look and feel of their Internet
              billing sites, which accelerates the product implementation
              process. Given the nature of the process we use to convert billing
              and/or statement information for use over the Internet, these
              products are equally marketable in international markets as well.

         -        Electronic Funds Transfer.

                  Through our Paperless Entry Processing System Plus software,
              we offer an online, real-time system providing an operational
              interface for originating and receiving payments through the
              automated clearinghouse. The automated clearinghouse is a
              nationwide electronic clearing and settlement system that
              processes electronically originated credit and debit transfers
              among participating depository institutions. These electronic
              transactions are substitutes for paper checks and are typically
              used for recurring payments like direct deposit payroll payments
              and corporate payments to contractors and vendors, debit transfers
              that consumers make to pay insurance premiums, mortgages, loans
              and other bills, and business to business payments. You may obtain
              additional information on the automated clearinghouse at the
              Federal Reserve Commission's website at
              http://www.federalreserve.gov. We do not maintain a direct
              connection with the automated clearinghouse, but rather, clear our
              electronic transactions through KeyBank, N.A., under the terms of
              an automated clearinghouse agreement.



                                       13
<PAGE>   14

         -        Reconciliation.

                  Through our ReconPlus software, we provide United States
              banks, international banks and corporate treasury operations with
              automated check and non-check reconciliations in high volume,
              multi-location environments. Some of the services provided by
              ReconPlus are automated deposit verification, consolidated bank
              account reconciliation and cash mobilization, immediate and
              accurate funds availability data and improved cash control.

         -        Other.

                  We also provide software solutions like regulatory compliance
              solutions for Form 1099 processing, safe box accounting and other
              applications.

         During the fiscal year June 30, 2000, Electronic Commerce accounted for
69% of our revenues, Investment Services accounted for 18% of our revenues, and
Software accounted for 13% of our revenues.

         Our current business was developed through expansion of our core
Electronic Commerce business and the acquisition of companies operating in
similar or complementary businesses.  Our major acquisitions include Servantis
Systems Holdings, Inc. in February 1996, Security APL, Inc. in May 1996, Intuit
Services Corporation in January 1997, Mobius Group, Inc. in March 1999, BlueGill
Technologies, Inc. in April 2000, and MSFDC, L.L.C (TransPoint) in September
2000.

         Effective on October 1, 2000, we completed the strategic agreement we
entered into with Bank of America on April 27, 2000, which was accompanied by us
acquiring certain of Bank of America's electronic billing and payment assets.


                                       14
<PAGE>   15




RESULTS OF OPERATIONS

         The following table sets forth as percentages of total operating
revenues, certain consolidated statements of operations data:

<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                            MARCH 31,                       MARCH 31,
                                                       2000          2001              2000          2001
                                                     ----------    ----------        ----------    ----------
<S>                                                     <C>           <C>               <C>           <C>
Total Revenues:                                         100.0%        100.0%            100.0%        100.0%

Expenses:
   Cost of processing, servicing and support             58.7%         60.4%             60.3%         60.3%
   Research and development                              11.5%         11.7%             11.0%         13.2%
   Sales and marketing                                   13.7%         14.8%             13.3%         23.1%
   General and administrative                            12.0%         11.4%             13.0%         11.9%
   Depreciation and amortization                         11.3%        110.7%             10.7%         97.9%
   In-process research and development                     --            --                --           6.0%
                                                     ----------    ----------        ----------    ----------
          Total expenses                                107.2%        209.0%            108.3%        212.4%
                                                     ----------    ----------        ----------    ----------

Loss from operations                                     -7.2%       -109.0%             -8.3%       -112.4%

Interest, net                                            -0.3%          0.6%              0.0%          0.8%

Loss on investments                                        --         -12.5%               --          -4.5%
                                                     ----------    ----------        ----------    ----------

Loss before income taxes                                 -7.5%       -120.9%             -8.3%       -116.2%

Income tax benefit                                       -2.6%        -31.5%             -3.0%        -27.8%
                                                     ----------    ----------        ----------    ----------

Net loss                                                 -4.9%        -89.4%             -5.3%        -88.4%
                                                     ==========    ==========        ==========    ==========
</TABLE>



         REVENUES. Reported revenue increased by $33.4 million or 42%, from
$79.7 million for the three months ended March 31, 2000 to $113.1 million for
the three months ended March 31, 2001 and by $89.9 million or 41%, from $221.7
million for the nine months ended March 31, 2000 to $311.5 million for the nine
months ended March 31, 2001. After adjusting for the combined new revenue
attributable to the acquisitions of BlueGill in April 2000 and TransPoint in
September 2000, and the incremental revenue attributable to the strategic
agreement with Bank of America in October 2000, underlying revenue increased by
over 20% from the three months ended March 31, 2000 to the three months ended
March 31, 2001 and by approximately 25% for the nine months ended March 31, 2000
to the nine months ended March 31, 2001. The growth in underlying revenue on a
quarter over quarter basis is driven primarily by underlying growth of 20% in
our Electronic Commerce business and 28% in our Investment Services business,
and relatively consistent performance in our legacy Software businesses. The
growth in underlying revenue on a year over year basis is driven by underlying
growth of 25% in our Electronic Commerce business, of 28% in our Investment
Services business and modest growth in our legacy Software businesses. Growth in
underlying Electronic Commerce revenue is driven primarily by an increase in
subscribers from approximately 3.3 million at March 31, 2000 to about 4.8
million at March 31, 2001. It should be noted that approximately 0.3 million of
the 4.8 million subscribers at March 31, 2001 were added as a direct result of
the strategic alliance with Bank of America effective in October 2000. Growth in
Investment Services revenue is driven primarily by an increase in portfolios
managed from approximately 900,000 at March 31, 2000 to about 1.1 million at
March 31, 2001. Refer to SEGMENT INFORMATION later in this commentary for
further information on the results of our three business segments.

         Reported processing and servicing revenue increased by 40%, from $68.5
million for the three months ended March 31, 2000 to $95.6 million for the three
months ended March 31, 2000, and by 38%, from $189.4


                                       15
<PAGE>   16

million for the nine months ended March 31, 2000 to $261.3 million for the nine
months ended March 31, 2001. Our acquisition of TransPoint in September 2000
includes minimum quarterly revenue guarantees from both Microsoft and First Data
Corporation over a five year period and our strategic alliance with Bank of
America in October 2000 includes minimum quarterly revenue guarantee over a ten
year period. In both cases, actual subscriber revenue is currently below
minimums, and as a result, overall subscriber based revenue growth will not
correlate as closely to the growth in the number of subscribers until Bank of
America subscribers and TransPoint related subscribers generate sufficient
revenue to exceed the quarterly minimums. After adjusting for new revenue of
approximately $12.5 million attributable to our acquisition of TransPoint and
our strategic alliance with Bank of America, our underlying processing and
servicing revenue increased by over 20% from the three months ended March 31,
2000 to the three months ended March 31, 2001. After adjusting for new revenue
of approximately $22.5 million attributable to our acquisition of TransPoint and
our strategic alliance with Bank of America, our underlying processing and
servicing revenue increased by over 25% from the nine months ended March 31,
2000 to the nine months ended March 31, 2001. Underlying growth in processing
and servicing revenue on a quarter over quarter basis is the result of over 18%
growth in underlying Electronic Commerce revenue and over 28% growth in
Investment Services revenue. Growth on a year over year basis is the result of
growth of over 24% in underlying Electronic Commerce revenue growth of over 28%
in Investment Services revenue. Growth in Investment Services revenue is driven
primarily by the previously mentioned increase in portfolios managed. Growth in
underlying Electronic Commerce revenue is driven primarily by the previously
mentioned increase in subscribers. Additionally, we now have 156 billers in
production that presented about 350,000 electronic bills in the month ended
March 31, 2001, which has increased significantly from over 62,000 electronic
bills presented in the same period of last year. During the quarter ended March
31, 2001, we achieved a new record high of processing approximately 21 million
monthly transactions, compared to approximately 15 million in the quarter ended
March 31, 2000, and over 18 million in the quarter ended December 31, 2000. As
mentioned in previous reports, we are now offering a transaction based pricing
model for our largest customers and, as a result, it will become increasingly
more difficult to correlate revenue solely to the number of subscribers, with
transactions processed becoming an additional indicator.

         Reported license fee revenue increased by 85%, from $4.1 million for
the three months ended March 31, 2000 to $7.6 million for the three months ended
March 31, 2001, and by 93%, from $10.3 million for the nine months ended March
31, 2000 to $19.8 million for the nine months ended March 31, 2001. The growth
in quarter over quarter and year over year license fee revenue is primarily
attributable to expected new revenue resulting from the acquisition of BlueGill
in April 2000. We enjoyed modest growth in license revenue from our more mature
software product lines. Although we anticipate continued growth in license
revenue, we expect current economic conditions to have a dampening effect on the
rate of growth, at least in the near term.

         Reported maintenance fee revenue increased by 13%, from $4.6 million
for the three months ended March 31, 2000 to $5.2 million for the three months
ended December 31, 2000, and by 14%, from $13.6 million for the nine months
ended March 31, 2000 to $15.5 million for the nine months ended March 31, 2000.
We have enjoyed modest increases in maintenance revenue as a result of our
acquisition of BlueGill. This line of billing software, however, is very new and
our related maintenance revenue is just now starting to grow as customers
complete their initial maintenance period and we establish a renewal maintenance
base. Additionally, since last year, we modified our maintenance revenue
recognition policy. Although we will continue to recognize maintenance ratably
over the related service period, we now delay the onset of revenue recognition
until we actually receive cash. This change caused an unusual decline in
maintenance revenue in the quarter ended September 30, 2000. We caught up this
unusual shortfall in the quarter ended December 31, 2000, as the timing of cash
receipts on first quarter billings shifted into the second quarter. We do not
expect this change to have further impact on quarterly maintenance revenue
growth and therefore we expect the 14% year over year growth rate to be
reasonable in the near term.

         Reported other revenue, consisting mostly of consulting fees, increased
by 85%, from $2.5 million for the three months ended March 31, 2000 to $4.6
million for the three months ended March 31, 2001, and by 77%, from $8.4 million
for the nine months ended March 31, 2000 to $14.8 million for the nine months
ended March 31, 2001. The growth in other revenue is driven primarily by
increased consulting fees resulting from the BlueGill acquisition, as well as
increases related to biller implementations in our Electronic Commerce business.
In the quarter ended March 31, 2001, we increased the number of billers in
production by 12 and for the nine months ended March 31, 2001 we increased
billers in production by 33 (net of 30 new billers added via the TransPoint
acquisition), versus 14 in the quarter ended March 31, 2000 and 47 in the nine
month period ended March 31, 2000.



                                       16
<PAGE>   17

         COST OF PROCESSING, SERVICING AND SUPPORT. Our cost of processing,
servicing and support was $46.8 million, or 58.7% of total revenue for the three
months ended March 31, 2000, and $68.3 million, or 60.4% of total revenue for
the three months ended March 31, 2001. Cost of processing, servicing and support
was $133.7 million, or 60.3% of total revenue for the nine months ended March
31, 2000, and $187.9 million, or 60.3% of total revenue for the nine months
ended December 31, 2001. Cost of processing, servicing and support as a
percentage of servicing only revenue (total revenue less license fees) was 61.9%
for the three months ended March 31, 2000, and 64.7% for three months ended
March 31, 2001, and was 63.2% for the nine months ended March 31, 2000, and
64.4% for the nine months ended March 31, 2001. As previously mentioned, we
acquired TransPoint in September 2000 and the electronic billing and payment
assets of Bank of America in October 2000. As a result of these transactions, we
have supported two additional billing and payment processing platforms for the
entire quarter ended March 31, 2001 for six months of the nine month period
ended March 31, 2001. Although expected, this has resulted in a significant
increase in our cost of processing for the quarter ended March 31, 2001, and
somewhat less of an increase on a percentage basis for the nine month period
ended March 31, 2001. We are in the process of converting TransPoint and Bank of
America subscribers and billers from their respective processing platforms to
our Genesis platform. We expect the conversion of TransPoint to be complete by
the end of fiscal 2001 and the conversion of Bank of America during the quarter
ending December 31, 2001. Between now and then, we will continue to experience
higher incremental processing costs, but at a decreasing rate, as incremental
conversions are completed. Somewhat masked by the significant added costs are
underlying improvements in efficiency and processing quality. From an efficiency
perspective, our ratio of electronic payments to total payments has improved
from approximately 56% at December 31, 1999 to over 62% as of March 31, 2001.
Electronic payments carry a significantly lower variable cost per unit than
paper based transactions and are far less likely to result in a customer claim.

         RESEARCH AND DEVELOPMENT. Our research and development costs were $9.2
million, or 11.5% of total revenue for the three months ended March 31, 2000,
and $13.3 million, or 11.7% of total revenue for the three months ended March
31, 2001. Research and development costs were $24.3 million, or 11.0% of total
revenue for the nine months ended March 31, 2000, and $41.2 million, or 13.2% of
total revenue for the nine months ended March 31, 2001. Over this period, we
have capitalized development costs of $2.0 million for the three months ended
March 31, 2000, $1.7 million for the three months ended March 31, 2001, $5.3
million for the nine months ended March 31, 2000, and $4.0 million for the nine
months ended March 31, 2001. Therefore, on a gross basis, our research and
development costs were $11.2 million, or 14.1% of total revenue for the three
months ended March 31, 2000, $15.0 million, or 13.2% of total revenue for the
three months ended March 31, 2001, $29.6 million, or 13.4% of total revenue for
the nine months ended March 31, 2000, and $45.2 million, or 14.5% of total
revenue for the nine months ended March 31, 2001. As a result of the acquisition
of BlueGill, we added a large number of software developers and we continue to
invest heavily in the build out of our i-Solutions electronic billing product
line. In addition, we completed WebPay for Consumers, or WebPay 3.2, for our
Genesis processing platform in our Electronic Commerce business in March 2001.
This product offering provides consumers the ability to receive and pay e-bills
over e-mail and to exchange money with each other using e-mail "invitations" to
send or receive money. Overall, we continue to invest a significant portion of
our revenue into research and development activities in all business segments in
anticipation and support of revenue growth, quality enhancement and efficiency
improvement opportunities.

         SALES AND MARKETING. Sales and marketing costs were $10.9 million, or
13.7% of total revenue for the three months ended March 31, 2000, and $16.8
million, or 14.8% of total revenue for the three months ended March 31, 2001.
Sales and marketing costs were $29.5 million, or 13.3% of total revenue for the
nine months ended March 31, 2000, and $71.8 million, or 23.1% of total revenue
for the nine months ended March 31, 2001. The terms of our strategic alliance
agreement with Bank of America called for us to provide $25.0 million of cash at
closing to help support an agreed upon two year $45.0 million marketing campaign
by Bank of America. Because we have no direct influence or impact on the
specific nature, timing or extent of the use of the funds, we expensed the $25.0
million as a period cost in the quarter ended December 31, 2000. Net of this one
time charge, sales and marketing costs were $46.8 million, or 15.0% of total
revenue for the nine months ended March 31, 2001. The increase in quarter over
quarter and year over year sales and marketing expenses are primarily the result
of increased sales and marketing staff resulting from both the BlueGill and
TransPoint acquisitions, costs associated with the launch of the new i-Solutions
product line and further investments in our core marketing and communications
areas in support of the continued growth of the business.


                                       17
<PAGE>   18


         GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$9.6 million, or 12.0% of total revenue for the three months ended March 31,
2000, and $12.8 million, or 11.4% of total revenue for the nine months ended
March 31, 2001. General and administrative expenses were $28.8 million or 13.0%
of total revenue for the nine months ended March 31, 2000, and $37.1 million or
11.9% of total revenue for the nine months ended March 31, 2001. We have
incurred additional general and administrative expenses such as facility and
administrative staff expenses resulting from the BlueGill and TransPoint
acquisitions and the Bank of America strategic alliance. We have also increased
administrative staff in order to support the continued growth in our business.
Our overall general and administrative expenses as a percentage of revenues,
however, continue to decline due to the inherent leverage in our existing
business model.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization costs
increased from $9.0 million for the three months ended March 31, 2000 to $125.1
million for the three months ended March 31, 2001, and from $23.8 million for
the nine months ended March 31, 2000 to $305.0 million for the nine months ended
March 31, 2000. The significant increase in quarter over quarter and year over
year depreciation and amortization is the direct result of amortization of
intangible assets from the acquisitions of BlueGill and TransPoint, and the
purchase of the electronic billing and payment assets from Bank of America. Net
of intangible asset amortization from all acquisitions, our depreciation costs
related solely to fixed assets increased from $6.8 million for the three months
ended March 31, 2000 to $8.6 million for the three months ended March 31, 2001,
and from $17.6 million for the nine months ended March 31, 2000 to $25.0 million
for the nine months ended March 31, 2001. The quarter over quarter and year over
year increase in fixed asset depreciation is the result of fixed assets obtained
in the BlueGill and TransPoint acquisitions, and increasing capital expenditures
for data processing equipment and related software, and new and improved
facilities in support of the continued growth of the business.

         IN-PROCESS RESEARCH AND DEVELOPMENT. In the quarter ended September 30,
2000, we incurred $18.6 million of in-process research and development costs.
These costs were incurred as a result of the TransPoint acquisition. Please
refer to footnote 3, Acquisitions and Divestitures, included in the Notes to
Interim Condensed Consolidated Unaudited Financial Statements attached for a
complete description of the in-process research and development charge.

         INTEREST. Net interest has increased from $(0.2) million for the three
months ended March 31, 2000 to $0.6 million for the three months ended March 31,
2001, and has increased from $(0.1) million for the nine months ended March 31,
2000 to $2.4 million for the nine months ended March 31, 2001. Net interest is
composed of interest income, offset by interest expense. Interest income has
increased from $3.1 million for the three months ended March 31, 2000 to $3.8
million for the three months ended March 31, 2001, and has increased from $4.5
million for the nine months ended March 31, 2000 to $12.3 million for the nine
months ended March 31, 2001. Although we have experienced a marginal decrease in
the average yield on our investments due to declining interest rates, the
increase in quarter over quarter and year over year interest income is due
primarily to an increase in average cash and invested assets from $202.8 million
for the quarter ended March 31, 2000 to $273.7 million for the quarter ended
March 31, 2001, and from $114.4 million for the nine months ended March 31, 2000
to $236.9 million for the nine months ended March 31, 2001.

         While we experience overall fluctuations in cash and invested asset
balances on an ongoing basis, in September 2000, we received approximately $97.2
million in cash as part of the TransPoint acquisition and in October 2000 we
used $35.0 million in cash in connection with our asset purchase agreement with
Bank of America. The timing of these two significant transactions will skew the
year to date average cash and invested asset balance at March 31, 2001 and
appear to result in higher investment yields than actually earned. In November
1999, we received approximately $166.9 million in net proceeds from the issuance
of $172.5 million of 6.5% subordinated convertible notes. The timing of this
cash receipt will skew the quarter to date and year to date average invested
assets at March 31, 2000 as well. Interest expense has increased from $3.3
million for the three months ended March 31, 2000 to $3.2 million for the three
months ended March 31, 2001, and from $4.6 million for the nine months ended
March 31, 2000 to $9.9 million for the nine months ended March 31, 2001. The
increase in both quarter over quarter and year over year interest expense is due
primarily to the $172.5 million of 6.5% subordinated convertible notes we issued
in November 1999, which created three months of interest expense in the three
month period ended March 31, 2000, slightly over four months of interest in the
nine months ended March 31, 2000, and a full three and nine months of interest
expense in the quarter and year to date results as of March 31, 2001,
respectively.


                                       18
<PAGE>   19

         LOSS ON INVESTMENTS. As a result of overall market conditions, over the
past three quarters, certain of our investments have incurred an "other than
temporary" decline in market value. As a result, in the quarter ended March 31,
2001 we recorded a charge of $14.1 million to reflect this decline in value.

         INCOME TAXES. We recorded an income tax benefit of $2.1 million at an
effective rate of 35% for the three months ended March 31, 2000, and an income
tax benefit of $35.7 million at an effective rate of 26% for the three months
ended March 31, 2001. We recorded an income tax benefit of $6.7 million at an
effective rate of 36% for the nine months ended March 31, 2000, and an income
tax benefit of $86.5 million at an effective rate of 24% for the nine months
ended March 31, 2001. The reported effective rates differ from the blended
statutory rate of 40% in all periods due to certain non-deductible goodwill,
in-process research and development and other non-deductible expenses offset
somewhat by jobs credits and tax exempt interest income.


SEGMENT INFORMATION

         The following table sets forth operating revenue and operating income
by industry segment for the periods noted (in thousands):
<TABLE>
<CAPTION>

                                         THREE MONTHS ENDED        NINE MONTHS ENDED
                                               MARCH 31,                MARCH 31,
                                       ----------------------    ----------------------
                                         2000         2001          2000        2001
                                       ---------    ---------    ---------    ---------
<S>                                    <C>          <C>          <C>          <C>
OPERATING REVENUE:
 Electronic Commerce ...............   $  55,723    $  79,870    $ 154,207    $ 217,234
 Software ..........................       9,933       15,284       27,993       43,730
 Investment Services ...............      14,050       17,914       39,495       50,584
                                       ---------    ---------    ---------    ---------
       Total Operating Revenue .....   $  79,706    $ 113,068    $ 221,695    $ 311,548
                                       =========    =========    =========    =========
OPERATING INCOME (LOSS):
 Electronic Commerce ...............   $  (3,790)   $  (2,462)   $ (13,408)   $ (13,501)
 Software ..........................       3,295         (436)       8,563           (7)
 Investment Services ...............       3,814        5,182       11,510       13,203
 Corporate .........................      (6,861)      (9,059)     (18,904)     (26,255)
 Purchase accounting amortization ..      (2,231)    (116,480)      (6,174)    (280,028)
 One time marketing charge .........        --           --           --        (25,000)
 In-process research and development        --           --           --        (18,600)
                                       ---------    ---------    ---------    ---------
       Total Operating Loss ........   $  (5,773)   $(123,255)   $ (18,413)   $(350,188)
                                       =========    =========    =========    =========
</TABLE>


         In order to provide a meaningful analysis of the underlying performance
of our business segments, for all periods presented we have separated the effect
of intangible asset amortization, in-process research and development costs and
significant one-time charges related to our various business and asset
acquisitions.

         Revenue in our Electronic Commerce business increased by 43%, from
$55.7 million for the three months ended March 31, 2000 to $79.9 million for the
three months ended March 31, 2000, and increased by 41%, from $154.2 million for
the nine months ended March 31, 2000 to $217.2 million for the nine months ended
March 31, 2001. Net of the incremental revenue provided from TransPoint and
Bank of America as described below, the primary reason for the increase in
revenue was an increase in subscribers from approximately 3.3 million at March
31, 2000 to about 4.8 million at March 31, 2001.

         We completed our acquisition of TransPoint in September 2000 and, with
this acquisition, became the preferred provider of electronic billing and
payment services to customers of Microsoft offered through their MSN and Money
Central offerings. The agreement with Microsoft comes with guaranteed revenue of
$120 million over a five-year period, which commenced early in the quarter ended
March 31, 2001. Additionally, as part of the TransPoint transaction, we received
$60 million of guaranteed revenue and/or cost savings opportunities through
First Data Corporation over a five-year period, which began in September 2000.
Effective October 1, 2000, we completed a strategic agreement with Bank of
America, the largest bank in the U.S., to offer electronic billing and payment
services to its customer base. This ten year agreement provides annual revenue
guarantees of $50 million


                                       19
<PAGE>   20

and Bank of America has agreed to invest $45 million over the next two years to
promote the adoption of electronic billing and payment services by Bank of
America's customers. We had been processing certain transactions for Bank of
America before the strategic alliance was completed and, therefore, the $50
million annual revenue guarantee ($12.5 million on a quarterly basis) should not
be considered entirely incremental to our ongoing revenue. We did, however, add
300,000 incremental new subscribers to our subscriber base upon completion of
the agreement. In both cases, actual subscriber revenue is below minimums
for now, and as a result, overall subscriber based revenue growth will not
correlate as closely to the growth in the number of subscribers until Bank of
America and Microsoft subscribers generate sufficient revenue to exceed the
quarterly minimums.

         To date, we have signed 215 primary billers to our E-Bill electronic
billing product offering. Combined with the 30 net new billers we assumed with
the TransPoint acquisition, this brings our biller total to 245. We now have 156
billers in production that delivered about 350,000 electronic bills in the month
ended March 31, 2001. Our acquisition of BlueGill is expected to facilitate our
efforts to provide quality billing content, and by simplifying and accelerating
the process of taking bills from paper to electronic. Also, we are adding bill
aggregation technology to our Genesis platform and currently plan to add access
to up to 30 additional billers through "bill scraping" over the course of
calendar year 2001, which will be available to our consumer service provider
partners as they upgrade to Web Pay for Consumers. We believe that a complete,
integrated round trip electronic billing and payment experience for an average
of four to ten bills per customer per month is an important factor in driving
subscriber growth. We expect that by the end of our fiscal year, we will have
enabled from six to eight electronic bills and by the end of the calendar year,
from eight to ten electronic bills for consumers in the major strategic
marketing areas throughout the United States. When combining increasing
electronic billing revenue with a transaction based pricing model available to
our largest bill payment customers, it will become increasingly difficult to
correlate revenue solely to the number of active subscribers, with transactions
processed becoming an additional key indicator. During the quarter ended March
31, 2001, we achieved a new record high of processing about 21 million monthly
transactions, compared to over 15 million in the quarter ended March 31, 2000
and more than 18 million in the quarter ended December 31, 2000.

         The operating loss in our Electronic Commerce segment, excluding
purchase accounting amortization, a one time marketing charge of $25 million,
and in-process research and development, has improved from $3.8 million for the
three months ended March 31, 2000 to $2.5 million for the three months ended
March 31, 2001, and remained consistent from $13.4 million for the nine month
period ended March 31, 2000 to $13.5 million for the nine months ended March 31,
2001. As a result of the TransPoint acquisition and the purchase of Bank of
America's electronic billing and payment assets, we have supported two
additional billing and payment processing platforms for the quarter ended
September 30, 2000, and for approximately six of the nine months ended March 31,
2001. Although expected, this has resulted in a significant increase in our cost
of processing for the quarter ended and the nine month periods ended March 31,
2001. We are in the process of converting TransPoint and Bank of America
subscribers and billers from their respective processing platforms to our
Genesis platform. We expect the complete the TransPoint conversion process by
the end of the fiscal year and the Bank of America conversion process sometime
in the quarter ending December 31, 2001. Between now and then, we will continue
to experience higher incremental processing costs, but at a decreasing rate, as
incremental conversions are completed. We have also incurred additional sales
and marketing and general and administrative costs from these two transactions.
Somewhat masked by the significant added costs are underlying improvements in
efficiency and processing quality. From an efficiency perspective, our ratio of
electronic payments to total payments has improved from approximately 56% at
March 31, 2000 to over 62% as of March 31, 2001. Electronic payments carry a
significantly lower variable cost per unit than paper based transactions and are
far less likely to result in a customer claim. For the remainder of fiscal 2001,
we continue to focus attention on the following four areas within our Electronic
Commerce business:

         -        delivery of an increasing number of bills electronically over
                  the Internet;

         -        extension of the payment capabilities of our Genesis
                  infrastructure while continuing to deliver market-leading
                  quality and cost efficiency;

         -        co-marketing programs designed to bring billers and channel
                  partners together to strengthen incentives and value delivered
                  to consumers; and

         -        expansion of the number of sites where consumers can receive
                  and pay bills.

         While there are no guarantees as to the timing or extent of accelerated
adoption of electronic billing and payment services, we believe that with our
recent transactions with BlueGill, TransPoint and Bank of America,


                                       20
<PAGE>   21

along with other previously described strategic alliances, we are better
positioned to maintain our market leadership position throughout the accelerated
growth cycle when it occurs.

         Revenue in our Software segment increased by 54%%, from $9.9 million
for the three months ended March 31, 2000 to $15.3 million for the three months
ended March 31, 2001, and increased by 56%, from $28.0 million for the nine
months ended March 31, 2000 to $43.7 million for the nine months ended March 31,
2001. The growth in Software revenue is primarily attributable to the
acquisition of BlueGill, now operating as CheckFree i-Solutions, as revenue in
our other software businesses has increased only modestly on a year over year
basis. While we expect software revenue to continue to grow, current market
conditions have placed a dampening effect on the rate of growth in the near
term.

         Operating income in our Software segment declined from an operating
profit of $3.3 million for the three months ended March 31, 2000 to an operating
loss of $0.4 million for the three months ended March 31, 2001, and declined
from an operating profit of $8.6 million for the nine months ended March 31,
2000 to an operating loss of about $0.1 million for the nine months ended March
31, 2001. As expected, the operations acquired from BlueGill have provided
downward pressure on operating margins throughout fiscal 2001, as we continue to
invest significantly in this emerging product line. The electronic billing
software product line acquired from BlueGill provides a significant complement
to the electronic billing and payment products within our Electronic Commerce
segment. Investments in this area are expected to facilitate our efforts to
provide high quality billing content, and simplify and accelerate the process of
taking bills from paper to electronic.

         Revenue in our Investment Services business has increased by 28%, from
$14.0 million for the three months ended March 31, 2000 to $17.9 million for the
three months ended March 31, 2001, and increased by 28%, from $39.5 million for
the nine months ended March 31, 2000 to $50.6 million for the nine months ended
March 31, 2001. Growth in this business is due primarily to an increase in
portfolios managed from approximately 900,000 at March 31, 2000 to approximately
1.1 million at March 31, 2001. Much of the revenue growth has occurred in retail
versus institutional accounts that carry a lower unit price. During the nine
month period ended March 31, 2001, the division released a significantly
enhanced version of M-Search, a money manager database system, and APL-ASP, an
innovative and flexible new portfolio management services offering for start-up
and break away money managers. When combined with the emergence of E-Wrap, or
Internet-based wrap services, which is creating a highly visible new
distribution channel for money managers and brokers, these product enhancements
and new distribution channel opportunities should fuel further growth for our
Investment Services business.

         Operating income in our Investment Services segment, net of purchase
accounting amortization, increased by 36%, from $3.8 million for the three
months ended March 31, 2000 to $5.2 million for the three months ended March 31,
2001, and increased by 15%, from $11.5 million for the nine months ended March
31, 2000 to $13.2 million for the nine months ended March 31, 2001. As indicated
above, much of our revenue growth has occurred in retail versus institutional
accounts that carry a lower unit price, which in turn places downward pressure
on margins as the cost to process this business is not proportionally lower.
Additionally, in the three month period ended December 31, 2000, we incurred
certain investment expenses, the timing of which caused a temporary drop in our
year to date operating margin. However, our margin is returning to historic
levels on a year to date basis, as expected.

         Our Corporate segment represents charges for legal, human resources,
finance and various other unallocated overhead expenses. Our Corporate segment
incurred operating expenses of $6.9 million, or 8.6% of total revenue for the
three months ended March 31, 2000, and operating expenses of $9.1 million, or
8.0% of total revenue for the three months ended March 31, 2001. Corporate
incurred operating expenses of $18.9 million, or 8.5% of total revenue for the
nine months ended March 31, 2000 and operating expenses of $26.3 million, or
8.4% of total revenue for the nine months ended March 31, 2001. Although we
continue to add corporate resources in support of the growth of the business,
our overhead costs as a percentage of revenue have started to decline,
reflecting leverage inherent in our business model.

         The purchase accounting amortization line represents amortization of
intangible assets resulting from all of our various acquisitions from 1996
forward. The total amount of purchase accounting amortization has increased from
$2.2 million for the three months ended March 31, 2000 to $116.5 million for the
three months ended March 31, 2001 and has increased from $6.2 million for the
nine months ended March 31, 2000 to $280.0 million for the nine months ended
March 31, 2001. The increases are the result of intangible assets created by the
acquisitions of


                                       21
<PAGE>   22

BlueGill in April 2000 and TransPoint in September 2000 and the acquisition of
the electronic billing and payment assets of Bank of American effective in
October 2000. For comparative purposes, the breakout of purchase accounting
amortization by segment is as follows (in thousands):

<TABLE>
<CAPTION>
                        THREE MONTHS ENDED   NINE MONTHS ENDED
                            MARCH 31,            MARCH 31,
                      -------------------   -------------------
                        2000       2001       2000       2001
                      --------   --------   --------   --------
<S>                   <C>        <C>        <C>        <C>
Electronic Commerce   $    590   $ 99,468   $  1,782   $228,991
Software ..........        308     15,670        810     47,010
Investment Services      1,333      1,342      3,582      4,027
                      --------   --------   --------   --------
    Total .........   $  2,231   $116,480   $  6,174   $280,028
                      ========   ========   ========   ========
</TABLE>

         The one time marketing charge took place in the three month period
ended December 31, 2000. Our strategic alliance with Bank of America called for
us to provide $25.0 million of cash at closing to help support an agreed upon
two year $45.0 million marketing campaign by Bank of America. Because we have no
direct influence or impact on the specific nature, timing or extent of the use
of the funds, we expensed the $25.0 million as a period cost in the quarter
ended December 31, 2000. Additionally, because we do not market directly to
subscribers but rather leave that to our various consumer service provider
customers, we have separated this charge from ongoing operations as an unusual,
non-recurring event.

         In the three month period ended September 30, 2000, we incurred $18.6
million of in-process research and development costs. These costs were incurred
as a result of the TransPoint acquisition in September 2000. Please refer to
footnote 3, Acquisitions and Divestitures, included in the Notes to Interim
Condensed Consolidated Unaudited Financial Statements attached for a complete
description of the in-process research and development charge.

LIQUIDITY AND CAPITAL RESOURCES

         As of March 31, 2001, we had cash, cash equivalents and investments
(short and long term) on hand totaling $266.1 million. Our balance sheet
reflects working capital of $159.6 million and our current ratio stands at 2.3.
We believe that existing cash, cash equivalents and investments will be more
than sufficient to meet our presently anticipated requirements for the
foreseeable future. To the extent that additional capital resources are
required, we have access to an untapped $30.0 million line of credit.

         The following chart summarizes our Consolidated Statement of Cash Flows
for the three and nine months ended March 31, 2001.
<TABLE>
<CAPTION>
                                       THREE MONTHS   THREE MONTHS    THREE MONTHS    NINE MONTHS
                                           ENDED          ENDED          ENDED           ENDED
                                        SEPTEMBER 30,  DECEMBER 31,     MARCH 31,       MARCH 31,
                                           2000           2000            2001            2001
                                         ---------      ---------       ---------       ---------
<S>                                      <C>            <C>             <C>             <C>
Net cash provided by (used in):
   Operating activities ...........      $   6,050      $ (21,559)      $   8,896       $  (6,613)
   Investing activities ...........         85,797        (90,136)         (5,118)         (9,457)
   Financing activities ...........          9,998          7,042           2,130          19,170
                                         ---------      ---------       ---------       ---------
Net increase (decrease) in cash and
   cash equivalents ...............      $ 101,845      $(104,653)      $   5,908       $   3,100
                                         =========      =========       =========       =========
</TABLE>


         For the nine months ended March 31, 2001, we have incurred a net
increase in cash and cash equivalents of $3.1 million.


         We have used $6.6 million of cash from operations on a year to date
basis. Starting with a net loss of $275.4 million, the primary factors impacting
operating cash flow are the adjustments for depreciation and


                                       22
<PAGE>   23

amortization totaling $305.0 million, for in-process research and development of
$18.6 million, for the related deferred income taxes of $(86.4) million, and for
a loss on investments of $14.1 million, all of which are non-cash expenses or
charges resulting from intangible assets obtained in acquisitions, capital
assets purchased in support of our growing business, or the write down in the
market value of investments due to market conditions. Additionally, we incurred
a one-time marketing charge of $25.0 million associated with our strategic
agreement with Bank of America.

         Our investing activities have been significant in fiscal 2001. In the
three months ended September 30, 2000, we received $97.2 million of cash in
relation to the TransPoint acquisition, which was offset by acquisition expenses
totaling $0.4 million in the quarter and another $0.7 million of acquisition
expenses in the three months ended December 31, 2000. We capitalized $10.1
million of cash payments and associated costs from the purchase of the
electronic billing and payment assets of Bank of America, net of the one-time
marketing charge of $25.0 million, which was accounted for above in cash flow
from operations. We used cash of $6.2 million for capital expenditures in the
three months ended September 30, 2000, $5.7 million in the three months ended
December 31, 2000 and $10.3 million in the three months ended March 31, 2001. On
a net basis we used $3.5 million of cash for the purchase of investments in the
three months ended September 30, 1999, used $72.7 million of cash in the three
months ended December 31, 2000 and generated $6.2 million of cash in the three
months ended March 31, 2001. Finally, we capitalized software development costs
of $1.3 million in the three months ended September 30, 2000, $1.0 million in
the three months ended December 31, 2000 and $1.7 million in the three months
ended March 31, 2001.

         Our financing activities have been significant in fiscal 2001 as well.
We have received $12.6 million of cash from the exercise of warrants, $9.4
million in the three months ended September 30, 2000 and $3.2 million in the
three months ended December 31, 2000. We have received another $6.7 million of
cash from the exercise of stock options, including associated tax benefits, $1.2
million in the quarter ended September 30, 2000 and $3.4 million in the quarter
ended December 31, 2000 and $2.1 million in the quarter ended March 31, 2001.
Finally, we received $3.1 million for the purchase of stock through our
employee stock purchase plan, $1.4 million in the quarter ended September 30,
2000, $0.8 million in the quarter ended December 31, 2000 and $0.9 million in
the quarter ended December 31, 2001. Cash receipts have been offset by payments
under capital lease obligations totaling $3.2 million, $2.0 million of which was
incurred in the quarter ended September 30, 2000, $0.4 million in the quarter
ended December 31, 2000 and $0.8 million in the quarter ended March 31, 2001.

INFLATION

         We believe the effects of inflation have not had a significant impact
on our results of operations.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         Except for the historical information contained herein, the matters
discussed in our Form 10-Q include certain forward-looking statements within the
meaning of Section 27A of the Securities Act, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. Those statements include, but may not be
limited to, all statements regarding our and management's intent, belief and
expectations, such as statements concerning our future profitability, our
operating and growth strategy. Investors are cautioned that all forward-looking
statements involve risks and uncertainties including, without limitation, the
factors set forth under the caption "Business - Business Risks" in our Annual
Report on Form 10-K for the year ended June 30, 2000 and other factors detailed
from time to time in our filings with the Securities and Exchange Commission.
One or more of these factors have affected, and in the future could affect, our
businesses and financial results in the future and could cause actual results to
differ materially from plans and projections. Although we believe that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate. Therefore, there can be
no assurance that the forward-looking statements included in Form 10-Q will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by us or any other person that our
objectives and plans will be achieved. All forward-looking statements made in
this Form 10-Q are based on information presently available to our management.
We assume no obligation to update any forward-looking statements.



                                       23
<PAGE>   24


                           PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      EXHIBITS

                  None.

         (b)      REPORTS ON FORM 8-K

         We did not file any Current Reports on Form 8-K with the Securities and
Exchange Commission during the quarter ended March 31, 2001.




                                       24
<PAGE>   25


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amended report to be signed on its behalf by
the undersigned thereunto duly authorized.

                         CHECKFREE CORPORATION



Date:  May 11, 2001       By:     /s/ David E. Mangum
                                  ---------------------------------------------
                                  David E. Mangum, Executive Vice President
                                  and Chief Financial Officer*
                                  (Principal Financial Officer)




Date: May 11, 2001        By:     /s/ Gary A. Luoma, Jr.
                                  ---------------------------------------------
                                  Gary A. Luoma, Jr., Senior Vice President,
                                  Chief Accounting Officer, and Assistant
                                  Secretary (Principal Accounting Officer)


*        In his capacity as Executive Vice President and Chief Financial
         Officer, Mr. Mangum is duly authorized to sign this report on behalf of
         the Registrant.




                                       25