##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-26802
 CHECKFREE CORPORATION
  Delaware
    
    58-2360335(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 4411 East Jones Bridge Road, Norcross, Georgia 30092
 (678) 375-3000
 Not Applicable
 þ o
  þ o o
 o þ




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##### 



FORM 10-Q
 CHECKFREE CORPORATION
 Table of Contents
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements.Unaudited Consolidated Balance Sheets
As of March 31, 2007 and June 30, 2006
    
    
    3Unaudited Consolidated Statements of Operations
For the Three and Nine Months Ended March 31, 2007 and 2006
    
    
    4Unaudited Consolidated Statements of Cash Flows
For the Nine Months Ended March 31, 2007 and 2006
    
    
    5Notes to the Interim Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    38Item 4. Controls and Procedures
    
    
    39PART II. OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 6. Exhibits
    
    
    41Signatures
 2




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##### 



Part I. Financial Information
 Item 1. Financial Statements
 CHECKFREE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
 March 31,
    
    
    June 30,2007
    
    
    2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    226,271
    
    
    $
    173,083Settlement assets
    
    
    128,365
    
    
    
    107,128Investments
    
    
    111,235
    
    
    
    144,530Accounts receivable, net
    
    
    157,834
    
    
    
    146,605Prepaid expenses and other assets
    
    
    31,545
    
    
    
    39,810Deferred income taxes
    
    
    5,461
    
    
    
    7,311Total current assets
    
    
    660,711
    
    
    
    618,467PROPERTY AND EQUIPMENT, NET
    
    
    122,211
    
    
    
    100,217OTHER ASSETS:Capitalized software, net
    
    
    4,145
    
    
    
    3,755Goodwill
    
    
    734,937
    
    
    
    734,591Strategic agreements, net
    
    
    87,298
    
    
    
    106,005Other intangible assets, net
    
    
    50,016
    
    
    
    62,416Investments and restricted cash
    
    
    59,309
    
    
    
    78,559Other noncurrent assets
    
    
    10,215
    
    
    
    8,779Deferred income taxes
    
    
    58,415
    
    
    
    45,240Total other assets
    
    
    1,004,335
    
    
    
    1,039,345Total assets
    
    $
    1,787,257
    
    
    $
    1,758,029LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    13,519
    
    
    $
    16,967Settlement obligations
    
    
    124,004
    
    
    
    103,732Accrued liabilities
    
    
    73,692
    
    
    
    74,366Current portion of long-term obligations
    
    
    2,391
    
    
    
    767Deferred revenue
    
    
    50,584
    
    
    
    40,301Total current liabilities
    
    
    264,190
    
    
    
    236,133ACCRUED RENT AND OTHER
    
    
    4,483
    
    
    
    3,844DEFERRED INCOME TAXES
    
    
    387
    
    
    
    2,964DEFERRED REVENUE
    
    
    3,022
    
    
    
    3,021CAPITAL LEASE AND LONG-TERM OBLIGATIONS  LESS CURRENT PORTION
    
    
    49,073
    
    
    
    28,432STOCKHOLDERS EQUITY:Preferred stock - 50,000,000 authorized shares, $0.01 par value; no amounts issued or outstanding
    
    
    
    
    
    
    Common stock - 500,000,000 authorized shares, $0.01 par value; issued and outstanding 87,585,385
and 90,867,834 shares, respectively
    
    
    876
    
    
    
    909Additional paid-in-capital
    
    
    2,366,653
    
    
    
    2,482,309Accumulated other comprehensive loss
    
    
    49
    
    
    
    (1,593
    )Accumulated deficit
    
    
    (901,476
    )
    
    
    (997,990
    )Total stockholders equity
    
    
    1,466,102
    
    
    
    1,483,635Total liabilities and stockholders equity
    
    $
    1,787,257
    
    
    $
    1,758,029
  3




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##### 



CHECKFREE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Operations
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006REVENUES:Processing and servicing
    
    
    199,315
    
    
    
    192,786
    
    
    
    595,568
    
    
    
    563,143License fees
    
    
    9,076
    
    
    
    9,479
    
    
    
    30,471
    
    
    
    24,859Maintenance fees
    
    
    11,857
    
    
    
    11,078
    
    
    
    35,311
    
    
    
    30,707Professional fees
    
    
    9,960
    
    
    
    13,584
    
    
    
    34,637
    
    
    
    35,755Total revenues
    
    
    230,208
    
    
    
    226,927
    
    
    
    695,987
    
    
    
    654,464EXPENSES:Cost of processing, servicing and support
    
    
    98,197
    
    
    
    91,351
    
    
    
    284,956
    
    
    
    253,026Research and development
    
    
    25,870
    
    
    
    26,038
    
    
    
    78,931
    
    
    
    72,865Sales and marketing
    
    
    21,085
    
    
    
    22,107
    
    
    
    66,630
    
    
    
    61,272General and administrative
    
    
    18,980
    
    
    
    16,219
    
    
    
    54,158
    
    
    
    48,777Depreciation and amortization
    
    
    21,517
    
    
    
    22,349
    
    
    
    64,629
    
    
    
    77,749Total expenses
    
    
    185,649
    
    
    
    178,064
    
    
    
    549,304
    
    
    
    513,689INCOME FROM CONTINUING OPERATIONS BEFORE OTHER
INCOME AND EXPENSES
    
    
    44,559
    
    
    
    48,863
    
    
    
    146,683
    
    
    
    140,775OTHER:Equity in net loss of joint venture
    
    
    (264
    )
    
    
    (973
    )
    
    
    (1,186
    )
    
    
    (2,447
    )Interest income, net
    
    
    3,238
    
    
    
    3,011
    
    
    
    9,228
    
    
    
    8,383INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES
    
    
    47,533
    
    
    
    50,901
    
    
    
    154,725
    
    
    
    146,711INCOME TAX EXPENSE
    
    
    17,513
    
    
    
    18,720
    
    
    
    58,211
    
    
    
    55,180INCOME FROM CONTINUING OPERATIONS
    
    
    30,020
    
    
    
    32,181
    
    
    
    96,514
    
    
    
    91,531Income from discontinued operations before income taxes
    
    
    
    
    
    
    13,056
    
    
    
    
    
    
    
    14,311Income tax expense on discontinued operations
    
    
    
    
    
    
    7,581
    
    
    
    
    
    
    
    8,064Income from discontinued operations
    
    
    
    
    
    
    5,475
    
    
    
    
    
    
    
    6,247NET INCOME
    
    $
    30,020
    
    
    $
    37,656
    
    
    $
    96,514
    
    
    $
    97,778BASIC EARNINGS PER SHARE:Continuing operations
    
    $
    0.34
    
    
    $
    0.35
    
    
    $
    1.09
    
    
    $
    1.01Discontinued operations
    
    $
    
    
    
    $
    0.06
    
    
    $
    
    
    
    $
    0.07Total basic
    
    $
    0.34
    
    
    $
    0.41
    
    
    $
    1.09
    
    
    $
    1.08Weighted average number of shares
    
    
    87,437
    
    
    
    91,257
    
    
    
    88,472
    
    
    
    90,883DILUTED EARNINGS PER SHARE:Continuing operations
    
    $
    0.33
    
    
    $
    0.34
    
    
    $
    1.06
    
    
    $
    0.98Discontinued operations
    
    $
    
    
    
    $
    0.06
    
    
    $
    
    
    
    $
    0.07Total diluted
    
    $
    0.33
    
    
    $
    0.40
    
    
    $
    1.06
    
    
    $
    1.05Weighted average number of shares
    
    
    89,858
    
    
    
    94,199
    
    
    
    91,041
    
    
    
    93,533
  4




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##### 



CHECKFREE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
 Nine Months EndedMarch 31,2007
    
    
    2006OPERATING ACTIVITIES:Net income
    
    $
    96,514
    
    
    $
    97,778Adjustments to reconcile net income to cash provided
by (used in) operating activities:Equity in net loss of joint venture
    
    
    1,185
    
    
    
    2,447Depreciation and amortization
    
    
    64,628
    
    
    
    78,238Expenses related to data center
    
    
    1,021
    
    
    
    Deferred income tax benefit
    
    
    (13,903
    )
    
    
    (12,316
    )Equity-based compensation
    
    
    13,123
    
    
    
    12,794Vested warrants held by a customer
    
    
    10,950
    
    
    
    Gain from discontinued operations
    
    
    
    
    
    
    (12,821
    )Net (gain)/loss on disposition of property and equipment
    
    
    (280
    )
    
    
    310Changes in certain assets and liabilities (net of acquisitions):Settlement assets and obligations
    
    
    (965
    )
    
    
    (2,194
    )Accounts receivable
    
    
    (10,862
    )
    
    
    (2,543
    )Prepaid expenses and other
    
    
    5,082
    
    
    
    (3,927
    )Accounts payable
    
    
    (3,252
    )
    
    
    (347
    )Accrued liabilities and other
    
    
    (1,764
    )
    
    
    9,781Deferred revenue
    
    
    9,713
    
    
    
    5,601Net cash provided by operating activities
    
    
    171,190
    
    
    
    172,801INVESTING ACTIVITIES:Purchase of property and software
    
    
    (29,851
    )
    
    
    (33,817
    )Purchase of property & equipment for data center facility
    
    
    (11,032
    )
    
    
    Capitalization of software development costs
    
    
    (472
    )
    
    
    (449
    )Purchase of businesses, net of cash acquired
    
    
    
    
    
    
    (136,025
    )Proceeds from sale of business
    
    
    
    
    
    
    18,593Purchase of investmentsAvailable for sale
    
    
    (253,527
    )
    
    
    (265,097
    )Proceeds from sales and maturities of investments  Available for sale
    
    
    310,463
    
    
    
    336,618Purchase of other investments
    
    
    (1,922
    )
    
    
    (444
    )Proceeds from other investments
    
    
    63
    
    
    
    162Increase in restricted cash
    
    
    
    
    
    
    (451
    )Investment in joint venture
    
    
    
    
    
    
    (3,190
    )Change in other assets
    
    
    (1,618
    )
    
    
    (3,387
    )Net cash provided by (used in) investing activities
    
    
    12,104
    
    
    
    (87,487
    )FINANCING ACTIVITIES:Principal payments under capital lease
and other long-term obligations
    
    
    (1,000
    )
    
    
    (2,226
    )Proceeds from exercise of stock options
    
    
    4,420
    
    
    
    20,762Excess tax benefit from equity-based compensation
    
    
    856
    
    
    
    3,005Purchase of treasury stock
    
    
    (150,000
    )
    
    
    (7,170
    )Proceeds from associates stock purchase plan
    
    
    3,727
    
    
    
    3,220Proceeds from data center facility
    
    
    11,295
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (130,702
    )
    
    
    17,591Effect of exchange rate changes on cash and cash equivalents
    
    
    596
    
    
    
    (104
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    53,188
    
    
    
    102,801CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    173,083
    
    
    
    101,272End of period
    
    $
    226,271
    
    
    $
    204,073
  5




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##### 



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




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##### 



2. Investments
  March 31,
    
    
    June 30,2007
    
    
    2006Available-for-sale
    
    $
    374,780
    
    
    $
    378,678Other investments
    
    
    4,110
    
    
    
    1,329Restricted cash
    
    
    460
    
    
    
    453Less: amounts classified as cash equivalents
    
    
    (208,806
    )
    
    
    (157,371
    )Total investments
    
    $
    170,544
    
    
    $
    223,089
   3 Goodwill and Other Intangible Assets
  Electronic
    
    
    
    
    
    
    InvestmentCommerce
    
    
    Software
    
    
    Services
    
    
    TotalBalance as of June 30, 2006
    
    $
    659,705
    
    
    $
    62,730
    
    
    $
    12,156
    
    
    $
    734,591Goodwill adjustments
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    346Balance as of March 31, 2007
    
    $
    660,051
    
    
    $
    62,730
    
    
    $
    12,156
    
    
    $
    734,937
 7




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##### 



March 31,
    
    
    June 30,2007
    
    
    2006Capitalized software:Product technology from acquisitions and strategic agreement
    
    $
    167,108
    
    
    $
    167,108Internal development costs
    
    
    35,116
    
    
    
    32,970Total
    
    
    202,224
    
    
    
    200,078Less: accumulated amortization
    
    
    (198,079
    )
    
    
    (196,323
    )Capitalized software, net
    
    $
    4,145
    
    
    $
    3,755Strategic agreements:Strategic agreements (1)
    
    $
    744,423
    
    
    $
    744,423Less: accumulated amortization
    
    
    (657,125
    )
    
    
    (638,418
    )Strategic agreements, net
    
    $
    87,298
    
    
    $
    106,005Other intangible assets:Tradenames
    
    $
    52,226
    
    
    $
    53,176Customer base
    
    
    89,639
    
    
    
    89,639Current technology
    
    
    10,290
    
    
    
    10,290Money transfer licenses
    
    
    1,700
    
    
    
    1,700Convenants not to compete
    
    
    5,670
    
    
    
    5,670Total
    
    
    159,525
    
    
    
    160,475Less: accumulated amortization
    
    
    (109,509
    )
    
    
    (98,059
    )Other intangible assets, net
    
    $
    50,016
    
    
    $
    62,416
 
 (1)
    
    Strategic agreements primarily include certain entity-level covenants not to compete.  4. Discontinued Operations
  5. Common Stock
  8




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##### 



6. Warrants Held by a Customer
    7. Equity-Based Compensation
  9




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##### 



Stock Options
  Weighted Average
    
    
    
    
    
    
    AggregateNumber of
    
    
    Remaining
    
    
    Weighted Average
    
    
    IntrinsicOptions
    
    
    Contractual Term
    
    
    Exercise Price
    
    
    ValueOutstanding  Beginning of year
    
    
    3,604,750
    
    
    
    
    
    
    $
    28.84Granted
    
    
    126,584
    
    
    
    
    
    
    $
    37.27Exercised
    
    
    (268,428
    )
    
    
    
    
    
    $
    16.54
    
    
    $
    6,098,608Cancelled
    
    
    (140,697
    )
    
    
    
    
    
    $
    36.70Outstanding  End of period
    
    
    3,322,209
    
    
    4.2 years
    
    $
    29.81
    
    
    $
    24,092,300Options exercisable at end of period
    
    
    2,983,909
    
    
    4.2 years
    
    $
    29.50
    
    
    $
    22,647,869Weighted average per-share fair value of options granted during the period
    
    $
    20.56
  
    
    dividend yield of 0% in all periods;
    
    expected volatility of 50.2% and 52.4% using a weighted average of the historical,
implied and guideline company methodologies;
    
    risk-free interest rates of 4.9% and 4.3%; and
    
    expected lives of three to seven years.
   10




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##### 



Restricted Stock
  Number of
    
    Weighted
    
    AggregateRestricted
    
    Average Grant
    
    IntrinsicStock
    
    Date Fair Value
    
    ValueOutstanding  Beginning of year
    
    
    603,881
    
    
    $
    31.49Granted
    
    
    332,872
    
    
    $
    37.13Vested
    
    
    (86,075
    )
    
    $
    29.16
    
    
    $
    3,663,000Cancelled
    
    
    (75,698
    )
    
    $
    32.72Outstanding  End of period
    
    
    774,980
    
    
    $
    34.08
  8. Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006NumeratorIncome from continuing operations
    
    $
    30,020
    
    
    $
    32,181
    
    
    $
    96,514
    
    
    $
    91,531Income (loss) from discontinuing operations
    
    
    
    
    
    
    5,475
    
    
    
    
    
    
    
    6,247Numerator for basic and diluted earnings per share
    
    $
    30,020
    
    
    $
    37,656
    
    
    $
    96,514
    
    
    $
    97,778Denominator:Basic earnings per share  weighted average shares outstanding
    
    
    87,437
    
    
    
    91,257
    
    
    
    88,472
    
    
    
    90,883Effect of diluted securities:Stock options and stock awards
    
    
    2,421
    
    
    
    2,942
    
    
    
    2,569
    
    
    
    2,650Diluted earnings per share  weighted average shares
outstanding
    
    
    89,858
    
    
    
    94,199
    
    
    
    91,041
    
    
    
    93,533Basic earnings per shareContinuing operations
    
    $
    0.34
    
    
    $
    0.35
    
    
    $
    1.09
    
    
    $
    1.01Discontinued operations
    
    
    
    
    
    
    0.06
    
    
    
    
    
    
    
    0.07Net income
    
    $
    0.34
    
    
    $
    0.41
    
    
    $
    1.09
    
    
    $
    1.08Diluted earnings per shareContinuing operations
    
    $
    0.33
    
    
    $
    0.34
    
    
    $
    1.06
    
    
    $
    0.98Discontinued operations
    
    
    
    
    
    
    0.06
    
    
    
    
    
    
    
    0.07Net income
    
    $
    0.33
    
    
    $
    0.40
    
    
    $
    1.06
    
    
    $
    1.05
  11




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##### 



9. Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Income
    
    $
    30,020
    
    
    $
    37,656
    
    
    $
    96,514
    
    
    $
    97,778Other
comprehensive income (loss):Foreign currency translation adjustments
    
    
    (35
    )
    
    
    140
    
    
    
    505
    
    
    
    3Unrealized holding gains (losses) on
investments, net of tax
    
    
    233
    
    
    
    78
    
    
    
    1,137
    
    
    
    (149
    )Comprehensive income
    
    $
    30,218
    
    
    $
    37,874
    
    
    $
    98,156
    
    
    $
    97,632
 10. Supplemental Disclosure of Cash Flow Information (in thousands)
 Nine Months EndedMarch 31,2007
    
    
    2006Interest paid
    
    $
    414
    
    
    $
    63Income taxes paid
    
    $
    54,150
    
    
    $
    59,971Supplemental disclosure of non-cash investing and financing activities:Capital lease and other long-term asset additions
    
    $
    5,187
    
    
    $
    1,821Stock funding of 401(k) match
    
    $
    2,700
    
    
    $
    2,994Stock funding of Associate Stock Purchase Plan
    
    $
    4,644
    
    
    $
    4,068Data center facilities advances
    
    $
    8,712
    
    
    $
    
 11. Business Segments
  12




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##### 



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Electronic Commerce, gross
    
    $
    184,710
    
    
    $
    169,438
    
    
    $
    532,152
    
    
    $
    496,187Impact of warrants to a customer
    
    
    10,950
    
    
    
    
    
    
    
    10,950
    
    
    
    Electronic Commerce, net
    
    
    173,760
    
    
    
    169,438
    
    
    
    521,202
    
    
    
    496,187Investment Services
    
    
    30,743
    
    
    
    27,833
    
    
    
    90,002
    
    
    
    78,542Software
    
    
    25,705
    
    
    
    29,656
    
    
    
    84,783
    
    
    
    79,735Total Revenue
    
    $
    230,208
    
    
    $
    226,927
    
    
    $
    695,987
    
    
    $
    654,464Income from continuing operations before other income and expenses:Segment
operating income (loss):Electronic Commerce
    
    $
    66,079
    
    
    $
    59,739
    
    
    $
    187,116
    
    
    $
    192,282Investment Services
    
    
    6,742
    
    
    
    3,950
    
    
    
    17,981
    
    
    
    12,145Software
    
    
    3,373
    
    
    
    7,496
    
    
    
    17,242
    
    
    
    15,969Corporate
    
    
    (9,296
    )
    
    
    (10,291
    )
    
    
    (31,171
    )
    
    
    (29,795
    )Total
    
    
    66,898
    
    
    
    60,894
    
    
    
    191,168
    
    
    
    190,601Purchase accounting amortization
    
    
    (10,133
    )
    
    
    (11,254
    )
    
    
    (31,256
    )
    
    
    (46,451
    )Impact of warrants to a customer
    
    
    (10,950
    )
    
    
    
    
    
    
    (10,950
    )
    
    
    SFAS 123(R)  Stock options issued before July 1, 2004(1)
    
    
    (319
    )
    
    
    (777
    )
    
    
    (1,342
    )
    
    
    (3,375
    )Integration costs associated with acquisitions
    
    
    (937
    )
    
    
    
    
    
    
    (937
    )
    
    
    Income from continuing operations
before other income and expenses
    
    $
    44,559
    
    
    $
    48,863
    
    
    $
    146,683
    
    
    $
    140,775
 
 (1)
    
    At the beginning of our fiscal year 2005, we implemented a new long-term incentive
compensation philosophy, which significantly reduced overall participation and focused on
restricted stock with limited stock options. As a result, we recorded the cost of restricted
stock throughout our fiscal year 2005. In fiscal year 2006, we adopted SFAS 123(R), and are
consequently recording all long-term incentive grants, both restricted stock and stock
options, as an expense in our consolidated statement of operations. The adjustment for SFAS
123(R) represents the charge associated with the current vesting of options that were unvested
as of July 1, 2004 under our previous compensation philosophy, which were originally accounted
for utilizing APB 25. 12. Pending Acquisition
   13. Subsequent Events
  13




---



##### 



Skubella v. CheckFree Corporation, et al. Gattelaro v.
CheckFree Corporation, et al.
 14




---



##### 



Item 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations
 Overview
   
    
    Electronic Commerce;
    
    Investment Services; and
    
    Software.
   
    
    receive e-bills through the Internet;
    
    pay any bill  whether it arrives over the Internet or through traditional mail  to anyone; and
    
    make payments not related to bills  to anyone.
 SM
  Executive Summary
  
    
    The vesting of one million performance-based warrants held by a customer, resulting in a
non-cash charge of $11.0 million against revenue in the quarter ended March 31, 2007;
    
    The negative impact on interest-based revenue from our largest bank customer migrating
from a processing model that guarantees funds to our standard risk-based processing model
during the quarter ended March 31, 2006;
 15




---



##### 




    
    The expiration of our agreements with First Data Corporation (FDC) in August 2005 and
Microsoft Corporation (Microsoft) in December 2005, reducing year-over-year minimum-based
revenue by $21.0 million, and the related completion of the amortization of intangible
assets in September 2005 resulting from our September 2000 acquisition of MSFDC, L.L.C.
(TransPoint), eliminating $16.5 million of year-over-year amortization expense;
    
    Our acquisition of PhoneCharge, Inc. (PhoneCharge) for $100 million in cash in January
2006;
    
    Our purchase of substantially all of the assets of Aphelion, Inc. (Aphelion) for $18.1
million in cash in October 2005;
    
    Our purchase of substantially all of the assets of Integrated Decision Systems, Inc.
(IDS) for $18.0 million in cash in September 2005;
    
    Acquisition related integration costs of $0.9 million incurred during the quarter ended
March 31, 2007, related primarily to our April 2007 acquisition of Carreker;
    
    The divestiture of our M-Solutions business unit for $18.6 million in February 2006,
which was accounted for as a discontinued operation; and
    
    Slower than expected transaction growth in the quarters ended June 20, 2006 and September
30, 2006.
   Microsoft
    
    FDC
    
    TotalQuarter ended September 30, 2005
    
    $
    9,000
    
    
    $
    3,000
    
    
    $
    12,000Quarter ended December 31, 2005
    
    
    9,000
    
    
    
    
    
    
    
    9,000Total
    
    $
    18,000
    
    
    $
    3,000
    
    
    $
    21,000
  16




---



##### 



17




---



##### 



18




---



##### 



Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2007
    
    2006
    
    2007
    
    2006Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Expenses:Cost of processing, services and support
    
    
    42.6
    
    
    
    40.3
    
    
    
    40.9
    
    
    
    38.7Research and development
    
    
    11.2
    
    
    
    11.5
    
    
    
    11.3
    
    
    
    11.1Sales and marketing
    
    
    9.2
    
    
    
    9.7
    
    
    
    9.6
    
    
    
    9.4General and administrative
    
    
    8.2
    
    
    
    7.1
    
    
    
    7.8
    
    
    
    7.4Depreciation and amortization
    
    
    9.4
    
    
    
    9.8
    
    
    
    9.3
    
    
    
    11.9Total expenses
    
    
    80.6
    
    
    
    78.4
    
    
    
    78.9
    
    
    
    78.5Income from continuing operations
    
    
    19.4
    
    
    
    21.6
    
    
    
    21.1
    
    
    
    21.5Equity in net loss of joint venture
    
    
    (0.1
    )
    
    
    (0.4
    )
    
    
    (0.2
    )
    
    
    (0.4
    )Interest, net
    
    
    1.4
    
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.3Income from continuing operations before income taxes
    
    
    20.7
    
    
    
    22.5
    
    
    
    22.2
    
    
    
    22.4Income tax expense
    
    
    7.6
    
    
    
    8.2
    
    
    
    8.4
    
    
    
    8.4Income from continuing operations
    
    
    13.1
    
    
    
    14.3
    
    
    
    13.8
    
    
    
    14.0Earnings from discontinued operations before income taxes
    
    
    
    
    
    
    5.7
    
    
    
    
    
    
    
    2.2Income tax expense on discontinued operations
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    1.3Income from discontinued operations
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    0.9Net income
    
    
    13.1
    %
    
    
    16.7
    %
    
    
    13.8
    %
    
    
    14.9
    %
 Results of Operations
  Total Revenues (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    230,208
    
    
    $
    226,927
    
    
    $
    3,281
    
    
    
    1.4
    %Nine months ended
    
    $
    695,987
    
    
    $
    654,464
    
    
    $
    41,523
    
    
    
    6.3
    %
   19




---



##### 



Processing and Servicing (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    199,315
    
    
    $
    192,786
    
    
    $
    6,529
    
    
    
    3.4
    %Nine months ended
    
    $
    595,568
    
    
    $
    563,143
    
    
    $
    32,425
    
    
    
    5.8
    %
  20




---



##### 



License Fees (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    9,076
    
    
    $
    9,479
    
    
    $
    (403
    )
    
    
    -4.3
    %Nine months ended
    
    $
    30,471
    
    
    $
    24,859
    
    
    $
    5,612
    
    
    
    22.6
    %
  Maintenance Fees (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    11,857
    
    
    $
    11,078
    
    
    $
    779
    
    
    
    7.0
    %Nine months ended
    
    $
    35,311
    
    
    $
    30,707
    
    
    $
    4,604
    
    
    
    15.0
    %
  21




---



##### 



Professional Fees (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    9,960
    
    
    $
    13,584
    
    
    $
    (3,624
    )
    
    
    -26.7
    %Nine months ended
    
    $
    34,637
    
    
    $
    35,755
    
    
    $
    (1,118
    )
    
    
    -3.1
    %
  Cost of Processing, Servicing and Support (000s)
 March 31,2007
    
    2006%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    98,197
    
    
    
    42.7
    %
    
    $
    91,351
    
    
    
    40.3
    %Nine months ended
    
    $
    284,956
    
    
    
    40.9
    %
    
    $
    253,026
    
    
    
    38.7
    %
  22




---



##### 



Research and Development (000s)
 March 31,2007
    
    2006%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    25,870
    
    
    
    11.3
    %
    
    $
    26,038
    
    
    
    11.5
    %Nine months ended
    
    $
    78,931
    
    
    
    11.3
    %
    
    $
    72,865
    
    
    
    11.1
    %
  Sales and Marketing (000s)
 March 31,2007
    
    2006%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    21,085
    
    
    
    9.2
    %
    
    $
    22,107
    
    
    
    9.7
    %Nine months ended
    
    $
    66,630
    
    
    
    9.6
    %
    
    $
    61,272
    
    
    
    9.4
    %
  General and Administrative (000s)
 March 31,2007
    
    2006%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    18,980
    
    
    
    8.2
    %
    
    $
    16,219
    
    
    
    7.1
    %Nine months ended
    
    $
    54,158
    
    
    
    7.8
    %
    
    $
    48,777
    
    
    
    7.4
    %
  23




---



##### 



Depreciation and Amortization (000s)
 March 31,2007
    
    2006%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    21,517
    
    
    
    9.4
    %
    
    $
    22,349
    
    
    
    9.8
    %Nine months ended
    
    $
    64,629
    
    
    
    9.3
    %
    
    $
    77,749
    
    
    
    11.9
    %
   Equity in Net Loss of Joint Venture (000s)
 March 31,2007
    
    2006%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    (264
    )
    
    
    (0.1
    )%
    
    $
    (973
    )
    
    
    (0.4
    )%Nine months ended
    
    $
    (1,186
    )
    
    
    (0.2
    )%
    
    $
    (2,447
    )
    
    
    (0.4
    )%
  24




---



##### 



Net Interest (000s)
 March 31,2007
    
    
    2006%
    
    
    
    
    
    
    %$
    
    
    Revenue
    
    
    $
    
    
    RevenueThree months endedInterest Income
    
    $
    3,362
    
    
    
    
    
    
    $
    3,238Interest expense
    
    
    (124
    )
    
    
    
    
    
    
    (227
    )Net interest
    
    $
    3,238
    
    
    
    1.4
    %
    
    $
    3,011
    
    
    
    1.3
    %Nine months endedInterest Income
    
    $
    10,095
    
    
    
    
    
    
    $
    9,085Interest expense
    
    
    (867
    )
    
    
    
    
    
    
    (702
    )Net interest
    
    $
    9,228
    
    
    
    1.3
    %
    
    $
    8,383
    
    
    
    1.3
    %
    Income Tax Expense (000s)
 March 31,2007
    
    2006Effective
    
    
    
    
    
    Effective$
    
    Rate
    
    $
    
    RateThree months ended
    
    $
    17,513
    
    
    
    36.8
    %
    
    $
    18,720
    
    
    
    36.8
    %Nine months ended
    
    $
    58,211
    
    
    
    37.6
    %
    
    $
    55,180
    
    
    
    37.6
    %
   25




---



##### 



Earnings from Discontinued Operations (000s)
 March 31,2007
    
    2006%
    
    
    
    
    
    %$
    
    Revenue
    
    $
    
    RevenueThree months ended
    
    $
    
    
    
    
    
    
    
    $
    13,056
    
    
    
    5.8
    %Nine months ended
    
    $
    
    
    
    
    
    
    
    $
    14,311
    
    
    
    2.2
    %
  Income Tax Expense on Discontinued Operations (000s)
 March 31,2007
    
    2006Effective
    
    
    
    
    
    Effective$
    
    Rate
    
    $
    
    RateThree months ended
    
    $
    
    
    
    
    
    
    
    $
    7,581
    
    
    
    58.1
    %Nine months ended
    
    $
    
    
    
    
    
    
    
    $
    8,064
    
    
    
    56.3
    %
  Segment Information
   26




---



##### 



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Electronic
Commerce, gross
    
    $
    184,710
    
    
    $
    169,438
    
    
    $
    532,152
    
    
    $
    496,187Impact of warrants to a customer
    
    
    10,950
    
    
    
    
    
    
    
    10,950
    
    
    
    Electronic
Commerce, net
    
    
    173,760
    
    
    
    169,438
    
    
    
    521,202
    
    
    
    496,187Investment Services
    
    
    30,743
    
    
    
    27,833
    
    
    
    90,002
    
    
    
    78,542Software
    
    
    25,705
    
    
    
    29,656
    
    
    
    84,783
    
    
    
    79,735Total Revenue
    
    $
    230,208
    
    
    $
    226,927
    
    
    $
    695,987
    
    
    $
    654,464Income from continuing operations before other income and expenses:Segment
operating income (loss):Electronic Commerce
    
    $
    66,079
    
    
    $
    59,739
    
    
    $
    187,116
    
    
    $
    192,282Investment Services
    
    
    6,742
    
    
    
    3,950
    
    
    
    17,981
    
    
    
    12,145Software
    
    
    3,373
    
    
    
    7,496
    
    
    
    17,242
    
    
    
    15,969Corporate
    
    
    (9,296
    )
    
    
    (10,291
    )
    
    
    (31,171
    )
    
    
    (29,795
    )Purchase accounting amortization
    
    
    (10,133
    )
    
    
    (11,254
    )
    
    
    (31,256
    )
    
    
    (46,451
    )Impact of warrants to a customer
    
    
    (10,950
    )
    
    
    
    
    
    
    (10,950
    )
    
    
    SFAS 123(R)  Stock options issued before July 1, 2004(1)
    
    
    (319
    )
    
    
    (777
    )
    
    
    (1,342
    )
    
    
    (3,375
    )Integration costs associated with acquisitions
    
    
    (937
    )
    
    
    
    
    
    
    (937
    )
    
    
    Income from continuing operations before other income and expenses
    
    $
    44,559
    
    
    $
    48,863
    
    
    $
    146,683
    
    
    $
    140,775
 
 (1)
    
    At the beginning of our fiscal year 2005, we implemented a new long-term incentive
compensation philosophy, which significantly reduced overall participation and focused on
restricted stock with limited stock options. As a result, we recorded the cost of restricted
stock throughout our fiscal year 2005. In fiscal year 2006, we adopted SFAS 123(R), and are
consequently recording all long-term incentive grants, both restricted stock and stock
options, as an expense in our consolidated statement of operations. The adjustment for SFAS
123(R) represents the charge associated with the current vesting of options that were unvested
as of July 1, 2004 under our previous compensation philosophy, which were originally accounted
for utilizing APB 25. Electronic Commerce Segment Information:
 Electronic Commerce Revenues  Gross (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    184,710
    
    
    $
    169,438
    
    
    $
    15,272
    
    
    
    9.0
    %Nine months ended
    
    $
    532,152
    
    
    $
    496,187
    
    
    $
    35,965
    
    
    
    7.2
    %
   27




---



##### 



Three Months Ended3/31/07
    
    12/31/06
    
    9/30/06
    
    6/30/06
    
    3/31/06(in millions, except revenue per transaction and revenueper e-bill delivered)TransactionsCSP:Revenue
    
    $
    122.5
    
    
    $
    116.8
    
    
    $
    114.2
    
    
    $
    111.8
    
    
    $
    113.8Revenue per transaction
    
    $
    0.45
    
    
    $
    0.46
    
    
    $
    0.48
    
    
    $
    0.49
    
    
    $
    0.52Transactions processed
    
    
    269.6
    
    
    
    251.5
    
    
    
    235.7
    
    
    
    227.5
    
    
    
    217.3Non-CSP:Revenue
    
    $
    39.6
    
    
    $
    38.3
    
    
    $
    36.2
    
    
    $
    34.4
    
    
    $
    36.0Revenue per transaction
    
    $
    0.56
    
    
    $
    0.54
    
    
    $
    0.48
    
    
    $
    0.46
    
    
    $
    0.47Transactions processed
    
    
    71.2
    
    
    
    70.5
    
    
    
    76.0
    
    
    
    74.7
    
    
    
    76.0Total Transactions:Revenue
    
    $
    162.1
    
    
    $
    155.1
    
    
    $
    150.4
    
    
    $
    146.2
    
    
    $
    149.8Transactions processed
    
    
    340.9
    
    
    
    322.0
    
    
    
    311.7
    
    
    
    302.2
    
    
    
    293.3e-bill DeliveryRevenue
    
    $
    9.8
    
    
    $
    8.7
    
    
    $
    8.5
    
    
    $
    8.0
    
    
    $
    7.4Revenue per e-bill delivered
    
    $
    0.17
    
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16e-bills delivered
    
    
    58.7
    
    
    
    54.9
    
    
    
    51.8
    
    
    
    50.0
    
    
    
    46.7Other Electronic Commerce(1)Revenue
    
    $
    12.8
    
    
    $
    12.6
    
    
    $
    12.1
    
    
    $
    12.3
    
    
    $
    12.2Other Performance MetricsActive subscribers(2)
    
    
    11.6
    
    
    
    11.1
    
    
    
    10.5
    
    
    
    10.0
    
    
    
    9.7
 
 (1)
    
    Other Electronic Commerce includes our Health & Fitness products,
ancillary revenue sources such as implementation and consulting services.(2)
    
    Active refers to subscribers who have viewed or paid a bill in the last 90
days at a Consumer Service Provider that out-sources essentially all of its electronic billing and
payment (EBP) functions to CheckFree.  28




---



##### 



29




---



##### 



Electronic Commerce Operating Income (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    66,079
    
    
    $
    59,739
    
    
    $
    6,340
    
    
    
    10.6
    %Nine months ended
    
    $
    187,116
    
    
    $
    192,282
    
    
    $
    (5,166
    )
    
    
    -2.7
    %
   Investment Services Segment Information:
 Investment Services Revenues (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    30,743
    
    
    $
    27,833
    
    
    $
    2,910
    
    
    
    10.5
    %Nine months ended
    
    $
    90,002
    
    
    $
    78,542
    
    
    $
    11,460
    
    
    
    14.6
    %
  Investment Services Operating Income (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    6,742
    
    
    $
    3,950
    
    
    $
    2,792
    
    
    
    70.7
    %Nine months ended
    
    $
    17,981
    
    
    $
    12,145
    
    
    $
    5,836
    
    
    
    48.1
    %
  30




---



##### 



SM SM
 Software Segment Information:
 Software Revenues (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    25,705
    
    
    $
    29,656
    
    
    $
    (3,951
    )
    
    
    -13.3
    %Nine months ended
    
    $
    84,783
    
    
    $
    79,735
    
    
    $
    5,048
    
    
    
    6.3
    %
   Software Operating Income (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    3,373
    
    
    $
    7,496
    
    
    $
    (4,123
    )
    
    
    -55.0
    %Nine months ended
    
    $
    17,242
    
    
    $
    15,969
    
    
    $
    1,273
    
    
    
    8.0
    %
   Corporate Segment Information:
 Corporate Operating Loss (000s)
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    (9,296
    )
    
    $
    (10,291
    )
    
    $
    995
    
    
    
    -9.7
    %Nine months ended
    
    $
    (31,171
    )
    
    $
    (29,795
    )
    
    $
    (1,376
    )
    
    
    4.6
    %
  31




---



##### 



Impact of Warrants Issued to a Customer (000s):
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    (10,950
    )
    
    $
    
    
    
    $
    (10,950
    )
    
    
    -100.0
    %Nine months ended
    
    $
    (10,950
    )
    
    $
    
    
    
    $
    (10,950
    )
    
    
    -100.0
    %
  Purchase Accounting Amortization (000s):
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    10,133
    
    
    $
    11,254
    
    
    $
    (1,121
    )
    
    
    -10.0
    %Nine months ended
    
    $
    31,256
    
    
    $
    46,451
    
    
    $
    (15,195
    )
    
    
    -32.7
    %
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Electronic Commerce
    
    $
    8,865
    
    
    $
    9,110
    
    
    $
    27,359
    
    
    $
    40,037Investment Services
    
    
    484
    
    
    
    547
    
    
    
    1,452
    
    
    
    1,508Software
    
    
    784
    
    
    
    1,597
    
    
    
    2,445
    
    
    
    4,906Total
    
    $
    10,133
    
    
    $
    11,254
    
    
    $
    31,256
    
    
    $
    46,451
 32




---



##### 



SFAS 123(R)  Options Issued Before July 1, 2004 (000s):
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    319
    
    
    $
    777
    
    
    $
    (458
    )
    
    
    -58.9
    %Nine months ended
    
    $
    1,342
    
    
    $
    3,375
    
    
    $
    (2,033
    )
    
    
    -60.2
    %
  Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Electronic Commerce
    
    $
    232
    
    
    $
    563
    
    
    $
    976
    
    
    $
    2,449Investment Services
    
    
    33
    
    
    
    80
    
    
    
    138
    
    
    
    347Software
    
    
    14
    
    
    
    35
    
    
    
    59
    
    
    
    150Corporate
    
    
    40
    
    
    
    99
    
    
    
    169
    
    
    
    429Total
    
    $
    319
    
    
    $
    777
    
    
    $
    1,342
    
    
    $
    3,375
 Integration costs associated with acquisitions (000s):
 March 31,
    
    Change2007
    
    2006
    
    $
    
    %Three months ended
    
    $
    937
    
    
    $
    
    
    
    $
    937
    
    
    
    Nine months ended
    
    $
    937
    
    
    $
    
    
    
    $
    937
    
    
    
    
  33




---



##### 



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Electronic Commerce
    
    $
    35
    
    
    $
    
    
    
    $
    35
    
    
    $
    Software
    
    
    902
    
    
    
    
    
    
    
    902
    
    
    
    Total
    
    $
    937
    
    
    $
    
    
    
    $
    937
    
    
    $
    
 Cyclicality and Seasonality
    Inflation
  Liquidity and Capital Resources
  Three
    
    
    NineMonths
    
    
    MonthsEnded
    
    
    EndedMarch 31, 2007(in thousands)Net cash provided by operating activities
    
    $
    64,708
    
    
    $
    171,190Net cash provided by (used in) investing activities
    
    
    (3,461
    )
    
    
    12,104Net cash provided by (used in) financing activities
    
    
    11,481
    
    
    
    (130,702
    )Effect of exchange rates
    
    
    (165
    )
    
    
    596Net increase in cash and cash equivalents
    
    $
    72,563
    
    
    $
    53,188
  34




---



##### 



Contractual Obligations
  Use of Non-GAAP Financial Information
  35




---



##### 



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)
    
    
    (in thousands)Net cash provided by operating activities
    
    $
    64,708
    
    
    $
    72,539
    
    
    $
    171,190
    
    
    $
    172,801Excluding : Net change in settlement accounts
    
    
    1,057
    
    
    
    (68
    )
    
    
    965
    
    
    
    2,194Less: Capital expenditures
    
    
    (15,348
    )
    
    
    (10,175
    )
    
    
    (40,883
    )
    
    
    (33,817
    )Plus: Data Center Reimbursements
    
    
    7,105
    
    
    
    
    
    
    
    11,295
    
    
    
    Free cash flow
    
    $
    57,522
    
    
    $
    62,296
    
    
    $
    142,567
    
    
    $
    141,178
   Recent Accounting Pronouncements
  36




---



##### 



Recent and Pending Acquisitions
    Subsequent Events
 Skubella v. CheckFree Corporation, et al. Gattelaro v. CheckFree Corporation, et al.
 37




---



##### 



Application of Critical Accounting Policies
  Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
  Item 3. Quantitative and Qualitative Disclosures About Market Risk
     38




---



##### 



Item 4. Controls and Procedures
 Disclosure Controls and Procedures
   Internal Controls.
 39




---



##### 



Part II. Other Information
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  (d)(c)
    
    Approximate DollarTotal Number of
    
    Value of Share that(a)
    
    (b)
    
    Shares Purchased
    
    May Yet BeTotal Number
    
    Average
    
    as Part of Publicly
    
    Purchased Underof Shares
    
    Price Paid
    
    Announced Plans or
    
    the Plans orPeriod
    
    Purchased
    
    per Share
    
    Programs
    
    ProgramsJanuary 1, 2007 to January 31, 2007
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    $
    50,000,000February 1, 2007 to February 28, 2007
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    $
    50,000,000March 1, 2007 to March 31, 2007
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    $
    50,000,000Total
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    50,000,000
 40




---



##### 



Item 6.
Exhibits
 Exhibit
    
    ExhibitNumber
    
    Description2
    
    Agreement and Plan of Merger, dated February 13, 2007, between CheckFree
Corporation, CF Oregon, Inc. and Corillian Corporation (Reference is made to Exhibit 2 to
the Companys Current Report on Form 8-K dated February 13, 2007, filed with the
Securities and Exchange Commission on February 14, 2007, and incorporated herein by
reference).3
    
    Amended and Restated By-Laws of CheckFree Corporation, as of February 8, 2007
(Reference is made to Exhibit 3 to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 2006, filed with the Securities and Exchange
Commission on February 8, 2007, and incorporated herein by reference).10(a)*
    
    CheckFree Services Corporation 401(K) Plan Adoption Agreement.10(b)
    
    Letter Agreement, dated February 16, 2007, between Matthew S. Lewis and CheckFree
Services Corporation (Reference is made to Exhibit 10(a) to the Companys Current Report on
Form 8-K dated February 15, 2007, filed with the Securities and Exchange Commission on
February 22, 2007, and incorporated herein by reference).31(a)*
    
    Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Chief
Executive Officer.31(b)*
    
    Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Chief
Financial Officer.32(a)+
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer.32(b)+
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer.
 
   41




---



##### 



Signatures
  CHECKFREE CORPORATIONDate:
May 10, 2007
    
    By:
    
    /s/ David E. Mangum

David E. Mangum, Executive Vice President andChief Financial Officer*
(Principal Financial Officer)Date:
May 10, 2007
    
    By:
    
    /s/ Samuel R. Schwartz

Samuel R. Schwartz, Senior Vice President,Controller, and Chief Accounting Officer*(Principal Accounting Officer)
 
 *
    
    In their capacities as Executive Vice President and Chief
Financial Officer, and as Senior
Vice President, Controller, and Chief Accounting Officer, Mr. Mangum and Mr. Schwartz are each
duly authorized to sign this report on behalf of the Registrant.




---



##### 



EXHIBIT INDEX
 Exhibit
    
    ExhibitNumber
    
    Description2
    
    Agreement and Plan of Merger, dated February 13, 2007, between CheckFree
Corporation, CF Oregon, Inc. and Corillian Corporation (Reference is made to Exhibit 2 to
the Companys Current Report on Form 8-K dated February 13, 2007, filed with the
Securities and Exchange Commission on February 14, 2007, and incorporated herein by
reference).3
    
    Amended and Restated By-Laws of CheckFree Corporation, as of February 8, 2007
(Reference is made to Exhibit 3 to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 2006, filed with the Securities and Exchange
Commission on February 8, 2007, and incorporated herein by reference).10(a)*
    
    CheckFree Services Corporation 401(K) Plan Adoption Agreement.10(b)
    
    Letter Agreement, dated February 16, 2007, between Matthew S. Lewis and CheckFree
Services Corporation (Reference is made to Exhibit 10(a) to the Companys Current Report on
Form 8-K dated February 15, 2007, filed with the Securities and Exchange Commission on
February 22, 2007, and incorporated herein by reference).31(a)*
    
    Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Chief
Executive Officer.31(b)*
    
    Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Chief
Financial Officer.32(a)+
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer.32(b)+
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer.
 
 *
    
    Filed with this report.+
    
    Furnished with this report.