##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For The Fiscal Year Ended June 30, 2005


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




|                                                                |  |                                                                 
|--------------------------------------------------------------- |  | ----------------------------------------------------------------
|Securities registered pursuant to Section 12(b) of the
    Act: |  | None                                                            
|Securities registered pursuant to Section 12(g) of the
    Act: |  | Common Stock, $.01 par value
    Preferred Stock Purchase Rights

þ o


o


þ o


o






DOCUMENTS INCORPORATED BY REFERENCE












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|                                                                       |  |                                                                                                                             |  |      |     | 
|---------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                       |  |                                                                                                                             |  | Page |    
|                                                                       |  |                                                                                                                             |  |      |    
|Part I                                                                
|Item 1.                                                                |  | Business                                                                                                                    |  |      | 4   | 
|Item 2.                                                                |  | Properties                                                                                                                  |  |      | 24  | 
|Item 3.                                                                |  | Legal Proceedings                                                                                                           |  |      | 24  | 
|Item 4.                                                                |  | Submission of Matters to a Vote of Security
    Holders                                                                     |  |      | 24  | 
|Part II                                                               
|Item 5.                                                                |  | Market for the Registrants Common
    Equity and Related Stockholder Matters and Issuer Purchases of
    Equity Securities |  |      | 25  | 
|Item 6.                                                                |  | Selected Financial Data                                                                                                     |  |      | 26  | 
|Item 7.                                                                |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                   |  |      | 28  | 
|Item 7A.                                                               |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                              |  |      | 58  | 
|Item 8.                                                                |  | Financial Statements and Supplementary
    Data                                                                             |  |      | 58  | 
|Item 9.                                                                |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                                    |  |      | 98  | 
|Item 9A.                                                               |  | Controls and Procedures                                                                                                     |  |      | 98  | 
|Item 9B.                                                               |  | Other Information                                                                                                           |  |      | 98  | 
|Part III                                                              
|Item 10.                                                               |  | Directors and Executive Officers of the
    Registrant                                                                      |  |      | 99  | 
|Item 11.                                                               |  | Executive Compensation                                                                                                      |  |      | 99  | 
|Item 12.                                                               |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                          |  |      | 99  | 
|Item 13.                                                               |  | Certain Relationships and Related
    Transactions                                                                          |  |      | 99  | 
|Item 14.                                                               |  | Principal Accountant Fees and Services                                                                                      |  |      | 99  | 
|Part IV                                                               
|Item 15.                                                               |  | Exhibits and Financial Statement
    Schedules                                                                              |  |      | 100 | 
|                                                                       |  | Signatures                                                                                                                  |  |      | 105 | 
|EX-10.(A) CHECKFREE SERVICES CORPORATION 401(K) PLAN                  
|EX-10.(N) NONQUALIFIED DEFERRED COMPENSATION PLAN                     
|EX-10.(O) 1ST AMENDMENT TO THE NONQUALIFIED DEFERRED COMPENSATION PLAN
|EX-10.(P) 2ND AMENDMENT TO THE NONQUALIFIED DEFERRED COMPENSATION PLAN
|EX-21 SUBSIDIARIES OF THE COMPANY                                     
|EX-23 CONSENT OF DELOITTE & TOUCHE LLP                                
|EX-24 POWER OF ATTORNEY                                               
|EX-31.(A) SECTION 302 CERTIFICATION OF THE CEO                        
|EX-31.(B) SECTION 302 CERTIFICATION OF THE CFO                        
|EX-32.(A) SECTION 906 CERTIFICATION OF THE CEO                        
|EX-32.(B) SECTION 906 CERTIFICATION OF THE CFO                        



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Part I







|        |          
|------- | ---------
|Item 1. | Business.

All references to we, us,
our, CheckFree or the
Company in this Annual Report on Form 10-K mean
CheckFree Corporation and all entities owned or controlled by
CheckFree Corporation, except where it is made clear that the
term only means the parent company.


We own many trademarks and service marks. This Annual Report
on Form 10-K contains trade dress, trade names and
trademarks of other companies. Use or display of other
parties trademarks, trade dress or trade names is not
intended to, and does not, imply a relationship with the
trademark or trade dress owner.


Overview






sm




Electronic Commerce Division


Introduction.




| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | 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.                                                     



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msn.com, www.mycheckfree.com.


Industry Background.




Products and Services. sm sm




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Electronic Billing or e-Bill Services. As of
    June 30, 2005, consumers could view 312 different e-bills
    through CSP websites or directly at our website. The following
    billers are some of our largest electronic billing customers, as
    determined by the number of consumers viewing and paying their
    e-bills: Bank of America Credit Card, JC Penney Card Services,
    SBC Communications, Sams Club Credit, Macys, Home
    Depot Consumer Accounts, Lowes Consumer Credit Card,
    Sprint PCS, Verizon Corporation and Texaco. Actual e-bills
    delivered in the fourth quarter ended June 30, 2005,
    approached 41 million, which is an increase of 11% over the
    approximately 36.8 million e-bills distributed in the third
    quarter ended March 31, 2005, and an increase of more than
    58% over the approximately 25.9 million e-bills delivered
    in the fourth quarter ended June 30, 2004. For the
    year, we delivered about 140 million e-bills.
|
| |  | Electronic Payment or the CheckFree
    PayAnyonesmService. Our PayAnyone service allows consumers to
    literally pay anyone electronically. Once a consumer has
    accessed the system, he or she can either elect to pay an
    electronic bill delivered by us or can instruct the system to
    pay any individual or company within the United States. We
    complete this payment request either                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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| |  |                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | electronically, using the Federal Reserves Automated
    Clearing House (ACH), or in some instances other
    electronic methods such as Visa ePay, or by issuing a paper
    check or draft.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Automated Clearing House. The Federal Reserves ACH
    is the primary batch-oriented electronic funds transfer system
    financial services organizations use to move funds
    electronically through the banking system. We access the ACH
    through an agreement with SunTrust Bank. Additional information
    on the ACH can be found at the Federal Reserve Commissions
    website at www.federalreserve.gov.                                                                       
|
| |  | Paper Checks or Drafts. When we are unable to move the
    funds electronically, we issue a paper check, drawn on our trust
    account, or a paper draft, drawn on the consumers bank
    account.                                                                                                                                                                                                                                                                                            
|
| |  | Payment Method Selection. Our Genesis system contains
    patented technology that determines the preferred method of
    payment to balance processing costs, operational efficiencies
    and risk of loss. We have been able to manage our risk of loss
    by using this technology to adjust the mix of electronic and
    paper transactions in individual cases such that, overall, we
    have not incurred losses in excess of 0.41% of our revenues in
    any of the past five years.
|
| |  | Walk-in Payment Services. Through our acquisition of
    American Payment Systems, Inc. (APS) in June 2004,
    we are able to offer walk-in payment services at more than
    10,000 retail and agent locations throughout the United States.
    The acquisition combines the APS footprint with our current
    electronic billing and payment infrastructure to offer billing
    organizations a wider number of payment processing services from
    a single company.                  

Usage Metrics.


The CheckFree Advantage.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Scalable Genesis Platform. The Genesis platform is
    an open infrastructure created to process e-bills and payments.
    Prior to the acquisition of APS, all transaction processing for
    all consumers using our services was performed on the Genesis
    platform, enabling us to improve our economies of scale.                                                                                                                                                                                                                                                                                      
|
| |  | Sigma Quality. In fiscal year 2000, we began an
    internal Sigma quality program, which ties employee performance
    evaluations and compensation to the achievement of process and
    system improvements which drive customer satisfaction. The
    program links key drivers of satisfaction to an internal set of
    metrics of system availability and payment accuracy and
    timeliness, to take our quality performance to 99.9%, or
    4.6 Sigma. As a result of our Sigma quality program, in
    2003, we voluntarily raised our service level agreements across
    our entire base of CSPs.
|
| |  | Electronic Payment Rate. Electronic payments are
    more efficient than paper payments, less expensive to process
    initially, result in fewer errors and result in fewer customer
    inquiries. As of June 30, 2005, we completed over 84% of
    our payments electronically. This compares to 79% as of
    June 30, 2004. In addition to sending a large majority of
    our payments electronically, we also have developed a process by
    which we include with the payment additional information the
    receiving                                                                               

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | merchant has given us about how its payment should be
    transmitted. We have established connectivity with thousands of
    merchants to provide this additional information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Experienced Customer Care. We have approximately
    800 trained, experienced customer care staff located in
    facilities in Phoenix, Arizona; Dublin, Ohio; Aurora, Illinois;
    and Wallingford, Connecticut. The level and types of customer
    care services we provide vary depending upon the customers
    or CSPs requirements. We provide both first- and
    second-tier support. When we provide first-tier customer care,
    we handle all inbound customer calls, in some cases under the
    CSPs name. When we provide second-tier customer support,
    we provide payment research and support, and the CSP handles its
    own inbound customer calls. To maintain our customer care
    standards, we employ extensive internal monitoring systems,
    conduct ongoing customer surveys and provide comprehensive
    training programs.
|
| |  | Real-Time Payment Processing for Walk-In Payments.We offer billers a real-time payment
    solution, meaning that billers can receive customer payment
    information as soon as payments are made at one of our retail
    agent locations, assuring that unnecessary service shut-offs of
    customers who pay their bills at the last minute are avoided.
    Real-time payments also have the advantage of minimizing calls
    to a billers call center by providing the billers
    customer with the confidence that the biller has already
    received his payment even before the customer leaves the agent
    location.                                                                                                                                                                                                                           

Our Business Strategy.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Drive increased adoption of electronic commerce services
    by consumers. We believe that consumers will move their
    financial transactions from traditional paper-based to
    electronic methods if they have an easy-to-access, easy-to-use,
    secure, and cost-effective method for receiving and paying their
    bills electronically. To drive this transition, we make our
    e-bill and payment services available directly, through CSPs and
    through biller sites so that e-bills are available wherever
    consumers feel most comfortable viewing and paying them. We also
    price our services to our customers in such a way as to
    facilitate their offering electronic billing and payment to a
    broad array of consumers. CSPs and billers pay us based on the
    number of their consumers enabled to use our system, the number
    of transactions we process, or some combination of both. The
    price charged for each consumer or each transaction is
    negotiated individually with each CSP and may vary depending on:



| |   |                                                
| | - | -----------------------------------------------
| |  | the services provided to the consumers;        
|
| |  | the nature of the transactions processed; and  
|
| |  | the volume of consumers, transactions, or both.





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continue to improve operational efficiency and
    effectiveness. We believe that as our business grows and
    the number of transactions we process increases, we will be able
    to take advantage of operating efficiencies associated with
    increased volumes, thereby reducing our unit costs. Our Sigma
    quality program, high electronic rate, consolidation of
    platforms, the scalability of the Genesis system and
    high-quality customer care centers all help us achieve greater
    efficiencies.
|
| |  | Drive new forms of electronic commerce services.
    We intend to leverage our infrastructure and distribution
    channels to address the requirements of consumers and businesses
    in new electronic commerce applications. For example, through
    our purchase of APS, we now offer a more complete suite of
    payment services to meet the needs of consumers and billers. In
    addition, our core payment and processing network can manage
    person-to-person and small business payments.                 

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Technology, Research and Development.






Sales, Marketing and Distribution.




Competition.






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Other Products and Services.


Acquisitions.


Investment Services Division


Introduction.






Industry Background.


Products and Services.




| |   |                                          
| | - | -----------------------------------------
| |  | proposal generation;                     
|
| |  | account opening and trading capabilities;
|
| |  | performance measurement and reporting;   
|
| |  | decision support tools;                  
|
| |  | tax lot accounting;                      
|
| |  | multiple strategy portfolios;            
|
| |  | straight through processing; and         
|
| |  | Depository Trust Corporation interfacing.



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Technology. tm


Sales, Marketing and Distribution.


Competition.


Other Products and Services.


Acquisitions.


Software Division






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Bank Payment. The Software Division provides ACH
    and account reconciliation software and services to banks and
    bank holding companies. ACH is the primary batch-oriented
    electronic funds transfer system financial services
    organizations use to move funds electronically through the
    banking system. Approximately 75% of the nations top 50
    ACH originators use our solutions for ACH processing, and more
    than two-thirds of the nations ten billion ACH payments
    are processed each year through institutions using our software
    systems.                                                                                                                                                                                                                                               
|
| |   | Our ACH software is marketed under the product name CheckFree
    PEP+tm
    (Paperless Entry Processing System). PEP+ is an online,
    real-time system that enables the originating and receiving of
    payments through the ACH system. These electronic transactions
    are substitutes for paper checks and are typically used for
    recurring payments such as direct deposit payroll payments;
    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. Our
    CheckFree PEP+
    reACHtm
    product, that can be used with our PEP+ software, allows
    returned checks, checks at the point-of-sale, and checks sent to
    a lockbox to be converted to electronic payments.

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our account reconciliation software is marketed under the
    product name CheckFree ARP/
    SMStm
    (Account Reconciliation Package/Service Management System).
    ARP/SMS is an online, real-time positive pay and reconcilement
    system. We also provide add-on positive pay modules that enable
    banks/financial institutions to reduce exposure to check fraud
    and manage electronic check conversion.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Operational Risk Management/Reconciliation. The
    Software Division provides software that enables organizations
    to reduce operational risk and perform automated reconciliation.
    Banks, bank holding companies, securities and insurance firms,
    corporations, and government agencies use our operational risk
    management and reconciliation products and services. Our
    reconciliation solutions are marketed under the CheckFree
    RECON-Plustm
    and CheckFree RECON
    Securitiestm
    brands. These systems reconcile high volumes of complex
    transactions that are spread across multiple internal and
    external systems and include securities transaction processing,
    automated deposit verification, consolidated bank account
    reconciliation and cash mobilization, and improved cash control.
    In fiscal 2002, we released RECON-Plus
    Frontiertm,
    a multi-tier reconciliation system that operates over the
    Internet. In April 2005, we acquired Accurate, whose NXG
    software provides a comprehensive, enterprise-wide operational
    control framework and system for reconciliation, exception
    management, workflow and business intelligence.
|
| |  | Financial Messaging/Corporate Actions. The
    Software Division provides software that enables the management,
    monitoring and measurement of the flow of securities and cash
    transactions across a local or global enterprise. Securities
    firms, insurance companies, custodian banks, brokerage firms and
    asset managers use our financial messaging and corporate actions
    products and services. These products are marketed under the
    names CheckFree TradeFlow
    TPMtm,
    CheckFree Message
    Brokertm,
    CheckFree Message
    Workstationtm
    and CheckFree
    eVenttm.
    In June 2005, we released TradeFlow TPM
    2.0tm,
    a system that enables securities firms to manage transaction
    processing across an enterprise via a single, integrated
    platform.                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Compliance. The Software Division provides
    solutions that enable banks, bank holding companies, securities
    and insurance firms, corporations, and government agencies to
    maintain compliance with federal and state regulations. These
    products support unclaimed property management and government
    tax-related compliance reporting. Our compliance software
    solutions are marketed under the names CheckFree
    APECStm,
    CheckFree
    IRStm,
    CheckFree
    LCRtm
    and CheckFree
    RRStm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Electronic Billing.CheckFree i-Solutions software
    enables billers to create online bills and statements and
    distribute them to their customers for viewing and payment. Our
    software and outsourced application hosting services provide
    e-bill and e-statement creation and delivery, e-bill payment
    transaction management, security, tracking and history, online
    marketing from the biller to its customers, and customer care.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Licenses.


Maintenance, Support and Professional Services.


Sales, Marketing and Distribution.


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Competition.




Acquisitions.




Government Regulation






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Intellectual Property Rights




Employees




Business Risks




Risks Related to Our Business


The market for our electronic commerce services is evolving
and may not continue to develop or grow rapidly enough for us to
sustain profitability.




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Our future profitability depends upon our ability to
implement our strategy successfully to increase adoption of
electronic billing and payment methods.






| |   |                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |  | drive consumer awareness of electronic billing and payment;                                                                         
|
| |  | encourage consumers to sign up for and use our electronic
    billing and payment services offered by our distribution
    partners;
|
| |  | address consumer concerns regarding privacy and security of
    their data in using electronic billing and payment services;        
|
| |  | continue to refine our infrastructure to handle seamless
    processing of transactions;                                            
|
| |  | continue to develop state-of-the-art, easy-to-use
    technology; and                                                               
|
| |  | increase the number of bills we can present and pay
    electronically.                                                             







Competitive pressures we face may have a material adverse
effect on us.








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Security and privacy breaches in our electronic transactions
may damage customer relations and inhibit our growth.






| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | cause our customers to lose confidence in our services;        
|
| |  | deter consumers from using our services;                       
|
| |  | harm our reputation;                                           
|
| |  | expose us to liability;                                        
|
| |  | increase our expenses from potential remediation costs; and    
|
| |  | decrease market acceptance of electronic commerce transactions.





We rely on third parties to distribute our electronic
commerce and investment services products, which may not result
in widespread adoption.




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Consolidation in the financial services industry may
adversely affect our ability to sell our electronic commerce
services, investment services and software.






| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | current and potential customers;                                                                                                                                                                                             
|
| |  | business opportunities, if combined financial services
    organizations were to determine that it is more efficient to
    develop in-house services similar to ours or offer our
    competitors products or services; and
|
| |  | revenue, if combined financial services organizations were able
    to negotiate a greater volume discount for, or discontinue the
    use of, our products and services.                                                    

One customer accounts for a significant percentage of our
consolidated revenues.




If we do not successfully renew or renegotiate our agreements
with our customers, our business may suffer.






Our future profitability depends on a decrease in the cost of
processing payment transactions.




The transactions we process expose us to fraud and credit
risks.




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| |   |                     
| | - | --------------------
| |  | insufficient funds; 
|
| |  | unauthorized use;   
|
| |  | stop payment orders;
|
| |  | payment disputes;   
|
| |  | closed accounts;    
|
| |  | theft;              
|
| |  | frozen accounts; and
|
| |  | fraud.              





We could experience significant losses due to our reliance on
agents for walk-in payment services.




We may experience breakdowns in our processing systems that
could damage customer relations and expose us to liability.






| |   |                            
| | - | ---------------------------
| |  | fire;                      
|
| |  | natural disaster;          
|
| |  | unauthorized entry;        
|
| |  | power loss;                
|
| |  | telecommunications failure;
|
| |  | computer viruses;          
|
| |  | terrorist acts; and        
|
| |  | war.                       

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We may experience software defects, computer viruses and
development delays, damaging customer relations, decreasing our
potential profitability and exposing us to liability.






| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | additional development costs;                                                     
|
| |  | diversion of technical and other resources from our other
    development efforts;
|
| |  | loss of credibility with current or potential customers;                          
|
| |  | harm to our reputation; or                                                        
|
| |  | exposure to liability claims.                                                     



We experience seasonal and other fluctuations in our revenues
causing our operating results to fluctuate.




If we do not respond to rapid technological change or changes
in industry standards, our services could become obsolete and we
could lose our customers.




We may be unable to protect our intellectual property and
technology, permitting competitors to duplicate our products and
services.




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Our business could become subject to increased government
regulation, which could make our business more expensive to
operate.






19



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##### Table of Contents



Our walk-in payment business is subject to government
regulation and any violation of such regulations could result in
civil or criminal penalties or a prohibition against providing
money transmitter services in particular jurisdictions.




A weak economy could have a materially adverse impact on our
business.




Our quarterly operating results fluctuate and may not
accurately predict our future performance.






| |   |                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in our pricing policies or those of our competitors;                                                                                                                   
|
| |  | loss of customers due to competitors or in-house solutions;                                                                                                                    
|
| |  | relative rates of acquisition of new customers;                                                                                                                                
|
| |  | seasonal patterns;                                                                                                                                                             
|
| |  | delays in the introduction of new or enhanced services, software
    and related products by us or our competitors or market
    acceptance of these products and services; and
|
| |  | other changes in operating expenses, personnel and general
    economic conditions.                                                                                            



We have not consistently operated profitably in the past and
may experience net losses in the future.






| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | a loss from operations of $535.5 million and net loss of
    $441.0 million for the fiscal year ended June 30,
    2002; and
|
| |  | a loss from operations of $73.5 million and net loss of
    $52.2 million for the fiscal year ended June 30, 2003.          



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Risks Related to Our Common Stock


Our common stock has been volatile since December 31,
2000.






| |   |                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------
| |  | actual or anticipated fluctuations in our operating results;                                               
|
| |  | actual or anticipated fluctuations in our transaction and
    consumer growth;                             
|
| |  | announcements by us, our competitors or our customers;                                                     
|
| |  | announcements of the introduction of new or enhanced products
    and services by us or our competitors;   
|
| |  | announcements of joint development efforts or corporate
    partnerships in the electronic commerce market;
|
| |  | market conditions in the banking, telecommunications, technology
    and other emerging growth sectors;    
|
| |  | rumors relating to our competitors or us; and                                                              
|
| |  | general market or economic conditions.                                                                     

Availability of significant amounts of our common stock for
sale in the future could adversely affect our stock price.






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | up to 10,466,156 shares available for issuance under our
    stock option and stock incentive plans, under which there are
    (1) outstanding options to
    purchase 5,142,248 shares of our common stock, of
    which options for 3,793,662 shares were fully vested and
    exercisable at an average weighted exercise price of
    approximately $28.81 per share, and (2) 459,656
    outstanding shares of restricted stock;
|
| |  | issued warrants to purchase 7,500,000 shares of our
    common stock, of which warrants for 2,500,000 shares were
    fully vested and exercisable at a weighted exercise price of
    approximately $28.86 per share;                                                                                                                                                                                                               
|
| |  | up to 791,983 shares available for issuance under our
    Associate Stock Purchase Plan; and                                                                                                                                                                                                                                                                                                                                         
|
| |  | up to 965,469 shares available for issuance under our
    401(k) Plan.                                                                                                                                                                                                                                                                                                                                                               

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| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Microsoft, which held 8,567,250 shares;                                                                                                                                                                       
|
| |  | The former members of Integrion Financial Network, L.L.C.
    (Integrion) and their assignees collectively held
    warrants to purchase up to 1,500,000 shares which were
    fully vested and exercisable;
|
| |  | Bank One, which held warrants to
    purchase 1,000,000 shares, which were fully vested and
    exercisable; and                                                                                              
|
| |  | Bank of America, which held 480,608 shares of record,
    450,000 of the vested Integrion warrants and warrants to
    purchase up to 5,000,000 shares, which warrants were not
    currently vested.         







Anti-takeover provisions in our organizational documents and
Delaware corporation law make any change in control more
difficult.






| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | division of our board of directors into three classes serving
    staggered three-year terms;                                                        
|
| |  | removal of our directors by the stockholders only for cause upon
    80% stockholder approval;                                                       
|
| |  | prohibiting our stockholders from calling a special meeting of
    stockholders;                                                                     
|
| |  | ability to issue additional shares of our common stock or
    preferred stock without stockholder approval;                                          
|
| |  | prohibiting our stockholders from unilaterally amending our
    certificate of incorporation or by-laws except with 80%
    stockholder approval; and
|
| |  | advance notice requirements for raising business or making
    nominations at stockholders meetings.                                                



22



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Available Information


www.checkfreecorp.com, www.checkfreecorp.com.


23



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|        |            
|------- | -----------
|Item 2. | Properties.





| |   |                                                                                     
| | - | ------------------------------------------------------------------------------------
| |  | approximately 251,000 square feet in Norcross, Georgia;                             
|
| |  | approximately 150,000 square feet in Dublin, Ohio;                                  
|
| |  | approximately 100,000 square feet in Phoenix, Arizona;                              
|
| |  | approximately 78,000 square feet in Aurora, Illinois;                               
|
| |  | approximately 59,000 square feet in Wallingford,
    Connecticut;                   
|
| |  | approximately 49,000 square feet in Jersey City, New Jersey;                        
|
| |  | approximately 35,000 square feet in Raleigh, North Carolina;                        
|
| |  | approximately 30,000 square feet in Ann Arbor, Michigan;                            
|
| |  | approximately 29,000 square feet in Waterloo, Ontario,
    Canada;                  
|
| |  | approximately 26,000 square feet in Owings Mills, Maryland;                         
|
| |  | approximately 22,000 square feet in Worthington, Ohio;                              
|
| |  | approximately 21,000 square feet in Newark, New Jersey;                             
|
| |  | approximately 15,000 square feet in Chicago, Illinois;                              
|
| |  | approximately 13,000 square feet in Wokingham, Berkshire,
    United Kingdom;       
|
| |  | approximately 8,000 square feet in London, United Kingdom;                          
|
| |  | approximately 5,000 square feet in San Diego,
    California;                       
|
| |  | approximately 2,000 square feet in Slough, Berkshire,
    United Kingdom;           
|
| |  | approximately 2,000 square feet in Boston, Massachusetts;                           
|
| |  | approximately 2,000 square feet in Henderson, Nevada;                               
|
| |  | approximately 1,000 square feet in North Sydney, New South
    Wales, Australia; and
|
| |  | approximately 300 square feet in Windhof, Luxembourg.                               








|        |                   
|------- | ------------------
|Item 3. | Legal Proceedings.








|        |                                                     
|------- | ----------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders.



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Part II







|        |                                                                                                                             
|------- | ----------------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common Equity and Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities.



|                                        |  |              |       |  |     |   |       | 
|--------------------------------------- |  | ------------ | ----- |  | --- | - | ----- | 
|                                        |  | Common Stock |      
|                                        |  | Price        |      
|                                        |  |              |      
|Fiscal Period                           |  | High         |       |  | Low |  
|                                        |  |              |       |  |     |  
|Fiscal 2004                             |  |              |       |  |     |   |       | 
|First Quarter                           |  | $            | 30.10 |  |     | $ | 19.75 | 
|Second Quarter                          |  | $            | 29.90 |  |     | $ | 20.30 | 
|Third Quarter                           |  | $            | 35.25 |  |     | $ | 26.07 | 
|Fourth Quarter                          |  | $            | 33.40 |  |     | $ | 28.06 | 
|                                       
|Fiscal 2005                             |  |              |       |  |     |   |       | 
|First Quarter                           |  | $            | 31.95 |  |     | $ | 24.56 | 
|Second Quarter                          |  | $            | 39.23 |  |     | $ | 27.42 | 
|Third Quarter                           |  | $            | 42.12 |  |     | $ | 34.68 | 
|Fourth Quarter                          |  | $            | 41.25 |  |     | $ | 32.59 | 
|                                       
|Fiscal 2006                             |  |              |       |  |     |   |       | 
|First Quarter (through August 23, 2005) |  | $            | 41.60 |  |     | $ | 32.33 | 





|                  |       |              |         |         |            |     |       |                        |     |  |                          |         |  |   |             |             | 
|----------------- | ----- | ------------ | ------- | ------- | ---------- | --- | ----- | ---------------------- | --- |  | ------------------------ | ------- |  | - | ----------- | ----------- | 
|                  |       |              |         |         |            | (c) |       |                        | (d) | 
|                  |       | (a)          |         |         | (b)        |     |       | Total Number of Shares |     |  | Approximate Dollar Value |        
|                  |       | Total Number |         |         | Average    |     |       | Purchased as Part of   |     |  | of Shares that May Yet   |        
|                  |       | of Shares    |         |         | Price Paid |     |       | Publicly Announced     |     |  | Be Purchased Under the   |        
|Period            |       | Purchased    |         |         | per Share  |     |       | Plans or Programs      |     |  | Plans or Programs        |        
|                  |       |              |         |         |            |     |       |                        |     |  |                          |        
|June 1  30, 2005 |       |              | 891,200 |         |            | $   | 37.52 |                        |     |  | 891,200                  |         |  | $ | 6.5 million |            
|                  |       |              |         |         |            |     |       |                        |     |  |                          |        
|                  | Total |              |         | 891,200 |            |     | $     | 37.52                  |     |  |                          | 891,200 |  |   | $           | 6.5 million | 
|                  |       |              |         |         |            |     |       |                        |     |  |                          |        



25



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|        |                         
|------- | ------------------------
|Item 6. | Selected Financial Data.



|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |        |           |         |           |        |           |         |         | 
|------------------------------------------ | -------------------------------------------------------------------------------- | --------------------------------------- | ------------------------------ | --------- | ------- | ------- | ------ | --------- | ------- | ------- | ------ | --------- | ------- | ------- | ------ | --------- | ------- | --------- | ------ | --------- | ------- | ------- | 
|                                           |                                                                                  | Year Ended June 30,                     |                               
|                                           |                                                                                  |                                         |                               
|                                           |                                                                                  | 2005                                    |                                |           | 2004    |         |        | 2003      |         |         | 2002   |           |         | 2001    |       
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|                                           |                                                                                  | (In thousands, except per share data)   |                               
|Consolidated Statements of Operations:     |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |        |           |         |           |        |          
|Revenues:                                  |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |        |           |         |           |        |          
|                                           | Processing and servicing                                                         |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |        |           |         |           |        |           |        
|                                           |                                                                                  | Third parties                           |                                | $         | 635,353 |         |        | $         | 488,705 |         |        | $         | 397,435 |         |        | $         | 339,424 |           |        | $         | 308,548 |        
|                                           |                                                                                  | Related parties (a)                     |                                |           | 33,000  |         |        |           | 41,500  |         |        |           | 78,981  |         |        |           | 82,813  |           |        |           | 53,503  |        
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|                                           |                                                                                  |                                         | Total processing and servicing |           |         | 668,353 |        |           |         | 530,205 |        |           |         | 476,416 |        |           |         | 422,237   |        |           |         | 362,051 | 
|                                           | License fees                                                                     |                                         |                                | 28,458    |         |         |        | 23,931    |         |         |        | 24,163    |         |         |        | 25,020    |         |           |        | 30,180    |        
|                                           | Maintenance fees                                                                 |                                         |                                | 31,265    |         |         |        | 28,271    |         |         |        | 25,733    |         |         |        | 24,298    |         |           |        | 21,332    |        
|                                           | Other                                                                            |                                         |                                | 29,756    |         |         |        | 24,057    |         |         |        | 25,334    |         |         |        | 18,922    |         |           |        | 19,757    |        
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|                                           |                                                                                  |                                         | Total revenues                 |           |         | 757,832 |        |           |         | 606,464 |        |           |         | 551,646 |        |           |         | 490,477   |        |           |         | 433,320 | 
|Expenses:                                  |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |        |           |         |           |        |          
|                                           | Cost of processing, servicing and support                                        |                                         |                                | 297,256   |         |         |        | 244,811   |         |         |        | 237,978   |         |         |        | 262,105   |         |           |        | 255,528   |        
|                                           | Research and development                                                         |                                         |                                | 82,550    |         |         |        | 66,288    |         |         |        | 52,717    |         |         |        | 55,172    |         |           |        | 55,621    |        
|                                           | Sales and marketing                                                              |                                         |                                | 70,054    |         |         |        | 51,910    |         |         |        | 57,170    |         |         |        | 58,030    |         |           |        | 90,283    |        
|                                           | General and administrative                                                       |                                         |                                | 59,272    |         |         |        | 45,759    |         |         |        | 39,030    |         |         |        | 43,687    |         |           |        | 50,474    |        
|                                           | Depreciation and amortization                                                    |                                         |                                | 176,598   |         |         |        | 177,582   |         |         |        | 226,638   |         |         |        | 435,565   |         |           |        | 427,495   |        
|                                           | In-process research and development (b)                                          |                                         |                                |          |         |         |        | 324       |         |         |        |          |         |         |        |          |         |           |        | 18,600    |        
|                                           | Impairment of intangible assets (c)                                              |                                         |                                |          |         |         |        |          |         |         |        | 10,228    |         |         |        | 155,072   |         |           |        |          |        
|                                           | Reorganization charge (d)                                                        |                                         |                                | 5,585     |         |         |        |          |         |         |        | 1,405     |         |         |        | 16,365    |         |           |        |          |        
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|                                           |                                                                                  |                                         | Total expenses                 |           |         | 691,315 |        |           |         | 586,674 |        |           |         | 625,166 |        |           |         | 1,025,996 |        |           |         | 898,001 | 
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|                                           | Income (loss) from operations                                                    |                                         |                                | 66,517    |         |         |        | 19,790    |         |         |        | (73,520   | )       |         |        | (535,519  | )       |           |        | (464,681  | )      
|                                           |                                                                                  | Equity in net loss of joint venture (e) |                                |           | (2,984  | )       |        |           | (593    | )       |        |           |        |         |        |           |        |           |        |           |        |        
|                                           |                                                                                  | Interest income                         |                                |           | 8,810   |         |        |           | 5,697   |         |        |           | 7,327   |         |        |           | 8,486   |           |        |           | 15,415  |        
|                                           |                                                                                  | Interest expense                        |                                |           | (1,094  | )       |        |           | (13,164 | )       |        |           | (12,975 | )       |        |           | (12,788 | )         |        |           | (13,154 | )      
|                                           |                                                                                  | Gain (loss) on investments (f)          |                                |           | 592     |         |        |           |        |         |        |           | (3,228  | )       |        |           |        |           |        |           | (16,077 | )      
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|                                           | Income (loss) before income taxes and cumulative effect of
    accounting change |                                         |                                | 71,841    |         |         |        | 11,730    |         |         |        | (82,396   | )       |         |        | (539,821  | )       |           |        | (478,497  | )      
|                                           | Income tax expense (benefit)                                                     |                                         |                                | 25,040    |         |         |        | 1,195     |         |         |        | (33,106   | )       |         |        | (98,871   | )       |           |        | (115,362  | )      
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|                                           | Income (loss) before cumulative effect of accounting change                      |                                         |                                | 46,801    |         |         |        | 10,535    |         |         |        | (49,290   | )       |         |        | (440,950  | )       |           |        | (363,135  | )      
|                                           | Cumulative effect of accounting change (g)                                       |                                         |                                |          |         |         |        |          |         |         |        | (2,894    | )       |         |        |          |         |           |        |          |        
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|                                           | Net income (loss)                                                                |                                         | $                              | 46,801    |         |         | $      | 10,535    |         |         | $      | (52,184   | )       |         | $      | (440,950  | )       |           | $      | (363,135  | )      
|                                           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |       
|Diluted net income (loss) per common share |                                                                                  | $                                       | 0.50                           |           |         | $       | 0.11   |           |         | $       | (0.59  | )         |         | $       | (5.04  | )         |         | $         | (4.49  | )        
|Weighted average shares outstanding (h)    |                                                                                  |                                         | 92,915                         |           |         |         | 91,864 |           |         |         | 88,807 |           |         |         | 87,452 |           |         |           | 80,863 |          
|                                          
|Consolidated Balance Sheet Data:           |                                                                                  |                                         |                                |           |         |         |        |           |         |         |        |           |         |         |        |           |         |           |        |          
|                                           | Working capital                                                                  |                                         | $                              | 337,529   |         |         | $      | 263,813   |         |         | $      | 304,286   |         |         | $      | 201,741   |         |           | $      | 142,661   |        
|                                           | Total assets                                                                     |                                         |                                | 1,569,916 |         |         |        | 1,548,932 |         |         |        | 1,587,270 |         |         |        | 1,637,477 |         |           |        | 2,183,953 |        
|                                           | Long-term obligations, less current portion                                      |                                         |                                | 25,389    |         |         |        | 25,504    |         |         |        | 176,692   |         |         |        | 176,377   |         |           |        | 176,541   |        
|                                           | Total stockholders equity                                                       |                                         |                                | 1,336,415 |         |         |        | 1,299,182 |         |         |        | 1,268,149 |         |         |        | 1,305,661 |         |           |        | 1,732,186 |        

26



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27



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|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations.

Overview








| |   |                         
| | - | ------------------------
| |  | Electronic Commerce;    
|
| |  | Investment Services; and
|
| |  | Software.               



SM




Executive Summary




28



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|                           |       |           |        |         |     |   |        |        |  |   |        |         | 
|-------------------------- | ----- | --------- | ------ | ------- | --- | - | ------ | ------ |  | - | ------ | ------- | 
|Fiscal Year Ended June 30, |       | Microsoft |        |         | FDC |   |        | Total  | 
|                           |       |           |        |         |     |   |        |        | 
|2001                       |       | $         | 6,000  |         |     | $ | 5,000  |        |  | $ | 11,000 |        
|2002                       |       |           | 15,000 |         |     |   | 8,500  |        |  |   | 23,500 |        
|2003                       |       |           | 21,000 |         |     |   | 11,500 |        |  |   | 32,500 |        
|2004                       |       |           | 27,000 |         |     |   | 14,500 |        |  |   | 41,500 |        
|2005                       |       |           | 33,000 |         |     |   | 17,500 |        |  |   | 50,500 |        
|2006                       |       |           | 18,000 |         |     |   | 3,000  |        |  |   | 21,000 |        
|                           |       |           |        |         |     |   |        |        | 
|                           | Total |           | $      | 120,000 |     |   | $      | 60,000 |  |   | $      | 180,000 | 
|                           |       |           |        |         |     |   |        |        | 



29



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|                                                                                 |                                           |                     |       |      |      |  |       |      |      |  |       |      |       |  |  | 
|-------------------------------------------------------------------------------- | ----------------------------------------- | ------------------- | ----- | ---- | ---- |  | ----- | ---- | ---- |  | ----- | ---- | ----- |  |  | 
|                                                                                 |                                           | Year ended June 30, |       |      |     
|                                                                                 |                                           |                     |       |      |     
|                                                                                 |                                           | 2005                |       |      | 2004 |  |       | 2003 |      |  |      
|                                                                                 |                                           |                     |       |      |      |  |       |      |      |  |      
|Total revenues                                                                   |                                           |                     | 100.0 | %    |      |  | 100.0 | %    |      |  | 100.0 | %    |       | 
|Expenses:                                                                        |                                           |                     |       |      |      |  |       |      |      |  |       |      |       | 
|                                                                                 | Cost of processing, servicing and support |                     |       | 39.2 |      |  |       | 40.4 |      |  |       | 43.1 |       |  | 
|                                                                                 | Research and development                  |                     |       | 10.9 |      |  |       | 10.9 |      |  |       | 9.6  |       |  | 
|                                                                                 | Sales and marketing                       |                     |       | 9.2  |      |  |       | 8.6  |      |  |       | 10.4 |       |  | 
|                                                                                 | General and administrative                |                     |       | 7.8  |      |  |       | 7.5  |      |  |       | 7.1  |       |  | 
|                                                                                 | Depreciation and amortization             |                     |       | 23.3 |      |  |       | 29.2 |      |  |       | 41.1 |       |  | 
|                                                                                 | In-process research and development       |                     |       |     |      |  |       | 0.1  |      |  |       |     |       |  | 
|                                                                                 | Impairment of intangible assets           |                     |       |     |      |  |       |     |      |  |       | 1.8  |       |  | 
|                                                                                 | Reorganization charge                     |                     |       | 0.8  |      |  |       |     |      |  |       | 0.2  |       |  | 
|                                                                                 |                                           |                     |       |      |      |  |       |      |      |  |      
|                                                                                 |                                           | Total expenses      |       |      | 91.2 |  |       |      | 96.7 |  |       |      | 113.3 |  |  | 
|                                                                                 |                                           |                     |       |      |      |  |       |      |      |  |      
|Income (loss) from operations                                                    |                                           |                     | 8.8   |      |      |  | 3.3   |      |      |  | (13.3 | )    |       | 
|                                                                                 | Equity in net loss of joint venture       |                     |       | (0.4 | )    |  |       | (0.1 | )    |  |       |     |       |  | 
|                                                                                 | Interest income                           |                     |       | 1.2  |      |  |       | 0.9  |      |  |       | 1.3  |       |  | 
|                                                                                 | Interest expense                          |                     |       | (0.1 | )    |  |       | (2.2 | )    |  |       | (2.3 | )     |  | 
|                                                                                 | Gain (loss) on investments                |                     |       |     |      |  |       |     |      |  |       | (0.6 | )     |  | 
|                                                                                 |                                           |                     |       |      |      |  |       |      |      |  |      
|Income (loss) before income taxes and cumulative effect of
    accounting change |                                           |                     | 9.5   |      |      |  | 1.9   |      |      |  | (14.9 | )    |       | 
|Income tax expense (benefit)                                                     |                                           |                     | 3.3   |      |      |  | 0.2   |      |      |  | (6.0  | )    |       | 
|                                                                                 |                                           |                     |       |      |      |  |       |      |      |  |      
|Income (loss) before cumulative effect of accounting change                      |                                           |                     | 6.2   |      |      |  | 1.7   |      |      |  | (8.9  | )    |       | 
|Cumulative effect of accounting change                                           |                                           |                     |      |      |      |  |      |      |      |  | (0.5  | )    |       | 
|                                                                                 |                                           |                     |       |      |      |  |       |      |      |  |      
|Net income (loss)                                                                |                                           |                     | 6.2   | %    |      |  | 1.7   | %    |      |  | (9.4  | )%   |       | 
|                                                                                 |                                           |                     |       |      |      |  |       |      |      |  |      

Results of Operations


Years Ended June 30, 2005 and 2004




Total Revenues (000s)


|           |  |          |         |  |        |   |         |   |  |   |         |  |  |  |       | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------- |  |  |  | ----- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2005     |         |  | 2004   |   |         | $ |  |   | %       | 
|           |  |          |         |  |        |   |         |   |  |   |         | 
|Year ended |  | $        | 757,832 |  |        | $ | 606,464 |   |  | $ | 151,368 |  |  |  | 25.0% | 





30



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Processing and Servicing Revenue (000s)


|           |  |          |         |  |        |   |         |   |  |   |         |  |  |  |       | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------- |  |  |  | ----- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2005     |         |  | 2004   |   |         | $ |  |   | %       | 
|           |  |          |         |  |        |   |         |   |  |   |         | 
|Year ended |  | $        | 668,353 |  |        | $ | 530,205 |   |  | $ | 138,148 |  |  |  | 26.1% | 



License Fee Revenue (000s)


|           |  |          |        |  |        |   |        |   |  |   |       |  |  |  |       | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ----- |  |  |  | ----- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2005     |        |  | 2004   |   |        | $ |  |   | %     | 
|           |  |          |        |  |        |   |        |   |  |   |       | 
|Year ended |  | $        | 28,458 |  |        | $ | 23,931 |   |  | $ | 4,527 |  |  |  | 18.9% | 



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Maintenance Fee Revenue (000s)


|           |  |          |        |  |        |   |        |   |  |   |       |  |  |  |       | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ----- |  |  |  | ----- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2005     |        |  | 2004   |   |        | $ |  |   | %     | 
|           |  |          |        |  |        |   |        |   |  |   |       | 
|Year ended |  | $        | 31,265 |  |        | $ | 28,271 |   |  | $ | 2,994 |  |  |  | 10.6% | 



Other Revenue (000s)


|           |  |          |        |  |        |   |        |   |  |   |       |  |  |  |       | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ----- |  |  |  | ----- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2005     |        |  | 2004   |   |        | $ |  |   | %     | 
|           |  |          |        |  |        |   |        |   |  |   |       | 
|Year ended |  | $        | 29,756 |  |        | $ | 24,057 |   |  | $ | 5,699 |  |  |  | 23.7% | 





Cost of Processing, Servicing and Support
(000s)


|           |  |          |         |   |         |  |       |   |   |   |         |  |  |  |       | 
|---------- |  | -------- | ------- | - | ------- |  | ----- | - | - | - | ------- |  |  |  | ----- | 
|           |  | June 30, |        
|           |  |          |        
|           |  | 2005     |         |   | 2004    | 
|           |  |          |         |   |         | 
|           |  |          |         | % |         |  |       |   | % |  
|           |  | $        |         |   | Revenue |  |       | $ |   |   | Revenue | 
|           |  |          |         |   |         |  |       |   |   |   |         | 
|Year ended |  | $        | 297,256 |   |         |  | 39.2% |   |   | $ | 244,811 |  |  |  | 40.4% | 





| |   |                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The gross margin of our walk-in payments business is less than
    our core electronic billing and payment business;                                                                                                                          
|
| |  | Our acquisitions of HelioGraph and Accurate resulted in
    increased customer support and implementation services resources
    that carry a lower gross margin than our core Electronic
    Commerce and Investment Services businesses; and

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| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | During fiscal 2005, we incurred a charge of approximately
    $1.6 million for a loss in a services agreement with a
    large customer in our Software business.





| |                                 
| | --------------------------------
| | Research and Development (000s)

|           |  |          |        |   |         |  |       |   |   |   |         |  |  |  |       | 
|---------- |  | -------- | ------ | - | ------- |  | ----- | - | - | - | ------- |  |  |  | ----- | 
|           |  | June 30, |       
|           |  |          |       
|           |  | 2005     |        |   | 2004    | 
|           |  |          |        |   |         | 
|           |  |          |        | % |         |  |       |   | % |  
|           |  | $        |        |   | Revenue |  |       | $ |   |   | Revenue | 
|           |  |          |        |   |         |  |       |   |   |   |         | 
|Year ended |  | $        | 82,550 |   |         |  | 10.9% |   |   | $ | 66,288  |  |  |  | 10.9% | 





| |                            
| | ---------------------------
| | Sales and Marketing (000s)

|           |  |          |        |   |         |  |      |   |   |   |         |  |  |  |      | 
|---------- |  | -------- | ------ | - | ------- |  | ---- | - | - | - | ------- |  |  |  | ---- | 
|           |  | June 30, |       
|           |  |          |       
|           |  | 2005     |        |   | 2004    | 
|           |  |          |        |   |         | 
|           |  |          |        | % |         |  |      |   | % |  
|           |  | $        |        |   | Revenue |  |      | $ |   |   | Revenue | 
|           |  |          |        |   |         |  |      |   |   |   |         | 
|Year ended |  | $        | 70,054 |   |         |  | 9.2% |   |   | $ | 51,910  |  |  |  | 8.6% | 





| |                                   
| | ----------------------------------
| | General and Administrative (000s)

|           |  |          |        |   |         |  |      |   |   |   |         |  |  |  |      | 
|---------- |  | -------- | ------ | - | ------- |  | ---- | - | - | - | ------- |  |  |  | ---- | 
|           |  | June 30, |       
|           |  |          |       
|           |  | 2005     |        |   | 2004    | 
|           |  |          |        |   |         | 
|           |  |          |        | % |         |  |      |   | % |  
|           |  | $        |        |   | Revenue |  |      | $ |   |   | Revenue | 
|           |  |          |        |   |         |  |      |   |   |   |         | 
|Year ended |  | $        | 59,272 |   |         |  | 7.8% |   |   | $ | 45,759  |  |  |  | 7.5% | 



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Depreciation and Amortization (000s)


|           |  |          |         |   |         |  |       |   |   |   |         |  |  |  |       | 
|---------- |  | -------- | ------- | - | ------- |  | ----- | - | - | - | ------- |  |  |  | ----- | 
|           |  | June 30, |        
|           |  |          |        
|           |  | 2005     |         |   | 2004    | 
|           |  |          |         |   |         | 
|           |  |          |         | % |         |  |       |   | % |  
|           |  | $        |         |   | Revenue |  |       | $ |   |   | Revenue | 
|           |  |          |         |   |         |  |       |   |   |   |         | 
|Year ended |  | $        | 176,598 |   |         |  | 23.3% |   |   | $ | 177,582 |  |  |  | 29.2% | 



Reorganization Charge (000s)


|           |  |          |       |   |         |  |      |   |   |         |   |  |  |  |   | 
|---------- |  | -------- | ----- | - | ------- |  | ---- | - | - | ------- | - |  |  |  | - | 
|           |  | June 30, |      
|           |  |          |      
|           |  | 2005     |       |   | 2004    | 
|           |  |          |       |   |         | 
|           |  |          |       | % |         |  |      |   | % |        
|           |  | $        |       |   | Revenue |  |      | $ |   | Revenue |  
|           |  |          |       |   |         |  |      |   |   |         |  
|Year ended |  | $        | 5,585 |   |         |  | 0.8% |   |   | $       |  |  |  |  |  | 



In-Process Research & Development
(000s)


|           |  |          |   |         |      |  |   |  |   |         |     |  |  |  |      | 
|---------- |  | -------- | - | ------- | ---- |  | - |  | - | ------- | --- |  |  |  | ---- | 
|           |  | June 30, |  
|           |  |          |  
|           |  | 2005     |   |         | 2004 | 
|           |  |          |   |         |      | 
|           |  |          |   | %       |      |  |   |  | % |        
|           |  | $        |   | Revenue |      |  | $ |  |   | Revenue |    
|           |  |          |   |         |      |  |   |  |   |         |    
|Year ended |  | $        |  |         |      |  |  |  |   | $       | 324 |  |  |  | 0.1% | 



Equity in Loss of Joint Venture (000s)


|           |  |          |         |   |         |  |        |   |   |   |         |  |  |  |        | 
|---------- |  | -------- | ------- | - | ------- |  | ------ | - | - | - | ------- |  |  |  | ------ | 
|           |  | June 30, |        
|           |  |          |        
|           |  | 2005     |         |   | 2004    | 
|           |  |          |         |   |         | 
|           |  |          |         | % |         |  |        |   | % |  
|           |  | $        |         |   | Revenue |  |        | $ |   |   | Revenue | 
|           |  |          |         |   |         |  |        |   |   |   |         | 
|Year ended |  | $        | (2,984) |   |         |  | (0.4)% |   |   | $ | (593)   |  |  |  | (0.1)% | 



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Net Interest (000s)


|            |                                 |              |   |        |         |  |  |   |      |  |         |        |        |   |  |  |        | 
|----------- | ------------------------------- | ------------ | - | ------ | ------- |  |  | - | ---- |  | ------- | ------ | ------ | - |  |  | ------ | 
|            |                                 | June 30,     |  
|            |                                 |              |  
|            |                                 | 2005         |   |        | 2004    | 
|            |                                 |              |   |        |         | 
|            |                                 |              |   | %      |         |  |  |   | %    | 
|            |                                 | $            |   |        | Revenue |  |  | $ |      |  | Revenue |       
|            |                                 |              |   |        |         |  |  |   |      |  |         |       
|Year ended: |                                 |              |   |        |         |  |  |   |      |  |         |        |        |   |  | 
|            | Interest income                 |              | $ | 8,810  |         |  |  |   |      |  | $       | 5,697  |        |   |  |  |       
|            | Interest expense                |              |   | (1,094 | )       |  |  |   |      |  |         | (5,944 | )      |   |  |  |       
|            | Call premium expense            |              |   |       |         |  |  |   |      |  |         | (4,813 | )      |   |  |  |       
|            | Unamortized note issuance costs |              |   |       |         |  |  |   |      |  |         | (2,407 | )      |   |  |  |       
|            |                                 |              |   |        |         |  |  |   |      |  |         |       
|            |                                 | Net interest |   | $      | 7,716   |  |  |   | 1.1% |  |         | $      | (7,467 | ) |  |  | (1.3)% | 
|            |                                 |              |   |        |         |  |  |   |      |  |         |       





Gain on Investments (000s)


|           |  |          |     |   |         |  |   |   |   |         |   |  |  |  |   | 
|---------- |  | -------- | --- | - | ------- |  | - | - | - | ------- | - |  |  |  | - | 
|           |  | June 30, |    
|           |  |          |    
|           |  | 2005     |     |   | 2004    | 
|           |  |          |     |   |         | 
|           |  |          |     | % |         |  |   |   | % |        
|           |  | $        |     |   | Revenue |  |   | $ |   | Revenue |  
|           |  |          |     |   |         |  |   |   |   |         |  
|Year ended |  | $        | 592 |   |         |  |  |   |   | $       |  |  |  |  |  | 



Income Tax Expense (000s)


|           |  |          |        |   |         |  |       |   |   |   |         |  |  |  |       | 
|---------- |  | -------- | ------ | - | ------- |  | ----- | - | - | - | ------- |  |  |  | ----- | 
|           |  | June 30, |       
|           |  |          |       
|           |  | 2005     |        |   | 2004    | 
|           |  |          |        |   |         | 
|           |  |          |        | % |         |  |       |   | % |  
|           |  | $        |        |   | Revenue |  |       | $ |   |   | Revenue | 
|           |  |          |        |   |         |  |       |   |   |   |         | 
|Year ended |  | $        | 25,040 |   |         |  | 34.9% |   |   | $ | 1,195   |  |  |  | 10.2% | 



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Years Ended June 30, 2004 and 2003




Total Revenues (000s)


|           |  |          |         |  |        |   |         |   |  |   |        |  |  |  |      | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------ |  |  |  | ---- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2004     |         |  | 2003   |   |         | $ |  |   | %      | 
|           |  |          |         |  |        |   |         |   |  |   |        | 
|Year ended |  | $        | 606,464 |  |        | $ | 551,646 |   |  | $ | 54,818 |  |  |  | 9.9% | 













Processing and Servicing Revenue (000s)


|           |  |          |         |  |        |   |         |   |  |   |        |  |  |  |       | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------ |  |  |  | ----- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2004     |         |  | 2003   |   |         | $ |  |   | %      | 
|           |  |          |         |  |        |   |         |   |  |   |        | 
|Year ended |  | $        | 530,205 |  |        | $ | 476,416 |   |  | $ | 53,789 |  |  |  | 11.3% | 



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License Fee Revenue (000s)


|           |  |          |        |  |        |   |        |   |  |   |      |   |  |  |        | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ---- | - |  |  | ------ | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2004     |        |  | 2003   |   |        | $ |  |   | %    |  
|           |  |          |        |  |        |   |        |   |  |   |      |  
|Year ended |  | $        | 23,931 |  |        | $ | 24,163 |   |  | $ | (232 | ) |  |  | (1.0)% | 



Maintenance Fee Revenue (000s)


|           |  |          |        |  |        |   |        |   |  |   |       |  |  |  |      | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ----- |  |  |  | ---- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2004     |        |  | 2003   |   |        | $ |  |   | %     | 
|           |  |          |        |  |        |   |        |   |  |   |       | 
|Year ended |  | $        | 28,271 |  |        | $ | 25,733 |   |  | $ | 2,538 |  |  |  | 9.9% | 



Other Revenue (000s)


|           |  |          |        |  |        |   |        |   |  |   |        |   |  |  |        | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ------ | - |  |  | ------ | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2004     |        |  | 2003   |   |        | $ |  |   | %      |  
|           |  |          |        |  |        |   |        |   |  |   |        |  
|Year ended |  | $        | 24,057 |  |        | $ | 25,334 |   |  | $ | (1,277 | ) |  |  | (5.0)% | 





Cost of Processing, Servicing and Support
(000s)


|           |  |          |         |   |         |  |       |   |   |   |         |  |  |  |       | 
|---------- |  | -------- | ------- | - | ------- |  | ----- | - | - | - | ------- |  |  |  | ----- | 
|           |  | June 30, |        
|           |  |          |        
|           |  | 2004     |         |   | 2003    | 
|           |  |          |         |   |         | 
|           |  |          |         | % |         |  |       |   | % |  
|           |  | $        |         |   | Revenue |  |       | $ |   |   | Revenue | 
|           |  |          |         |   |         |  |       |   |   |   |         | 
|Year ended |  | $        | 244,811 |   |         |  | 40.4% |   |   | $ | 237,978 |  |  |  | 43.1% | 

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Research and Development (000s)


|           |  |          |        |   |         |  |       |   |   |   |         |  |  |  |      | 
|---------- |  | -------- | ------ | - | ------- |  | ----- | - | - | - | ------- |  |  |  | ---- | 
|           |  | June 30, |       
|           |  |          |       
|           |  | 2004     |        |   | 2003    | 
|           |  |          |        |   |         | 
|           |  |          |        | % |         |  |       |   | % |  
|           |  | $        |        |   | Revenue |  |       | $ |   |   | Revenue | 
|           |  |          |        |   |         |  |       |   |   |   |         | 
|Year ended |  | $        | 66,288 |   |         |  | 10.9% |   |   | $ | 52,717  |  |  |  | 9.6% | 



Sales and Marketing (000s)


|           |  |          |        |   |         |  |      |   |   |   |         |  |  |  |       | 
|---------- |  | -------- | ------ | - | ------- |  | ---- | - | - | - | ------- |  |  |  | ----- | 
|           |  | June 30, |       
|           |  |          |       
|           |  | 2004     |        |   | 2003    | 
|           |  |          |        |   |         | 
|           |  |          |        | % |         |  |      |   | % |  
|           |  | $        |        |   | Revenue |  |      | $ |   |   | Revenue | 
|           |  |          |        |   |         |  |      |   |   |   |         | 
|Year ended |  | $        | 51,910 |   |         |  | 8.6% |   |   | $ | 57,170  |  |  |  | 10.4% | 



General and Administrative (000s)


|           |  |          |        |   |         |  |      |   |   |   |         |  |  |  |      | 
|---------- |  | -------- | ------ | - | ------- |  | ---- | - | - | - | ------- |  |  |  | ---- | 
|           |  | June 30, |       
|           |  |          |       
|           |  | 2004     |        |   | 2003    | 
|           |  |          |        |   |         | 
|           |  |          |        | % |         |  |      |   | % |  
|           |  | $        |        |   | Revenue |  |      | $ |   |   | Revenue | 
|           |  |          |        |   |         |  |      |   |   |   |         | 
|Year ended |  | $        | 45,759 |   |         |  | 7.5% |   |   | $ | 39,030  |  |  |  | 7.1% | 



Depreciation and Amortization (000s)


|           |  |          |         |   |         |  |       |   |   |   |         |  |  |  |       | 
|---------- |  | -------- | ------- | - | ------- |  | ----- | - | - | - | ------- |  |  |  | ----- | 
|           |  | June 30, |        
|           |  |          |        
|           |  | 2004     |         |   | 2003    | 
|           |  |          |         |   |         | 
|           |  |          |         | % |         |  |       |   | % |  
|           |  | $        |         |   | Revenue |  |       | $ |   |   | Revenue | 
|           |  |          |         |   |         |  |       |   |   |   |         | 
|Year ended |  | $        | 177,582 |   |         |  | 29.2% |   |   | $ | 226,638 |  |  |  | 41.1% | 



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In-Process Research and Development (000s)


|           |  |          |     |   |         |  |      |   |   |         |   |  |  |  |   | 
|---------- |  | -------- | --- | - | ------- |  | ---- | - | - | ------- | - |  |  |  | - | 
|           |  | June 30, |    
|           |  |          |    
|           |  | 2004     |     |   | 2003    | 
|           |  |          |     |   |         | 
|           |  |          |     | % |         |  |      |   | % |        
|           |  | $        |     |   | Revenue |  |      | $ |   | Revenue |  
|           |  |          |     |   |         |  |      |   |   |         |  
|Year ended |  | $        | 324 |   |         |  | 0.1% |   |   | $       |  |  |  |  |  | 



Impairment of Intangible Assets (000s)


|           |  |          |   |         |      |  |   |  |   |         |        |  |  |  |      | 
|---------- |  | -------- | - | ------- | ---- |  | - |  | - | ------- | ------ |  |  |  | ---- | 
|           |  | June 30, |  
|           |  |          |  
|           |  | 2004     |   |         | 2003 | 
|           |  |          |   |         |      | 
|           |  |          |   | %       |      |  |   |  | % |        
|           |  | $        |   | Revenue |      |  | $ |  |   | Revenue |       
|           |  |          |   |         |      |  |   |  |   |         |       
|Year ended |  | $        |  |         |      |  |  |  |   | $       | 10,228 |  |  |  | 1.8% | 



Reorganization Charge (000s)


|           |  |          |   |         |      |  |   |  |   |         |       |  |  |  |      | 
|---------- |  | -------- | - | ------- | ---- |  | - |  | - | ------- | ----- |  |  |  | ---- | 
|           |  | June 30, |  
|           |  |          |  
|           |  | 2004     |   |         | 2003 | 
|           |  |          |   |         |      | 
|           |  |          |   | %       |      |  |   |  | % |        
|           |  | $        |   | Revenue |      |  | $ |  |   | Revenue |      
|           |  |          |   |         |      |  |   |  |   |         |      
|Year ended |  | $        |  |         |      |  |  |  |   | $       | 1,405 |  |  |  | 0.2% | 



Equity in Loss of Joint Venture (000s)


|           |  |          |      |   |         |  |        |   |   |         |   |  |  |  |   | 
|---------- |  | -------- | ---- | - | ------- |  | ------ | - | - | ------- | - |  |  |  | - | 
|           |  | June 30, |     
|           |  |          |     
|           |  | 2004     |      |   | 2003    | 
|           |  |          |      |   |         | 
|           |  |          |      | % |         |  |        |   | % |        
|           |  | $        |      |   | Revenue |  |        | $ |   | Revenue |  
|           |  |          |      |   |         |  |        |   |   |         |  
|Year ended |  | $        | (593 | ) |         |  | (0.1)% |   |   | $       |  |  |  |  |  | 



39



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Net Interest (000s)


|            |                                 |              |   |        |         |   |  |   |        |  |         |         |        |   |  |  |        | 
|----------- | ------------------------------- | ------------ | - | ------ | ------- | - |  | - | ------ |  | ------- | ------- | ------ | - |  |  | ------ | 
|            |                                 | June 30,     |  
|            |                                 |              |  
|            |                                 | 2004         |   |        | 2003    |  
|            |                                 |              |   |        |         |  
|            |                                 |              |   | %      |         |   |  |   | %      | 
|            |                                 | $            |   |        | Revenue |   |  | $ |        |  | Revenue |        
|            |                                 |              |   |        |         |   |  |   |        |  |         |        
|Year ended: |                                 |              |   |        |         |   |  |   |        |  |         |         |        |   |  | 
|            | Interest income                 |              | $ | 5,697  |         |   |  |   |        |  | $       | 7,327   |        |   |  |  |       
|            | Interest expense                |              |   | (5,944 | )       |   |  |   |        |  |         | (12,975 | )      |   |  |  |       
|            | Call premium expense            |              |   | (4,813 | )       |   |  |   |        |  |         |        |        |   |  |  |       
|            | Unamortized note issuance costs |              |   | (2,407 | )       |   |  |   |        |  |         |        |        |   |  |  |       
|            |                                 |              |   |        |         |   |  |   |        |  |         |        
|            |                                 | Net interest |   | $      | (7,467  | ) |  |   | (1.3)% |  |         | $       | (5,648 | ) |  |  | (1.0)% | 
|            |                                 |              |   |        |         |   |  |   |        |  |         |        





Loss on Investments (000s)


|           |  |          |   |         |      |  |   |  |   |         |        |   |  |  |        | 
|---------- |  | -------- | - | ------- | ---- |  | - |  | - | ------- | ------ | - |  |  | ------ | 
|           |  | June 30, |  
|           |  |          |  
|           |  | 2004     |   |         | 2003 | 
|           |  |          |   |         |      | 
|           |  |          |   | %       |      |  |   |  | % |        
|           |  | $        |   | Revenue |      |  | $ |  |   | Revenue |       
|           |  |          |   |         |      |  |   |  |   |         |       
|Year ended |  | $        |  |         |      |  |  |  |   | $       | (3,228 | ) |  |  | (0.6)% | 



Income Tax Expense (Benefit) (000s)


|           |  |          |       |           |      |  |       |   |           |   |         |   |  |  |       | 
|---------- |  | -------- | ----- | --------- | ---- |  | ----- | - | --------- | - | ------- | - |  |  | ----- | 
|           |  | June 30, |      
|           |  |          |      
|           |  | 2004     |       |           | 2003 | 
|           |  |          |       |           |      | 
|           |  |          |       | Effective |      |  |       |   | Effective |  
|           |  | $        |       |           | Rate |  |       | $ |           |   | Rate    |  
|           |  |          |       |           |      |  |       |   |           |   |         |  
|Year ended |  | $        | 1,195 |           |      |  | 10.2% |   |           | $ | (33,106 | ) |  |  | 40.2% | 



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Cumulative Effect of Accounting Change (000s)


|           |  |          |   |         |      |  |   |  |   |         |        |   |  |  |        | 
|---------- |  | -------- | - | ------- | ---- |  | - |  | - | ------- | ------ | - |  |  | ------ | 
|           |  | June 30, |  
|           |  |          |  
|           |  | 2004     |   |         | 2003 | 
|           |  |          |   |         |      | 
|           |  |          |   | %       |      |  |   |  | % |        
|           |  | $        |   | Revenue |      |  | $ |  |   | Revenue |       
|           |  |          |   |         |      |  |   |  |   |         |       
|Year ended |  | $        |  |         |      |  |  |  |   | $       | (2,894 | ) |  |  | (0.5)% | 





Segment Information




|                                 |                                                |                               |       |         |          |         |   |         |          |         |   |         |          |         | 
|-------------------------------- | ---------------------------------------------- | ----------------------------- | ----- | ------- | -------- | ------- | - | ------- | -------- | ------- | - | ------- | -------- | ------- | 
|                                 |                                                | Year Ended June 30,           |      
|                                 |                                                |                               |      
|                                 |                                                | 2005                          |       |         | 2004     |         |   | 2003    |         
|                                 |                                                |                               |       |         |          |         |   |         |         
|                                 |                                                | (In thousands)                |      
|Revenues:                        |                                                |                               |       |         |          |         |   |         |          |         |   |        
|                                 | Electronic Commerce                            |                               | $     | 580,696 |          |         | $ | 452,732 |          |         | $ | 405,373 |         
|                                 | Investment Services                            |                               |       | 96,064  |          |         |   | 86,270  |          |         |   | 81,562  |         
|                                 | Software                                       |                               |       | 81,072  |          |         |   | 67,462  |          |         |   | 64,711  |         
|                                 |                                                |                               |       |         |          |         |   |         |         
|                                 |                                                |                               | Total |         | $        | 757,832 |   |         | $        | 606,464 |   |         | $        | 551,646 | 
|                                 |                                                |                               |       |         |          |         |   |         |         
|Segment operating income (loss): |                                                |                               |       |         |          |         |   |         |          |         |   |        
|                                 | Electronic Commerce                            |                               | $     | 207,796 |          |         | $ | 155,724 |          |         | $ | 115,539 |         
|                                 | Investment Services                            |                               |       | 18,638  |          |         |   | 19,911  |          |         |   | 21,062  |         
|                                 | Software                                       |                               |       | 17,748  |          |         |   | 14,293  |          |         |   | 18,008  |         
|                                 | Corporate                                      |                               |       | (37,595 | )        |         |   | (33,256 | )        |         |   | (33,798 | )       
|                                 | Purchase accounting amortization:              |                               |       |         |          |         |   |         |          |         |   |         |         
|                                 |                                                | Electronic Commerce           |       |         | (130,175 | )       |   |         | (132,699 | )       |   |         | (175,028 | )      
|                                 |                                                | Investment Services           |       |         | (604     | )       |   |         | (819     | )       |   |         | (2,300   | )      
|                                 |                                                | Software                      |       |         | (2,667   | )       |   |         | (3,040   | )       |   |         | (6,014   | )      
|                                 | Reorganization charge:                         |                               |       |         |          |         |   |         |          |         |   |         |         
|                                 |                                                | Electronic Commerce           |       |         | (3,208   | )       |   |         |         |         |   |         | (307     | )      
|                                 |                                                | Investment Services           |       |         | (313     | )       |   |         |         |         |   |         | 68       |        
|                                 |                                                | Software                      |       |         | (1,876   | )       |   |         |         |         |   |         | (1,183   | )      
|                                 |                                                | Corporate                     |       |         | (188     | )       |   |         |         |         |   |         | 17       |        
|                                 | Write off of capitalized software  Software   |                               |       | (1,039  | )        |         |   |        |          |         |   |        |         
|                                 | Impairment of intangible assets  Software     |                               |       |        |          |         |   |        |          |         |   | (10,228 | )       
|                                 | Impact of warrants  Electronic Commerce       |                               |       |        |          |         |   |        |          |         |   | 644     |         
|                                 | In-process research and development  Software |                               |       |        |          |         |   | (324    | )        |         |   |        |         
|                                 |                                                |                               |       |         |          |         |   |         |         
|                                 |                                                | Income (loss) from operations |       | $       | 66,517   |         |   | $       | 19,790   |         |   | $       | (73,520  | )      
|                                 |                                                |                               |       |         |          |         |   |         |         

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Years Ended June 30, 2005 and 2004




| |                                         
| | ----------------------------------------
| | Electronic Commerce Segment Information:

Electronic
Commerce Revenue (000s)


|           |  |          |         |  |        |   |         |   |  |   |         |  |  |  |       | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------- |  |  |  | ----- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2005     |         |  | 2004   |   |         | $ |  |   | %       | 
|           |  |          |         |  |        |   |         |   |  |   |         | 
|Year ended |  | $        | 580,696 |  |        | $ | 452,732 |   |  | $ | 127,964 |  |  |  | 28.3% | 









Fiscal 2005:


|                          |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |       | 
|------------------------- | --------------------------- | ------------- | - | ----- | ------- |  | - | -------- |  |  | ------- | ----- |  |  | - | ----- | 
|                          |                             | Quarter Ended |  
|                          |                             |               |  
|                          |                             | 6/30/05       |   |       | 3/31/05 |  |   | 12/31/04 |  |  | 9/30/04 |      
|                          |                             |               |   |       |         |  |   |          |  |  |         |      
|                          |                             | (In millions) |  
|Full Service              |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 110.1 |         |  | $ | 106.4    |  |  | $       | 102.4 |  |  | $ | 99.1  | 
|                          | Active subscribers          |               |   | 7.8   |         |  |   | 7.4      |  |  |         | 6.9   |  |  |   | 6.4   | 
|                          | Transactions processed      |               |   | 161.9 |         |  |   | 153.6    |  |  |         | 142.9 |  |  |   | 133.5 | 
|Payment Services          |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 33.8  |         |  | $ | 32.4     |  |  | $       | 31.3  |  |  | $ | 30.5  | 
|                          | Transactions processed      |               |   | 83.0  |         |  |   | 80.8     |  |  |         | 76.5  |  |  |   | 72.3  | 
|Other Electronic Commerce |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 8.9   |         |  | $ | 8.8      |  |  | $       | 8.4   |  |  | $ | 8.6   | 
|Totals                    |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Electronic Commerce revenue |               | $ | 152.8 |         |  | $ | 147.6    |  |  | $       | 142.1 |  |  | $ | 138.2 | 
|                          | Transactions processed      |               |   | 244.9 |         |  |   | 234.4    |  |  |         | 219.4 |  |  |   | 205.8 | 

42



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##### Table of Contents



Fiscal 2004:


|                          |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |       | 
|------------------------- | --------------------------- | ------------- | - | ----- | ------- |  | - | -------- |  |  | ------- | ----- |  |  | - | ----- | 
|                          |                             | Quarter Ended |  
|                          |                             |               |  
|                          |                             | 6/30/04       |   |       | 3/31/04 |  |   | 12/31/03 |  |  | 9/30/03 |      
|                          |                             |               |   |       |         |  |   |          |  |  |         |      
|                          |                             | (In millions) |  
|Full Service              |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 96.2  |         |  | $ | 94.0     |  |  | $       | 91.8  |  |  | $ | 85.5  | 
|                          | Active subscribers          |               |   | 5.9   |         |  |   | 5.5      |  |  |         | 5.0   |  |  |   | 4.6   | 
|                          | Transactions processed      |               |   | 123.9 |         |  |   | 115.5    |  |  |         | 106.1 |  |  |   | 94.3  | 
|Payment Services          |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 14.0  |         |  | $ | 12.8     |  |  | $       | 12.0  |  |  | $ | 11.9  | 
|                          | Transactions processed      |               |   | 41.3  |         |  |   | 36.7     |  |  |         | 33.1  |  |  |   | 32.4  | 
|Other Electronic Commerce |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 8.3   |         |  | $ | 8.4      |  |  | $       | 8.7   |  |  | $ | 9.2   | 
|Totals                    |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Electronic Commerce revenue |               | $ | 118.4 |         |  | $ | 115.2    |  |  | $       | 112.5 |  |  | $ | 106.6 | 
|                          | Transactions processed      |               |   | 165.2 |         |  |   | 152.2    |  |  |         | 139.2 |  |  |   | 126.7 | 





Electronic
Commerce Operating Income (000s)


|           |  |          |         |  |        |   |         |   |  |   |        |  |  |  |       | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------ |  |  |  | ----- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2005     |         |  | 2004   |   |         | $ |  |   | %      | 
|           |  |          |         |  |        |   |         |   |  |   |        | 
|Year ended |  | $        | 207,796 |  |        | $ | 155,724 |   |  | $ | 52,072 |  |  |  | 33.4% | 



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Investment Services Segment Information:




| |                                    
| | -----------------------------------
| | Investment Services Revenue (000s)

|           |  |          |        |  |        |   |        |   |  |   |       |  |  |  |       | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ----- |  |  |  | ----- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2005     |        |  | 2004   |   |        | $ |  |   | %     | 
|           |  |          |        |  |        |   |        |   |  |   |       | 
|Year ended |  | $        | 96,064 |  |        | $ | 86,270 |   |  | $ | 9,794 |  |  |  | 11.4% | 





| |                                             
| | --------------------------------------------
| | Investment Services Operating Income (000s)

|           |  |          |        |  |        |   |        |   |  |   |        |   |  |  |        | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ------ | - |  |  | ------ | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2005     |        |  | 2004   |   |        | $ |  |   | %      |  
|           |  |          |        |  |        |   |        |   |  |   |        |  
|Year ended |  | $        | 18,638 |  |        | $ | 19,911 |   |  | $ | (1,273 | ) |  |  | (6.4)% | 

tm


Software Segment Information:




| |                         
| | ------------------------
| | Software Revenue (000s)

|           |  |          |        |  |        |   |        |   |  |   |        |  |  |  |       | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ------ |  |  |  | ----- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2005     |        |  | 2004   |   |        | $ |  |   | %      | 
|           |  |          |        |  |        |   |        |   |  |   |        | 
|Year ended |  | $        | 81,072 |  |        | $ | 67,462 |   |  | $ | 13,610 |  |  |  | 20.2% | 





| |                                  
| | ---------------------------------
| | Software Operating Income (000s)

|           |  |          |        |  |        |   |        |   |  |   |       |  |  |  |       | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ----- |  |  |  | ----- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2005     |        |  | 2004   |   |        | $ |  |   | %     | 
|           |  |          |        |  |        |   |        |   |  |   |       | 
|Year ended |  | $        | 17,748 |  |        | $ | 14,293 |   |  | $ | 3,455 |  |  |  | 24.2% | 



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Corporate Segment
Information:




| |                                 
| | --------------------------------
| | Corporate Operating Loss (000s)

|           |  |          |         |   |        |   |         |   |  |   |        |   |  |  |         | 
|---------- |  | -------- | ------- | - | ------ | - | ------- | - |  | - | ------ | - |  |  | ------- | 
|           |  | June 30, |         |   | Change |  
|           |  |          |         |   |        |  
|           |  | 2005     |         |   | 2004   |   |         | $ |  |   | %      |  
|           |  |          |         |   |        |   |         |   |  |   |        |  
|Year ended |  | $        | (37,595 | ) |        | $ | (33,256 | ) |  | $ | (4,339 | ) |  |  | (13.0)% | 



Purchase Accounting
Amortization:




| |                                         
| | ----------------------------------------
| | Purchase Accounting Amortization (000s)

|           |  |          |         |  |        |   |         |   |  |   |        |   |  |  |        | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------ | - |  |  | ------ | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2005     |         |  | 2004   |   |         | $ |  |   | %      |  
|           |  |          |         |  |        |   |         |   |  |   |        |  
|Year ended |  | $        | 133,446 |  |        | $ | 136,558 |   |  | $ | (3,112 | ) |  |  | (2.3)% | 



Reorganization Charge:




| |                              
| | -----------------------------
| | Reorganization Charge (000s)

|           |  |          |       |        |      |   |   |  |  |   |       |  |  |  |   | 
|---------- |  | -------- | ----- | ------ | ---- | - | - |  |  | - | ----- |  |  |  | - | 
|           |  | June 30, |       | Change |     
|           |  |          |       |        |     
|           |  | 2005     |       |        | 2004 |   | $ |  |  | % |      
|           |  |          |       |        |      |   |   |  |  |   |      
|Year ended |  | $        | 5,585 |        |      | $ |  |  |  | $ | 5,585 |  |  |  |  | 



Write off of Capitalized
Software:




| |                                          
| | -----------------------------------------
| | Write off of Capitalized Software (000s)

|           |  |          |       |        |      |   |   |  |  |   |       |  |  |  |   | 
|---------- |  | -------- | ----- | ------ | ---- | - | - |  |  | - | ----- |  |  |  | - | 
|           |  | June 30, |       | Change |     
|           |  |          |       |        |     
|           |  | 2005     |       |        | 2004 |   | $ |  |  | % |      
|           |  |          |       |        |      |   |   |  |  |   |      
|Year ended |  | $        | 1,039 |        |      | $ |  |  |  | $ | 1,039 |  |  |  |  | 



45



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In-Process Research &
Development:




| |                                               
| | ----------------------------------------------
| | In-Process Research & Development:
    (000s)

|           |  |          |   |      |        |   |     |  |  |   |      |   |  |  |   | 
|---------- |  | -------- | - | ---- | ------ | - | --- |  |  | - | ---- | - |  |  | - | 
|           |  | June 30, |   |      | Change |  
|           |  |          |   |      |        |  
|           |  | 2005     |   | 2004 |        |   | $   |  |  | % |     
|           |  |          |   |      |        |   |     |  |  |   |     
|Year ended |  | $        |  |      |        | $ | 324 |  |  | $ | (324 | ) |  |  |  | 



Years Ended June 30, 2004 and 2003




| |                                         
| | ----------------------------------------
| | Electronic Commerce Segment Information:



| |                                    
| | -----------------------------------
| | Electronic Commerce Revenue (000s)

|           |  |          |         |  |        |   |         |   |  |   |        |  |  |  |       | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------ |  |  |  | ----- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2004     |         |  | 2003   |   |         | $ |  |   | %      | 
|           |  |          |         |  |        |   |         |   |  |   |        | 
|Year ended |  | $        | 452,732 |  |        | $ | 405,373 |   |  | $ | 47,359 |  |  |  | 11.7% | 





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Fiscal 2004:


|                          |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |       | 
|------------------------- | --------------------------- | ------------- | - | ----- | ------- |  | - | -------- |  |  | ------- | ----- |  |  | - | ----- | 
|                          |                             | Quarter Ended |  
|                          |                             |               |  
|                          |                             | 6/30/04       |   |       | 3/31/04 |  |   | 12/31/03 |  |  | 9/30/03 |      
|                          |                             |               |   |       |         |  |   |          |  |  |         |      
|                          |                             | (In millions) |  
|Full Service              |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 96.2  |         |  | $ | 94.0     |  |  | $       | 91.8  |  |  | $ | 85.5  | 
|                          | Active subscribers          |               |   | 5.9   |         |  |   | 5.5      |  |  |         | 5.0   |  |  |   | 4.6   | 
|                          | Transactions processed      |               |   | 123.9 |         |  |   | 115.5    |  |  |         | 106.1 |  |  |   | 94.3  | 
|Payment Services          |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 14.0  |         |  | $ | 12.8     |  |  | $       | 12.0  |  |  | $ | 11.9  | 
|                          | Transactions processed      |               |   | 41.3  |         |  |   | 36.7     |  |  |         | 33.1  |  |  |   | 32.4  | 
|Other Electronic Commerce |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Revenue                     |               | $ | 8.3   |         |  | $ | 8.4      |  |  | $       | 8.7   |  |  | $ | 9.2   | 
|Totals                    |                             |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      
|                          | Electronic Commerce revenue |               | $ | 118.4 |         |  | $ | 115.2    |  |  | $       | 112.5 |  |  | $ | 106.6 | 
|                          | Transactions processed      |               |   | 165.2 |         |  |   | 152.2    |  |  |         | 139.2 |  |  |   | 126.7 | 

Fiscal 2003:


|                          |                                     |               |   |       |         |  |   |          |  |  |         |       |  |  |   |      | 
|------------------------- | ----------------------------------- | ------------- | - | ----- | ------- |  | - | -------- |  |  | ------- | ----- |  |  | - | ---- | 
|                          |                                     | Quarter Ended |  
|                          |                                     |               |  
|                          |                                     | 6/30/03       |   |       | 3/31/03 |  |   | 12/31/02 |  |  | 9/30/02 |      
|                          |                                     |               |   |       |         |  |   |          |  |  |         |      
|                          |                                     | (In millions) |  
|Full Service              |                                     |               |   |       |         |  |   |          |  |  |         |       |  |  |   |     
|                          | Revenue                             |               | $ | 82.6  |         |  | $ | 81.5     |  |  | $       | 75.1  |  |  | $ | 71.6 | 
|                          | Active subscribers                  |               |   | 4.2   |         |  |   | 3.9      |  |  |         | 3.5   |  |  |   | 3.2  | 
|                          | Transactions processed              |               |   | 87.5  |         |  |   | 80.3     |  |  |         | 74.9  |  |  |   | 67.2 | 
|Payment Services          |                                     |               |   |       |         |  |   |          |  |  |         |       |  |  |   |     
|                          | Revenue                             |               | $ | 12.3  |         |  | $ | 12.8     |  |  | $       | 13.9  |  |  | $ | 14.7 | 
|                          | Transactions processed              |               |   | 32.7  |         |  |   | 31.6     |  |  |         | 30.1  |  |  |   | 29.5 | 
|Other Electronic Commerce |                                     |               |   |       |         |  |   |          |  |  |         |       |  |  |   |     
|                          | Revenue                             |               | $ | 11.1  |         |  | $ | 10.3     |  |  | $       | 9.2   |  |  | $ | 9.7  | 
|                          | Non-cash revenue impact of warrants |               | $ |      |         |  | $ |         |  |  | $       |      |  |  | $ | 0.6  | 
|Totals                    |                                     |               |   |       |         |  |   |          |  |  |         |       |  |  |   |     
|                          | Electronic Commerce revenue         |               | $ | 106.0 |         |  | $ | 104.6    |  |  | $       | 98.2  |  |  | $ | 96.6 | 
|                          | Transactions processed              |               |   | 120.2 |         |  |   | 111.9    |  |  |         | 105.0 |  |  |   | 96.7 | 



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| |                                             
| | --------------------------------------------
| | Electronic Commerce Operating Income (000s)

|           |  |          |         |  |        |   |         |   |  |   |        |  |  |  |       | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------ |  |  |  | ----- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2004     |         |  | 2003   |   |         | $ |  |   | %      | 
|           |  |          |         |  |        |   |         |   |  |   |        | 
|Year ended |  | $        | 155,724 |  |        | $ | 115,539 |   |  | $ | 40,185 |  |  |  | 34.8% | 





| |                                         
| | ----------------------------------------
| | Investment Services Segment Information:



| |                                    
| | -----------------------------------
| | Investment Services Revenue (000s)

|           |  |          |        |  |        |   |        |   |  |   |       |  |  |  |      | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ----- |  |  |  | ---- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2004     |        |  | 2003   |   |        | $ |  |   | %     | 
|           |  |          |        |  |        |   |        |   |  |   |       | 
|Year ended |  | $        | 86,270 |  |        | $ | 81,562 |   |  | $ | 4,708 |  |  |  | 5.8% | 





| |                                             
| | --------------------------------------------
| | Investment Services Operating Income (000s)

|           |  |          |        |  |        |   |        |   |  |   |        |   |  |  |        | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ------ | - |  |  | ------ | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2004     |        |  | 2003   |   |        | $ |  |   | %      |  
|           |  |          |        |  |        |   |        |   |  |   |        |  
|Year ended |  | $        | 19,911 |  |        | $ | 21,062 |   |  | $ | (1,151 | ) |  |  | (5.5)% | 





| |                              
| | -----------------------------
| | Software Segment Information:



| |                         
| | ------------------------
| | Software Revenue (000s)

|           |  |          |        |  |        |   |        |   |  |   |       |  |  |  |      | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ----- |  |  |  | ---- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2004     |        |  | 2003   |   |        | $ |  |   | %     | 
|           |  |          |        |  |        |   |        |   |  |   |       | 
|Year ended |  | $        | 67,462 |  |        | $ | 64,711 |   |  | $ | 2,751 |  |  |  | 4.3% | 

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tm




| |                                  
| | ---------------------------------
| | Software Operating Income (000s)

|           |  |          |        |  |        |   |        |   |  |   |        |   |  |  |         | 
|---------- |  | -------- | ------ |  | ------ | - | ------ | - |  | - | ------ | - |  |  | ------- | 
|           |  | June 30, |        |  | Change |  
|           |  |          |        |  |        |  
|           |  | 2004     |        |  | 2003   |   |        | $ |  |   | %      |  
|           |  |          |        |  |        |   |        |   |  |   |        |  
|Year ended |  | $        | 14,293 |  |        | $ | 18,008 |   |  | $ | (3,715 | ) |  |  | (20.6)% | 





| |                               
| | ------------------------------
| | Corporate Segment Information:



| |                                 
| | --------------------------------
| | Corporate Operating Loss (000s)

|           |  |          |         |   |        |   |         |   |  |   |     |  |  |  |      | 
|---------- |  | -------- | ------- | - | ------ | - | ------- | - |  | - | --- |  |  |  | ---- | 
|           |  | June 30, |         |   | Change |  
|           |  |          |         |   |        |  
|           |  | 2004     |         |   | 2003   |   |         | $ |  |   | %   | 
|           |  |          |         |   |        |   |         |   |  |   |     | 
|Year ended |  | $        | (33,256 | ) |        | $ | (33,798 | ) |  | $ | 542 |  |  |  | 1.6% | 





| |                                  
| | ---------------------------------
| | Purchase Accounting Amortization:



| |                                         
| | ----------------------------------------
| | Purchase Accounting Amortization (000s)

|           |  |          |         |  |        |   |         |   |  |   |         |   |  |  |         | 
|---------- |  | -------- | ------- |  | ------ | - | ------- | - |  | - | ------- | - |  |  | ------- | 
|           |  | June 30, |         |  | Change |  
|           |  |          |         |  |        |  
|           |  | 2004     |         |  | 2003   |   |         | $ |  |   | %       |  
|           |  |          |         |  |        |   |         |   |  |   |         |  
|Year ended |  | $        | 136,558 |  |        | $ | 183,342 |   |  | $ | (46,784 | ) |  |  | (25.5)% | 





| |                                 
| | --------------------------------
| | Impairment of Intangible Assets:



| |                                        
| | ---------------------------------------
| | Impairment of Intangible Assets (000s)

|           |  |          |   |      |        |   |        |  |  |   |         |   |  |  |   | 
|---------- |  | -------- | - | ---- | ------ | - | ------ |  |  | - | ------- | - |  |  | - | 
|           |  | June 30, |   |      | Change |  
|           |  |          |   |      |        |  
|           |  | 2004     |   | 2003 |        |   | $      |  |  | % |        
|           |  |          |   |      |        |   |        |  |  |   |        
|Year ended |  | $        |  |      |        | $ | 10,228 |  |  | $ | (10,228 | ) |  |  |  | 



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Reorganization Charge:




| |                              
| | -----------------------------
| | Reorganization Charge (000s)

|           |  |          |   |      |        |   |       |  |  |   |        |   |  |  |   | 
|---------- |  | -------- | - | ---- | ------ | - | ----- |  |  | - | ------ | - |  |  | - | 
|           |  | June 30, |   |      | Change |  
|           |  |          |   |      |        |  
|           |  | 2004     |   | 2003 |        |   | $     |  |  | % |       
|           |  |          |   |      |        |   |       |  |  |   |       
|Year ended |  | $        |  |      |        | $ | 1,405 |  |  | $ | (1,405 | ) |  |  |  | 





| |                    
| | -------------------
| | Impact of Warrants:



| |                           
| | --------------------------
| | Impact of Warrants (000s)

|           |  |          |   |      |        |   |     |  |  |   |      |   |  |  |   | 
|---------- |  | -------- | - | ---- | ------ | - | --- |  |  | - | ---- | - |  |  | - | 
|           |  | June 30, |   |      | Change |  
|           |  |          |   |      |        |  
|           |  | 2004     |   | 2003 |        |   | $   |  |  | % |     
|           |  |          |   |      |        |   |     |  |  |   |     
|Year ended |  | $        |  |      |        | $ | 644 |  |  | $ | (644 | ) |  |  |  | 



Liquidity and Capital Resources




|                                          |                                                      |                     |          |         |      |   |          |         |   |   |         |        | 
|----------------------------------------- | ---------------------------------------------------- | ------------------- | -------- | ------- | ---- | - | -------- | ------- | - | - | ------- | ------ | 
|                                          |                                                      | Year Ended June 30, |         
|                                          |                                                      |                     |         
|                                          |                                                      | 2005                |          |         | 2004 |   |          | 2003    |  
|                                          |                                                      |                     |          |         |      |   |          |         |  
|                                          |                                                      | (In thousands)      |         
|Net cash provided by operating activities |                                                      | $                   | 206,095  |         |      | $ | 171,059  |         |   | $ | 157,793 |       
|Net cash used in investing activities     |                                                      |                     | (215,855 | )       |      |   | (103,415 | )       |   |   | (61,172 | )     
|Net cash used in financing activities     |                                                      |                     | (24,113  | )       |      |   | (142,466 | )       |   |   | (2,272  | )     
|Effect of exchange rate changes           |                                                      |                     | 313      |         |      |   | 296      |         |   |   |        |       
|                                          |                                                      |                     |          |         |      |   |          |         |  
|                                          | Net increase (decrease) in cash and cash equivalents |                     | $        | (33,560 | )    |   | $        | (74,526 | ) |   | $       | 94,349 | 
|                                          |                                                      |                     |          |         |      |   |          |         |  



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|                            |                               |                                  |         |         |      |   |         |        |  |   |        |        |  |            |        |        |  |   |        |        | 
|--------------------------- | ----------------------------- | -------------------------------- | ------- | ------- | ---- | - | ------- | ------ |  | - | ------ | ------ |  | ---------- | ------ | ------ |  | - | ------ | ------ | 
|                            |                               | Payments Due Year Ended June 30, |        
|                            |                               |                                  |        
|                            |                               |                                  |         | 2007 to |      |   | 2009 to |        |  |  
|Contractual Obligations     |                               | Total                            |         |         | 2006 |   |         | 2008   |  |   | 2010   |        |  | Thereafter |       
|                            |                               |                                  |         |         |      |   |         |        |  |   |        |        |  |            |       
|                            |                               | (In thousands)                   |        
|Operating leases            |                               | $                                | 102,879 |         |      | $ | 15,120  |        |  | $ | 24,970 |        |  | $          | 24,135 |        |  | $ | 38,654 |       
|Capital lease obligations   |                               |                                  | 6       |         |      |   | 6       |        |  |   |       |        |  |            |       |        |  |   |       |       
|Other long-term obligations |                               |                                  | 42,385  |         |      |   | 12,377  |        |  |   | 28,295 |        |  |            | 1,500  |        |  |   | 213    |       
|                            |                               |                                  |         |         |      |   |         |        |  |   |        |        |  |            |       
|                            | Total contractual obligations |                                  | $       | 145,270 |      |   | $       | 27,503 |  |   | $      | 53,265 |  |            | $      | 25,635 |  |   | $      | 38,867 | 
|                            |                               |                                  |         |         |      |   |         |        |  |   |        |        |  |            |       



Use of Non-GAAP Financial Information




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|                                             |                |                     |         |         |      |   |         |         | 
|-------------------------------------------- | -------------- | ------------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                             |                | Year Ended June 30, |        
|                                             |                |                     |        
|                                             |                | 2005                |         |         | 2004 |  
|                                             |                |                     |         |         |      |  
|Cash provided by operating activities        |                | $                   | 206,095 |         |      | $ | 171,059 |        
|Excluding: Net change in settlement accounts |                |                     | (153    | )       |      |   | 193     |        
|Less: Capital expenditures                   |                |                     | (33,893 | )       |      |   | (23,482 | )      
|                                             |                |                     |         |         |      |  
|                                             | Free cash flow |                     | $       | 172,049 |      |   | $       | 147,770 | 
|                                             |                |                     |         |         |      |  





Recent Accounting Pronouncements




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| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We reclassified approximately $1,350,000 of unamortized
    workforce in place intangible assets, net of the associated
    deferred income taxes, into goodwill.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | After the reclassification above, goodwill was no longer
    amortized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | We performed a transitional impairment test as of July 1,
    2002. This impairment test required that we (1) identified
    our reporting units, (2) determine the carrying value of
    each reporting unit by assigning assets and liabilities,
    including existing goodwill and intangible assets, to those
    reporting units, and (3) determine the fair value of each
    reporting unit. If the carrying value of any reporting unit
    exceeded its fair value, then the amount of any goodwill
    impairment was determined through a fair value analysis of each
    of the assigned assets (excluding goodwill) and liabilities.



Application of Critical Accounting Policies and Estimates




Discussion with the Audit Committee of the Board of
Directors.


Accounting for Goodwill.




| |   |                                       
| | - | --------------------------------------
| |  | Electronic Commerce of $581.2 million;
|
| |  | Software of $63.6 million; and        
|
| |  | Investment Services of $11.4 million. 



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Intangible Assets Exclusive of Goodwill.


Equity Instruments Issued to Customers.


Income Taxes and Deferred Income Taxes.


55



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Investments.


Inflation




Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995




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|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk.


















|        |                                             
|------- | --------------------------------------------
|Item 8. | Financial Statements and Supplementary Data.



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
INTERNAL


CONTROL OVER FINANCIAL REPORTING








Internal
Control  Integrated Framework








Internal
Control  Integrated Framework Internal Control  Integrated
Framework


59



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















Internal Control 
Integrated Framework









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CHECKFREE CORPORATION AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                                                                   |                                                                                                                                              |                            |                                            |            |           |           |        |            |           |           | 
|------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ---------- | --------- | --------- | ------ | ---------- | --------- | --------- | 
|                                                                   |                                                                                                                                              | June 30,                   |                                           
|                                                                   |                                                                                                                                              |                            |                                           
|                                                                   |                                                                                                                                              | 2005                       |                                            |            | 2004      |          
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          
|                                                                   |                                                                                                                                              | (In thousands, except      |                                           
|                                                                   |                                                                                                                                              | share and per share data)  |                                           
|ASSETS                                                            
|CURRENT ASSETS:                                                    |                                                                                                                                              |                            |                                            |            |           |           |        |           
|                                                                   | Cash and cash equivalents                                                                                                                    |                            | $                                          | 101,272    |           |           | $      | 134,832    |          
|                                                                   | Settlement assets                                                                                                                            |                            |                                            | 73,675     |           |           |        | 82,520     |          
|                                                                   | Investments                                                                                                                                  |                            |                                            | 196,805    |           |           |        | 73,197     |          
|                                                                   | Accounts receivable, net                                                                                                                     |                            |                                            | 122,158    |           |           |        | 85,217     |          
|                                                                   | Accounts receivable, related parties                                                                                                         |                            |                                            | 5,775      |           |           |        | 26,632     |          
|                                                                   | Prepaid expenses and other assets                                                                                                            |                            |                                            | 26,258     |           |           |        | 14,727     |          
|                                                                   | Deferred income taxes                                                                                                                        |                            |                                            | 10,407     |           |           |        | 49,129     |          
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          
|                                                                   |                                                                                                                                              | Total current assets       |                                            |            | 536,350   |           |        |            | 466,254   |          
|PROPERTY AND EQUIPMENT, Net                                        |                                                                                                                                              |                            | 89,273                                     |            |           |           | 91,912 |           
|OTHER ASSETS:                                                      |                                                                                                                                              |                            |                                            |            |           |           |        |           
|                                                                   | Capitalized software, net                                                                                                                    |                            |                                            | 6,175      |           |           |        | 11,512     |          
|                                                                   | Goodwill                                                                                                                                     |                            |                                            | 656,174    |           |           |        | 612,971    |          
|                                                                   | Strategic agreements, net                                                                                                                    |                            |                                            | 147,448    |           |           |        | 271,390    |          
|                                                                   | Other intangible assets, net                                                                                                                 |                            |                                            | 30,935     |           |           |        | 21,670     |          
|                                                                   | Investments                                                                                                                                  |                            |                                            | 62,996     |           |           |        | 68,344     |          
|                                                                   | Other noncurrent assets                                                                                                                      |                            |                                            | 4,600      |           |           |        | 4,396      |          
|                                                                   | Deferred income taxes                                                                                                                        |                            |                                            | 35,648     |           |           |        |           |          
|                                                                   | Investment in joint venture                                                                                                                  |                            |                                            | 317        |           |           |        | 483        |          
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          
|                                                                   |                                                                                                                                              | Total other assets         |                                            |            | 944,293   |           |        |            | 990,766   |          
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          
|                                                                   |                                                                                                                                              |                            | Total assets                               |            | $         | 1,569,916 |        |            | $         | 1,548,932 | 
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          
|LIABILITIES AND STOCKHOLDERS EQUITY                              
|CURRENT LIABILITIES:                                               |                                                                                                                                              |                            |                                            |            |           |           |        |           
|                                                                   | Accounts payable                                                                                                                             |                            | $                                          | 11,444     |           |           | $      | 12,234     |          
|                                                                   | Settlement obligations                                                                                                                       |                            |                                            | 73,919     |           |           |        | 82,611     |          
|                                                                   | Accrued liabilities                                                                                                                          |                            |                                            | 72,189     |           |           |        | 67,211     |          
|                                                                   | Current portion of long-term obligations                                                                                                     |                            |                                            | 476        |           |           |        | 4,192      |          
|                                                                   | Deferred revenue                                                                                                                             |                            |                                            | 40,793     |           |           |        | 36,193     |          
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          
|                                                                   |                                                                                                                                              | Total current liabilities  |                                            |            | 198,821   |           |        |            | 202,441   |          
|ACCRUED RENT AND OTHER                                             |                                                                                                                                              |                            | 4,324                                      |            |           |           | 4,313  |           
|DEFERRED INCOME TAXES                                              |                                                                                                                                              |                            | 4,967                                      |            |           |           | 17,492 |           
|CAPITAL LEASE AND LONG-TERM OBLIGATIONS  Less current
    portion |                                                                                                                                              |                            | 25,389                                     |            |           |           | 25,504 |           
|COMMITMENTS AND CONTINGENCIES (Note 11)                            |                                                                                                                                              |                            |                                            |            |           |           |        |           
|STOCKHOLDERS 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 90,257,704 and
    90,164,926 shares, respectively |                            |                                            | 903        |           |           |        | 902        |          
|                                                                   | Additional paid-in-capital                                                                                                                   |                            |                                            | 2,469,184  |           |           |        | 2,471,062  |          
|                                                                   | Unearned compensation                                                                                                                        |                            |                                            | (6,168     | )         |           |        |           |          
|                                                                   | Accumulated other comprehensive loss                                                                                                         |                            |                                            | (2,251     | )         |           |        | (728       | )        
|                                                                   | Accumulated deficit                                                                                                                          |                            |                                            | (1,125,253 | )         |           |        | (1,172,054 | )        
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          
|                                                                   |                                                                                                                                              | Total stockholders equity |                                            |            | 1,336,415 |           |        |            | 1,299,182 |          
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          
|                                                                   |                                                                                                                                              |                            | Total liabilities and stockholders equity |            | $         | 1,569,916 |        |            | $         | 1,548,932 | 
|                                                                   |                                                                                                                                              |                            |                                            |            |           |          



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CHECKFREE CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |         |         |         |            |         |         |         | 
|-------------------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------------- | ------------------------------ | -------------- | ------- | ------- | ------- | ---------- | ------- | ------- | ------- | ---------- | ------- | ------- | ------- | 
|                                                                                 |                                                             | Year Ended June 30,             |                               
|                                                                                 |                                                             |                                 |                               
|                                                                                 |                                                             | 2005                            |                                |                | 2004    |         |         | 2003       |        
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|                                                                                 |                                                             | (In thousands, except share and |                               
|                                                                                 |                                                             | per share data)                 |                               
|REVENUES:                                                                        |                                                             |                                 |                                |                |         |         |         |            |         |         |         |           
|                                                                                 | Processing and servicing:                                   |                                 |                                |                |         |         |         |            |         |         |         |            |        
|                                                                                 |                                                             | Third parties                   |                                | $              | 635,353 |         |         | $          | 488,705 |         |         | $          | 397,435 |        
|                                                                                 |                                                             | Related parties                 |                                |                | 33,000  |         |         |            | 41,500  |         |         |            | 78,981  |        
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|                                                                                 |                                                             |                                 | Total processing and servicing |                |         | 668,353 |         |            |         | 530,205 |         |            |         | 476,416 |        
|                                                                                 | License fees                                                |                                 |                                | 28,458         |         |         |         | 23,931     |         |         |         | 24,163     |        
|                                                                                 | Maintenance fees                                            |                                 |                                | 31,265         |         |         |         | 28,271     |         |         |         | 25,733     |        
|                                                                                 | Other                                                       |                                 |                                | 29,756         |         |         |         | 24,057     |         |         |         | 25,334     |        
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|                                                                                 |                                                             |                                 |                                | Total revenues |         |         | 757,832 |            |         |         | 606,464 |            |         |         | 551,646 | 
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|EXPENSES:                                                                        |                                                             |                                 |                                |                |         |         |         |            |         |         |         |           
|                                                                                 | Cost of processing, servicing and support                   |                                 |                                | 297,256        |         |         |         | 244,811    |         |         |         | 237,978    |        
|                                                                                 | Research and development                                    |                                 |                                | 82,550         |         |         |         | 66,288     |         |         |         | 52,717     |        
|                                                                                 | Sales and marketing                                         |                                 |                                | 70,054         |         |         |         | 51,910     |         |         |         | 57,170     |        
|                                                                                 | General and administrative                                  |                                 |                                | 59,272         |         |         |         | 45,759     |         |         |         | 39,030     |        
|                                                                                 | Depreciation and amortization                               |                                 |                                | 176,598        |         |         |         | 177,582    |         |         |         | 226,638    |        
|                                                                                 | In-process research and development                         |                                 |                                |               |         |         |         | 324        |         |         |         |           |        
|                                                                                 | Impairment of intangible assets                             |                                 |                                |               |         |         |         |           |         |         |         | 10,228     |        
|                                                                                 | Reorganization charge                                       |                                 |                                | 5,585          |         |         |         |           |         |         |         | 1,405      |        
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|                                                                                 |                                                             |                                 |                                | Total expenses |         |         | 691,315 |            |         |         | 586,674 |            |         |         | 625,166 | 
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|INCOME (LOSS) FROM OPERATIONS                                                    |                                                             |                                 | 66,517                         |                |         |         | 19,790  |            |         |         | (73,520 | )         
|OTHER:                                                                           |                                                             |                                 |                                |                |         |         |         |            |         |         |         |           
|                                                                                 | Equity in net loss of joint venture                         |                                 |                                | (2,984         | )       |         |         | (593       | )       |         |         |           |        
|                                                                                 | Interest income                                             |                                 |                                | 8,810          |         |         |         | 5,697      |         |         |         | 7,327      |        
|                                                                                 | Interest expense                                            |                                 |                                | (1,094         | )       |         |         | (13,164    | )       |         |         | (12,975    | )      
|                                                                                 | Gain (loss) on investments                                  |                                 |                                | 592            |         |         |         |           |         |         |         | (3,228     | )      
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
    ACCOUNTING CHANGE |                                                             |                                 | 71,841                         |                |         |         | 11,730  |            |         |         | (82,396 | )         
|INCOME TAX EXPENSE (BENEFIT)                                                     |                                                             |                                 | 25,040                         |                |         |         | 1,195   |            |         |         | (33,106 | )         
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                      |                                                             |                                 | 46,801                         |                |         |         | 10,535  |            |         |         | (49,290 | )         
|CUMULATIVE EFFECT OF ACCOUNTING CHANGE                                           |                                                             |                                 |                               |                |         |         |        |            |         |         | (2,894  | )         
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|NET INCOME (LOSS)                                                                |                                                             | $                               | 46,801                         |                |         | $       | 10,535  |            |         | $       | (52,184 | )         
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|BASIC INCOME (LOSS) PER SHARE:                                                   |                                                             |                                 |                                |                |         |         |         |            |         |         |         |           
|                                                                                 | Income (loss) before cumulative effect of accounting change |                                 | $                              | 0.52           |         |         | $       | 0.12       |         |         | $       | (0.56      | )      
|                                                                                 | Cumulative effect of accounting change                      |                                 |                                |               |         |         |         |           |         |         |         | (0.03      | )      
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|                                                                                 | Net income (loss) per share                                 |                                 | $                              | 0.52           |         |         | $       | 0.12       |         |         | $       | (0.59      | )      
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|                                                                                 | Weighted average number of shares                           |                                 |                                | 90,767,054     |         |         |         | 89,869,760 |         |         |         | 88,807,069 |        
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|DILUTED INCOME (LOSS) PER SHARE:                                                 |                                                             |                                 |                                |                |         |         |         |            |         |         |         |           
|                                                                                 | Income (loss) before cumulative effect of accounting change |                                 | $                              | 0.50           |         |         | $       | 0.11       |         |         | $       | (0.56      | )      
|                                                                                 | Cumulative effect of accounting change                      |                                 |                                |               |         |         |         |           |         |         |         | (0.03      | )      
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|                                                                                 | Net income (loss) per share                                 |                                 | $                              | 0.50           |         |         | $       | 0.11       |         |         | $       | (0.59      | )      
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        
|                                                                                 | Weighted average number of shares                           |                                 |                                | 92,914,597     |         |         |         | 91,864,490 |         |         |         | 88,807,069 |        
|                                                                                 |                                                             |                                 |                                |                |         |         |         |            |        



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##### Table of Contents



CHECKFREE CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                                                       |                            |                                   |            |   |                |  |          |        |  |   |            |   |  |   |           |   | 
|---------------------------------------------------------------------- | -------------------------- | --------------------------------- | ---------- | - | -------------- |  | -------- | ------ |  | - | ---------- | - |  | - | --------- | - | 
|                                                                       |                            | Number of                         |            |   | Number of      |  |          | Common |  |   | Additional |  
|                                                                       |                            | Shares of                         |            |   | Shares of      |  |          | Stock  |  |   | Paid-In    |  
|                                                                       |                            | Common Stock                      |            |   | Treasury Stock |  |          | at Par |  |   | Capital    |  
|                                                                       |                            |                                   |            |   |                |  |          |        |  |   |            |  
|                                                                       |                            | (In thousands, except share data) |           
|BALANCE  JUNE 30, 2002                                                |                            |                                   | 88,085,894 |   |                |  |         |        |  | $ | 881        |   |  | $ | 2,435,310 |  
|Net loss                                                               |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|Unrealized gain on available-for-sale securities, net of tax           |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|                                                                       | Total comprehensive loss   |                                   |            |   |                |  |          |        |  |   |            |   |  |   |           |   | 
|Stock options and warrants exercised                                   |                            |                                   | 532,841    |   |                |  |         |        |  |   | 5          |   |  |   | 6,942     |  
|Tax benefit associated with exercise of stock options and
    warrants |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   | 1,550     |  
|Employee stock purchases                                               |                            |                                   | 257,533    |   |                |  |         |        |  |   | 3          |   |  |   | 3,291     |  
|401(k) match                                                           |                            |                                   | 402,102    |   |                |  |         |        |  |   | 4          |   |  |   | 3,225     |  
|Return of restricted stock                                             |                            |                                   | (12,000    | ) |                |  |         |        |  |   |           |   |  |   | (300      | )
|Impact of warrants                                                     |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   | (644      | )
|                                                                       |                            |                                   |            |   |                |  |          |        |  |   |            |  
|BALANCE  JUNE 30, 2003                                                |                            |                                   | 89,266,370 |   |                |  |         |        |  |   | 893        |   |  |   | 2,449,374 |  
|Net income                                                             |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|Unrealized loss on available-for-sale securities, net of tax           |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|Unrealized gain on foreign currency translation                        |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|Unrealized loss on cash flow hedges, net of tax                        |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|                                                                       | Total comprehensive income |                                   |            |   |                |  |          |        |  |   |            |   |  |   |           |   | 
|Stock options exercised                                                |                            |                                   | 571,844    |   |                |  |         |        |  |   | 6          |   |  |   | 7,150     |  
|Tax benefit associated with exercise of stock options                  |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   | 2,621     |  
|Employee stock purchases                                               |                            |                                   | 176,868    |   |                |  |         |        |  |   | 2          |   |  |   | 3,299     |  
|401(k) match                                                           |                            |                                   | 149,844    |   |                |  |         |        |  |   | 1          |   |  |   | 6,213     |  
|Equity-based compensation                                              |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   | 2,405     |  
|                                                                       |                            |                                   |            |   |                |  |          |        |  |   |            |  
|BALANCE  JUNE 30, 2004                                                |                            |                                   | 90,164,926 |   |                |  |         |        |  |   | 902        |   |  |   | 2,471,062 |  
|Net income                                                             |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|Unrealized loss on available-for-sale
    securities, net of tax       |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|Unrealized loss on foreign currency translation                        |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|Unrealized loss on cash flow hedges,
    net of tax                    |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|                                                                       | Total comprehensive income |                                   |            |   |                |  |          |        |  |   |            |   |  |   |           |   | 
|Stock options exercised                                                |                            |                                   | 710,396    |   |                |  |         |        |  |   | 7          |   |  |   | 10,200    |  
|Tax benefit associated with exercise of stock options                  |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   | 4,028     |  
|Employee stock purchases                                               |                            |                                   | 165,098    |   |                |  |         |        |  |   | 2          |   |  |   | 3,995     |  
|Treasury shares acquired                                               |                            |                                   |           |   |                |  | (891,200 | )      |  |   |           |   |  |   |          |  
|Treasury shares retired                                                |                            |                                   | (891,200   | ) |                |  | 891,200  |        |  |   | (9         | ) |  |   | (33,451   | )
|401(k) match                                                           |                            |                                   | 108,484    |   |                |  |         |        |  |   | 1          |   |  |   | 3,069     |  
|Unearned compensation                                                  |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   | 8,721     |  
|Amortization of unearned
    compensation                              |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   |          |  
|Equity-based compensation                                              |                            |                                   |           |   |                |  |         |        |  |   |           |   |  |   | 1,560     |  
|                                                                       |                            |                                   |            |   |                |  |          |        |  |   |            |  
|BALANCE  JUNE 30, 2005                                                |                            |                                   | 90,257,704 |   |                |  |         |        |  | $ | 903        |   |  | $ | 2,469,184 |  
|                                                                       |                            |                                   |            |   |                |  |          |        |  |   |            |  



64



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##### Table of Contents



CHECKFREE CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |            |   |  |   |           |         |  
|---------------------------------------------------------------------- | -------------------------- | --------------------------------- | ------ | - | -------- | - | ------- | ------------ |  | - | ----------- | ----- |  | ------------- | ---------- | - |  | - | --------- | ------- | -
|                                                                       |                            | Accumulated                       |        |   |          |   |         |              |  |   |            
|                                                                       |                            | Other                             |        |   | Treasury |   |         |              |  |   |             | Total | 
|                                                                       |                            | Comprehensive                     |        |   | Stock    |   |         | Unearned     |  |   | Accumulated |       |  | Stockholders |           
|                                                                       |                            | Income (Loss)                     |        |   | At Cost  |   |         | Compensation |  |   | Deficit     |       |  | Equity        |           
|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |           
|                                                                       |                            | (In thousands, except share data) |       
|BALANCE  JUNE 30, 2002                                                |                            | $                                 |       |   |          | $ |        |              |  | $ | (125        | )     |  | $             | (1,130,405 | ) |  | $ | 1,305,661 |        
|Net loss                                                               |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               | (52,184    | ) |  |   | (52,184   | )      
|Unrealized gain on available-for-sale securities, net of tax           |                            |                                   | 471    |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 471       |        
|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |           
|                                                                       | Total comprehensive loss   |                                   |        |   |          |   |         |              |  |   |             |       |  |               |            |   |  |   |           | (51,713 | )
|Stock options and warrants exercised                                   |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 6,947     |        
|Tax benefit associated with exercise of stock options and
    warrants |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 1,550     |        
|Employee stock purchases                                               |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 3,294     |        
|401(k) match                                                           |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 3,229     |        
|Return of restricted stock                                             |                            |                                   |       |   |          |   |        |              |  |   | 125         |       |  |               |           |   |  |   | (175      | )      
|Impact of warrants                                                     |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | (644      | )      
|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |           
|BALANCE  JUNE 30, 2003                                                |                            |                                   | 471    |   |          |   |        |              |  |   |            |       |  |               | (1,182,589 | ) |  |   | 1,268,149 |        
|Net income                                                             |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               | 10,535     |   |  |   | 10,535    |        
|Unrealized loss on available-for-sale securities, net of tax           |                            |                                   | (709   | ) |          |   |        |              |  |   |            |       |  |               |           |   |  |   | (709      | )      
|Unrealized gain on foreign currency translation                        |                            |                                   | 54     |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 54        |        
|Unrealized loss on cash flow hedges, net of tax                        |                            |                                   | (544   | ) |          |   |        |              |  |   |            |       |  |               |           |   |  |   | (544      | )      
|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |           
|                                                                       | Total comprehensive income |                                   |        |   |          |   |         |              |  |   |             |       |  |               |            |   |  |   |           | 9,336   |  
|Stock options exercised                                                |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 7,156     |        
|Tax benefit associated with exercise of stock options                  |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 2,621     |        
|Employee stock purchases                                               |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 3,301     |        
|401(k) match                                                           |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 6,214     |        
|Equity-based compensation                                              |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 2,405     |        
|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |           
|BALANCE  JUNE 30, 2004                                                |                            |                                   | (728   | ) |          |   |        |              |  |   |            |       |  |               | (1,172,054 | ) |  |   | 1,299,182 |        
|Net income                                                             |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               | 46,801     |   |  |   | 46,801    |        
|Unrealized loss on available-for-sale securities, net of tax           |                            |                                   | (174   | ) |          |   |        |              |  |   |            |       |  |               |           |   |  |   | (174      | )      
|Unrealized loss on foreign currency translation                        |                            |                                   | (800   | ) |          |   |        |              |  |   |            |       |  |               |           |   |  |   | (800      | )      
|Unrealized loss on cash flow hedges, net of tax                        |                            |                                   | (549   | ) |          |   |        |              |  |   |            |       |  |               |           |   |  |   | (549      | )      
|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |           
|                                                                       | Total comprehensive income |                                   |        |   |          |   |         |              |  |   |             |       |  |               |            |   |  |   |           | 45,278  |  
|Stock options exercised                                                |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 10,207    |        
|Tax benefit associated with exercise of stock options                  |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 4,028     |        
|Employee stock purchases                                               |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 3,997     |        
|Treasury shares acquired                                               |                            |                                   |       |   |          |   | (33,460 | )            |  |   |            |       |  |               |           |   |  |   | (33,460   | )      
|Treasury shares retired                                                |                            |                                   |       |   |          |   | 33,460  |              |  |   |            |       |  |               |           |   |  |   |          |        
|401(k) match                                                           |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 3,070     |        
|Unearned compensation                                                  |                            |                                   |       |   |          |   |        |              |  |   | (8,721      | )     |  |               |           |   |  |   |          |        
|Amortization of unearned compensation                                  |                            |                                   |       |   |          |   |        |              |  |   | 2,553       |       |  |               |           |   |  |   | 2,553     |        
|Equity-based compensation                                              |                            |                                   |       |   |          |   |        |              |  |   |            |       |  |               |           |   |  |   | 1,560     |        
|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |           
|BALANCE  JUNE 30, 2005                                                |                            | $                                 | (2,251 | ) |          | $ |        |              |  | $ | (6,168      | )     |  | $             | (1,125,253 | ) |  | $ | 1,336,415 |        
|                                                                       |                            |                                   |        |   |          |   |         |              |  |   |             |       |  |               |           



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##### Table of Contents



CHECKFREE CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                             |                                                                                              |                                           |         |          |          |   |         |          |          |   |        |          |         |  
|------------------------------------------------------------ | -------------------------------------------------------------------------------------------- | ----------------------------------------- | ------- | -------- | -------- | - | ------- | -------- | -------- | - | ------ | -------- | ------- | -
|                                                             |                                                                                              | Year Ended June 30,                       |        
|                                                             |                                                                                              |                                           |        
|                                                             |                                                                                              | 2005                                      |         |          | 2004     |   |         | 2003     |         
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         
|                                                             |                                                                                              | (In thousands)                            |        
|OPERATING ACTIVITIES:                                        |                                                                                              |                                           |         |          |          |   |         |          |          |   |        |         
|                                                             | Net income (loss)                                                                            |                                           | $       | 46,801   |          |   | $       | 10,535   |          |   | $      | (52,184  | )      
|                                                             | Adjustments to reconcile net income (loss) to net cash provided
    by operating activities: |                                           |         |          |          |   |         |          |          |   |        |          |        
|                                                             | Equity in net loss of joint venture                                                          |                                           |         | 2,984    |          |   |         | 593      |          |   |        |         |        
|                                                             | Depreciation and amortization                                                                |                                           |         | 176,598  |          |   |         | 177,582  |          |   |        | 226,638  |        
|                                                             | Deferred income tax benefit                                                                  |                                           |         | (13,701  | )        |   |         | (12,930  | )        |   |        | (35,147  | )      
|                                                             | Impairment of intangible assets                                                              |                                           |         |         |          |   |         |         |          |   |        | 10,228   |        
|                                                             | Impact of warrants                                                                           |                                           |         |         |          |   |         |         |          |   |        | (644     | )      
|                                                             | (Gain) loss on investments                                                                   |                                           |         | (592     | )        |   |         |         |          |   |        | 3,228    |        
|                                                             | Equity-based compensation                                                                    |                                           |         | 8,193    |          |   |         | 5,569    |          |   |        |         |        
|                                                             | Cumulative effect of accounting change                                                       |                                           |         |         |          |   |         |         |          |   |        | 2,894    |        
|                                                             | Net loss on disposition of property and equipment                                            |                                           |         | 277      |          |   |         | 487      |          |   |        | 471      |        
|                                                             | Write off of in-process research and development                                             |                                           |         |         |          |   |         | 324      |          |   |        |         |        
|                                                             | Write off of convertible notes issuance costs                                                |                                           |         |         |          |   |         | 2,407    |          |   |        |         |        
|                                                             | Change in certain assets and liabilities (net of acquisitions):                              |                                           |         |          |          |   |         |          |          |   |        |          |        
|                                                             |                                                                                              | Settlement assets and obligations         |         |          | 153      |   |         |          | (193     | ) |        |          |        |  
|                                                             |                                                                                              | Accounts receivable                       |         |          | (11,994  | ) |         |          | (12,874  | ) |        |          | 6,404   |  
|                                                             |                                                                                              | Prepaid expenses and other                |         |          | (6,211   | ) |         |          | 3,495    |   |        |          | (2,604  | )
|                                                             |                                                                                              | Accounts payable                          |         |          | (1,750   | ) |         |          | 11       |   |        |          | (344    | )
|                                                             |                                                                                              | Accrued liabilities and other             |         |          | 4,238    |   |         |          | (2,308   | ) |        |          | 4,720   |  
|                                                             |                                                                                              | Deferred revenue                          |         |          | 1,099    |   |         |          | (1,639   | ) |        |          | (5,867  | )
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         
|                                                             |                                                                                              | Net cash provided by operating activities |         |          | 206,095  |   |         |          | 171,059  |   |        |          | 157,793 |  
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         
|INVESTING ACTIVITIES:                                        |                                                                                              |                                           |         |          |          |   |         |          |          |   |        |         
|                                                             | Purchase of property and software                                                            |                                           |         | (33,893  | )        |   |         | (23,482  | )        |   |        | (24,324  | )      
|                                                             | Proceeds from sale of assets                                                                 |                                           |         |         |          |   |         |         |          |   |        | 580      |        
|                                                             | Capitalization of software development costs                                                 |                                           |         | (1,706   | )        |   |         | (2,817   | )        |   |        | (4,296   | )      
|                                                             | Purchases of investments  Held-to-maturity                                                  |                                           |         |         |          |   |         | (511     | )        |   |        | (38,522  | )      
|                                                             | Proceeds from maturities of investments 
    Held-to-maturity                               |                                           |         |         |          |   |         | 34,253   |          |   |        | 118,527  |        
|                                                             | Purchases of investments  Available-for-sale                                                |                                           |         | (380,672 | )        |   |         | (240,919 | )        |   |        | (137,921 | )      
|                                                             | Proceeds from maturities of investments 
    Available-for-sale                             |                                           |         | 262,704  |          |   |         | 255,972  |          |   |        | 24,936   |        
|                                                             | Purchase of other investments                                                                |                                           |         | (223     | )        |   |         | (74      | )        |   |        | (152     | )      
|                                                             | Proceeds from other investments                                                              |                                           |         | 26       |          |   |         | 11       |          |   |        |         |        
|                                                             | Decrease in restricted investments                                                           |                                           |         |         |          |   |         | 3,000    |          |   |        |         |        
|                                                             | Purchase of businesses, net of cash acquired                                                 |                                           |         | (54,934  | )        |   |         | (122,322 | )        |   |        |         |        
|                                                             | Investment in joint venture                                                                  |                                           |         | (2,818   | )        |   |         | (1,212   | )        |   |        |         |        
|                                                             | Changes in other assets                                                                      |                                           |         | (4,339   | )        |   |         | (5,314   | )        |   |        |         |        
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         
|                                                             |                                                                                              | Net cash used in investing activities     |         |          | (215,855 | ) |         |          | (103,415 | ) |        |          | (61,172 | )
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         
|FINANCING ACTIVITIES:                                        |                                                                                              |                                           |         |          |          |   |         |          |          |   |        |         
|                                                             | Principal payments under capital lease and other long-term
    obligations                   |                                           |         | (5,108   | )        |   |         | (5,575   | )        |   |        | (12,212  | )      
|                                                             | Proceeds from stock options exercised                                                        |                                           |         | 10,207   |          |   |         | 7,156    |          |   |        | 6,947    |        
|                                                             | Proceeds from employee stock purchase plan                                                   |                                           |         | 4,248    |          |   |         | 3,453    |          |   |        | 2,993    |        
|                                                             | Treasury shares acquired                                                                     |                                           |         | (33,460  | )        |   |         |         |          |   |        |         |        
|                                                             | Redemption of convertible notes                                                              |                                           |         |         |          |   |         | (172,500 | )        |   |        |         |        
|                                                             | Increase in long-term deposits                                                               |                                           |         |         |          |   |         | 25,000   |          |   |        |         |        
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         
|                                                             |                                                                                              | Net cash used in financing activities     |         |          | (24,113  | ) |         |          | (142,466 | ) |        |          | (2,272  | )
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                                              |                                           | 313     |          |          |   | 296     |          |          |   |       |         
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         |                                                                                              |                                           | (33,560 | )        |          |   | (74,526 | )        |          |   | 94,349 |         
|CASH AND CASH EQUIVALENTS:                                   |                                                                                              |                                           |         |          |          |   |         |          |          |   |        |         
|                                                             | Beginning of period                                                                          |                                           |         | 134,832  |          |   |         | 209,358  |          |   |        | 115,009  |        
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         
|                                                             | End of period                                                                                |                                           | $       | 101,272  |          |   | $       | 134,832  |          |   | $      | 209,358  |        
|                                                             |                                                                                              |                                           |         |          |          |   |         |          |         



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS




|        |                                           
|------- | ------------------------------------------
|NOTE 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Organization


Principles of Consolidation


Use of Estimates


Cash and Cash Equivalents


Investments








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Settlement Assets and Obligations


Concentrations of Credit Risk


Derivative Financial Instruments




Property and Equipment


Capitalized Software




|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SFAS 86  Software development costs
    incurred prior to the establishment of technological feasibility
    are expensed as incurred. Software development costs incurred
    after the technological feasibility of the subject software
    product has been established are capitalized in accordance with
    SFAS 86. Capitalized software costs are amortized on a
    product-by-product basis using either the estimated economic
    life of the product on a straight-line basis over three to five
    years, or the current year gross product revenue to the current
    and anticipated future gross product revenue, whichever produces
    the greater annual amortization. Unamortized software
    development costs in excess of estimated future net realizable
    values from a particular product are written down to estimated
    net realizable value.
| 
| | SOP 98-1  Software costs incurred in the
    preliminary project stage are expensed as incurred. Software
    costs incurred after the preliminary project stage is complete,
    we have committed to the project, and it                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | is probable the software will be used to perform the function
    intended are capitalized in accordance with SOP 98-1.
    Capitalized software costs are amortized on a product-by-product
    basis using the estimated economic life of the product on a
    straight-line basis, generally three to five years. Capitalized
    software costs not expected to be completed and placed in
    service are written down to estimated fair value.

Goodwill and Other Intangible Assets






Impairment of Long-Lived Assets


Transaction Processing


Comprehensive Income (Loss)


Stock-Based Compensation


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|                                                       |                             |                     |        |        |      |   |         |        |   |   |         |         |  
|------------------------------------------------------ | --------------------------- | ------------------- | ------ | ------ | ---- | - | ------- | ------ | - | - | ------- | ------- | -
|                                                       |                             | Year Ended June 30, |       
|                                                       |                             |                     |       
|                                                       |                             | 2005                |        |        | 2004 |   |         | 2003   |  
|                                                       |                             |                     |        |        |      |   |         |        |  
|Net income (loss), as reported                         |                             | $                   | 46,801 |        |      | $ | 10,535  |        |   | $ | (52,184 | )      
|Stock-based compensation included in net income (loss) |                             |                     | 3,677  |        |      |   | 1,828   |        |   |   | (175    | )      
|Stock-based compensation under SFAS 123                |                             |                     | (9,281 | )      |      |   | (16,589 | )      |   |   | (27,764 | )      
|                                                       |                             |                     |        |        |      |   |         |        |  
|                                                       | Pro forma net income (loss) |                     | $      | 41,197 |      |   | $       | (4,226 | ) |   | $       | (80,123 | )
|                                                       |                             |                     |        |        |      |   |         |        |  
|Pro forma earnings (loss) per share:                   |                             |                     |        |        |      |   |         |        |   |   |         |        
|                                                       | Basic and diluted           |                     | $      | 0.45   |      |   | $       | (0.05  | ) |   | $       | (0.90   | )
|                                                       |                             |                     |        |        |      |   |         |        |  

Stock-Related Transactions With Third Parties


Basic and Diluted Earnings (Loss) Per Share


Foreign Currency Translation


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Revenue Recognition




|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Processing and servicing  Processing and
    servicing includes revenues from transaction processing,
    electronic funds transfer and monthly service fees on consumer
    funds transfer services. We recognize revenues when the services
    have been performed. Certain customer agreements include minimum
    monthly revenue commitments to us and, of those agreements; some
    have provisions that allow these minimum commitments to be
    credited against future services, as defined. We defer any
    portion of the minimum revenue commitments that we expect to be
    credited against future services until the future services are
    performed or the credits expire unused. Our estimate of minimums
    to be credited against future services is primarily based on
    customer specific historical experience and volume and growth
    experience with other customers. Transaction fees related to our
    walk-in payment operations are recorded gross of agent
    commissions if we are required to invoice our customers for such
    fees and remit the commission to our agents.





|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | License fees  We recognize revenues on
    software transactions in accordance with SOP 97-2,
    Software Revenue Recognition,
    (SOP 97-2) as amended by SOP 98-9,
    Modification of SOP 97-2, Software Revenue
    Recognition, With Respect to Certain Transactions and
    SOP 81-1, Accounting for Performance of
    Construction-Type and Certain Production-Type Contracts,
    based on the terms and conditions in the contract. In accordance
    with the provisions of SOP 97-2, revenues from software
    license agreements are recognized when there is persuasive
    evidence that an arrangement exists, the fee is fixed or
    determinable, collectibility is probable and the software has
    been shipped, provided that no significant obligation remains
    under the contract. Contracts accounted for under the
    percentage-of-completion method are generally measured based on
    the ratio of labor costs incurred to total estimated labor costs
    to be incurred. Changes in estimates to complete and revisions
    in overall profit estimates on these contracts are charged to
    earnings in the period in which they are determined. We accrue
    for contract losses if and when the current estimate of total
    contract costs exceeds total contract revenue.
| 
| | Maintenance fees  We recognize maintenance fee
    revenues ratably over the term of the related contractual
    support period, generally 12 months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| 
| | Other  Other revenues consists primarily of
    consulting and training services. We recognize consulting
    revenues as services are performed and training revenues are
    recognized upon delivery of the related services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



Advertising Costs


Income Taxes


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Business Segments


Related Parties


Recent Accounting Pronouncements








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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We reclassified approximately $1,350,000 of unamortized
    workforce in place intangible assets, net of the associated
    deferred income taxes, into goodwill.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| 
| | After the reclassification above, goodwill was no longer
    amortized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| 
| | We performed a transitional impairment test as of July 1,
    2002. This impairment test required that we (1) identified
    our reporting units, (2) determine the carrying value of
    each reporting unit by assigning assets and liabilities,
    including existing goodwill and intangible assets, to those
    reporting units, and (3) determine the fair value of each
    reporting unit. If the carrying value of any reporting unit
    exceeded its fair value, then the amount of any goodwill
    impairment was determined through a fair value analysis of each
    of the assigned assets (excluding goodwill) and liabilities.



Reclassifications




|        |             
|------- | ------------
|NOTE 2. | ACQUISITIONS



| |                          
| | -------------------------
| | Accurate Software Limited



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|                         |  |            |        |  |             |  |              | 
|------------------------ |  | ---------- | ------ |  | ----------- |  | ------------ | 
|                         |  | Intangible |        |  |            
|                         |  | Asset      |        |  | Useful Life | 
|                         |  |            |        |  |             | 
|Customer relationships   |  | $          | 11,000 |  |             |  | 6 yrs        | 
|Current technology       |  |            | 1,860  |  |             |  | 2 to 5 yrs   | 
|Covenants not to compete |  |            | 2,490  |  |             |  | 1 yr         | 
|Tradenames               |  |            | 2,026  |  |             |  | 1.5 to 3 yrs | 





| |                               
| | ------------------------------
| | American Payment Systems, Inc.



|                         |  |            |        |  |             |  |             | 
|------------------------ |  | ---------- | ------ |  | ----------- |  | ----------- | 
|                         |  | Intangible |        |  |            
|                         |  | Asset      |        |  | Useful Life | 
|                         |  |            |        |  |             | 
|Customer relationships   |  | $          | 10,790 |  |             |  | 3 to 6 yrs  | 
|Current technology       |  |            | 2,230  |  |             |  | 4 to 5 yrs  | 
|Covenants not to compete |  |            | 1,250  |  |             |  | 4 to 5 yrs  | 
|Money transfer licenses  |  |            | 1,700  |  |             |  | 1 yr        | 
|Tradenames               |  |            | 2,650  |  |             |  | 2 to 10 yrs | 



| |                 
| | ----------------
| | HelioGraph, Ltd.



|                         |  |            |     |  |             |  |            | 
|------------------------ |  | ---------- | --- |  | ----------- |  | ---------- | 
|                         |  | Intangible |     |  |            
|                         |  | Asset      |     |  | Useful Life | 
|                         |  |            |     |  |             | 
|Customer relationships   |  | $          | 520 |  |             |  | 5 yrs      | 
|Covenants not to compete |  |            | 410 |  |             |  | 3 yrs      | 
|Current technology       |  |            | 880 |  |             |  | 4 to 5 yrs | 
|Tradenames               |  |            | 110 |  |             |  | 3 yrs      | 



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|        |            
|------- | -----------
|NOTE 3. | INVESTMENTS



|                                             |                   |          |         |         |      |   |         |         | 
|-------------------------------------------- | ----------------- | -------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                             |                   | June 30, |        
|                                             |                   |          |        
|                                             |                   | 2005     |         |         | 2004 |  
|                                             |                   |          |         |         |      |  
|Available-for-sale                           |                   | $        | 347,895 |         |      | $ | 243,526 |        
|Other investments                            |                   |          | 918     |         |      |   | 725     |        
|Less: amounts classified as cash equivalents |                   |          | 89,012  |         |      |   | 102,710 |        
|                                             |                   |          |         |         |      |  
|                                             | Total investments |          | $       | 259,801 |      |   | $       | 141,541 | 
|                                             |                   |          |         |         |      |  

Available-for-Sale


|               |                                                |                                    |   |         |                  |  |   |           |     |  |             |      |      |   |   |         |         | 
|-------------- | ---------------------------------------------- | ---------------------------------- | - | ------- | ---------------- |  | - | --------- | --- |  | ----------- | ---- | ---- | - | - | ------- | ------- | 
|               |                                                | Cost or                            |   |         | Gross Unrealized |  |   |          
|               |                                                | Amortized                          |   |         |                  |  |   | Estimated |    
|               |                                                | Cost                               |   |         | Gains            |  |   | Losses    |     |  | Fair Values |     
|               |                                                |                                    |   |         |                  |  |   |           |     |  |             |     
|June 30, 2005: |                                                |                                    |   |         |                  |  |   |           |     |  |             |      |      |   |   |        
|               | Corporate bonds                                |                                    | $ | 59,211  |                  |  | $ | 9         |     |  | $           | (167 | )    |   | $ | 59,053  |        
|               | Asset-backed securities                        |                                    |   | 21,470  |                  |  |   | 25        |     |  |             | (95  | )    |   |   | 21,400  |        
|               | Collateralized mortgage obligations            |                                    |   | 11,404  |                  |  |   | 26        |     |  |             | (224 | )    |   |   | 11,206  |        
|               | Commercial paper                               |                                    |   | 2,760   |                  |  |   |          |     |  |             |     |      |   |   | 2,760   |        
|               | U.S. Government and federal agency obligations |                                    |   | 46,382  |                  |  |   | 2         |     |  |             | (241 | )    |   |   | 46,143  |        
|               | Municipal bonds                                |                                    |   | 74,208  |                  |  |   | 12        |     |  |             | (17  | )    |   |   | 74,203  |        
|               | Money market and mutual funds and other        |                                    |   | 103,152 |                  |  |   |          |     |  |             |     |      |   |   | 103,152 |        
|               | Mortgage pass-through securities               |                                    |   | 30,178  |                  |  |   | 14        |     |  |             | (214 | )    |   |   | 29,978  |        
|               |                                                |                                    |   |         |                  |  |   |           |     |  |             |     
|               | Available-for-sale investments                 |                                    |   | 348,765 |                  |  |   | 88        |     |  |             | (958 | )    |   |   | 347,895 |        
|               | Less: amounts classified as cash equivalents   |                                    |   | 89,012  |                  |  |   |           |     |  |             |      |      |   |   | 89,012  |        
|               |                                                |                                    |   |         |                  |  |   |           |     |  |             |     
|               |                                                | Net available-for-sale investments |   | $       | 259,753          |  |   | $         | 88  |  |             | $    | (958 | ) |   | $       | 258,883 | 
|               |                                                |                                    |   |         |                  |  |   |           |     |  |             |     
|June 30, 2004: |                                                |                                    |   |         |                  |  |   |           |     |  |             |      |      |   |   |        
|               | Corporate bonds                                |                                    | $ | 44,853  |                  |  | $ | 196       |     |  | $           | (293 | )    |   | $ | 44,756  |        
|               | Asset-backed securities                        |                                    |   | 20,511  |                  |  |   | 89        |     |  |             | (107 | )    |   |   | 20,493  |        
|               | Collateralized mortgage obligations            |                                    |   | 5,072   |                  |  |   | 1         |     |  |             | (194 | )    |   |   | 4,879   |        
|               | Commercial paper                               |                                    |   | 7,146   |                  |  |   |          |     |  |             |     |      |   |   | 7,146   |        
|               | U.S. Government and federal agency obligations |                                    |   | 40,699  |                  |  |   | 55        |     |  |             | (184 | )    |   |   | 40,570  |        
|               | Municipal bonds                                |                                    |   | 4,770   |                  |  |   |          |     |  |             |     |      |   |   | 4,770   |        
|               | Money market and mutual funds                  |                                    |   | 98,588  |                  |  |   |          |     |  |             |     |      |   |   | 98,588  |        
|               | Mortgage pass-through securities               |                                    |   | 22,264  |                  |  |   | 108       |     |  |             | (48  | )    |   |   | 22,324  |        
|               |                                                |                                    |   |         |                  |  |   |           |     |  |             |     
|               | Available-for-sale investments                 |                                    |   | 243,903 |                  |  |   | 449       |     |  |             | (826 | )    |   |   | 243,526 |        
|               | Less: amounts classified as cash equivalents   |                                    |   | 102,710 |                  |  |   |           |     |  |             |      |      |   |   | 102,710 |        
|               |                                                |                                    |   |         |                  |  |   |           |     |  |             |     
|               |                                                | Net available-for-sale investments |   | $       | 141,193          |  |   | $         | 449 |  |             | $    | (826 | ) |   | $       | 140,816 | 
|               |                                                |                                    |   |         |                  |  |   |           |     |  |             |     





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|               |                                                |                                         |   |        |            |  |   |           |      |   |   |        |         | 
|-------------- | ---------------------------------------------- | --------------------------------------- | - | ------ | ---------- |  | - | --------- | ---- | - | - | ------ | ------- | 
|               |                                                | Cost or                                 |   |        | Gross      |  |   | Estimated |     
|               |                                                | Amortized                               |   |        | Unrealized |  |   | Fair      |     
|               |                                                | Cost                                    |   |        | Losses     |  |   | Values    |     
|               |                                                |                                         |   |        |            |  |   |           |     
|June 30, 2005: |                                                |                                         |   |        |            |  |   |           |      |   |   |       
|               | Corporate bonds                                |                                         | $ | 21,270 |            |  | $ | (167      | )    |   | $ | 21,103 |        
|               | Asset-backed securities                        |                                         |   | 14,663 |            |  |   | (95       | )    |   |   | 14,568 |        
|               | Collateralized mortgage obligations            |                                         |   | 9,849  |            |  |   | (224      | )    |   |   | 9,625  |        
|               | U.S. Government and federal agency obligations |                                         |   | 45,321 |            |  |   | (241      | )    |   |   | 45,080 |        
|               | Municipal bonds                                |                                         |   | 11,595 |            |  |   | (17       | )    |   |   | 11,578 |        
|               | Mortgage pass-through securities               |                                         |   | 21,979 |            |  |   | (214      | )    |   |   | 21,765 |        
|               |                                                |                                         |   |        |            |  |   |           |     
|               |                                                | Impaired available-for-sale investments |   | $      | 124,677    |  |   | $         | (958 | ) |   | $      | 123,719 | 
|               |                                                |                                         |   |        |            |  |   |           |     
|June 30, 2004: |                                                |                                         |   |        |            |  |   |           |      |   |   |       
|               | Corporate bonds                                |                                         | $ | 27,549 |            |  | $ | (293      | )    |   | $ | 27,256 |        
|               | Asset-backed securities                        |                                         |   | 5,386  |            |  |   | (107      | )    |   |   | 5,279  |        
|               | Collateralized mortgage obligations            |                                         |   | 4,825  |            |  |   | (194      | )    |   |   | 4,631  |        
|               | U.S. Government and federal agency obligations |                                         |   | 34,811 |            |  |   | (184      | )    |   |   | 34,627 |        
|               | Mortgage pass-through securities               |                                         |   | 11,733 |            |  |   | (48       | )    |   |   | 11,685 |        
|               |                                                |                                         |   |        |            |  |   |           |     
|               |                                                | Impaired available-for-sale investments |   | $      | 84,304     |  |   | $         | (826 | ) |   | $      | 83,478  | 
|               |                                                |                                         |   |        |            |  |   |           |     



|               |                                                |                                         |   |        |                       |  |   |             |      |   |            |        |        |             |   |      |            |   |   |        |         |  |   |      |      |  
|-------------- | ---------------------------------------------- | --------------------------------------- | - | ------ | --------------------- |  | - | ----------- | ---- | - | ---------- | ------ | ------ | ----------- | - | ---- | ---------- | - | - | ------ | ------- |  | - | ---- | ---- | -
|               |                                                | Less than                               |   |        | Equal or Greater than |  |   |             |      |  
|               |                                                | 12 Months Impaired                      |   |        | 12 Months Impaired    |  |   |             |      |  
|               |                                                |                                         |   |        |                       |  |   | Total       |      |   | Total      |       
|               |                                                | Estimated                               |   |        | Unrealized            |  |   | Estimated   |      |   | Unrealized |        |        | Estimated   |   |      | Unrealized |  
|               |                                                | Fair Values                             |   |        | Losses                |  |   | Fair Values |      |   | Losses     |        |        | Fair Values |   |      | Losses     |  
|               |                                                |                                         |   |        |                       |  |   |             |      |   |            |        |        |             |   |      |            |  
|June 30, 2005: |                                                |                                         |   |        |                       |  |   |             |      |   |            |        |        |             |   |      |            |   |   |        |         |  |   |     
|               | Corporate bonds                                |                                         | $ | 11,227 |                       |  | $ | (66         | )    |   | $          | 9,876  |        |             | $ | (101 | )          |   | $ | 21,103 |         |  | $ | (167 | )   
|               | Asset-backed securities                        |                                         |   | 12,385 |                       |  |   | (69         | )    |   |            | 2,183  |        |             |   | (26  | )          |   |   | 14,568 |         |  |   | (95  | )   
|               | Collateralized mortgage obligations            |                                         |   | 6,193  |                       |  |   | (47         | )    |   |            | 3,432  |        |             |   | (177 | )          |   |   | 9,625  |         |  |   | (224 | )   
|               | U.S. Government and federal agency obligations |                                         |   | 13,328 |                       |  |   | (85         | )    |   |            | 31,752 |        |             |   | (156 | )          |   |   | 45,080 |         |  |   | (241 | )   
|               | Municipal bonds                                |                                         |   | 11,578 |                       |  |   | (17         | )    |   |            |       |        |             |   |     |            |   |   | 11,578 |         |  |   | (17  | )   
|               | Mortgage pass-through securities               |                                         |   | 21,563 |                       |  |   | (212        | )    |   |            | 202    |        |             |   | (2   | )          |   |   | 21,765 |         |  |   | (214 | )   
|               |                                                |                                         |   |        |                       |  |   |             |      |   |            |        |        |             |   |      |            |  
|               |                                                | Impaired available-for-sale investments |   | $      | 76,274                |  |   | $           | (496 | ) |            | $      | 47,445 |             |   | $    | (462       | ) |   | $      | 123,719 |  |   | $    | (958 | )
|               |                                                |                                         |   |        |                       |  |   |             |      |   |            |        |        |             |   |      |            |  

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|               |                                                |                                         |   |        |                       |  |   |             |      |   |            |       |        |             |   |      |            |   |   |        |        |  |   |      |      |  
|-------------- | ---------------------------------------------- | --------------------------------------- | - | ------ | --------------------- |  | - | ----------- | ---- | - | ---------- | ----- | ------ | ----------- | - | ---- | ---------- | - | - | ------ | ------ |  | - | ---- | ---- | -
|               |                                                | Less than                               |   |        | Equal or Greater than |  |   |             |      |  
|               |                                                | 12 Months Impaired                      |   |        | 12 Months Impaired    |  |   |             |      |  
|               |                                                |                                         |   |        |                       |  |   | Total       |      |   | Total      |      
|               |                                                | Estimated                               |   |        | Unrealized            |  |   | Estimated   |      |   | Unrealized |       |        | Estimated   |   |      | Unrealized |  
|               |                                                | Fair Values                             |   |        | Losses                |  |   | Fair Values |      |   | Losses     |       |        | Fair Values |   |      | Losses     |  
|               |                                                |                                         |   |        |                       |  |   |             |      |   |            |       |        |             |   |      |            |  
|June 30, 2004: |                                                |                                         |   |        |                       |  |   |             |      |   |            |       |        |             |   |      |            |   |   |        |        |  |   |     
|               | Corporate bonds                                |                                         | $ | 19,163 |                       |  | $ | (142        | )    |   | $          | 8,093 |        |             | $ | (151 | )          |   | $ | 27,256 |        |  | $ | (293 | )   
|               | Asset-backed securities                        |                                         |   | 2,203  |                       |  |   | (16         | )    |   |            | 3,076 |        |             |   | (91  | )          |   |   | 5,279  |        |  |   | (107 | )   
|               | Collateralized mortgage obligations            |                                         |   |       |                       |  |   |            |      |   |            | 4,631 |        |             |   | (194 | )          |   |   | 4,631  |        |  |   | (194 | )   
|               | U.S. Government and federal agency obligations |                                         |   | 34,627 |                       |  |   | (184        | )    |   |            |      |        |             |   |     |            |   |   | 34,627 |        |  |   | (184 | )   
|               | Mortgage pass-through securities               |                                         |   | 11,685 |                       |  |   | (48         | )    |   |            |      |        |             |   |     |            |   |   | 11,685 |        |  |   | (48  | )   
|               |                                                |                                         |   |        |                       |  |   |             |      |   |            |       |        |             |   |      |            |  
|               |                                                | Impaired available-for-sale investments |   | $      | 67,678                |  |   | $           | (390 | ) |            | $     | 15,800 |             |   | $    | (436       | ) |   | $      | 83,478 |  |   | $    | (826 | )
|               |                                                |                                         |   |        |                       |  |   |             |      |   |            |       |        |             |   |      |            |  



|                                                                       |  |                        |        |                |              |   |        |             |  |   |           |  |  |   |         | 
|---------------------------------------------------------------------- |  | ---------------------- | ------ | -------------- | ------------ | - | ------ | ----------- |  | - | --------- |  |  | - | ------- | 
|                                                                       |  | Contractual Maturities |       
|                                                                       |  |                        |       
|                                                                       |  |                        |        | After Five     |              |   |       
|                                                                       |  |                        |        | After One Year |              |   | Years  |             |  |  
|                                                                       |  | Within One             |        |                | through Five |   |        | through Ten |  |   | After Ten | 
|                                                                       |  | Year                   |        |                | Years        |   |        | Years       |  |   | Years     | 
|                                                                       |  |                        |        |                |              |   |        |             |  |   |           | 
|Corporate bonds                                                        |  | $                      | 45,143 |                |              | $ | 13,910 |             |  | $ |          |  |  | $ |        | 
|Asset-backed securities                                                |  |                        |       |                |              |   | 18,264 |             |  |   | 961       |  |  |   | 2,175   | 
|Collateralized mortgage obligations                                    |  |                        |       |                |              |   | 1,251  |             |  |   | 1,541     |  |  |   | 8,414   | 
|U.S. Government and federal agency obligations                         |  |                        | 7,129  |                |              |   | 39,014 |             |  |   |          |  |  |   |        | 
|Municipal bonds                                                        |  |                        | 11,578 |                |              |   |       |             |  |   |          |  |  |   | 62,625  | 
|Mortgage pass-through securities                                       |  |                        | 815    |                |              |   | 724    |             |  |   | 680       |  |  |   | 27,759  | 
|                                                                       |  |                        |        |                |              |   |        |             |  |   |           | 
|Total debt securities classified as available-for-sale
    investments |  | $                      | 64,665 |                |              | $ | 73,163 |             |  | $ | 3,182     |  |  | $ | 100,973 | 
|                                                                       |  |                        |        |                |              |   |        |             |  |   |           | 



|                                       |       |           |         |         |             |   |         |         | 
|-------------------------------------- | ----- | --------- | ------- | ------- | ----------- | - | ------- | ------- | 
|                                       |       | Cost or   |         |         |            
|                                       |       | Amortized |         |         | Estimated   |  
|                                       |       | Cost      |         |         | Fair Values |  
|Contractual Maturities                 |       |           |         |         |             |  
|Due in one year or less                |       | $         | 65,166  |         |             | $ | 64,665  |        
|Due after one year through five years  |       |           | 73,522  |         |             |   | 73,163  |        
|Due after five years through ten years |       |           | 3,184   |         |             |   | 3,182   |        
|Due after ten years                    |       |           | 100,981 |         |             |   | 100,973 |        
|                                       |       |           |         |         |             |  
|                                       | Total |           | $       | 242,853 |             |   | $       | 241,983 | 
|                                       |       |           |         |         |             |  



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Other investments






Pledged investments


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|        |                    
|------- | -------------------
|NOTE 4. | ACCOUNTS RECEIVABLE



|                                   |                                       |          |         |         |      |   |         |         | 
|---------------------------------- | ------------------------------------- | -------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                   |                                       | June 30, |        
|                                   |                                       |          |        
|                                   |                                       | 2005     |         |         | 2004 |  
|                                   |                                       |          |         |         |      |  
|Trade accounts receivable          |                                       | $        | 114,238 |         |      | $ | 102,706 |        
|Unbilled trade accounts receivable |                                       |          | 3,729   |         |      |   | 4,336   |        
|Other receivables                  |                                       |          | 12,537  |         |      |   | 5,641   |        
|                                   |                                       |          |         |         |      |  
|                                   | Total                                 |          |         | 130,504 |      |   |         | 112,683 | 
|                                   | Less: allowance for doubtful accounts |          |         | 2,571   |      |   |         | 834     | 
|                                   |                                       |          |         |         |      |  
|                                   | Accounts receivable, net              |          | $       | 127,933 |      |   | $       | 111,849 | 
|                                   |                                       |          |         |         |      |  





|        |                       
|------- | ----------------------
|NOTE 5. | PROPERTY AND EQUIPMENT



|                                         |                                |          |         |         |      |   |         |         | 
|---------------------------------------- | ------------------------------ | -------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                         |                                | June 30, |        
|                                         |                                |          |        
|                                         |                                | 2005     |         |         | 2004 |  
|                                         |                                |          |         |         |      |  
|Land and land improvements               |                                | $        | 4,944   |         |      | $ | 4,944   |        
|Building and building improvements       |                                |          | 51,928  |         |      |   | 51,390  |        
|Computer equipment and software licenses |                                |          | 235,863 |         |      |   | 206,946 |        
|Furniture and equipment                  |                                |          | 21,589  |         |      |   | 20,781  |        
|                                         |                                |          |         |         |      |  
|                                         | Total                          |          |         | 314,324 |      |   |         | 284,061 | 
|                                         | Less: accumulated depreciation |          |         | 225,051 |      |   |         | 192,149 | 
|                                         |                                |          |         |         |      |  
|                                         | Property and equipment, net    |          | $       | 89,273  |      |   | $       | 91,912  | 
|                                         |                                |          |         |         |      |  





|        |                                     
|------- | ------------------------------------
|NOTE 6. | GOODWILL AND OTHER INTANGIBLE ASSETS

Impairment of Intangible Assets




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|                            |                   |            |         |        |          |   |            |          |  |   |        |   |  |   |         |        | 
|--------------------------- | ----------------- | ---------- | ------- | ------ | -------- | - | ---------- | -------- |  | - | ------ | - |  | - | ------- | ------ | 
|                            |                   | Electronic |         |        |          |   | Investment |          |  |  
|                            |                   | Commerce   |         |        | Software |   |            | Services |  |   | Total  |  
|                            |                   |            |         |        |          |   |            |          |  |   |        |  
|                           
|Balance as of June 30, 2003 |                   | $          | 503,738 |        |          | $ | 8,106      |          |  | $ | 11,387 |   |  | $ | 523,231 |       
|                            | Goodwill acquired |            |         | 74,957 |          |   |            | 14,783   |  |   |        |  |  |   |         | 89,740 | 
|                            |                   |            |         |        |          |   |            |          |  |   |        |  
|Balance as of June 30, 2004 |                   |            | 578,695 |        |          |   | 22,889     |          |  |   | 11,387 |   |  |   | 612,971 |       
|                            | Goodwill acquired |            |         | 2,544  |          |   |            | 40,659   |  |   |        |  |  |   |         | 43,203 | 
|                            |                   |            |         |        |          |   |            |          |  |   |        |  
|Balance as of June 30, 2005 |                   | $          | 581,239 |        |          | $ | 63,548     |          |  | $ | 11,387 |   |  | $ | 656,174 |       
|                            |                   |            |         |        |          |   |            |          |  |   |        |  

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|                         |                                                              |                                |                              |         |         |         |   |         |         |         | 
|------------------------ | ------------------------------------------------------------ | ------------------------------ | ---------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                         |                                                              | June 30,                       |                             
|                         |                                                              |                                |                             
|                         |                                                              | 2005                           |                              |         | 2004    |        
|                         |                                                              |                                |                              |         |         |        
|Capitalized software:    |                                                              |                                |                              |         |         |         |   |        
|                         | Product technology from acquisitions and strategic agreement |                                | $                            | 167,458 |         |         | $ | 167,458 |        
|                         | Internal development costs                                   |                                |                              | 33,226  |         |         |   | 31,519  |        
|                         |                                                              |                                |                              |         |         |        
|                         |                                                              | Total                          |                              |         | 200,684 |         |   |         | 198,977 |        
|                         |                                                              | Less: accumulated amortization |                              |         | 194,509 |         |   |         | 187,465 |        
|                         |                                                              |                                |                              |         |         |        
|                         |                                                              |                                | Capitalized software, net    |         | $       | 6,175   |   |         | $       | 11,512  | 
|                         |                                                              |                                |                              |         |         |        
|Strategic agreements:    |                                                              |                                |                              |         |         |         |   |        
|                         | Strategic
    agreements(1)                                  |                                | $                            | 744,423 |         |         | $ | 744,424 |        
|                         |                                                              | Less: accumulated amortization |                              |         | 596,975 |         |   |         | 473,034 |        
|                         |                                                              |                                |                              |         |         |        
|                         |                                                              |                                | Strategic agreements, net    |         | $       | 147,448 |   |         | $       | 271,390 | 
|                         |                                                              |                                |                              |         |         |        
|Other intangible assets: |                                                              |                                |                              |         |         |         |   |        
|                         | Tradenames                                                   |                                | $                            | 52,754  |         |         | $ | 50,728  |        
|                         | Customer base                                                |                                |                              | 57,068  |         |         |   | 46,068  |        
|                         | Current technology                                           |                                |                              | 4,090   |         |         |   | 2,230   |        
|                         | Money transfer licenses                                      |                                |                              | 1,700   |         |         |   | 1,700   |        
|                         | Covenants not to compete                                     |                                |                              | 5,350   |         |         |   | 2,860   |        
|                         |                                                              |                                |                              |         |         |        
|                         |                                                              | Total                          |                              |         | 120,962 |         |   |         | 103,586 |        
|                         |                                                              | Less: accumulated amortization |                              |         | 90,027  |         |   |         | 81,916  |        
|                         |                                                              |                                |                              |         |         |        
|                         |                                                              |                                | Other intangible assets, net |         | $       | 30,935  |   |         | $       | 21,670  | 
|                         |                                                              |                                |                              |         |         |        



| |     |                                                                                          
| | --- | -----------------------------------------------------------------------------------------
| | (1) | Strategic agreements primarily include certain entity-level
    covenants not to compete.





|                            |      |  |   |        | 
|--------------------------- | ---- |  | - | ------ | 
|Fiscal Year Ending June 30, |      |  |   |       
|                            | 2006 |  | $ | 53,749 | 
|                            | 2007 |  |   | 32,733 | 
|                            | 2008 |  |   | 31,015 | 
|                            | 2009 |  |   | 29,462 | 
|                            | 2010 |  |   | 28,822 | 



|        |                    
|------- | -------------------
|NOTE 7. | ACCRUED LIABILITIES



|                          |       |          |        |        |      |   |        |        | 
|------------------------- | ----- | -------- | ------ | ------ | ---- | - | ------ | ------ | 
|                          |       | June 30, |       
|                          |       |          |       
|                          |       | 2005     |        |        | 2004 |  
|                          |       |          |        |        |      |  
|Compensation and benefits |       | $        | 33,156 |        |      | $ | 37,953 |       
|Reorganization reserves   |       |          | 5,356  |        |      |   | 732    |       
|Other                     |       |          | 33,677 |        |      |   | 28,526 |       
|                          |       |          |        |        |      |  
|                          | Total |          | $      | 72,189 |      |   | $      | 67,211 | 
|                          |       |          |        |        |      |  

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|        |                     
|------- | --------------------
|NOTE 8. | FINANCING AGREEMENTS





Line of Credit




|        |                               
|------- | ------------------------------
|NOTE 9. | CONVERTIBLE SUBORDINATED NOTES





|         |                                              
|-------- | ---------------------------------------------
|NOTE 10. | CAPITAL LEASE AND OTHER LONG-TERM OBLIGATIONS





|                                                |                                    |          |        |       |      |   |        |        | 
|----------------------------------------------- | ---------------------------------- | -------- | ------ | ----- | ---- | - | ------ | ------ | 
|                                                |                                    | June 30, |       
|                                                |                                    |          |       
|                                                |                                    | 2005     |        |       | 2004 |  
|                                                |                                    |          |        |       |      |  
|Equipment and software licenses                 |                                    | $        | 13,583 |       |      | $ | 19,962 |       
|Less: accumulated depreciation and amortization |                                    |          | 8,310  |       |      |   | 8,764  |       
|                                                |                                    |          |        |       |      |  
|                                                | Property under capital leases, net |          | $      | 5,273 |      |   | $      | 11,198 | 
|                                                |                                    |          |        |       |      |  

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|                            |      |                                     |   |     |     | 
|--------------------------- | ---- | ----------------------------------- | - | --- | --- | 
|Fiscal Year Ending June 30, |      |                                     |   |    
|                            | 2006 |                                     | $ | 498 |    
|                            | 2007 |                                     |   | 407 |    
|                            | 2008 |                                     |   | 32  |    
|                            |      |                                     |  
|                            |      | Total future minimum lease payments |   |     | 937 | 
|                            |      | Less: amount representing interest  |   |     | 78  | 
|                            |      |                                     |  
|                            |      | Net future minimum payments         |   | $   | 859 | 
|                            |      |                                     |  





|         |                              
|-------- | -----------------------------
|NOTE 11. | COMMITMENTS AND CONTINGENCIES

Operating Leases




|                            |            |                               |   |        |         | 
|--------------------------- | ---------- | ----------------------------- | - | ------ | ------- | 
|Fiscal Year Ending June 30, |            |                               |   |       
|                            | 2006       |                               | $ | 15,120 |        
|                            | 2007       |                               |   | 12,794 |        
|                            | 2008       |                               |   | 12,176 |        
|                            | 2009       |                               |   | 12,322 |        
|                            | 2010       |                               |   | 11,813 |        
|                            | Thereafter |                               |   | 38,654 |        
|                            |            |                               |  
|                            |            | Future minimum lease payments |   | $      | 102,879 | 
|                            |            |                               |  



Guarantees


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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | We warrant that our software products will perform in all
    material respects in accordance with our standard published
    specifications in effect at the time of delivery of the licensed
    products to the customer for 90 days. Additionally, we
    warrant that our services will be performed consistent with
    generally accepted industry standards or specific service levels
    through completion of the agreed upon services. If necessary, we
    would provide for the estimated cost of product and service
    warranties based on specific warranty claims and claim history,
    however, we have not incurred significant recurring expense
    under our product or service warranties. As a result, we believe
    the estimated liabilities related to these agreements are not
    material.
|
| | (2) | CheckFree Services guarantees the obligations of one of its
    wholly owned subsidiaries. See Note 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



Litigation




|         |              
|-------- | -------------
|NOTE 12. | CAPITAL STOCK






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|         |                                          
|-------- | -----------------------------------------
|NOTE 13. | TRANSACTIONS INVOLVING EQUITY INSTRUMENTS

Employee Plans










|                                                                             |  |               |           |          |               |   |       |               |          |  |            |   |  |           |       |  |          |  |            |   |  |   |       | 
|---------------------------------------------------------------------------- |  | ------------- | --------- | -------- | ------------- | - | ----- | ------------- | -------- |  | ---------- | - |  | --------- | ----- |  | -------- |  | ---------- | - |  | - | ----- | 
|                                                                             |  | Year Ended    |          
|                                                                             |  |               |          
|                                                                             |  | June 30, 2005 |           |          | June 30, 2004 |   |       | June 30, 2003 |         
|                                                                             |  |               |           |          |               |   |       |               |         
|                                                                             |  |               |           | Weighted |               |   |       |               | Weighted |  |            |   |  | Weighted  |      
|                                                                             |  |               |           | Average  |               |   |       |               | Average  |  |            |   |  | Average   |      
|                                                                             |  | Number of     |           |          | Exercise      |   |       | Number of     |          |  | Exercise   |   |  | Number of |       |  | Exercise | 
|                                                                             |  | Shares        |           |          | Price         |   |       | Shares        |          |  | Price      |   |  | Shares    |       |  | Price    | 
|                                                                             |  |               |           |          |               |   |       |               |          |  |            |   |  |           |       |  |          | 
|Outstanding  Beginning of period                                            |  |               | 5,657,281 |          |               | $ | 25.07 |               |          |  | 7,236,216  |   |  | $         | 31.72 |  |          |  | 8,084,673  |   |  | $ | 34.25 | 
|Granted                                                                      |  |               | 571,669   |          |               |   | 8.10  |               |          |  | 661,529    |   |  |           | 17.13 |  |          |  | 1,195,168  |   |  |   | 15.89 | 
|Exercised                                                                    |  |               | (731,661  | )        |               |   | 14.12 |               |          |  | (571,844   | ) |  |           | 12.51 |  |          |  | (533,263   | ) |  |   | 13.01 | 
|Cancelled                                                                    |  |               | (355,041  | )        |               |   | 21.24 |               |          |  | (1,668,620 | ) |  |           | 55.07 |  |          |  | (1,510,362 | ) |  |   | 39.37 | 
|                                                                             |  |               |           |          |               |   |       |               |          |  |            |   |  |           |       |  |          | 
|Outstanding  End of period                                                  |  |               | 5,142,248 |          |               | $ | 25.11 |               |          |  | 5,657,281  |   |  | $         | 25.07 |  |          |  | 7,236,216  |   |  | $ | 31.72 | 
|                                                                             |  |               |           |          |               |   |       |               |          |  |            |   |  |           |       |  |          | 
|Options exercisable at end of period                                         |  |               | 3,793,662 |          |               | $ | 28.81 |               |          |  | 3,494,088  |   |  | $         | 28.82 |  |          |  | 3,972,477  |   |  | $ | 37.79 | 
|Weighted average per-share fair value of options granted during
    the year |  |               |           |          |               | $ | 22.28 |               |          |  |            |   |  | $         | 21.10 |  |          |  |            |   |  | $ | 12.25 | 

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|                        |  |                     |           |                  |                     |  |     |          |          |   |           |  |  |          |           |  |  |   |        | 
|----------------------- |  | ------------------- | --------- | ---------------- | ------------------- |  | --- | -------- | -------- | - | --------- |  |  | -------- | --------- |  |  | - | ------ | 
|                        |  | Options Outstanding |           |                  | Options Exercisable | 
|                        |  |                     |           |                  |                     | 
|                        |  |                     |           | Weighted Average |                     |  |    
|                        |  |                     |           |                  |                     |  |     |          | Weighted |  
|                        |  |                     |           | Remaining        |                     |  |     |          |          |   | Average   | 
|                        |  | Number of           |           |                  | Contractual         |  |     | Exercise |          |   | Number of |  |  | Exercise |          
|Range of Exercise Price |  | Options             |           |                  | Life                |  |     | Price    |          |   | Options   |  |  | Price    |          
|                        |  |                     |           |                  |                     |  |     |          |          |   |           |  |  |          |          
|$ 0.00  $ 15.00        |  |                     | 1,816,756 |                  |                     |  | 4.5 |          |          | $ | 10.31     |  |  |          | 1,039,505 |  |  | $ | 13.69  | 
|$15.01  $ 30.00        |  |                     | 1,549,635 |                  |                     |  | 6.7 |          |          |   | 21.02     |  |  |          | 1,073,614 |  |  |   | 19.03  | 
|$30.01  $ 60.00        |  |                     | 1,685,732 |                  |                     |  | 5.3 |          |          |   | 40.56     |  |  |          | 1,590,418 |  |  |   | 41.00  | 
|$60.01  $ 90.00        |  |                     |          |                  |                     |  |    |          |          |   |          |  |  |          |          |  |  |   |       | 
|$90.01  $120.00        |  |                     | 90,125    |                  |                     |  | 4.5 |          |          |   | 104.50    |  |  |          | 90,125    |  |  |   | 104.50 | 
|                        |  |                     |           |                  |                     |  |     |          |          |   |           |  |  |          |          
|                        |  |                     | 5,142,248 |                  |                     |  |     |          |          | $ | 25.11     |  |  |          | 3,793,662 |  |  | $ | 28.81  | 
|                        |  |                     |           |                  |                     |  |     |          |          |   |           |  |  |          |          









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|                      |                         |          |      |          |              |   |      |          |  |   |              |          |  |          |      |          |              |   |      |          |  |   |      |          | 
|--------------------- | ----------------------- | -------- | ---- | -------- | ------------ | - | ---- | -------- |  | - | ------------ | -------- |  | -------- | ---- | -------- | ------------ | - | ---- | -------- |  | - | ---- | -------- | 
|                      |                         | June 30, |      |          | December 31, |   |      | June 30, |  |   | December 31, |          |  | June 30, |      |          | December 31, |  
|                      |                         | 2005     |      |          | 2004         |   |      | 2004     |  |   | 2003         |          |  | 2003     |      |          | 2002         |  
|Fair value of options |                         | $        | 9.27 |          |              | $ | 7.61 |          |  | $ | 7.56         |          |  | $        | 8.46 |          |              | $ | 7.73 |          |  | $ | 5.08 |         
|Assumptions:          |                         |          |      |          |              |   |      |          |  |   |              |          |  |          |      |          |              |   |      |          |  |   |      |         
|                      | Risk-free interest rate |          |      | 2.6%     |              |   |      | 1.7%     |  |   |              | 1.0%     |  |          |      | 1.0%     |              |   |      | 1.2%     |  |   |      | 1.8%     | 
|                      | Expected life           |          |      | 3 months |              |   |      | 3 months |  |   |              | 3 months |  |          |      | 3 months |              |   |      | 3 months |  |   |      | 3 months | 
|                      | Volatility              |          |      | 33.9%    |              |   |      | 33.5%    |  |   |              | 43.7%    |  |          |      | 53.8%    |              |   |      | 107.9%   |  |   |      | 71.8%    | 
|                      | Dividend yield          |          |      | 0.0%     |              |   |      | 0.0%     |  |   |              | 0.0%     |  |          |      | 0.0%     |              |   |      | 0.0%     |  |   |      | 0.0%     | 



Stock Related Transactions With Third Parties




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15 16




|         |                          
|-------- | -------------------------
|NOTE 14. | EARNINGS (LOSS) PER SHARE



|                                  |                      |                          |        |   |                          |  |        |                          |  |   |             |  |  |               |        |   |           |  |        |             |  |   |               |  |  |           |         |   |  |  |        |   |  |   |       |   | 
|--------------------------------- | -------------------- | ------------------------ | ------ | - | ------------------------ |  | ------ | ------------------------ |  | - | ----------- |  |  | ------------- | ------ | - | --------- |  | ------ | ----------- |  | - | ------------- |  |  | --------- | ------- | - |  |  | ------ | - |  | - | ----- | - | 
|                                  |                      | Year Ended June 30, 2005 |        |   | Year Ended June 30, 2004 |  |        | Year Ended June 30, 2003 | 
|                                  |                      |                          |        |   |                          |  |        |                          | 
|                                  |                      | Net Income               |        |   | Shares                   |  |        | Earnings                 |  |   | Net Income  |  |  | Shares        |        |   | Earnings  |  |        | Net Loss    |  |   | Shares        |  |  | Loss      |        
|                                  |                      | (Numerator)              |        |   | (Denominator)            |  |        | Per Share                |  |   | (Numerator) |  |  | (Denominator) |        |   | Per Share |  |        | (Numerator) |  |   | (Denominator) |  |  | Per Share |        
|                                  |                      |                          |        |   |                          |  |        |                          |  |   |             |  |  |               |        |   |           |  |        |             |  |   |               |  |  |           |        
|Basic EPS                         |                      | $                        | 46,801 |   |                          |  | 90,767 |                          |  | $ | 0.52        |  |  | $             | 10,535 |   |           |  | 89,870 |             |  | $ | 0.12          |  |  | $         | (52,184 | ) |  |  | 88,807 |   |  | $ | (0.59 | )
|                                  |                      |                          |        |   |                          |  |        |                          |  |   |             |  |  |               |        |   |           |  |        |             |  |   |               |  |  |           |        
|Effective of dilutive securities: |                      |                          |        |   |                          |  |        |                          |  |   |             |  |  |               |        |   |           |  |        |             |  |   |               |  |  |           |         |   |  |  |        |   |  |   |       |  
|                                  | Options and warrants |                          |        |  |                          |  |        | 2,148                    |  |   |             |  |  |               |        |  |           |  |        | 1,994       |  |   |               |  |  |           |         |  |  |  |        |  |  |   |       |   | 
|                                  |                      |                          |        |   |                          |  |        |                          |  |   |             |  |  |               |        |   |           |  |        |             |  |   |               |  |  |           |        
|Diluted EPS                       |                      | $                        | 46,801 |   |                          |  | 92,915 |                          |  | $ | 0.50        |  |  | $             | 10,535 |   |           |  | 91,864 |             |  | $ | 0.11          |  |  | $         | (52,184 | ) |  |  | 88,807 |   |  | $ | (0.59 | )
|                                  |                      |                          |        |   |                          |  |        |                          |  |   |             |  |  |               |        |   |           |  |        |             |  |   |               |  |  |           |        







|         |                       
|-------- | ----------------------
|NOTE 15. | EMPLOYEE BENEFIT PLANS

Retirement Plan


Pension Plan


Deferred Compensation Plan


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Group Medical Plans






|         |                       
|-------- | ----------------------
|NOTE 16. | REORGANIZATION CHARGES

Reorganization of fiscal year 2005






|                       |                     |               |   |       |       | 
|---------------------- | ------------------- | ------------- | - | ----- | ----- | 
|                       |                     | Year Ended    |  
|                       |                     | June 30, 2005 |  
|                       |                     |               |  
|Reorganization charge: |                     |               |   |      
|                       | Electronic Commerce |               | $ | 3,208 |      
|                       | Investment Services |               |   | 313   |      
|                       | Software            |               |   | 1,876 |      
|                       | Corporate           |               |   | 188   |      
|                       |                     |               |  
|                       |                     | Total         |   | $     | 5,585 | 
|                       |                     |               |  



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|                            |                                         |           |       |        |            |   |       |       |   |   |       |       |  
|--------------------------- | --------------------------------------- | --------- | ----- | ------ | ---------- | - | ----- | ----- | - | - | ----- | ----- | -
|                            |                                         |           |       | Office |            |   |      
|                            |                                         | Severance |       |        | Closure    |   |       |      
|                            |                                         | and Other |       |        | and        |   |       |      
|                            |                                         | Employee  |       |        | Business   |   |       |      
|                            |                                         | Costs     |       |        | Exit Costs |   |       | Total |  
|                            |                                         |           |       |        |            |   |       |       |  
|Balance as of June 30, 2003 |                                         | $         |      |        |            | $ | 1,537 |       |   | $ | 1,537 |      
|                            | Cash payments, year ended June 30, 2004 |           |       |       |            |   |       | (805  | ) |   |       | (805  | )
|                            |                                         |           |       |        |            |   |       |       |  
|Balance as of June 30, 2004 |                                         |           |      |        |            |   | 732   |       |   |   | 732   |      
|                            | Reorganization charge                   |           |       | 5,585  |            |   |       |      |   |   |       | 5,585 |  
|                            | Cash payments, year ended June 30, 2005 |           |       | (385   | )          |   |       | (576  | ) |   |       | (961  | )
|                            |                                         |           |       |        |            |   |       |       |  
|Balance as of June 30, 2005 |                                         | $         | 5,200 |        |            | $ | 156   |       |   | $ | 5,356 |      
|                            |                                         |           |       |        |            |   |       |       |  



|         |                                 
|-------- | --------------------------------
|NOTE 17. | DERIVATIVE FINANCIAL INSTRUMENTS









|                                     |  |                     |        |   |      |   |      |  
|------------------------------------ |  | ------------------- | ------ | - | ---- | - | ---- | -
|                                     |  | Year Ended June 30, |       
|                                     |  |                     |       
|                                     |  | 2005                |        |   | 2004 |  
|                                     |  |                     |        |   |      |  
|Beginning balance                    |  | $                   | (544   | ) |      | $ |     |  
|Net losses from cash flow hedges     |  |                     | (549   | ) |      |   | (544 | )
|Net amounts reclassified to earnings |  |                     |       |   |      |   |     |  
|                                     |  |                     |        |   |      |  
|Ending balance                       |  | $                   | (1,093 | ) |      | $ | (544 | )
|                                     |  |                     |        |   |      |  



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|         |             
|-------- | ------------
|NOTE 18. | INCOME TAXES



|         |                                         |                     |        |        |      |   |        |        |  |   |         |         |  
|-------- | --------------------------------------- | ------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------- | ------- | -
|         |                                         | Year Ended June 30, |       
|         |                                         |                     |       
|         |                                         | 2005                |        |        | 2004 |   |        | 2003   | 
|         |                                         |                     |        |        |      |   |        |        | 
|Domestic |                                         | $                   | 75,726 |        |      | $ | 11,398 |        |  | $ | (81,903 | )      
|Foreign  |                                         |                     | (3,885 | )      |      |   | 332    |        |  |   | (493    | )      
|         |                                         |                     |        |        |      |   |        |        | 
|         | Total income (loss) before income taxes |                     | $      | 71,841 |      |   | $      | 11,730 |  |   | $       | (82,396 | )
|         |                                         |                     |        |        |      |   |        |        | 



|         
|---------
|         
|         
|         
|         
|         
|Current: 
|         
|         
|         
|         
|         
|         
|Deferred:
|         
|         
|         
|         
|         
|         
|         
|         
|         
|         



|                                                          |                                    |                     |        |        |      |   |        |       |  |   |         |         |  
|--------------------------------------------------------- | ---------------------------------- | ------------------- | ------ | ------ | ---- | - | ------ | ----- |  | - | ------- | ------- | -
|                                                          |                                    | Year Ended June 30, |       
|                                                          |                                    |                     |       
|                                                          |                                    | 2005                |        |        | 2004 |   |        | 2003  | 
|                                                          |                                    |                     |        |        |      |   |        |       | 
|Computed expected tax expense (benefit)                 |                                    | $                   | 25,144 |        |      | $ | 4,106  |       |  | $ | (28,838 | )      
|Nondeductible intangible charges                          |                                    |                     |       |        |      |   |       |       |  |   | 2,094   |        
|State and local taxes, net of federal income tax benefits |                                    |                     | 2,142  |        |      |   | (796   | )     |  |   | (4,715  | )      
|Deemed dividend from foreign affiliate                    |                                    |                     | 144    |        |      |   | 1,329  |       |  |   |        |        
|Federal, state and foreign tax credits                    |                                    |                     | (5,291 | )      |      |   | (3,779 | )     |  |   | (2,080  | )      
|Valuation allowance                                       |                                    |                     | 1,624  |        |      |   | 1,114  |       |  |   |        |        
|Impact of change in effective state tax rates             |                                    |                     | 1,287  |        |      |   | (1,353 | )     |  |   |        |        
|Other, net                                                |                                    |                     | (10    | )      |      |   | 574    |       |  |   | 433     |        
|                                                          |                                    |                     |        |        |      |   |        |       | 
|                                                          | Total income tax expense (benefit) |                     | $      | 25,040 |      |   | $      | 1,195 |  |   | $       | (33,106 | )
|                                                          |                                    |                     |        |        |      |   |        |       | 

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|                          |                                                             |                          |   |        |        |   |   |         |         |  
|------------------------- | ----------------------------------------------------------- | ------------------------ | - | ------ | ------ | - | - | ------- | ------- | -
|                          |                                                             | June 30,                 |  
|                          |                                                             |                          |  
|                          |                                                             | 2005                     |   |        | 2004   |  
|                          |                                                             |                          |   |        |        |  
|Deferred tax assets:      |                                                             |                          |   |        |        |   |   |        
|                          | Federal, state and foreign net operating loss carryforwards |                          | $ | 3,728  |        |   | $ | 19,768  |        
|                          | Federal, state and foreign tax credit carryforwards         |                          |   | 3,962  |        |   |   | 14,530  |        
|                          | Allowance for bad debts and returns                         |                          |   | 702    |        |   |   | 855     |        
|                          | Accrued compensation and related items                      |                          |   | 2,680  |        |   |   | 1,577   |        
|                          | Stock warrants                                              |                          |   | 12,445 |        |   |   | 14,797  |        
|                          | Property and equipment                                      |                          |   | 849    |        |   |   |        |        
|                          | Other investments and other                                 |                          |   | 7,183  |        |   |   | 4,702   |        
|                          | Deferred revenue                                            |                          |   | 1,232  |        |   |   | 1,481   |        
|                          | Reserve accruals                                            |                          |   | 5,574  |        |   |   | 7,140   |        
|                          | Capitalized software                                        |                          |   | 443    |        |   |   |        |        
|                          | Other intangible assets                                     |                          |   | 11,691 |        |   |   |        |        
|                          |                                                             |                          |   |        |        |  
|                          |                                                             | Deferred tax assets      |   |        | 50,489 |   |   |         | 64,850  |  
|                          |                                                             |                          |   |        |        |  
|Deferred tax liabilities: |                                                             |                          |   |        |        |   |   |        
|                          | Capitalized software                                        |                          |   |       |        |   |   | (1,101  | )      
|                          | Property and equipment                                      |                          |   |       |        |   |   | (2,346  | )      
|                          | Intangible assets                                           |                          |   | (4,967 | )      |   |   | (28,652 | )      
|                          | Prepaid expenses                                            |                          |   | (1,696 | )      |   |   |        |        
|                          |                                                             |                          |   |        |        |  
|                          |                                                             | Deferred tax liabilities |   |        | (6,663 | ) |   |         | (32,099 | )
|                          |                                                             |                          |   |        |        |  
|                          | Valuation allowance                                         |                          |   | (2,738 | )      |   |   | (1,114  | )      
|                          |                                                             |                          |   |        |        |  
|                          |                                                             | Net deferred tax assets  |   | $      | 41,088 |   |   | $       | 31,637  |  
|                          |                                                             |                          |   |        |        |  





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|         |                                                 
|-------- | ------------------------------------------------
|NOTE 19. | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

|                                                                            |                                                                        |                     |        |       |      |   |       |       |  |   |        |        | 
|--------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------- | ------ | ----- | ---- | - | ----- | ----- |  | - | ------ | ------ | 
|                                                                            |                                                                        | Year Ended June 30, |       
|                                                                            |                                                                        |                     |       
|                                                                            |                                                                        | 2005                |        |       | 2004 |   |       | 2003  | 
|                                                                            |                                                                        |                     |        |       |      |   |       |       | 
|                                                                            |                                                                        | (In thousands)      |       
|Interest paid                                                               |                                                                        | $                   | 970    |       |      | $ | 6,233 |       |  | $ | 12,028 |       
|                                                                            |                                                                        |                     |        |       |      |   |       |       | 
|Call premium for redemption of convertible notes                            |                                                                        | $                   |       |       |      | $ | 4,813 |       |  | $ |       |       
|                                                                            |                                                                        |                     |        |       |      |   |       |       | 
|Income taxes paid, net                                                      |                                                                        | $                   | 41,109 |       |      | $ | 8,152 |       |  | $ | 2,770  |       
|                                                                            |                                                                        |                     |        |       |      |   |       |       | 
|Supplemental disclosure of non-cash investing and financing
    activities: |                                                                        |                     |        |       |      |   |       |       |  |   |        |       
|                                                                            | Capital lease additions and acquisitions of other long-term
    assets |                     | $      | 710   |      |   | $     | 1,247 |  |   | $      | 13,105 | 
|                                                                            |                                                                        |                     |        |       |      |   |       |       | 
|                                                                            | Stock funding of 401(k) match                                          |                     | $      | 3,100 |      |   | $     | 3,144 |  |   | $      | 3,229  | 
|                                                                            |                                                                        |                     |        |       |      |   |       |       | 
|                                                                            | Stock funding of Associate Stock Purchase Plan                         |                     | $      | 3,997 |      |   | $     | 3,208 |  |   | $      | 3,274  | 
|                                                                            |                                                                        |                     |        |       |      |   |       |       | 



|         |                  
|-------- | -----------------
|NOTE 20. | BUSINESS SEGMENTS





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Electronic Commerce  Electronic Commerce
    provides services that allow consumers to receive electronic
    bills through the Internet, pay bills received electronically or
    in paper form to anyone and perform ordinary banking
    transactions including balance inquiries, transfers between
    accounts and on-line statement reconciliation. These services
    are primarily directed to financial institutions, internet
    financial sites, personal financial management software
    providers and the customers of these businesses.
|
| |  | Software  Software includes software products
    and related services for electronic billing, ACH processing and
    account reconciliation. These products and services are
    primarily directed to large corporations and financial
    institutions.                                                                                                                                                                                                                                                                                               
|
| |  | Investment Services  Investment Services
    includes investment portfolio management services and investment
    trading and reporting services. These products and services are
    primarily directed to fee-based money managers and financial
    planners who manage investments of institutions and high net
    worth individuals.                                                                                                                                                                                                               
|
| |  | Corporate  Corporate services include human
    resources, legal, finance and accounting and various other of
    our unallocated overhead charges.                                                                                                                                                                                                                                                                                                                                                                                                      



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|                                    |                     |                                                                                        |          |           |           |  |          |           |           |  |          |           |           |  
|----------------------------------- | ------------------- | -------------------------------------------------------------------------------------- | -------- | --------- | --------- |  | -------- | --------- | --------- |  | -------- | --------- | --------- | -
|                                    |                     | Year Ended June 30,                                                                    |         
|                                    |                     |                                                                                        |         
|                                    |                     | 2005                                                                                   |          |           | 2004      |  |          | 2003      |          
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|                                    |                     | (In thousands)                                                                         |         
|Revenues:                           |                     |                                                                                        |          |           |           |  |          |           |           |  |          |          
|                                    | Electronic Commerce |                                                                                        | $        | 580,696   |           |  | $        | 452,732   |           |  | $        | 405,373   |          
|                                    | Investment Services |                                                                                        |          | 96,064    |           |  |          | 86,270    |           |  |          | 81,562    |          
|                                    | Software            |                                                                                        |          | 81,072    |           |  |          | 67,462    |           |  |          | 64,711    |          
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|                                    |                     | Total                                                                                  |          | $         | 757,832   |  |          | $         | 606,464   |  |          | $         | 551,646   |  
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|Segment operating income (loss):    |                     |                                                                                        |          |           |           |  |          |           |           |  |          |          
|                                    | Electronic Commerce |                                                                                        | $        | 207,796   |           |  | $        | 155,724   |           |  | $        | 115,539   |          
|                                    | Investment Services |                                                                                        |          | 18,638    |           |  |          | 19,911    |           |  |          | 21,062    |          
|                                    | Software            |                                                                                        |          | 17,748    |           |  |          | 14,293    |           |  |          | 18,008    |          
|                                    | Corporate           |                                                                                        |          | (37,595   | )         |  |          | (33,256   | )         |  |          | (33,798   | )        
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|                                    |                     | Total                                                                                  |          |           | 206,587   |  |          |           | 156,672   |  |          |           | 120,811   |  
|Purchase accounting amortization    |                     |                                                                                        | (133,446 | )         |           |  | (136,558 | )         |           |  | (183,342 | )        
|Equity in net loss of joint venture |                     |                                                                                        | (2,984   | )         |           |  | (593     | )         |           |  |         |          
|Reorganization charge               |                     |                                                                                        | (5,585   | )         |           |  |         |           |           |  | (1,405   | )        
|Write off of capitalized software   |                     |                                                                                        | (1,039   | )         |           |  |         |           |           |  |         |          
|Gain (loss) on investments          |                     |                                                                                        | 592      |           |           |  |         |           |           |  | (3,228   | )        
|Impairment of intangible assets     |                     |                                                                                        |         |           |           |  |         |           |           |  | (10,228  | )        
|Impact of warrants                  |                     |                                                                                        |         |           |           |  |         |           |           |  | 644      |          
|In-process research and development |                     |                                                                                        |         |           |           |  | (324     | )         |           |  |         |          
|Interest, net                       |                     |                                                                                        | 7,716    |           |           |  | (7,467   | )         |           |  | (5,648   | )        
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|                                    |                     | Total income (loss) before income taxes and cumulative effect of
    accounting change |          | $         | 71,841    |  |          | $         | 11,730    |  |          | $         | (82,396   | )
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|Identifiable assets:                |                     |                                                                                        |          |           |           |  |          |           |           |  |          |          
|                                    | Electronic Commerce |                                                                                        | $        | 1,028,511 |           |  | $        | 1,105,751 |           |  | $        | 1,046,063 |          
|                                    | Investment Services |                                                                                        |          | 43,161    |           |  |          | 62,838    |           |  |          | 37,696    |          
|                                    | Software            |                                                                                        |          | 118,252   |           |  |          | 40,171    |           |  |          | 39,782    |          
|                                    | Corporate           |                                                                                        |          | 379,992   |           |  |          | 340,172   |           |  |          | 463,729   |          
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|                                    |                     | Total                                                                                  |          | $         | 1,569,916 |  |          | $         | 1,548,932 |  |          | $         | 1,587,270 |  
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|Capital expenditures:               |                     |                                                                                        |          |           |           |  |          |           |           |  |          |          
|                                    | Electronic Commerce |                                                                                        | $        | 26,783    |           |  | $        | 18,113    |           |  | $        | 31,963    |          
|                                    | Investment Services |                                                                                        |          | 6,246     |           |  |          | 5,446     |           |  |          | 4,857     |          
|                                    | Software            |                                                                                        |          | 651       |           |  |          | 708       |           |  |          | 381       |          
|                                    | Corporate           |                                                                                        |          | 923       |           |  |          | 462       |           |  |          | 228       |          
|                                    |                     |                                                                                        |          |           |           |  |          |           |          
|                                    |                     | Total                                                                                  |          | $         | 34,603    |  |          | $         | 24,729    |  |          | $         | 37,429    |  
|                                    |                     |                                                                                        |          |           |           |  |          |           |          

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|                               |                     |                     |   |         |         |  |   |         |         |  |   |         |         | 
|------------------------------ | ------------------- | ------------------- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                               |                     | Year Ended June 30, |  
|                               |                     |                     |  
|                               |                     | 2005                |   |         | 2004    |  |   | 2003    |        
|                               |                     |                     |   |         |         |  |   |         |        
|                               |                     | (In thousands)      |  
|Depreciation and amortization: |                     |                     |   |         |         |  |   |         |         |  |   |        
|                               | Electronic Commerce |                     | $ | 157,756 |         |  | $ | 158,873 |         |  | $ | 202,313 |        
|                               | Investment Services |                     |   | 7,919   |         |  |   | 6,725   |         |  |   | 8,126   |        
|                               | Software            |                     |   | 7,076   |         |  |   | 7,115   |         |  |   | 10,665  |        
|                               | Corporate           |                     |   | 3,847   |         |  |   | 4,869   |         |  |   | 5,534   |        
|                               |                     |                     |   |         |         |  |   |         |        
|                               |                     | Total               |   | $       | 176,598 |  |   | $       | 177,582 |  |   | $       | 226,638 | 
|                               |                     |                     |   |         |         |  |   |         |        



|              |       |                     |         |         |      |   |         |           | 
|------------- | ----- | ------------------- | ------- | ------- | ---- | - | ------- | --------- | 
|              |       | Year Ended June 30, |        
|              |       |                     |        
|              |       | 2005                |         |         | 2004 |  
|              |       |                     |         |         |      |  
|United States |       | $                   | 856,032 |         |      | $ | 992,438 |          
|Other         |       |                     | 73,973  |         |      |   | 17,017  |          
|              |       |                     |         |         |      |  
|              | Total |                     | $       | 930,005 |      |   | $       | 1,009,455 | 
|              |       |                     |         |         |      |  



|         |                                              
|-------- | ---------------------------------------------
|NOTE 21. | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)



|                            |                                   |               |         |        |             |   |         |          |  |   |         |        |  |   |         |        | 
|--------------------------- | --------------------------------- | ------------- | ------- | ------ | ----------- | - | ------- | -------- |  | - | ------- | ------ |  | - | ------- | ------ | 
|                            |                                   | Quarter Ended |        
|                            |                                   |               |        
|                            |                                   | September 30  |         |        | December 31 |   |         | March 31 |  |   | June 30 |       
|                            |                                   |               |         |        |             |   |         |          |  |   |         |       
|FISCAL 2005                 |                                   |               |         |        |             |   |         |          |  |   |         |        |  |   |         |       
|Total revenues              |                                   | $             | 177,833 |        |             | $ | 185,756 |          |  | $ | 191,220 |        |  | $ | 203,023 |       
|Income from operations      |                                   |               | 8,970   |        |             |   | 20,384  |          |  |   | 21,806  |        |  |   | 15,357  |       
|Net income                  |                                   |               | 6,207   |        |             |   | 13,043  |          |  |   | 15,606  |        |  |   | 11,945  |       
|Basic earnings per share:   |                                   |               |         |        |             |   |         |          |  |   |         |        |  |   |         |       
|                            | Net income per common share       |               | $       | 0.07   |             |   | $       | 0.14     |  |   | $       | 0.17   |  |   | $       | 0.13   | 
|                            |                                   |               |         |        |             |   |         |          |  |   |         |       
|                            | Weighted average number of shares |               |         | 90,315 |             |   |         | 90,545   |  |   |         | 90,864 |  |   |         | 90,962 | 
|                            |                                   |               |         |        |             |   |         |          |  |   |         |       
|Diluted earnings per share: |                                   |               |         |        |             |   |         |          |  |   |         |        |  |   |         |       
|                            | Net income per common share       |               | $       | 0.07   |             |   | $       | 0.14     |  |   | $       | 0.17   |  |   | $       | 0.13   | 
|                            |                                   |               |         |        |             |   |         |          |  |   |         |       
|                            | Weighted average number of shares |               |         | 92,212 |             |   |         | 93,019   |  |   |         | 93,052 |  |   |         | 93,054 | 
|                            |                                   |               |         |        |             |   |         |          |  |   |         |       

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|                                   |                                    |               |         |        |             |   |         |          |   |   |         |        |  |   |         |        | 
|---------------------------------- | ---------------------------------- | ------------- | ------- | ------ | ----------- | - | ------- | -------- | - | - | ------- | ------ |  | - | ------- | ------ | 
|                                   |                                    | Quarter Ended |        
|                                   |                                    |               |        
|                                   |                                    | September 30  |         |        | December 31 |   |         | March 31 |   |   | June 30 |       
|                                   |                                    |               |         |        |             |   |         |          |   |   |         |       
|FISCAL 2004                        |                                    |               |         |        |             |   |         |          |   |   |         |        |  |   |         |       
|Total revenues                     |                                    | $             | 141,264 |        |             | $ | 149,936 |          |   | $ | 155,238 |        |  | $ | 160,026 |       
|Income (loss) from operations      |                                    |               | (7,388  | )      |             |   | 5,450   |          |   |   | 9,387   |        |  |   | 12,341  |       
|Net income (loss)                  |                                    |               | (6,669  | )      |             |   | (1,896  | )        |   |   | 7,696   |        |  |   | 11,404  |       
|Basic earnings (loss) per share:   |                                    |               |         |        |             |   |         |          |   |   |         |        |  |   |         |       
|                                   | Net income (loss) per common share |               | $       | (0.07  | )           |   | $       | (0.02    | ) |   | $       | 0.09   |  |   | $       | 0.13   | 
|                                   |                                    |               |         |        |             |   |         |          |   |   |         |       
|                                   | Weighted average number of shares  |               |         | 89,463 |             |   |         | 89,624   |   |   |         | 89,924 |  |   |         | 90,166 | 
|                                   |                                    |               |         |        |             |   |         |          |   |   |         |       
|Diluted earnings (loss) per share: |                                    |               |         |        |             |   |         |          |   |   |         |        |  |   |         |       
|                                   | Net income (loss) per common share |               | $       | (0.07  | )           |   | $       | (0.02    | ) |   | $       | 0.08   |  |   | $       | 0.12   | 
|                                   |                                    |               |         |        |             |   |         |          |   |   |         |       
|                                   | Weighted average number of shares  |               |         | 89,463 |             |   |         | 89,624   |   |   |         | 92,053 |  |   |         | 92,279 | 
|                                   |                                    |               |         |        |             |   |         |          |   |   |         |       



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SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS


FOR THE YEARS ENDED JUNE 30, 2005, 2004 AND 2003


|                                |      |                |   |       |            |  |   |            |   |            |        |       |  |  |   |       | 
|------------------------------- | ---- | -------------- | - | ----- | ---------- |  | - | ---------- | - | ---------- | ------ | ----- |  |  | - | ----- | 
|                                |      | BALANCE AS     |   |       |            |  |   |            |  
|                                |      | OF             |   |       | CHARGES TO |  |   |            |   | BALANCE AS |       
|                                |      | BEGINNING      |   |       | COSTS AND  |  |   |            |   | OF END OF  |       
|                                |      | OF PERIOD      |   |       | EXPENSES   |  |   | DEDUCTIONS |   |            | PERIOD |      
|                                |      |                |   |       |            |  |   |            |   |            |        |      
|                                |      | (In thousands) |  
|Allowance for Doubtful Accounts |      |                |   |       |            |  |   |            |   |            |        |       |  |  |   |      
|                                | 2005 |                | $ | 834   |            |  | $ | 2,197      |   |            | $      | 460   |  |  | $ | 2,571 | 
|                                | 2004 |                | $ | 1,670 |            |  | $ | (757       | ) |            | $      | 79    |  |  | $ | 834   | 
|                                | 2003 |                | $ | 2,000 |            |  | $ | (232       | ) |            | $      | 98    |  |  | $ | 1,670 | 
|Reserve for Returns             |      |                |   |       |            |  |   |            |   |            |        |       |  |  |   |      
|                                | 2005 |                | $ | 1,171 |            |  | $ | 1,247      |   |            | $      | 1,398 |  |  | $ | 1,020 | 
|                                | 2004 |                | $ | 1,262 |            |  | $ | 2,483      |   |            | $      | 2,574 |  |  | $ | 1,171 | 
|                                | 2003 |                | $ | 1,706 |            |  | $ | 1,235      |   |            | $      | 1,679 |  |  | $ | 1,262 | 

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
    and Financial Disclosure.








|         |                         
|-------- | ------------------------
|Item 9A. | Controls and Procedures.

Evaluation of Disclosure Controls and Procedures








Management Report on Internal Control over Financial
Reporting


Internal
Control  Integrated Framework,




Changes in Internal Control over Financial Reporting







Item 9B. Other Information.




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Part III







|         |                                                    
|-------- | ---------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant.

Election of Directors, Executive
Officers Section 16(a) Beneficial
Ownership Reporting Compliance







|         |                        
|-------- | -----------------------
|Item 11. | Executive Compensation.

Information Concerning the Board of Directors,
Executive Officers and Principal Stockholders Information Concerning Compensation







|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters.

Ownership of Our Common Stock by Directors and
Executive Officers, Ownership of Our Common Stock by
Principal Stockholders Equity
Compensation Plan Information







|         |                                                
|-------- | -----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions.

Certain Relationships and Related
Transactions Compensation Committee
Interlocks and Insider Participation







|         |                                        
|-------- | ---------------------------------------
|Item 14. | Principal Accountant Fees and Services.

Fees of the Independent Public Accountants for
Fiscal 2005


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Part IV







|         |                                            
|-------- | -------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules.





| |                                                                          
| | -------------------------------------------------------------------------
| | (1) The following financial statements are included herein
    in Item 8:



| |                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------
| | Report of Independent Registered Public Accounting Firm on
    Internal Control Over Financial Reporting          
|
| | Report of Independent Registered Public Accounting Firm                                                           
|
| | Consolidated Balance Sheets as of June 30, 2005 and 2004.                                                         
|
| | Consolidated Statements of Operations for each of the three
    years in the period ended June 30, 2005.          
|
| | Consolidated Statements of Stockholders Equity for each of
    the three years in the period ended June 30, 2005.
|
| | Consolidated Statements of Cash Flows for each of the three
    years in the period ended June 30, 2005.          
|
| | Notes to the Consolidated Financial Statements.                                                                   



| |                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) The following financial statement schedule is included
    in this Annual Report on Form 10-K and should be read in
    conjunction with the Consolidated Financial Statements contained
    in Item 8:





| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Schedules not listed above are omitted because of the absence of
    the conditions under which they are required or because the
    required information is included in the financial statements or
    the notes thereto.
|
| | (3) Exhibits:                                                                                                                                                                                                              

|        |      |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | ---- | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                    
|Number  |      | Exhibit Description
|        |      |                    
|        | 2(a) |                     |  | Agreement and Plan Merger and Contribution Agreement, dated as
    of February 15, 2000, among Microsoft Corporation, First
    Data Corporation, Citibank, N.A., MS II, LLC, First Data,
    L.L.C., H & B Finance, Inc., First Data
    International Partner, Inc., MSFDC International, Inc., Citicorp
    Electronic Commerce, Inc., CheckFree Holdings Corporation,
    Chopper Merger Corporation, and CheckFree Corporation.
    (Reference is made to Exhibit 2(b) of the Registration
    Statement on Form S-4 (Registration No. 333-32644)
    filed with the Securities and Exchange Commission on
    March 16, 2000, and incorporated herein by reference.)                                                                         
|        | 2(b) |                     |  | Amended and Restated Agreement and Plan of Merger, dated as of
    July 7, 2000, among CheckFree Holdings Corporation,
    Microsoft Corporation, First Data Corporation, Citibank, N.A.,
    H&B Finance, Inc., FDC International Partner, Inc., FDR
    Subsidiary Corp., MS FDC International, Inc., Citi TransPoint
    Holdings Inc., TransPoint Acquisition Corporation, Tank
    Acquisition Corporation, Chopper Merger Corporation, CheckFree
    Corporation, Microsoft II, LLC and First Data, L.L.C.
    (Reference is made to Appendix A of the Registration
    Statement on Form S-4 (Registration No. 333-41098)
    filed with the Securities and Exchange Commission on
    July 10, 2000, and incorporated herein by reference.)
|        | 2(c) |                     |  | Amended and Restated Strategic Alliance Master Agreement, dated
    as of April 26, 2000, among CheckFree Holdings Corporation,
    CheckFree Services Corporation and Bank of America, N.A.
    (Reference is made to Appendix A to the Companys
    Proxy Statement for the Special Meeting of Stockholders held on
    September 28, 2000, and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                              

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|        |       |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ----- | ------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 2(d)  |                     |  | Stock Purchase Agreement by and among UIL Holdings Corporation,
    United Resources, Inc. and CheckFree Corporation, dated
    December 16, 2003 (Reference is made to Exhibit 2 to
    the Companys Quarterly Report on Form 10-Q for the
    quarter ended December 31, 2003, filed with the Securities
    and Exchange Commission on February 12, 2004, and
    incorporated herein by reference; the Company agrees to furnish
    supplementally a copy of any omitted schedules to this Agreement
    to the Securities and Exchange Commission upon request).
|        | 3(a)  |                     |  | Amended and Restated Certificate of Incorporation of the
    Company. (Reference is made to Exhibit 4(e) to the
    Registration Statement on Form S-8 (Registration
    No. 333-50322), filed with the Securities and Exchange
    Commission on November 20, 2000, and incorporated herein by
    reference.)                                                                                                                                                                                                                                                        
|        | 3(b)  |                     |  | Certificate of Ownership and Merger Merging CheckFree
    Corporation into CheckFree Holdings Corporation. (Reference is
    made to Exhibit 3(b) to the Companys Form 10-K
    for the year ended June 30, 2000, filed with the Securities
    and Exchange Commission on September 26, 2000, and
    incorporated herein by reference.)                                                                                                                                                                                                                             
|        | 3(c)  |                     |  | By-Laws of the Company. (Reference is made to Exhibit 3(b)
    to the Current Report on Form 8-K, dated December 22,
    1997, filed with the Securities and Exchange Commission on
    December 30, 1997, and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                      
|        | 3(d)  |                     |  | Form of Specimen Stock Certificate. (Reference is made to
    Exhibit 3(d) to the Companys Form 10-K for the
    year ended June 30, 2000, filed with the Securities and
    Exchange Commission on September 26, 2000, and incorporated
    herein by reference.)                                                                                                                                                                                                                                                                                                    
|        | 4(a)  |                     |  | Articles FOURTH, FIFTH, SEVENTH, EIGHTH, TENTH AND ELEVENTH of
    the Companys Amended and Restated Certificate of
    Incorporation (contained in the Companys Amended and
    Restated Certificate of Incorporation filed as Exhibit 3(a)
    hereto) and Articles II, III, IV, VI and VIII of the
    Companys By-Laws (contained in the Companys By-Laws
    filed as Exhibit 3(b) hereto.)                                                                                                                                                                   
|        | 4(b)  |                     |  | Rights Agreement, dated as of December 16, 1997, by and
    between the Company and The Fifth Third Bank, as Rights Agent.
    (Reference is made to Exhibit 4.1 to Registration Statement
    on Form 8-A, filed with the Securities and Exchange
    Commission on December 19, 1997, and incorporated herein by
    reference.)                                                                                                                                                                                                                                     
|        | 4(c)  |                     |  | Amendment No. 1 to the Rights Agreement, dated as of
    February 5, 1999, between CheckFree Corporation and the
    Fifth Third Bank, as Rights Agent. (Reference is made to
    Exhibit 4.2 to Amendment No. 1 to Registration
    Statement on Form 8-A (File No. 0-26802), filed with
    the Securities and Exchange Commission on May 12, 1999, and
    incorporated herein by reference.)                                                                                                                                                                       
|        | 4(d)  |                     |  | Amendment No. 2 to the Rights Agreement, dated as of
    August 3, 2000, between CheckFree Corporation and the Fifth
    Third Bank, as Rights Agent. (Reference is made to
    Exhibit 4.3 to Amendment No. 2 to Registration
    Statement on Form 8-A (File No. 0-26802), filed with
    the Securities and Exchange Commission on October 3, 2000,
    and incorporated herein by reference.)                                                                                                                                                                      
|        | 4(e)  |                     |  | Amendment No. 3 to the Rights Agreement, dated as of
    January 25, 2002, between CheckFree Corporation and Wells
    Fargo Bank Minnesota, National Association, as Rights Agent.
    (Reference is made to Exhibit 4.4 to Amendment No. 3
    to Registration Statement on Form 8-A (File
    No. 0-26802), filed with the Securities and Exchange
    Commission on January 28, 2002, and incorporated herein by
    reference.)                                                                                                                                   
|        | 10(a) |                     |  | CheckFree Services Corporation 401(k) Plan (restatement as of
    June 30, 2005).*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10(b) |                     |  | CheckFree Services Corporation Defined Contribution Plan and
    Trust, sponsored by SunTrust Bank  Basic Plan
    Document #02, June 2002 (Prototype plan for CheckFree
    Services Corporation 401(k) Plan) (Reference is made to
    Exhibit 10(b) to the Companys Quarterly Report on
    Form 10-Q for the quarterly period ended December 31,
    2004, filed with the Securities and Exchange Commission on
    February 8, 2005, and incorporated herein by reference.)                                                                                     
|        | 10(c) |                     |  | CheckFree Corporation Third Amended and Restated Associate Stock
    Purchase Plan. (Reference is made to Exhibit 4(a) to the
    Post-Effective Amendment No. 1 to the Registration
    Statement on Form S-8 (Registration No. 333-101284),
    filed with the Securities and Exchange Commission on
    June 13, 2005, and incorporated herein by reference.)                                                                                                                                                                                                       

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|        |       |                     |  |                                                                                                                                                                                                                                                                                                                                                         
|------- | ----- | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 10(d) |                     |  | CheckFree Corporation 2002 Stock Incentive Plan. (Reference is
    made to Appendix B to the Companys Definitive Proxy
    Statement for the 2002 Annual Meeting of Stockholders held on
    November 6, 2002, filed with the Securities and Exchange
    Commission on October 3, 2002, and incorporate herein by
    reference.)+                    
|        | 10(e) |                     |  | Form of Restricted Stock Award Agreement for Non-Employee
    Directors. (Reference is made to Exhibit 10(d) to the
    Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)+            
|        | 10(f) |                     |  | Form of Performance Accelerated Restricted Stock Award
    Agreement. (Reference is made to Exhibit 10(e) to the
    Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)+               
|        | 10(g) |                     |  | Form of Restricted Stock Award Agreement. (Reference is made to
    Exhibit 10(f) to the Companys Quarterly Report on
    Form 10-Q for the quarterly period ended December 31,
    2004, filed with the Securities and Exchange Commission on
    February 8, 2005, and incorporated herein by reference. )+                                          
|        | 10(h) |                     |  | Form of Nonstatutory Stock Option Agreement under the 2002 Stock
    Incentive Plan. (Reference is made to Exhibit 10(g) to the
    Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)+
|        | 10(i) |                     |  | Form of Incentive Stock Option Agreement under the 2002 Stock
    Incentive Plan. (Reference is made to Exhibit 10(h) to the
    Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)+   
|        | 10(j) |                     |  | CheckFree Corporation Third Amended and Restated 1995 Stock
    Option Plan. (Reference is made to Exhibit 4(d) to
    Registration Statement on Form S-8, as amended
    (Registration No. 333-50322), filed with the Securities and
    Exchange Commission on November 20, 2000, and incorporated
    herein by reference.)+                         
|        | 10(k) |                     |  | CheckFree Corporation Amended and Restated 1993 Stock Option
    Plan. (Reference is made to Exhibit 4(a) to Post-Effective
    Amendment No. 1 to Form S-8, as amended (Registration
    No. 33-98442), filed with the Securities and Exchange
    Commission on January 9, 1998, and incorporated herein by
    reference.)+                          
|        | 10(l) |                     |  | BlueGill Technologies, Inc. 1997 Stock Option Plan (reference is
    made to Exhibit 4(a) to Registration Statement on
    form S-8 (Registration No. 333-35812), filed with the
    Securities and Exchange Commission on April 28, 2000, and
    incorporated herein by reference.)+                                                                  
|        | 10(m) |                     |  | BlueGill Technologies, Inc. Amended and Restated 1998 Incentive
    and Non-Qualified Stock Option Plan (Reference is made to
    Exhibit 4(a) to Registration Statement on Form S-8
    (Registration No. 333-35814), filed with the Securities and
    Exchange Commission on April 28, 2000, and incorporated
    herein by reference.)+             
|        | 10(n) |                     |  | CheckFree Corporation Nonqualified Deferred Compensation Plan,
    dated December 31, 1998.*+                                                                                                                                                                                                                                                           
|        | 10(o) |                     |  | Amendment No. 1 to CheckFree Corporation Nonqualified
    Deferred Compensation Plan, dated May 5, 2000.*+                                                                                                                                                                                                                                              
|        | 10(p) |                     |  | Second Amendment to the CheckFree Services Corporation
    Nonqualified Deferred Compensation Plan, dated January 1,
    2002.*+                                                                                                                                                                                                                        
|        | 10(q) |                     |  | Form of Indemnification Agreement. (Reference is made to
    Exhibit 10(a) to Registration Statement on Form S-1,
    as amended (Registration No. 33-95738), filed with the
    Securities and Exchange Commission on August 14, 1995, and
    incorporated herein by reference.)+                                                                     
|        | 10(r) |                     |  | Schedule identifying material details of Indemnification
    Agreements substantially identical to Exhibit 10(h).
    (Reference is made to Exhibit 10(i) to the Companys
    Form 10-K for the year ended June 30, 2003, filed with
    the Securities and Exchange Commission on September 15,
    2003, and incorporated herein by reference.)+     

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|        |        |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | ------ | ------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                    
|Number  |        | Exhibit Description
|        |        |                    
|        | 10(s)  |                     |  | Confidentiality and Noncompetition Agreement, dated May 7,
    1999, between Peter J. Kight and the Company. (Reference is
    made to Exhibit 10(j) to the Companys Form 10-K
    for the year ended June 30, 2003, filed with the Securities
    and Exchange Commission on September 15, 2003, and
    incorporated herein by reference.)                                                                                                                                                                                                                                                                         
|        | 10(t)  |                     |  | Noncompetition Agreement, dated February 11, 2003, between
    Mark A. Johnson and the Company. (Reference is made to
    Exhibit 10(k) to the Companys Form 10-K for the
    year ended June 30, 2003, filed with the Securities and
    Exchange Commission on September 15, 2003, and incorporated
    herein by reference.)                                                                                                                                                                                                                                                                                      
|        | 10(u)  |                     |  | Confidentiality and Nonsolicitation Agreement, dated
    February 11, 2003, between Mark A. Johnson and the Company.
    (Reference is made to Exhibit 10(l) to the Companys
    Form 10-K for the year ended June 30, 2003, filed with
    the Securities and Exchange Commission on September 15,
    2003, and incorporated herein by reference.)                                                                                                                                                                                                                                                                 
|        | 10(v)  |                     |  | Executive Employment Agreement between the Company and
    Peter J. Kight. (Reference is made to Exhibit 10(z) to
    the Companys Form 10-K for the year ended
    June 30, 1997, filed with the Securities and Exchange
    Commission on September 26, 1997, and incorporated herein
    by reference.)+                                                                                                                                                                                                                                                                                                          
|        | 10(w)  |                     |  | CheckFree Corporation 2003 Incentive Compensation Plan.
    (Reference is made to Appendix A to the Companys
    Proxy Statement for the Annual Meeting of Stockholders held on
    October 29, 2003, and incorporated herein by reference.)+                                                                                                                                                                                                                                                                                                                                                                        
|        | 10(x)  |                     |  | Form of Stockholder Agreement entered into between the Company
    and each of Microsoft Corporation and First Data Corporation.
    (Reference is made to Exhibit 10(ff) of the Companys
    Registration Statement on Form S-4 (Registration
    No. 333-41098) filed with the Securities and Exchange
    Commission on July 10, 2000 and incorporated herein by
    reference.)**                                                                                                                                                                                                                                
|        | 10(y)  |                     |  | Form of Registration Rights Agreement entered into between the
    Company and each of Microsoft Corporation and First Data
    Corporation. (Reference is made to Exhibit 10(gg) of the
    Companys Registration Statement on Form S-4
    (Registration No. 333-41098) filed with the Securities and
    Exchange Commission on July 10, 2000 and incorporated
    herein by reference.)**                                                                                                                                                                                                                        
|        | 10(z)  |                     |  | Form of Registration Rights Agreement entered into between the
    Company and Citibank, N.A. (Reference is made to
    Exhibit 10(hh) of the Companys Registration Statement
    on Form S-4 (Registration No. 333-41098) filed with
    the Securities and Exchange Commission on July 10, 2000 and
    incorporated herein by reference.)**                                                                                                                                                                                                                                                                       
|        | 10(aa) |                     |  | Form of Commercial Alliance Agreement entered into between the
    Company and Microsoft Corporation. (Reference is made to
    Exhibit 10(ff) of the Companys Amendment No. 1
    to the Registration Statement on Form S-4 (Registration
    No. 333-32644) filed with the Securities and Exchange
    Commission on April 18, 2000 and incorporated herein by
    reference.)**                                                                                                                                                                                                                                   
|        | 10(bb) |                     |  | Form of Marketing Agreement entered into between the Company and
    First Data Corporation. (Reference is made to
    Exhibit 10(gg) of the Companys Amendment No. 1
    to the Registration Statement on Form S-4 (Registration
    No. 333-32644) filed with the Securities and Exchange
    Commission on April 18, 2000 and incorporated herein by
    reference.)**                                                                                                                                                                                                                                            
|        | 10(cc) |                     |  | Master Agreement, dated August 5, 2003, among Bastogne,
    Inc., CheckFree Services Corporation and SunTrust Bank.
    (Reference is made to Exhibit 10(v) to the Companys
    Form 10-K for the year ended June 30, 2003, filed with
    the Securities and Exchange Commission on September 15,
    2003, and incorporated herein by reference.)**                                                                                                                                                                                                                                                                
|        | 10(dd) |                     |  | Revolving Credit Agreement, dated August 20, 2004, among
    CheckFree Corporation, CheckFree Services Corporation and
    CheckFree Investment Corporation, as Borrowers, the lenders from
    time to time party thereto, SunTrust Bank, as Administrative
    Agent, Bank of America, N.A., as Syndication Agent and KeyBank
    National Association, US Bank and BNP Paribas, as Documentation
    Agents. (Reference is made to Exhibit 10.1 of the
    Companys Current Report on Form 8-K filed with the
    Securities and Exchange Commission on August 25, 2004 and
    incorporated herein by reference).

103



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|        |        |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ------ | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                    
|Number  |        | Exhibit Description
|        |        |                    
|        | 10(ee) |                     |  | First Amendment to Revolving Credit Agreement, made and entered
    into as of December 7, 2004, by and among CheckFree
    Corporation, CheckFree Services Corporation, and CheckFree
    Investment Corporation, the several banks and other financial
    institutions from time to time party thereto (the
    Lenders), and Sun Trust Bank, in its capacity as
    administrative agent for the Lenders, as issuing bank, and as
    swingline lender. (Reference is made to Exhibit 10(c) to
    the Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)
|        | 21     |                     |  | Subsidiaries of the Company.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 23     |                     |  | Consent of Deloitte & Touche LLP.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 24     |                     |  | Power of Attorney.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 31(a)  |                     |  | Certification of Chief Executive Officer under Section 302
    of Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 31(b)  |                     |  | Certification of Chief Financial Officer under Section 302
    of Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 32(a)  |                     |  | Certification of Chief Executive Officer under Section 906
    of the Sarbanes-Oxley Act of 2002.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 32(b)  |                     |  | Certification of Chief Financial Officer under Section 906
    of the Sarbanes-Oxley Act of 2002.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            






| |   |                        
| | - | -----------------------
| | * | Filed with this report.



| |    |                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------
| | ** | Portions of this Exhibit have been given confidential treatment
    by the Securities and Exchange Commission.



|    |                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------
|*** | Furnished with this report.                                                                                            
|   
|+   | Management compensatory plan required to be filed pursuant to
    Item 14(c) of this Annual Report Report on Form 10-K.

(b) Exhibits.




(c) Financial Statement Schedules.




104



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##### Table of Contents






SIGNATURES




|                        |  |                                                                          
|----------------------- |  | -------------------------------------------------------------------------
|                        |  | CHECKFREE CORPORATION                                                    
|                       
|Date: September 2, 2005 |  | By: /s/ David E. Mangum                                                  
|                        |  |                                                                          
|                        |  | David E. Mangum, Executive Vice
    President and Chief Financial Officer



|                                               |  |                                                                                             |  | 
|---------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | 
|                                              
|* Peter J. KightPeter
    J. Kight             |  | Chairman of the Board and Chief Executive Officer (Principal
    Executive Officer)        
|                                              
|/s/ David E. MangumDavid
    E. Mangum         |  | Executive Vice President and Chief Financial Officer (Principal
    Financial Officer)     
|                                              
|/s/ John J. Browne, Jr.John
    J. Browne, Jr. |  | Vice President, Controller, and Chief Accounting Officer
    (Principal Accounting Officer)
|                                              
|* William P. BoardmanWilliam
    P. Boardman   |  | Director                                                                                   
|                                              
|* James D. DixonJames
    D. Dixon             |  | Director                                                                                   
|                                              
|* Mark A. JohnsonMark
    A. Johnson           |  | Director                                                                                   
|                                              
|* Lewis C. LevinLewis
    C. Levin             |  | Director                                                                                   
|                                              
|* Eugene F. QuinnEugene
    F. Quinn           |  | Director                                                                                   
|                                              
|* Jeffrey M. WilkinsJeffrey
    M. Wilkins     |  | Director                                                                                   
|                                              
|*By:                                           |  | /s/ Curtis A. LovelandCurtis
    A. Loveland,
    Attorney-in-Fact                          |  | 

105



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##### Table of Contents



Exhibit Index


|        |      |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- | ---- | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                    
|Number  |      | Exhibit Description
|        |      |                    
|        | 2(a) |                     |  | Agreement and Plan Merger and Contribution Agreement, dated as
    of February 15, 2000, among Microsoft Corporation, First
    Data Corporation, Citibank, N.A., MS II, LLC, First Data,
    L.L.C., H & B Finance, Inc., First Data
    International Partner, Inc., MSFDC International, Inc., Citicorp
    Electronic Commerce, Inc., CheckFree Holdings Corporation,
    Chopper Merger Corporation, and CheckFree Corporation.
    (Reference is made to Exhibit 2(b) of the Registration
    Statement on Form S-4 (Registration No. 333-32644)
    filed with the Securities and Exchange Commission on
    March 16, 2000, and incorporated herein by reference.)                                                                         
|        | 2(b) |                     |  | Amended and Restated Agreement and Plan of Merger, dated as of
    July 7, 2000, among CheckFree Holdings Corporation,
    Microsoft Corporation, First Data Corporation, Citibank, N.A.,
    H&B Finance, Inc., FDC International Partner, Inc., FDR
    Subsidiary Corp., MS FDC International, Inc., Citi TransPoint
    Holdings Inc., TransPoint Acquisition Corporation, Tank
    Acquisition Corporation, Chopper Merger Corporation, CheckFree
    Corporation, Microsoft II, LLC and First Data, L.L.C.
    (Reference is made to Appendix A of the Registration
    Statement on Form S-4 (Registration No. 333-41098)
    filed with the Securities and Exchange Commission on
    July 10, 2000, and incorporated herein by reference.)
|        | 2(c) |                     |  | Amended and Restated Strategic Alliance Master Agreement, dated
    as of April 26, 2000, among CheckFree Holdings Corporation,
    CheckFree Services Corporation and Bank of America, N.A.
    (Reference is made to Appendix A to the Companys
    Proxy Statement for the Special Meeting of Stockholders held on
    September 28, 2000, and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                              
|        | 2(d) |                     |  | Stock Purchase Agreement by and among UIL Holdings Corporation,
    United Resources, Inc. and CheckFree Corporation, dated
    December 16, 2003 (Reference is made to Exhibit 2 to
    the Companys Quarterly Report on Form 10-Q for the
    quarter ended December 31, 2003, filed with the Securities
    and Exchange Commission on February 12, 2004, and
    incorporated herein by reference; the Company agrees to furnish
    supplementally a copy of any omitted schedules to this Agreement
    to the Securities and Exchange Commission upon request).                                                                                                                                                                            
|        | 3(a) |                     |  | Amended and Restated Certificate of Incorporation of the
    Company. (Reference is made to Exhibit 4(e) to the
    Registration Statement on Form S-8 (Registration
    No. 333-50322), filed with the Securities and Exchange
    Commission on November 20, 2000, and incorporated herein by
    reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 3(b) |                     |  | Certificate of Ownership and Merger Merging CheckFree
    Corporation into CheckFree Holdings Corporation. (Reference is
    made to Exhibit 3(b) to the Companys Form 10-K
    for the year ended June 30, 2000, filed with the Securities
    and Exchange Commission on September 26, 2000, and
    incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 3(c) |                     |  | By-Laws of the Company. (Reference is made to Exhibit 3(b)
    to the Current Report on Form 8-K, dated December 22,
    1997, filed with the Securities and Exchange Commission on
    December 30, 1997, and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 3(d) |                     |  | Form of Specimen Stock Certificate. (Reference is made to
    Exhibit 3(d) to the Companys Form 10-K for the
    year ended June 30, 2000, filed with the Securities and
    Exchange Commission on September 26, 2000, and incorporated
    herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 4(a) |                     |  | Articles FOURTH, FIFTH, SEVENTH, EIGHTH, TENTH AND ELEVENTH of
    the Companys Amended and Restated Certificate of
    Incorporation (contained in the Companys Amended and
    Restated Certificate of Incorporation filed as Exhibit 3(a)
    hereto) and Articles II, III, IV, VI and VIII of the
    Companys By-Laws (contained in the Companys By-Laws
    filed as Exhibit 3(b) hereto.)                                                                                                                                                                                                                                                                                                                                               
|        | 4(b) |                     |  | Rights Agreement, dated as of December 16, 1997, by and
    between the Company and The Fifth Third Bank, as Rights Agent.
    (Reference is made to Exhibit 4.1 to Registration Statement
    on Form 8-A, filed with the Securities and Exchange
    Commission on December 19, 1997, and incorporated herein by
    reference.)                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 4(c) |                     |  | Amendment No. 1 to the Rights Agreement, dated as of
    February 5, 1999, between CheckFree Corporation and the
    Fifth Third Bank, as Rights Agent. (Reference is made to
    Exhibit 4.2 to Amendment No. 1 to Registration
    Statement on Form 8-A (File No. 0-26802), filed with
    the Securities and Exchange Commission on May 12, 1999, and
    incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                   

-i-



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##### Table of Contents



|        |       |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ----- | ------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 4(d)  |                     |  | Amendment No. 2 to the Rights Agreement, dated as of
    August 3, 2000, between CheckFree Corporation and the Fifth
    Third Bank, as Rights Agent. (Reference is made to
    Exhibit 4.3 to Amendment No. 2 to Registration
    Statement on Form 8-A (File No. 0-26802), filed with
    the Securities and Exchange Commission on October 3, 2000,
    and incorporated herein by reference.)                                                                                 
|        | 4(e)  |                     |  | Amendment No. 3 to the Rights Agreement, dated as of
    January 25, 2002, between CheckFree Corporation and Wells
    Fargo Bank Minnesota, National Association, as Rights Agent.
    (Reference is made to Exhibit 4.4 to Amendment No. 3
    to Registration Statement on Form 8-A (File
    No. 0-26802), filed with the Securities and Exchange
    Commission on January 28, 2002, and incorporated herein by
    reference.)                                              
|        | 10(a) |                     |  | CheckFree Services Corporation 401(k) Plan (restatement as of
    June 30, 2005).*                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10(b) |                     |  | CheckFree Services Corporation Defined Contribution Plan and
    Trust, sponsored by SunTrust Bank  Basic Plan
    Document #02, June 2002 (Prototype plan for CheckFree
    Services Corporation 401(k) Plan) (Reference is made to
    Exhibit 10(b) to the Companys Quarterly Report on
    Form 10-Q for the quarterly period ended December 31,
    2004, filed with the Securities and Exchange Commission on
    February 8, 2005, and incorporated herein by reference.)
|        | 10(c) |                     |  | CheckFree Corporation Third Amended and Restated Associate Stock
    Purchase Plan. (Reference is made to Exhibit 4(a) to the
    Post-Effective Amendment No. 1 to the Registration
    Statement on Form S-8 (Registration No. 333-101284),
    filed with the Securities and Exchange Commission on
    June 13, 2005, and incorporated herein by reference.)                                                                                                                  
|        | 10(d) |                     |  | CheckFree Corporation 2002 Stock Incentive Plan. (Reference is
    made to Appendix B to the Companys Definitive Proxy
    Statement for the 2002 Annual Meeting of Stockholders held on
    November 6, 2002, filed with the Securities and Exchange
    Commission on October 3, 2002, and incorporate herein by
    reference.)+                                                                                                                                              
|        | 10(e) |                     |  | Form of Restricted Stock Award Agreement for Non-Employee
    Directors. (Reference is made to Exhibit 10(d) to the
    Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)+                                                                                                                                      
|        | 10(f) |                     |  | Form of Performance Accelerated Restricted Stock Award
    Agreement. (Reference is made to Exhibit 10(e) to the
    Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)+                                                                                                                                         
|        | 10(g) |                     |  | Form of Restricted Stock Award Agreement. (Reference is made to
    Exhibit 10(f) to the Companys Quarterly Report on
    Form 10-Q for the quarterly period ended December 31,
    2004, filed with the Securities and Exchange Commission on
    February 8, 2005, and incorporated herein by reference. )+                                                                                                                                                                    
|        | 10(h) |                     |  | Form of Nonstatutory Stock Option Agreement under the 2002 Stock
    Incentive Plan. (Reference is made to Exhibit 10(g) to the
    Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)+                                                                                                                          
|        | 10(i) |                     |  | Form of Incentive Stock Option Agreement under the 2002 Stock
    Incentive Plan. (Reference is made to Exhibit 10(h) to the
    Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)+                                                                                                                             
|        | 10(j) |                     |  | CheckFree Corporation Third Amended and Restated 1995 Stock
    Option Plan. (Reference is made to Exhibit 4(d) to
    Registration Statement on Form S-8, as amended
    (Registration No. 333-50322), filed with the Securities and
    Exchange Commission on November 20, 2000, and incorporated
    herein by reference.)+                                                                                                                                                   
|        | 10(k) |                     |  | CheckFree Corporation Amended and Restated 1993 Stock Option
    Plan. (Reference is made to Exhibit 4(a) to Post-Effective
    Amendment No. 1 to Form S-8, as amended (Registration
    No. 33-98442), filed with the Securities and Exchange
    Commission on January 9, 1998, and incorporated herein by
    reference.)+                                                                                                                                                    

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##### Table of Contents



|        |       |                     |  |                                                                                                                                                                                                                                                                                                                                                                                               
|------- | ----- | ------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 10(l) |                     |  | BlueGill Technologies, Inc. 1997 Stock Option Plan (reference is
    made to Exhibit 4(a) to Registration Statement on
    form S-8 (Registration No. 333-35812), filed with the
    Securities and Exchange Commission on April 28, 2000, and
    incorporated herein by reference.)+                                                                                                        
|        | 10(m) |                     |  | BlueGill Technologies, Inc. Amended and Restated 1998 Incentive
    and Non-Qualified Stock Option Plan (Reference is made to
    Exhibit 4(a) to Registration Statement on Form S-8
    (Registration No. 333-35814), filed with the Securities and
    Exchange Commission on April 28, 2000, and incorporated
    herein by reference.)+                                                   
|        | 10(n) |                     |  | CheckFree Corporation Nonqualified Deferred Compensation Plan,
    dated December 31, 1998.*+                                                                                                                                                                                                                                                                                                 
|        | 10(o) |                     |  | Amendment No. 1 to CheckFree Corporation Nonqualified
    Deferred Compensation Plan, dated May 5, 2000.*+                                                                                                                                                                                                                                                                                    
|        | 10(p) |                     |  | Second Amendment to the CheckFree Services Corporation
    Nonqualified Deferred Compensation Plan, dated January 1,
    2002.*+                                                                                                                                                                                                                                                              
|        | 10(q) |                     |  | Form of Indemnification Agreement. (Reference is made to
    Exhibit 10(a) to Registration Statement on Form S-1,
    as amended (Registration No. 33-95738), filed with the
    Securities and Exchange Commission on August 14, 1995, and
    incorporated herein by reference.)+                                                                                                           
|        | 10(r) |                     |  | Schedule identifying material details of Indemnification
    Agreements substantially identical to Exhibit 10(h).
    (Reference is made to Exhibit 10(i) to the Companys
    Form 10-K for the year ended June 30, 2003, filed with
    the Securities and Exchange Commission on September 15,
    2003, and incorporated herein by reference.)+                                           
|        | 10(s) |                     |  | Confidentiality and Noncompetition Agreement, dated May 7,
    1999, between Peter J. Kight and the Company. (Reference is
    made to Exhibit 10(j) to the Companys Form 10-K
    for the year ended June 30, 2003, filed with the Securities
    and Exchange Commission on September 15, 2003, and
    incorporated herein by reference.)                                                 
|        | 10(t) |                     |  | Noncompetition Agreement, dated February 11, 2003, between
    Mark A. Johnson and the Company. (Reference is made to
    Exhibit 10(k) to the Companys Form 10-K for the
    year ended June 30, 2003, filed with the Securities and
    Exchange Commission on September 15, 2003, and incorporated
    herein by reference.)                                                              
|        | 10(u) |                     |  | Confidentiality and Nonsolicitation Agreement, dated
    February 11, 2003, between Mark A. Johnson and the Company.
    (Reference is made to Exhibit 10(l) to the Companys
    Form 10-K for the year ended June 30, 2003, filed with
    the Securities and Exchange Commission on September 15,
    2003, and incorporated herein by reference.)                                         
|        | 10(v) |                     |  | Executive Employment Agreement between the Company and
    Peter J. Kight. (Reference is made to Exhibit 10(z) to
    the Companys Form 10-K for the year ended
    June 30, 1997, filed with the Securities and Exchange
    Commission on September 26, 1997, and incorporated herein
    by reference.)+                                                                                  
|        | 10(w) |                     |  | CheckFree Corporation 2003 Incentive Compensation Plan.
    (Reference is made to Appendix A to the Companys
    Proxy Statement for the Annual Meeting of Stockholders held on
    October 29, 2003, and incorporated herein by reference.)+                                                                                                                                                
|        | 10(x) |                     |  | Form of Stockholder Agreement entered into between the Company
    and each of Microsoft Corporation and First Data Corporation.
    (Reference is made to Exhibit 10(ff) of the Companys
    Registration Statement on Form S-4 (Registration
    No. 333-41098) filed with the Securities and Exchange
    Commission on July 10, 2000 and incorporated herein by
    reference.)**        
|        | 10(y) |                     |  | Form of Registration Rights Agreement entered into between the
    Company and each of Microsoft Corporation and First Data
    Corporation. (Reference is made to Exhibit 10(gg) of the
    Companys Registration Statement on Form S-4
    (Registration No. 333-41098) filed with the Securities and
    Exchange Commission on July 10, 2000 and incorporated
    herein by reference.)**
|        | 10(z) |                     |  | Form of Registration Rights Agreement entered into between the
    Company and Citibank, N.A. (Reference is made to
    Exhibit 10(hh) of the Companys Registration Statement
    on Form S-4 (Registration No. 333-41098) filed with
    the Securities and Exchange Commission on July 10, 2000 and
    incorporated herein by reference.)**                                               

-iii-



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##### Table of Contents



|        |        |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ------ | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                    
|Number  |        | Exhibit Description
|        |        |                    
|        | 10(aa) |                     |  | Form of Commercial Alliance Agreement entered into between the
    Company and Microsoft Corporation. (Reference is made to
    Exhibit 10(ff) of the Companys Amendment No. 1
    to the Registration Statement on Form S-4 (Registration
    No. 333-32644) filed with the Securities and Exchange
    Commission on April 18, 2000 and incorporated herein by
    reference.)**                                                                                                                                                                                                                                                                                                                                             
|        | 10(bb) |                     |  | Form of Marketing Agreement entered into between the Company and
    First Data Corporation. (Reference is made to
    Exhibit 10(gg) of the Companys Amendment No. 1
    to the Registration Statement on Form S-4 (Registration
    No. 333-32644) filed with the Securities and Exchange
    Commission on April 18, 2000 and incorporated herein by
    reference.)**                                                                                                                                                                                                                                                                                                                                                      
|        | 10(cc) |                     |  | Master Agreement, dated August 5, 2003, among Bastogne,
    Inc., CheckFree Services Corporation and SunTrust Bank.
    (Reference is made to Exhibit 10(v) to the Companys
    Form 10-K for the year ended June 30, 2003, filed with
    the Securities and Exchange Commission on September 15,
    2003, and incorporated herein by reference.)**                                                                                                                                                                                                                                                                                                                                                                          
|        | 10(dd) |                     |  | Revolving Credit Agreement, dated August 20, 2004, among
    CheckFree Corporation, CheckFree Services Corporation and
    CheckFree Investment Corporation, as Borrowers, the lenders from
    time to time party thereto, SunTrust Bank, as Administrative
    Agent, Bank of America, N.A., as Syndication Agent and KeyBank
    National Association, US Bank and BNP Paribas, as Documentation
    Agents. (Reference is made to Exhibit 10.1 of the
    Companys Current Report on Form 8-K filed with the
    Securities and Exchange Commission on August 25, 2004 and
    incorporated herein by reference).                                                                                                          
|        | 10(ee) |                     |  | First Amendment to Revolving Credit Agreement, made and entered
    into as of December 7, 2004, by and among CheckFree
    Corporation, CheckFree Services Corporation, and CheckFree
    Investment Corporation, the several banks and other financial
    institutions from time to time party thereto (the
    Lenders), and Sun Trust Bank, in its capacity as
    administrative agent for the Lenders, as issuing bank, and as
    swingline lender. (Reference is made to Exhibit 10(c) to
    the Companys Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2004, filed with the
    Securities and Exchange Commission on February 8, 2005, and
    incorporated herein by reference.)
|        | 21     |                     |  | Subsidiaries of the Company.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 23     |                     |  | Consent of Deloitte & Touche LLP.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 24     |                     |  | Power of Attorney.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 31(a)  |                     |  | Certification of Chief Executive Officer under Section 302
    of Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 31(b)  |                     |  | Certification of Chief Financial Officer under Section 302
    of Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 32(a)  |                     |  | Certification of Chief Executive Officer under Section 906
    of the Sarbanes-Oxley Act of 2002.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 32(b)  |                     |  | Certification of Chief Financial Officer under Section 906
    of the Sarbanes-Oxley Act of 2002.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            






| |   |                        
| | - | -----------------------
| | * | Filed with this report.



| |    |                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------
| | ** | Portions of this Exhibit have been given confidential treatment
    by the Securities and Exchange Commission.



|    |                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------
|*** | Furnished with this report.                                                                                            
|   
|+   | Management compensatory plan required to be filed pursuant to
    Item 14(c) of this Annual Report Report on Form 10-K.

-iv-