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                                  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 Year Ended June 30, 2002

                         Commission File Number: 0-26802

                              CheckFree CORPORATION
             (Exact name of Registrant as specified in its charter)

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

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

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

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     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. Yes  X   No
                                                       ---     ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]

     The aggregate market value of our Common Stock held by our non-affiliates
was approximately $740,013,614 on September 12, 2002.

     There were 88,616,788 shares of our Common Stock outstanding on September
12, 2002.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of our Annual Report to Stockholders for the fiscal year ended
June 30, 2002 are incorporated by reference in Part II.

     Portions of our Proxy Statement for the 2002 Annual Meeting of Stockholders
are incorporated by reference in Part III.





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                                TABLE OF CONTENTS

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                                                                                                              Page
                                                                                                              ----
                                                         PART I

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     Item 1     Business..................................................................................      3

     Item 2.    Properties................................................................................     21

     Item 3.    Legal Proceedings.........................................................................     22

     Item 4.    Submission of Matters to a Vote of Security Holders.......................................     22


                                                        PART II

     Item 5.    Market for the Registrant's Common Equity and Related Stockholder Matters.................     23

     Item 6.    Selected Financial Data...................................................................     23

     Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operation......     23

     Item 7A.   Quantitative and Qualitative Disclosures About Market Risk................................     24

     Item 8.    Financial Statements and Supplementary Data...............................................     24

     Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......     24


                                                        PART III

     Item 10.   Directors and Executive Officers of the Registrant........................................     25

     Item 11.   Executive Compensation....................................................................     25

     Item 12.   Security Ownership of Certain Beneficial Owners and Management............................     25

     Item 13.   Certain Relationships and Related Transactions............................................     25


                                                        PART IV

     Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K...........................     26

     Signatures...........................................................................................     31

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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.

OVERVIEW

     CheckFree was founded in 1981 as an electronic payment processing company
and has become a leading provider of financial electronic commerce products and
services. Our current business was developed through the expansion of our core
electronic payments business and the acquisition of companies operating in
similar or complementary businesses.

     Through our Electronic Commerce division, we enable consumers to receive
and pay bills electronically. For the year ended June 30, 2002, we processed
approximately 316 million transactions, and delivered approximately 10.8 million
electronic bills. For the quarter ended June 30, 2002, we processed
approximately 87 million electronic payments and delivered approximately 3.8
million electronic bills. As of June 30, 2002, over 6.6 million consumers were
enabled to use our systems, with a large majority of these consumers accessing
our services via the Internet. The number of transactions we process each year
continues to grow. For the year ended June 30, 2002, growth in the number of
transactions exceeded 36%. The Electronic Commerce division accounts for
approximately 72% of our fiscal 2002 revenue.

     Through our Investment Services division, we provide a range of portfolio
management services to financial institutions, including broker dealers, money
managers and investment advisors. As of June 30, 2002, our clients used the
CheckFree APL portfolio accounting system to manage about 1.2 million portfolios
totaling more than $500 billion in assets. The Investment Services division
accounts for approximately 16% of our fiscal 2002 revenue.

     Through our Software division, we deliver software, maintenance, support
and professional services to large financial service providers and other
companies across a range of industries. Our Software division is comprised of
three units, each with its own distinct set of software products. The ACH
Solutions unit provides software and services that are used to process more than
two-thirds of the nation's eight billion Automated Clearing House (ACH)
payments. The CheckFree Financial and Compliance Solutions (CFACS) unit enables
organizations to handle their reconciliation and compliance requirements. The
i-Solutions unit provides software and services that enable end-to-end e-billing
and e-statement creation, delivery and payment. The Software division accounts
for approximately 12% of our fiscal 2002 revenue.

ELECTRONIC COMMERCE DIVISION

     Introduction. The Electronic Commerce division enables consumers to receive
and pay bills electronically. Its products enable consumers to:

     -    receive electronic bills through the Internet;
     -    pay any bill - whether it arrives over the Internet or through
          traditional mail - to anyone;
     -    make payments not related to bills - to anyone; and
     -    perform customary banking transactions, including balance inquiries,
          transfers between accounts and online statement reconciliations.

     The majority of consumers using our services access the CheckFree system
through Consumer Service Providers (CSPs). These are organizations, such as
banks, brokerage firms, Internet portals and content sites, Internet-based
banks, Internet financial sites and personal financial management software
providers, that use our




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products to enable consumers to receive and/or pay bills electronically. We have
relationships with hundreds of CSPs. Some of our largest CSPs, as determined by
type of CSP and number of consumers using CheckFree's products, are Bank of
America, Bank One, Charles Schwab & Co., Chase Manhattan Bank, Merrill Lynch &
Co., SunTrust, U.S. Postal Service, Wachovia, Wells Fargo and Yahoo. This list
of our CSPs is not exhaustive and may not fully represent our customer base.

     Industry Background. On average more than 17 billion paper bills are
produced each year, with the cost to a biller of submitting a paper bill,
including printing, postage and billing inserts, averaging anywhere from $0.50 -
$2.00 per bill (Gartner 2002). In addition, it is estimated that 42.5 billion
checks are written in the United States every year. The use of checks imposes
significant costs on financial services organizations, businesses and their
customers. These costs include the writing, mailing, recording and manual
processing of checks. The majority of today's consumer bill payments are
completed using traditional paper-based methods. According to a March 2002
TowerGroup study, of the estimated 17 billion consumer bills produced each year,
74% are paid by paper check, 11% are paid by electronic means and the remainder
are paid by other means (cash, payroll deduction, money order, etc.) This
compares to PSI Global statistics for 1990, which indicated that 90% of consumer
bills were paid by check and 2 to 3% were paid electronically. Today, many
traditional financial transactions can be completed electronically due to the
emergence of new communications, computing and security technologies. Many
financial services organizations and businesses have invested in these
technologies and are creating the infrastructure for recording, reporting and
executing electronic transactions. We believe the broad impact of the Internet,
the relatively high cost of producing, printing and mailing a paper bill and the
cost to financial services organizations, businesses and customers of processing
paper checks will continue the trend toward increased usage of electronic
methods to execute financial transactions.

     Products and Services. We have developed an open infrastructure, known as
Genesis, to process electronic bills and payments. The Genesis system is
accessed by CSPs using various Web-based applications. In March 2001, we
introduced our latest application for electronic billing and payments - "WebPay
for Consumers" (or WebPay 3.2), which added to our core product the ability for
consumers to receive and pay e-bills over e-mail and to exchange money with each
other using e-mail "invitations" to receive money. WebPay 3.2 helps consumers
automate the complete process of viewing and paying bills - they can receive
bills online and pay those bills online, too. WebPay 3.2 also allows the
consumer to "Pay Anyone" - from a child in college, to a lawn care or other
service provider, to a friend, electronically, using the Genesis system. The
number of sites where consumers can both view and pay bills doubled in 2002,
with 584 CSPs now offering full electronic billing and payment.

     -    ELECTRONIC BILLING OR E-BILL SERVICES. As of June 30, 2002, consumers
          could view 262 different e-bills through CSP websites or directly at
          our website. We have contractual arrangements with 237 "live" billers,
          or billers that currently make e-bills available for viewing and
          paying. Of these 237 live billers, 207 are primary billers or billers
          that issue more than 100,000 bills per month. The following billers
          are some of our largest e-billing customers, as determined by the
          number of consumers viewing and paying their e-bills: Bank of America
          Credit Card, JC Penney Card Services, Texaco, Lowe's Consumer Credit
          Card, Pacific Bell, Sprint PCS, Bellsouth Telecommunications, Macy's
          and Verizon Corporation. This list of billers is not exhaustive and
          may not fully represent our customer base. These billers may use our
          system to deliver full-color electronic bills to their customers,
          together with detailed information and electronic promotional offers.
          These billers also have the opportunity to add interactive one-to-one
          marketing features to their bills. In addition to providing electronic
          bills through contractual relationships with 237 billers, we deliver
          25 e-bills "scraped" - which means copied, with the consumer's
          permission - from different billers' Web sites. The 262 e-bills that
          we currently deliver represent a 27% growth over the number of
          different e-bills available for the year ended June 30, 2001. We also
          have executed contracts with 28 billers who are not yet in production.
          Actual e-bills delivered in the fourth quarter ended June 30, 2002
          exceeded 3.8 million, which is an increase of 23% over the 3.1 million
          e-bills distributed in the third quarter ended March 31, 2002.


     -    ELECTRONIC PAYMENT OR THE CheckFree PayAnyone (SM) SERVICE. Our
          PayAnyoneSM service allows consumers to literally pay anyone
          electronically using a variety of devices like personal computers.
          Typically, consumers access the Genesis system through CSPs. Once a
          consumer has accessed the




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          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
          electronically, using the Federal Reserve's Automated Clearing House,
          or in some instances other electronic methods such as Visa e-pay, or
          by issuing a paper check or draft.

          -    AUTOMATED CLEARING HOUSE. The Federal Reserve's Automated
               Clearing House (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 KeyBank, N.A., under the terms of an automated
               clearing house agreement. Additional information on the ACH can
               be found at the Federal Reserve Commission's Web site at
               www.federalreserve.gov. Like other users of the ACH, we bear
               credit risk resulting from returned transactions caused by
               insufficient funds, stop payment orders, closed accounts, frozen
               accounts, unauthorized use, disputes, theft or fraud.

          -    PAPER CHECKS OR DRAFTS. When we are unable to move the funds
               electronically, we will issue either a paper check, drawn on
               trust accounts, or a paper draft, drawn on the consumer's bank
               account. When we issue a paper check, we bear the risk of
               insufficient funds, stop payment orders, closed accounts or
               frozen accounts.

          -    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 draft or
               check transactions in individual cases such that overall we have
               not incurred losses in excess of 0.93% of our revenues in any of
               the past five years. We also maintained a reserve for these risks
               of $1.0 million at June 30, 2002.

     Usage Metrics. Historically, we have measured usage on our systems by
counting the total number of consumers enrolled to use our systems and the total
number of transactions we process. Using these metrics, as of June 30, 2002,
over 6.6 million consumers were enabled to receive and pay bills online, and we
processed in excess of 316 million transactions for the year ended June 30,
2002. Beginning with the fourth quarter 2002, we reported usage metrics based on
"Full Service" relationships and "Transaction Service" relationships. A Full
Service relationship is one with a CSP that outsources the electronic billing
and payment process to us. A Transaction Service relationship is one with a CSP
that utilizes only a subset of our electronic billing and payment services or
uses one of our other electronic commerce division products. Using these
metrics, 4.9 of the 6.6 million consumers enrolled on our systems are enrolled
through CSPs that use our Full Service offering. Of these 4.9 million Full
Service consumers, about 3.1 million are active consumers. For the quarter ended
June 30, 2002, we processed approximately 69 million transactions related to
Full Service consumers and recorded revenues of approximately $74 million for
these services. For the remainder of the 6.6 million consumers enabled on our
systems, we provided Transaction Services. We also provided Transaction Services
to many other consumers for whom we do not capture detailed consumer data. For
the quarter ended June 30, 2002, we processed approximately 19 million
transactions related to Transaction Service consumers and recorded revenue of
approximately $11 million for these services.

     The CheckFree Advantage. We have developed numerous systems and programs to
enhance our electronic billing and payment products.

     -    SCALABLE GENESIS PLATFORM. The Genesis platform is an open
          infrastructure created by our engineers to process electronic bills
          and payments. Genesis has the built-in scale to handle transactions
          from more than 30 million consumers. During 2002, we successfully
          migrated all transaction processing for consumers we acquired through
          our strategic agreement with Bank of America from the processing
          platform Bank of America was using to Genesis. Because we no longer
          needed to continue operating Bank of America's platform afterward, we
          were able to close our San Francisco and Houston offices. Similarly,
          in 2002, we also migrated to Genesis all transaction processing for
          consumers using our services through Wells Fargo. We had processed
          these transactions through an older platform we supported through our
          Austin, Texas office, which we were able to close when we completed
          the




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          migration. This consolidation has enabled CheckFree to obtain numerous
          economies of scale. Today, substantially all of our transactions are
          processed by the Genesis system.

     -    SIGMA QUALITY. In fiscal year 2000, we began an internal program
          called the "Sigma Challenge" which ties employee performance
          evaluations and compensation to the achievement of process and system
          improvements. Sigma is a measure of quality typically used by
          manufacturing firms to minimize defects. The Sigma Challenge applies
          Sigma measurements as a barometer of our performance on our key
          metrics of system availability and payment timeliness, and focuses our
          attention on critical tasks and peak performance. Small improvements
          in Sigma measurements signify significant performance improvements.
          The Sigma Challenge was designed to take our quality performance to
          99.9, or 4.6 Sigma. A 4.6 Sigma is the quality standard set by the
          telecommunications industry for delivering their services to
          businesses and consumers, and signifies "dial-tone" quality.

     -    ELECTRONIC PAYMENT RATE. Electronic payments are more efficient than
          paper payments, which are made by check or draft. Electronic payments
          are less expensive to process initially, result in fewer errors and
          result in fewer customer inquiries. For the month ended June 30, 2002,
          we completed over 71% of all of our payments electronically. This
          compares to 64% for the month ended June 30, 2001. In addition to
          sending a large majority of our payments electronically, we also have
          developed a process pursuant to which we include with the payment
          additional information the receiving merchant has given us about how
          its payment should be transmitted. We have established connectivity
          with over 1,100 merchants to provide this additional information. This
          additional information allows merchants to quickly and more accurately
          process the electronic payments they receive from us and reduces the
          number of customer inquiries we receive on these payments.

     -    EXPERIENCED CUSTOMER CARE. We have approximately 825 trained,
          experienced customer care and merchant services staff located in
          facilities in Dublin, Ohio; Aurora, Illinois; and Phoenix, Arizona.
          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 and conduct ongoing customer
          surveys. We use the feedback from these sources to identify areas of
          strength and opportunities for improvement in customer care, and to
          help us adjust resources to respond efficiently.

     Our Business Strategy. Our business strategy is to provide an expanding
range of convenient, secure and cost-effective electronic commerce services and
related products to financial services organizations, Internet-based information
sites, businesses that generate recurring bills and statements, and their
customers. We have designed our services and products to take advantage of
opportunities we perceive in light of current trends and our fundamental
strategy. The key elements of our business strategy are to:

     -    DRIVE INCREASED ADOPTION OF ELECTRONIC COMMERCE SERVICES BY CONSUMERS.
          We believe that consumers will move their financial transactions from
          traditional paper-based methods to electronic ones 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, based on the number of
          transactions we process, or based on 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




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               -    the volume of consumers, transactions, or both.

          We believe this flexibility equips our CSPs and billers to provide
          their consumers with services that will meet their needs, and that
          this flexibility makes it more attractive for CSPs and billers to more
          heavily promote the CheckFree e-bill and payment service.

     -    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 program, our high electronic rate, our
          consolidation of platforms, the scalability of the Genesis system and
          our high quality customer care centers all help us achieve greater
          efficiencies. In 2002, we launched five new programs focused on
          ongoing investments in cost, quality and scale. Each of these program
          ties employee performance evaluations and compensation to the
          achievement of process, system and cost-saving improvements.

     -    DRIVE NEW FORMS OF ELECTRONIC COMMERCE SERVICES. Our electronic
          commerce services are currently applied to banking, billing and
          payment and brokerage transactions. We believe that new applications
          will be developed as a result of the growth in electronic commerce
          generally, and Internet-based commerce specifically. We intend to
          leverage our infrastructure and distribution to address the
          requirements of consumers and businesses in these new applications.
          For example, our core payment and processing network can manage
          person-to-person and small business payments, as well as payments made
          at Internet merchant sites.

     Technology; Research and Development. Our core technology capabilities were
developed to handle settlement services, merchant database services and online
inquiry services on a traditional mainframe system with direct communications to
businesses. We have implemented a logical, nationwide "n-tier" internetworking
infrastructure. In other words, our infrastructure networks together any number
of other networks, passing transaction data among them. For example, we
internetwork together networks of billers, consumers, Consumer Service Providers
and financial institutions to complete electronic billing and payment
transactions. Consumers, businesses and financial services organizations access
this internetworking infrastructure through dial-up telephone lines, private
leased lines, various types of communications networks or the Internet. Our
computing complex in Norcross, Georgia houses a wide variety of application
servers that capture transactions and route them to our back-end banking,
billing and payment applications for processing. The back-end applications are
run on IBM mainframes, Tandems or Unix servers. We have developed databases and
information files that allow accurate editing and initiation of payments to
billers. These databases have been constructed over the past 21 years as a
result of our transaction processing experience.

     We have instituted several practices to minimize loss of data and operating
functionality in the event of a disaster. We operate on redundant computer
systems. Archival storage is kept on site as well as off site in fireproof
facilities. Diesel generators provide power to the computing facilities in the
event of a power disruption. We have contracted for the emergency provision of
an alternate site to aid in disaster recovery. Finally, our plans for fiscal
year 2003 include enhancing our disaster recovery systems to be able to offer a
mirrored data storage solution.

     We maintain a research and development group with a long-term perspective
of planning and developing new services and related products for the electronic
commerce, financial application software and investment services markets. As of
June 30, 2002, our research and development group consisted of approximately 455
employees. Additionally we use independent third party software development
contractors as needed.

     Sales, Marketing and Distribution. Our marketing and distribution strategy
has been to create and maintain distribution alliances that maximize access to
potential customers for our electronic commerce services and related products.
We do not, for the most part, market to, or have a direct relationship with,
consumers or end-users of our products and services. We believe that these
alliances enable us to offer services and related products to a larger customer
base than can be reached through stand-alone marketing efforts. We seek
distribution alliances with companies who have maximum penetration and leading
reputations for quality with our target customers. These alliances include our
relationship with CSPs; with billers; with Biller Service Providers (or BSPs)
such as Alltel




                                      -7-
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Corporation, Billserv, Inc. and Kubra; and with value-added resellers such as
EDS, Fiserv, Certegy, Digital Insight, PSCU Financial Services and S1
Corporation. This list of BSPs and resellers is not exhaustive and may not fully
represent our customer base.

     In order to foster a better understanding of the needs of our CSPs,
billers, BSPs and resellers, we employ a number of account managers assigned to
each of these specific customers. We also employ marketing personnel to
facilitate joint customer acquisition programs with each of these customer
groups, and to share our industry knowledge and previously developed campaigns
with their marketing departments.

     Competition. We face significant competition for all of our electronic
commerce products. Our primary competition can be considered to be the
continuance of traditional paper-based methods for receiving and paying bills,
both on the part of consumers and billers. In addition, the possibility of
billers and CSPs using internal development and management resources to create
in-house systems to handle electronic billing and payment remains a competitive
threat.

     Metavante, a division of Marshall and Ilsley Bank, competes with us most
directly from the perspective of providing pay anyone solutions to financial
services organizations. In 2000 Metavante announced that it had signed an
agreement to provide processing to Spectrum, a joint venture formed by J.P.
Morgan Chase, First Union (now Wachovia Corporation) and Wells Fargo & Co to
allow individuals and businesses to receive and pay bills electronically.
According to Metavante, this agreement contained guaranteed minimum transactions
from each of the three joint venture banks. Since 2001, Metavante has either
purchased or announced the purchase of four companies associated with some
aspect of electronic billing or payment: Cyberbills, Derivion, Paytrust and
Spectrum.

     A number of "niche" players compete with us in various ways. MasterCard
International has announced an online offering to enable people to receive and
pay bills over the Internet. In addition to providing Internet payment
capabilities primarily to consumers and merchants participating in online
auctions, PayPal, Inc. provides businesses and consumers with the ability to
send and receive online payments via e-mail.

     Other Products and Services. In addition to the e-bill and payment service
products, the Electronic Commerce division also offers a credit card account
balance transfer product, a credit card refund product, an automated recurring
payments and software service, which is primarily installed at health clubs
throughout the United States, and other forms of wholesale and retail payment
solutions.

     Acquisitions. Our current business was developed through expansion of our
core Electronic Commerce business and the acquisition of companies operating in
similar or complementary businesses. Our major acquisitions related to the
Electronic Commerce division include Servantis Systems Holdings, Inc. in
February 1996, Intuit Services Corporation in January 1997, and MSFDC, L.L.C
(TransPoint) in September 2000. In October 2000, we completed the strategic
agreement we entered into with Bank of America in April 2000, under which we
acquired certain of Bank of America's electronic billing and payment assets.

INVESTMENT SERVICES DIVISION

     Introduction. The Investment Services division provides a range of
outsourced portfolio management services to help more than 250 institutions
deliver portfolio management, performance measurement and reporting services to
their clients.

     Our institutional client base includes investment advisors, brokerage
firms, banks and insurance companies. Our fee-based money manager clients are
typically sponsors or managers of "wrap," or separately managed accounts, money
management products, or traditional money managers, managing investments of
institutions and high net worth individuals. We also support a growing number of
third party vendors providing quick to market turnkey solutions.

     Investment Services' primary product is a real-time portfolio management
system called CheckFree APL, representing:





                                      -8-
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     -    38 of the top 50 brokers are APL clients;
     -    36 of the top 40 money managers are APL clients;
     -    1.2 million portfolios representing $500 billion assets under
          management; and
     -    1,100 daily interfaces to manager data for 1,300 managers and 5,600
          investment products.

          Industry Background. Industry analysts (including Forrester Research
     and Financial Research Corporation 2001) predict a compound annual growth
     in the separately managed account business to exceed 30 percent over the
     next several years.

          Products and Services. Our portfolio management products and services
     are marketed under the product names CheckFree APL and CheckFree APL Wrap,
     and provide the following functions:

     -    account open and trading capabilities;
     -    graphical client reporting;
     -    performance measurement;
     -    decision support tools;
     -    account analytics;
     -    tax lot accounting;
     -    manager due diligence;
     -    multiple strategy portfolios;
     -    straight through processing;
     -    Depository Trust Corporation interfacing;
     -    billing functions; and
     -    system and data security.

     In addition, our Investment Services team provides data conversion
services, trains personnel on system use, and provides technical network support
and computer system interface set-up.

     Revenues in our portfolio management services are generated per portfolio
under management through multiple year agreements that provide for monthly
revenue on a volume basis. Revenue from our information services and software is
typically generated through annual agreements.

     Technology. Our Investment Services division utilizes advanced technology
for our portfolio management services and utilizes IBM RS/6000s to run the
portfolio management software. Services are provided primarily as a service
bureau offering with the data center residing at our Chicago office. Clients
obtain access from their personal computers either through a dedicated circuit
or through dial-up applications. The Chicago data center is the communication
center for more than 160 dedicated links together with four concentration hub
sites located in New Jersey, New York, Boston and San Diego. Each of these hub
sites supports the concentration of local dedicated links plus dial-up access.
In addition to the dedicated private network, clients use frame relay services
from several companies to access services. Our integrated outsourced solution
utilizes a highly scalable Unix platform.

     Sales, Marketing and Distribution. We market CheckFree APL and CheckFree
APL Wrap through our direct sales force. We generate new customers through
direct solicitation, user groups and advertisements. We also participate in
trade shows and sponsor industry seminars for distribution alliances.

     Competition. One source of competition Investment Services faces is from
potential customers building their own internal portfolio accounting systems. We
also compete with providers of portfolio accounting software like Advent
Software, DST, and IDS; and service bureau providers like SunGard Portfolio
Solutions and Financial Models Company.

     Other Products and Services. In addition to our APL and APL Wrap portfolio
management products, the Investment Services division also offers investment
performance measurement and reporting products and services. Marketed under
M-Search and M-Watch, these products are a result of the acquisition of Mobius
Group, Inc. in March 1999.




                                      -9-
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     Acquisitions. Our current business was developed through the acquisition of
Security APL, Inc. in May 1996, and Mobius Group, Inc. in March 1999.

SOFTWARE DIVISION

     The Software division operates three units, each of which delivers
software, maintenance, support and professional services. These units are ACH
Solutions, CheckFree Financial and Compliance Solutions, and i-Solutions.

     -    ACH SOLUTIONS. Our ACH Solutions unit provides Automated Clearing
          House (ACH) software and services. ACH is the primary batch-oriented
          electronic funds transfer system financial services organizations use
          to move funds electronically through the banking system. More than 80
          percent of the nation's top 50 ACH originators use our solutions for
          ACH processing, and more than two-thirds of the nation's eight billion
          ACH payments are processed each year through institutions using our
          software systems. In addition to the United States, we have provided
          electronic payment technology in Australia, Barbados, Chile, Colombia,
          Dominican Republic, Guatemala, Jamaica, Malaysia, and Panama.

          ACH Solutions markets software under the product name PEP+ (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 like 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. Recent new ACH product types allow returned checks, checks
          at the point-of-sale, and checks sent to a lockbox to be converted to
          electronic payments.

     -    CHECKFREE FINANCIAL AND COMPLIANCE SOLUTIONS (CFACS). Our CFACS unit
          provides software and professional services that enable organizations
          to perform automated reconciliation and maintain compliance with
          federal and state regulations. Banks, bank holding companies,
          securities and insurance firms, corporations, and government agencies
          use our reconciliation and compliance products and services. Our
          reconciliation solutions are marketed under the CheckFree
          RECON-Plus(TM)brand. These systems reconcile high volumes of complex
          transactions that are spread across multiple enterprise-wide systems
          and include securities transaction processing, automated deposit
          verification, consolidated bank account reconciliation and cash
          mobilization, and improved cash control. In fiscal 2002, we completed
          development of RECON-Plus Frontier(TM), a multi-tier reconciliation
          system that operates over the Internet.

          CheckFree RECON Securities(TM) enables securities firms to
          automatically match intra-day transactions, generate affirmations,
          facilitate settlement, and reconcile cash and securities transactions
          at both the omnibus, or collective, and shareholder level. In addition
          to reconciliation, CFACS delivers automated regulatory tracking and
          reporting solutions that help organizations maintain compliance. The
          CFACS compliance products provide compliance with: (1) unclaimed
          property management, (2) 1099 reporting, (3) fraud detection, (4) the
          Bank Secrecy Act and (5) retirement reporting.

     -    i-SOLUTIONS. Our i-Solutions unit provides end-to-end
          business-to-consumer and business-to-business software and services
          for e-billing and e-statement creation, delivery, and payment.
          i-Solutions helps billers, financial services organizations and biller
          service providers leverage electronic bills and statements as
          interactive conduits to customer relationship management, marketing
          and customer self-service applications.

          i-Solutions enables billers to create online bills and statements and
          distribute them to their customers for viewing and payment. Online
          bills can be delivered to the biller's customers through any or all of
          the following options: through CheckFree's network of Consumer Service
          Providers (CSPs), directly at the biller's Web site; through e-mail;
          and through CheckFree's Web site MyCheckFree.com, all of which are
          serviced through our Electronic Commerce division. Our software and
          outsourced




                                      -10-
<PAGE>

          application hosting services deliver: e-bill and e-statement creation;
          e-bill and e-statement delivery; e-bill payment transaction management
          and security; e-bill payment tracking and history; online marketing
          from the biller to its customers; and customer care.

          i-Solutions markets the i-Series product line, which is a set of
          e-billing and e-statement software solutions developed for various
          industry segments. Each product in the i-Series includes a template
          for creating e-bills and e-statements unique to a specific industry
          segment, reducing development and deployment time. These solutions are
          offered in both licensed and outsourced application service provider
          (ASP) agreements. Given the nature of the process we use to convert
          billing and/or statement information for use over the Internet, these
          products are marketable in international markets as well. i-Solutions
          software has been sold in 23 countries.

     Licenses. We generally grant non-exclusive, non-transferable perpetual
licenses to use our application software at a single site. Our standard license
agreements contain provisions designed to prevent disclosure and unauthorized
use of our software. License fees vary according to a number of factors,
including the types and levels of services we provide. Multiple site licenses
are available for an additional fee. In our license agreements, we generally
warrant that our products will function in accordance with the specifications
set forth in our product documentation. License fees generally are due upon
product documentation and software delivery to the customer.

     Maintenance and Support. Maintenance includes enhancements to our software.
Customers who obtain maintenance generally retain maintenance service from year
to year. To complement customer support, we frequently participate in user
groups with our customers. These groups exchange ideas and techniques for using
our products and provide a forum for customers to make suggestions for product
acquisition, development and enhancement.

     Professional Services. We offer implementation services building customer
applications around our products.

     Sales, Marketing and Distribution. We market software products through our
direct and indirect sales force. Salespersons have specific product
responsibility and receive support from technical personnel as needed. We
generate new customers through direct solicitations, user groups,
advertisements, direct mail campaigns and strategic alliances. We also
participate in trade shows and sponsor industry technology seminars for
prospective customers. Existing customers are often candidates for sales of
additional products or for enhancements to products they have already purchased.
We also market through resellers for certain geographies and vertical markets.

     Competition. The computer application software industry is highly
competitive. We believe that there is at least one direct competitor for most of
our software products, but no competitor competes with us in all of our software
product areas.

     In the electronic statement creation and financial applications software
markets, we compete directly or indirectly with a number of firms, including
large diversified computer software service companies and independent suppliers
of software products. CheckFree i-Solutions' electronic statement and billing
creation software products compete primarily with edocs, Inc., Avolent Software
and with billers building their own solutions rather than buying software or
outsourcing the service. The RECON-Plus products compete with Chesapeake,
Driscoll and SmartStream/Geac. Our PEP+ products compete with Transaction
Systems Architects, Inc.

     Acquisitions. Our current business was developed through the acquisition of
Servantis Systems Holdings, Inc. in February 1996 and BlueGill Technologies,
Inc. in April 2000.


GOVERNMENT REGULATION

     We believe that we are not required to be licensed by the Office of the
Comptroller of the Currency, the Federal Reserve Board, or other federal or
state agencies that regulate or monitor banks or other types of providers of
electronic commerce services. The Office of the Comptroller of the Currency,
however, periodically audits us, since we are a supplier of products and
services to financial services organizations. In 2001, the USA Patriot Act





                                      -11-
<PAGE>


amended the Bank Secrecy Act to expand the definition of money services
businesses so that it may include CheckFree. Several states have also passed
legislation regulating or licensing check sellers, money transmitters or service
providers to banks, and we have registered under this legislation in specific
instances. We do not believe that any state or federal legislation of this type
materially affects us. In addition, as are all U.S. citizens, CheckFree is
subject to the regulations of the Office of Foreign Assets Control targeted at
money laundering. Finally, through our processing agreements, we agree to comply
with the data, record keeping, processing, and other requirements of applicable
federal and state laws and regulations, Federal Reserve Bank operating letters,
and the National Automated Clearing House Association Operating Rules imposed on
our processing banks. We may be subject to audit or examination under any of
these requirements. Violations of these requirements could limit or further
restrict our access to the payment clearance systems or our ability to obtain
access to these systems from banks. Further, the Federal Reserve rules provide
that we can only access the Federal Reserve's automated clearing house through a
bank. If the Federal Reserve rules were to change to further restrict our access
to the automated clearing house or limit our ability to provide automated
clearing house transaction processing services, our business could be materially
adversely affected.

     In conducting various aspects of our business, we are subject to laws and
regulations relating to commercial transactions generally, like the Uniform
Commercial Code, and are also subject to the electronic funds transfer rules
embodied in Regulation E, promulgated by the Federal Reserve Board. The Federal
Reserve's Regulation E implements the Electronic Fund Transfer Act, which was
enacted in 1978. Regulation E protects consumers engaging in electronic
transfers, and sets forth the basic rights, liabilities, and responsibilities of
consumers who use electronic money transfer services and of financial services
organizations that offer these services. For us, Regulation E sets forth
disclosure and investigative procedures. For consumers, Regulation E establishes
procedures and time periods for reporting unauthorized use of electronic money
transfer services and limitations on the consumer's liability if the
notification procedures are followed within prescribed periods. These
limitations on the consumer's liability may result in liability to us.

   INTELLECTUAL PROPERTY RIGHTS

     We regard our financial transaction services and related products as
proprietary and rely on a combination of patent, copyright, trademark and trade
secret laws, employee and third party nondisclosure agreements, and other
intellectual property protection methods to protect our services and related
products. CheckFree has been issued fifteen patents in the United States and
abroad. The majority of these patents cover various facets of electronic billing
and/or payment. CheckFree also has a large number of pending patent
applications. CheckFree owns over 30 domestic and foreign trade and service mark
registrations related to products or services and has additional registrations
pending.

EMPLOYEES

     As of June 30, 2002, we employed approximately 2,650 full-time employees,
including approximately 913 in systems and research and development, including
software development, approximately 973 in customer care, and approximately 764
in sales and marketing, administration, financial control, corporate services,
and human resources. We are not a party to any collective bargaining agreement
and are not aware of any efforts to unionize our employees. We believe that our
relations with our employees are good. We believe our future success and growth
will depend in large measure upon our ability to attract and retain qualified
management, technical, marketing, business development and sales personnel.

BUSINESS RISKS

     We desire to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Many of the following important
factors discussed below have been discussed in our prior filings with the
Securities and Exchange Commission. In addition to the other information in this
report, readers should carefully consider that the following important factors,
among others, in some cases have affected, and in the future could




                                      -12-
<PAGE>



affect, our actual results and could cause our actual consolidated results of
operations for the fiscal year ending June 30, 2003, and beyond, to differ
materially from those expressed in any forward-looking statements made by us, or
on our behalf.

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 REMAIN CONSISTENTLY PROFITABLE.

     If the number of electronic commerce transactions does not continue to grow
or if consumers or businesses do not continue to adopt our services, it could
have a material adverse effect on our business, financial condition and results
of operations. We believe future growth in the electronic commerce market will
be driven by the cost, ease-of-use and quality of products and services offered
to consumers and businesses. In order to consistently increase and maintain our
profitability, consumers and businesses must continue to adopt our services.

WE HAVE NOT OPERATED PROFITABLY IN THE PAST AND EXPECT TO EXPERIENCE NET LOSSES
IN THE FUTURE.

     We have not consistently operated profitably to date. Since our inception,
our accumulated losses have totaled approximately $1,130,405,000. We incurred:

     -    a loss from operations of $43.4 million and a net loss of $32.3
          million for the fiscal year ended June 30, 2000;
     -    a loss from operations of $464.7 million and a net loss of $363.1
          million for the fiscal year ended June 30, 2001; and
     -    a loss from operations of $535.5 million and net loss of $441.0
          million for the fiscal year ended June 30, 2002.

     We anticipate having a net loss from operations in fiscal 2003 and may
experience net losses and may not be able to sustain or increase our
profitability in the future. For the fiscal year ended June 30, 2002, we
invested over $55 million in research and development and $58 million in sales
and marketing. We intend to continue to make significant investments in research
and development and sales and marketing. If the investment of our capital is not
successful to grow our business, it will have a material adverse effect on our
business and financial condition, as well as negatively impact your investment
in our business and limit our ability to pay dividends in the future to our
stockholders.

OUR FUTURE PROFITABILITY DEPENDS UPON OUR ABILITY TO IMPLEMENT OUR STRATEGY
SUCCESSFULLY TO INCREASE ADOPTION OF ELECTRONIC BILLING AND PAYMENT METHODS.

     Our future profitability will depend, in part, on our ability to implement
our strategy successfully to increase adoption of electronic billing and payment
methods. Our strategy includes investment of time and money during fiscal 2003
in programs designed to:

     -    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;
     -    continually 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 billers whose bills we can present and pay
          electronically.

     If we do not successfully implement our strategy, revenue growth will be
minimal, and expenditures for these programs will not be justified.

     Our investment in these programs will have a negative impact on our
short-term profitability. Additionally, our failure to implement these programs
successfully or to increase substantially adoption of electronic commerce





                                      -13-
<PAGE>


billing and payment methods by consumers who pay for the services could have a
material adverse effect on our business, financial condition and results of
operations.

COMPETITIVE PRESSURES WE FACE MAY HAVE A MATERIAL ADVERSE EFFECT ON US.

     We face significant competition in each of our business units, Electronic
Commerce, Investment Services and Software. Increased competition or other
competitive pressures may result in price reductions, reduced margins or loss
of business, any of which could have a material adverse effect on our business,
financial condition and results of operations. Further, competition will
persist, and may increase and intensify in the future.

     In Electronic Commerce our primary competition remains the traditional
paper-based methods of paying and receiving bills. In addition, a number of
banks have developed or have announced their intent to develop their own
internal solutions for portions of the electronic bill presentment and payment
process. Wells Fargo & Co. and J.P. Morgan Chase currently have in-house
solutions for a portion of the integrated services we provide and Wachovia has
announced its intent to develop a similar solution. We do not know whether other
banks that currently outsource the bill presentment and payment process to us
will decide to construct in-house solutions in the future. Although we believe
that most banks who decide to use an in-house solution will continue to use our
services for some portion of their electronic bill presentment and payment
product we may not be able to provide the same range of services as we currently
do, and therefore we may not receive the same amount of revenue from these
banks. We also compete directly with Metavante, a division of Marshall and
Ilsley Bank Inc., which currently offers a pay anyone solution to financial
service organizations. In 2000, Metavante announced that it had executed a
long-term contract with Spectrum, a joint venture formed by J.P. Morgan Chase,
First Union (now Wachovia) and Wells Fargo & Co., to provide electronic payment
processing. According to Metavante, this contract contained guaranteed minimum
transaction amounts from each of the three joint venture banks. Over the past
several years, Metavante has completed or announced several acquisitions in the
electronic bill presentment and payment area, including the purchase of
CyberBills, Derivion, Paytrust and, in 2002, Spectrum. We also face potential
competition from MasterCard International, a company that has announced a
product to offer online bill presentment to enable people to receive and pay
bills over the Internet. We cannot assure you that we will be able to compete
effectively against Metavante and MasterCard, or against the action of financial
services organizations and billers building their own electronic billing and
payment solutions internally, or against other current and future electronic
commerce competitors.

     In addition, we cannot assure you that we will be able to compete
effectively against current and future competitors in the investment services
and software products markets. The markets for our investment services and
software products are also highly competitive. In Investment Services, our
competition comes primarily from providers of portfolio accounting software and
from in-house solutions developed by large financial institutions. In Software,
our competition comes from several different market segments, including large
diversified computer software and service companies and independent suppliers of
software products. Because there are relatively low barriers to entry, we expect
competition in the software market to increase significantly in the future.

SECURITY AND PRIVACY BREACHES IN OUR ELECTRONIC TRANSACTIONS MAY DAMAGE CUSTOMER
RELATIONS AND INHIBIT OUR GROWTH.

     Any failures in our security and privacy measures could have a material
adverse effect on our business, financial condition and results of operations.
We electronically transfer large sums of money and store personal information
about consumers, including bank account and credit card information, social
security numbers, and merchant account numbers. If we are unable to protect, or
consumers perceive that we are unable to protect, the security and privacy of
our electronic transactions, our growth and the growth of the electronic
commerce market in general could be materially adversely affected. A security or
privacy breach may:

     -    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





                                      -14-
<PAGE>



     -    decrease market acceptance of electronic commerce transactions.

     While we believe that we utilize proven applications designed for premium
data security and integrity to process electronic transactions, there can be no
assurance that our use of these applications will be sufficient to address
changing market conditions or the security and privacy concerns of existing and
potential subscribers.

WE RELY ON THIRD PARTIES TO DISTRIBUTE OUR ELECTRONIC COMMERCE AND INVESTMENT
SERVICES PRODUCTS, WHICH MAY NOT RESULT IN WIDESPREAD ADOPTION.

     In Electronic Commerce, we rely on our contracts with financial services
organizations, businesses, billers, Internet portals and other third parties to
provide branding for our electronic commerce services and to market our services
to their customers. Similarly, in Investment Services we rely upon investment
advisors, brokerage firms, banks and insurance companies to market investment
accounts to consumers and thereby increase portfolios on our APL system. These
contracts are an important source of the growth in demand for our electronic
commerce and investment service products. If any of these third parties abandon,
curtail or insufficiently increase their marketing efforts, it could have a
material adverse effect on our business, financial condition and results of
operations.

CONSOLIDATION IN THE FINANCIAL SERVICES INDUSTRY MAY ADVERSELY AFFECT OUR
ABILITY TO SELL OUR ELECTRONIC COMMERCE SERVICES, INVESTMENT SERVICES AND
SOFTWARE.

     Mergers, acquisitions and personnel changes at key financial services
organizations have the potential to adversely affect our business, financial
condition and results of operations. This consolidation could cause us to lose:

     -    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 to discontinue the use of,
          our products and services.

WE DEPEND UPON A SMALL NUMBER OF FINANCIAL SERVICES ORGANIZATION CUSTOMERS FOR A
SIGNIFICANT PERCENTAGE OF OUR TRANSACTIONS.

     We rely on our contracts with three key financial services organizations
for a substantial portion of the transactions we process. For the year ended
June 30, 2002, these three financial services organizations accounted for
approximately 34.8% of the transactions we processed. Only one of these
financial institutions accounted for more than 10% of our revenue. Revenues from
this customer, Bank of America, represented 12% of our revenues. The loss of the
contract with any of these key financial services organizations or a significant
decline in the number of transactions processed through them could have a
material adverse effect on our business, financial condition and results of
operations.

IF WE DO NOT SUCCESSFULLY RENEW OR RENEGOTIATE OUR AGREEMENTS WITH OUR
CUSTOMERS, OUR BUSINESS MAY SUFFER.

     Our agreements for electronic commerce services with financial services
organizations generally provide for terms of three to five years. Similarly our
agreements with our portfolio management customers are generally long term. If
we are not able to renew or renegotiate these agreements on favorable terms as
they expire, it could have a material adverse effect on our business, financial
condition and results of operations.

     The profitability of our Software business depends, to a substantial
degree, upon our software customers electing to periodically renew their
maintenance agreements. If a substantial number of our software customers
declined to renew these agreements, our revenues and profits in this business
segment would be materially adversely affected.




                                      -15-
<PAGE>

OUR FUTURE PROFITABILITY DEPENDS ON A DECREASE IN THE COST OF PROCESSING
TRANSACTIONS.

     If we are unable to continue to decrease the cost of processing
transactions, our margins could decrease, which could have a material adverse
effect on our business, financial condition and results of operations. Many
factors contribute to our ability to decrease the cost of processing
transactions, including our Sigma Quality program, our RightCare customer care
efficiency program, our QuantumLeap processing technology optimization program,
and our focus on continually increasing the number of transactions we process
electronically. Compared with conventional paper-based transactions, electronic
transactions cost less to complete, give rise to far fewer errors, which are
costly to resolve, and generate far fewer consumer inquiries and, therefore,
consume far fewer customer care resources. Our electronic rate, or percentage of
transactions processed electronically, was 58% at the end of fiscal year 2000,
64% at the end of the fiscal year 2001 and more than 71% at the end of fiscal
year 2002. As a result of the combined effects of programs focused on quality
and process improvements, maximizing efficiency, and improving electronic
processing rates, our total Electronic Commerce cost per transaction processed
decreased more than 20% for the year ended June 30, 2002. Our future
profitability will depend, in part, on our ability to continue to decrease this
cost.

THE TRANSACTIONS WE PROCESS EXPOSE US TO CREDIT RISKS.

     Any losses resulting from returned transactions, merchant fraud or
erroneous transmissions could result in liability to financial services
organizations, merchants or subscribers, which could have a material adverse
effect on our business, financial condition and results of operations. The
electronic and conventional paper-based transactions we process expose us to
credit risks. These include risks arising from returned transactions caused by:

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

     We are also exposed to credit risk from merchant fraud and erroneous
transmissions.

WE MAY EXPERIENCE BREAKDOWNS IN OUR PAYMENT PROCESSING SYSTEM THAT COULD DAMAGE
CUSTOMER RELATIONS AND EXPOSE US TO LIABILITY.

     A system outage or data loss could have a material adverse effect on our
business, financial condition and results of operations. In addition to the
damage to our reputation a system outage or data loss could entail, many of our
contractual agreements with financial institutions require the payment of
penalties if our systems do not meet certain operating standards. To
successfully operate our business, we must be able to protect our payment
processing and other systems from interruption by events that are beyond our
control. For example, our system may be subject to loss of service interruptions
caused by hostile third parties or other instances of deliberate system
sabotage. Other events that could cause system interruptions include:

     -    fire;
     -    natural disaster;
     -    unauthorized entry;
     -    power loss;
     -    telecommunications failure; and
     -    computer viruses.




                                      -16-
<PAGE>

     Although we have taken steps to protect against data loss and system
failures, there is still risk that we may lose critical data or experience
system failures. Furthermore, our property and business interruption insurance
may not be adequate to compensate us for all losses or failures that may occur.

WE MAY EXPERIENCE SOFTWARE DEFECTS AND DEVELOPMENT DELAYS, DAMAGING CUSTOMER
RELATIONS, DECREASING OUR POTENTIAL PROFITABILITY AND EXPOSING US TO LIABILITY.

     Our products are based on sophisticated software and computing systems that
often encounter development delays, and the underlying software may contain
undetected errors or defects. Defects in our software products and errors or
delays in our processing of electronic transactions could result in:

     -    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.

     In addition, we rely on technologies supplied to us by third parties that
may also contain undetected errors or defects that could have a material adverse
effect on our business, financial condition and results of operations. Although
we attempt to limit our potential liability for warranty claims through
disclaimers in our software documentation and limitation-of-liability provisions
in our license and customer agreements, we cannot assure you that these measures
will be successful in limiting our liability.

WE EXPERIENCE SEASONAL FLUCTUATIONS IN OUR NET SALES CAUSING OUR OPERATING
RESULTS TO FLUCTUATE.

     We have historically experienced seasonal fluctuations in our electronic
services and software sales, and we expect to experience similar fluctuations in
the future. If our sales are below the expectations of securities analysts and
investors due to seasonal fluctuations, our stock price could decrease
unexpectedly. Our growth in electronic commerce transactions is affected by
seasonal factors like holiday-based resolutions consumers make to manage
finances better, and the fact that most financial institutions traditionally
conduct their largest consumer marketing campaigns in the fall months. These
seasonal factors may impact our operating results by concentrating consumer
acquisition and set-up costs, which may not be immediately offset by revenue
increases primarily due to introductory service price discounts. Additionally,
on-line interactive service consumers generally tend to be less active users
during the summer months, resulting in lower revenue during this period. Our
software sales have historically been affected by calendar year end, buying
patterns of financial services organizations and our sales compensation
structure which measures sales performance at our June 30 fiscal year end.

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.

     If competitors introduce new products and services embodying new
technologies, or if new industry standards and practices emerge, our existing
product and service offerings, proprietary technology and systems may become
obsolete. Further, if we fail to adopt or develop new technologies or to adapt
our products and services to emerging industry standards, we may lose current
and future customers, which could have a material adverse effect on our
business, financial condition and results of operations. The electronic commerce
industry is changing rapidly. To remain competitive, we must continue to enhance
and improve the functionality and features of our products, services and
technologies.

OUR INABILITY TO MANAGE GROWTH COULD ADVERSELY AFFECT OUR BUSINESS.

     We have experienced rapid growth in our revenues, from $76.8 million in the
twelve months ended June 30, 1996 to $490.5 million in the fiscal year ended
June 30, 2002, and we intend to continue to grow our business. To support our
growth plans, we will have to expand our existing management, operational,
financial and human resources and management information systems and controls.
If we are not able to manage our growth successfully, we will not




                                      -17-
<PAGE>


grow as planned, which could have a material adverse effect on our business,
financial condition and results of operations.

WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY AND TECHNOLOGY, PERMITTING
COMPETITORS TO DUPLICATE OUR PRODUCTS AND SERVICES.

     Our success and ability to compete depends, in part, upon our proprietary
technology, which includes several patents for our electronic billing and
payment processing system, our source code information for our software
products, and our operating technology. We rely primarily on patent, copyright,
trade secret and trademark laws to protect our technology. We also enter into
confidentiality and assignment agreements with our employees, consultants and
vendors and generally control access to and distribution of our software
documentation and other intellectual property. We cannot assure you that these
measures will provide the protection that we need.

     Because our means of protecting our intellectual property rights may not be
adequate, it may be possible for a third party to copy, reverse engineer or
otherwise obtain and use our technology without authorization. In addition, the
laws of some countries in which we sell our products do not protect software and
intellectual property rights to the same extent as the laws of the United
States. Unauthorized copying, use or reverse engineering of our products could
have a material adverse effect on our business, financial condition and results
of operations.

     A third party could also claim that our technology infringes its
proprietary rights. As the number of software products in our target markets
increases and the functionality of these products overlap, we believe that
software developers may increasingly face infringement claims. These claims,
even if without merit, can be time-consuming and expensive to defend. A third
party asserting infringement claims against us in the future may require us to
enter into costly royalty arrangements or litigation.

OUR BUSINESS COULD BECOME SUBJECT TO INCREASED GOVERNMENT REGULATION, WHICH
COULD MAKE OUR BUSINESS MORE EXPENSIVE TO OPERATE.

     We believe that we are not required to be licensed by the Office of the
Comptroller of the Currency, or OCC, the Federal Reserve Board or other federal
agencies that regulate or monitor banks or other types of providers of
electronic commerce services. In 2001, the USA Patriot Act amended the Bank
Secrecy Act to expand the definition of money services businesses so that it may
include us. A number of states have also passed legislation regulating or
licensing check sellers, money transmitters or service providers to banks, and
we have registered under this legislation in specific instances. In addition, as
a U.S. citizen, we are subject to the regulations of the Office of Foreign
Assets Control targeted at money laundering. Because electronic commerce in
general, and most of our products and services in particular, are so new, the
application of many of these laws and regulations is uncertain and difficult to
interpret. The entities responsible for interpreting and enforcing these laws
and regulations could amend these laws or regulations or issue new
interpretations of existing laws or regulations. Any of these changes could lead
to increased operating costs and reduce the convenience and functionality of our
products or services, possibly resulting in reduced market acceptance. It is
also possible that new laws and regulations may be enacted with respect to the
Internet, including taxation of electronic commerce activities. The adoption of
any of these laws or regulations may decrease the growth of consumers using the
Internet, which could in turn decrease the demand for our products or services,
increase our cost of doing business or could otherwise have a material adverse
effect on our business, financial condition and results of operations.

     The Federal Reserve rules provide that we can only access the Federal
Reserve's automated clearing house through a bank. If the Federal Reserve rules
were to change to further restrict our access to the automated clearing house or
limit our ability to provide automated clearing house transaction processing
services, it could have a material adverse effect on our business, financial
condition and results of operations.

A CONTINUED WEAK ECONOMY COULD HAVE A MATERIALLY ADVERSE IMPACT ON OUR BUSINESS.

     A continued weak United States economy could have a material adverse impact
on our business. In a weak economy companies may postpone or cancel new software
purchases or limit the amount of money they spend on technology and marketing.
With respect to the Investment Services division, growth depends upon
individuals and




                                      -18-
<PAGE>


companies continuing to invest in the United States equity markets. To the
extent the United States stock markets see a decrease in investment, we may see
a decrease in portfolio accounts.

OUR QUARTERLY OPERATING RESULTS FLUCTUATE AND MAY NOT ACCURATELY PREDICT OUR
FUTURE PERFORMANCE.

     Our quarterly results of operations have varied significantly and probably
will continue to do so in the future as a result of a variety of factors, many
of which are outside our control. These factors include:

     -    changes in our pricing policies or those of our competitors;
     -    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.

     As a result, we believe that period-to-period comparisons of our operating
results are not necessarily meaningful, and you should not rely on them as an
indication of our future performance. In addition, our operating results in a
future quarter or quarters may fall below expectations of securities analysts or
investors and, as a result, the price of our common stock may fluctuate.

THE MARKETING AGREEMENT WITH First Data AND THE COMMERCIAL ALLIANCE AGREEMENT
WITH MICROSOFT MAY LIMIT THE FLEXIBILITY OF MANAGEMENT

     The marketing agreement we executed with First Data requires us to purchase
payment processing and other products from First Data under specified
circumstances, even if our management has other reasons for choosing a different
supplier. In addition, the commercial alliance agreement with Microsoft requires
us to develop our products that are used with products made by Microsoft in ways
that conform to specified standards. Accordingly, as a result of these
arrangements with Microsoft and First Data, both of which were entered into as
part of our acquisition of MSFDC, L.L.C. (TransPoint), our management's
flexibility to make business decisions may be limited in various respects.

RISKS RELATED TO OUR COMMON STOCK

OUR COMMON STOCK HAS BEEN VOLATILE SINCE DECEMBER 31, 2000.

     Since December 31, 2000, our stock price has been extremely volatile.
During the fiscal year ended June 30, 2002, our common stock traded at a high
of $35.40 per share and a low of $10.93 per share. The volatility in our stock
price has been caused by:

     -    actual or anticipated fluctuations in our operating results;
     -    actual or anticipated fluctuations in our subscriber 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.

     The availability for future sale of a substantial number of shares of our
common stock in the public market, or issuance of common stock upon the exercise
of stock options, warrants or conversion of the notes or otherwise could
adversely affect the market price for our common stock. As of August 31, 2002,
we had outstanding





                                      -19-
<PAGE>


88,616,367 shares of our common stock, of which 57,768,011 shares of our issued
and outstanding common stock were held by non-affiliates. The holders of the
remaining 30,848,356 shares were entitled to resell them only by a registration
statement under the Securities Act of 1933 or an applicable exemption from
registration. As of August 31, 2002, we had an additional 22,328,822 shares of
our common stock available for future sale, including:

     -    outstanding options to purchase 7,989,714 shares of our common stock,
          of which options for 3,500,749 shares were fully vested and
          exercisable at an average weighted exercise price of approximately
          $39.06 per share;
     -    issued warrants to purchase 12,500,000 shares of our common stock, of
          which warrants for 1,500,000 shares were fully vested and exercisable
          at a weighted exercise price of approximately $20.94 per share;
     -    up to 258,754 shares available for issuance under our Associate Stock
          Purchase Plan;
     -    up to 223,797 shares available for issuance under our 401(k) Plan; and
     -    up to 2,356,557 shares of our common stock issuable upon conversion of
          the notes.

     As of August 31, 2002, the following entities hold shares or warrants to
purchase shares of our common stock in the following amounts:

     -    Microsoft Corporation, which holds 8,567,250 shares;
     -    First Data Corporation, which holds 5,567,250 shares;
     -    The former members of Integrion Financial Network, L.L.C., which
          collectively hold warrants to purchase up to 1,500,000 shares which
          are fully vested and exercisable;
     -    Bank One, which holds warrants to purchase 1,000,000 shares and may be
          entitled to receive warrants to purchase up to 2,000,000 additional
          shares, none of which are vested or exercisable; and
     -    Bank of America, which holds 10,098,043 shares and warrants to
          purchase up to 10,000,000 shares, which warrants are not currently
          vested.

     Each of Bank One, Bank of America and the former members of Integrion may
be entitled to registration rights. If Bank One, Bank of America or the former
members of Integrion, by exercising their registration rights, cause a large
number of shares to be registered and sold in the public market, these sales may
have an adverse effect on the market price of our common stock.

     We filed a shelf registration statement on behalf of Microsoft, First Data
and Citibank that allows continuous resales of the shares that they received on
the closing date of the TransPoint acquisition. Although Microsoft and First
Data have been limited in their ability to transfer their shares of our common
stock through September 1, 2002, pursuant to stockholder agreements with us,
they now are able to transfer significant portions of their common stock in both
registered and unregistered sales. As of September 1, 2001, Microsoft, First
Data and Citibank could sell up to the greater of one percent of our average
weekly trading volume or one percent of our outstanding common stock in reliance
on registration exemptions. In addition, Microsoft and First Data are permitted
to a limited extent to engage in hedging transactions with respect to our common
stock. Sales of substantial amounts of our common stock by either Microsoft or
First Data, or the perception that these sales could occur, may adversely affect
prevailing market prices for our common stock.

     As of September 28, 2001, Bank of America could sell up to the greater of
one percent of our average weekly trading volume or one percent of our
outstanding common stock in reliance on registration exemptions. Sales of
substantial amounts of our common stock by Bank of America, or the perception
that these sales could occur, may adversely affect prevailing market prices for
our common stock.

ANTI-TAKEOVER PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS AND DELAWARE LAW MAKE
ANY CHANGE IN CONTROL MORE DIFFICULT.

     Our certificate of incorporation and by-laws contain provisions that may
have the effect of delaying or preventing a change in control, may discourage
bids at a premium over the market price of our common stock and may adversely
affect the market price of our common stock and the voting and other rights of
the holders of our common stock. These provisions include:




                                      -20-
<PAGE>


     -    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.

     We also have a stockholder rights plan that allows us to issue preferred
stock with rights senior to those of our common stock without any further vote
or action by our stockholders. The issuance of our preferred stock under the
stockholder rights plan could decrease the amount of earnings and assets
available for distribution to the holders of our common stock or could adversely
affect the rights and powers, including voting rights, of the holders of our
common stock. In some circumstances, the issuance of preferred stock could have
the effect of decreasing the market price of our common stock.

     We also are subject to provisions of the Delaware corporation law that, in
general, prohibit any business combination with a beneficial owner of 15% or
more of our common stock for five years unless the holder's acquisition of our
stock was approved in advance by our board of directors.

     In addition, both the commercial alliance agreement with Microsoft and the
marketing agreement with First Data, each of which we executed in connection
with the closing of the TransPoint acquisition, allow the termination of the
agreement by Microsoft or First Data, as the case may be, under specific change
of control circumstances. If either Microsoft or First Data terminates under
these circumstances, we will lose a portion of the future revenue guarantees
under the applicable agreement. This potential termination event could
discourage third parties from acquiring us.

WE ARE SUBJECT TO SIGNIFICANT INFLUENCE BY SOME STOCKHOLDERS THAT MAY HAVE THE
EFFECT OF DELAYING OR PREVENTING A CHANGE IN CONTROL.

     At August 31, 2002, our directors, executive officers and principal
stockholders and their affiliates collectively owned approximately 35% of the
outstanding shares of our common stock. As a result, these stockholders are able
to exercise significant influence over matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership may have the effect of delaying or
preventing a change in control.

ITEM 2. PROPERTIES.

     We lease the following office facilities:

     -    approximately 229,000 square feet in Norcross, Georgia;
     -    approximately 150,000 square feet in Dublin, Ohio;
     -    approximately 100,000 square feet in Phoenix, Arizona;
     -    approximately 77,706 square feet in Aurora, Illinois;
     -    approximately 33,000 square feet in Jersey City, New Jersey
     -    approximately 29,000 square feet in Waterloo, Ontario, Canada;
     -    approximately 26,000 square feet in Owings Mills, Maryland;
     -    approximately 21,000 square feet in Newark, New Jersey;
     -    approximately 15,000 square feet in Chicago, Illinois;
     -    approximately 5,000 square feet in San Diego, California; and
     -    approximately 2,000 square feet in Boston Massachusetts.

     We own a 51,000 square foot conference center in Norcross, Georgia that
includes lodging, training, and fitness facilities for our customers and
employees. Although we own the building, it is on land that is leased through




                                      -21-
<PAGE>


June 30, 2015. We believe that our facilities are adequate for current and
near-term growth and that additional space is available to provide for
anticipated growth.

ITEM 3. LEGAL PROCEEDINGS.

     There are no material legal proceedings pending against us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.























                                      -22-
<PAGE>



                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

     Our common stock is traded on the Nasdaq National Market under the symbol
"CKFR." The following table sets forth the high and low sales prices of our
common stock for the periods indicated as reported by the Nasdaq National
Market.

<TABLE>
<CAPTION>
                                                                      COMMON STOCK
                                                                          PRICE
                                                                          -----
FISCAL PERIOD                                                     HIGH             LOW
                                                                  ----             ---
<S>                                                             <C>              <C>
FISCAL 2001
First Quarter................................................   $ 70.88          $ 34.50
Second Quarter...............................................   $ 62.50          $ 33.50
Third Quarter................................................   $ 57.25          $ 25.38
Fourth Quarter...............................................   $ 43.15          $ 24.06

FISCAL 2002
First Quarter................................................   $ 35.40          $ 14.55
Second Quarter...............................................   $ 22.69          $ 12.20
Third Quarter................................................   $ 20.20          $ 10.93
Fourth Quarter...............................................   $ 25.40          $ 13.28

FISCAL 2003
First Quarter (through September 20, 2002)...................   $ 15.83          $  7.45

</TABLE>

     On September 20, 2002, the last reported bid price for our common stock on
the Nasdaq National Market was $11.44 per share. As of September 12, 2002, there
were approximately 900 holders of record of our common stock.

     We currently anticipate that all of our future earnings will be retained
for the development of our business and do not anticipate paying cash dividends
on our common stock for the foreseeable future. In addition, our line of credit
does not allow for the payment of cash dividends on our common stock. Our board
of directors will determine future dividend policy based on our results of
operations, financial condition, capital requirements and other circumstances.
During the last ten years, we have not paid cash dividends.

ITEM 6. SELECTED FINANCIAL DATA.

     The information required by this item is included under the caption
"SELECTED FINANCIAL DATA" in our Annual Report and is incorporated herein by
reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

     The information required by this item is included under the caption
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" in our Annual Report and is incorporated herein by reference.









                                      -23-
<PAGE>


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

     Except for the historical information contained herein, the matters
discussed in our Annual Report on Form 10-K include certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 which are intended to be
covered by the safe harbors created thereby. Those statements include, but may
not be limited to, all statements regarding our and management's intent, belief
and expectations, such as statements concerning our future profitability and our
operating and growth strategy. Investors are cautioned that all forward-looking
statements involve risks and uncertainties including, without limitation, the
factors set forth under the caption "Business - Business Risks" included
elsewhere in this Annual Report on Form 10-K and other factors detailed from
time to time in our filings with the Securities and Exchange Commission. One or
more of these factors have affected, and in the future could affect, our
businesses and financial results in the future and could cause actual results to
differ materially from plans and projections. Although we believe that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate. Therefore, there can be
no assurance that the forward-looking statements included in this Annual Report
on Form 10-K will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that our objectives and plans will be achieved. All
forward-looking statements made in this Annual Report on Form 10-K are based on
information presently available to our management. We assume no obligation to
update any forward-looking statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     With the acquisition of BlueGill in April 2000, we obtained operations in
Canada and we maintain an office in the United Kingdom. As a result, we have
assets and liabilities outside the United States that are subject to
fluctuations in foreign currency exchange rates. Due to the start up nature of
each of these operations, however, we currently utilize the U.S. dollar as the
functional currency for all international operations. As these operations begin
to generate sufficient cash flow to provide for their own cash flow
requirements, we will convert to local currency as the functional currency in
each related operating unit as appropriate. Because we utilize the U.S. dollar
as the functional currency and due to the immaterial nature of the amounts
involved, our economic exposure from fluctuations in foreign exchange rates is
not significant enough at this time to engage in forward foreign exchange and
other similar instruments.

     While our international sales represented less than 2.2% of our revenue for
the year ended June 30, 2002, we now market, sell and license our products
throughout the world. As a result, our future revenue could be somewhat affected
by weak economic conditions in foreign markets that could reduce demand for our
products.

     Our exposure to interest rate risk is limited to the yield we earn on
invested cash, cash equivalents and investments and interest based revenue
earned on products such as our account balance transfer business. Our
convertible debt carries a fixed rate, as do any outstanding capital lease
obligations. Our Investment Policy currently prohibits the use of derivatives
for trading or hedging purposes.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     Our consolidated balance sheets as of June 30, 2001 and 2002 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended June 30, 2000, 2001 and 2002 and the notes to the
consolidated financial statements, together with the independent auditors'
report thereon, appear in our Annual Report and are incorporated herein by
reference.

     Our Financial Statement Schedule and Independent Auditors' Report on
Financial Statement Schedule are included in response to Item 14 below.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None.







                                      -24-
<PAGE>



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information required by this item is included under the captions
"ELECTION OF DIRECTORS," "EXECUTIVE OFFICERS" and "SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE" in our Proxy Statement relating to our 2002
Annual Meeting of Stockholders to be held on November 6, 2002 and is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

     The information required by this item is included under the captions
"INFORMATION CONCERNING THE BOARD OF DIRECTORS" and "EXECUTIVE COMPENSATION" in
our Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

     The information required by this item is included under the captions
"OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS," "OWNERSHIP OF
COMMON STOCK BY PRINCIPAL STOCKHOLDERS" and "EQUITY COMPENSATION PLAN
INFORMATION" in our Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required by this item is included under the captions
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" and "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION" in our Proxy Statement and is incorporated
herein by reference.



















                                      -25-
<PAGE>



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)  The following documents are filed as part of this report:

          (1) The following financial statements appearing in our 2002 Annual
Report to Stockholders are incorporated herein by reference:

          Independent Auditors' Report.

          Consolidated Balance Sheets as of June 30, 2001 and 2002.

          Consolidated Statements of Operations for each of the three years in
          the period ended June 30, 2002.

          Consolidated Statements of Stockholders' Equity for each of the three
          years in the period ended June 30, 2002.

          Consolidated Statements of Cash Flows for each of the three years in
          the period ended June 30, 2002.

          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 the Annual Report:

          Schedule II -- Valuation and Qualifying Accounts.

          Independent Auditors' Report on Financial Statement Schedule.

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                                 EXHIBIT
      NUMBER                               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 (333-32644) 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.,
               MSFDC 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 Exhibit 2(c) of
               the Registration Statement on Form S-4 (333-32644) and
               incorporated herein by reference.)






                                      -26-
<PAGE>

      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).

      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 Restated Certificate of Incorporation (contained in
               the Company's 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 Amendment No. 1 to Registration
               Statement on Form 8-A, filed with the Securities and Exchange
               Commission on May 12, 1999, and incorporated herein by
               reference.)

      4(c)     Amendment No. 2 to the Rights Agreement, dated September 30,
               2000, between CheckFree Corporation and the Fifth Third Bank, as
               Rights Agent. (Reference is made to Exhibit 99 to Current Report
               on Form 8-K, dated September 30, 2001, filed with the Securities
               and Exchange Commission on October 3, 2000 and incorporated
               herein by reference).

      10(a)    CheckFree Corporation Amended and Restated Associate Stock
               Purchase Plan. (Reference is made to Exhibit 4(a) to
               Post-Effective Amendment No. 1 to Form S-8, as amended
               (Registration No. 333-21795), filed with the Securities and
               Exchange Commission on January 14, 1998, and incorporated herein
               by reference.)

      10(b)    CheckFree Corporation Amended and Restated 1995 Stock Option
               Plan. (Reference is made to Exhibit 4(a) to Post-Effective
               Amendment No. 1 to Form S-8, as amended (Registration No.
               33-98446), filed with the Securities and Exchange Commission on
               January 9, 1998, and incorporated herein by reference.)

      10(c)    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.)




                                      -27-
<PAGE>


      10(d)    CheckFree Corporation Amended and Restated 1983 Non-Statutory
               Stock Option Plan. (Reference is made to Exhibit 4(a) to
               Post-Effective Amendment No. 1 to Form S-8, as amended
               (Registration No. 33-98440), filed with the Securities and
               Exchange Commission on January 9, 1998, and incorporated herein
               by reference.)

      10(e)    CheckFree Corporation Second Amended and Restated 1983 Incentive
               Stock Option Plan. (Reference is made to Exhibit 4(a) to
               Post-Effective Amendment No. 1 to Form S-8, as amended
               (Registration No. 33-98444), filed with the Securities and
               Exchange Commission on January 9, 1998, and incorporated herein
               by reference.)

      10(f)    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(g)    Schedule identifying material details of Indemnification
               Agreements substantially identical to Exhibit 10(f). (Reference
               is made to Exhibit 10(g) 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(h)    Noncompete, Nondisclosure, and Assignment Agreement, dated
               February 1, 1990, between Peter J. Kight and the Company.
               (Reference is made to Exhibit 10(i) 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(i)    Noncompete, Nondisclosure, and Assignment Agreement, dated
               February 1, 1990, between Mark A. Johnson and the Company.
               (Reference is made to Exhibit 10(j) 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(j) *  ACH Operations Agreement, dated April 1, 1999, between the
               Company and KeyBank National Association.

      10(k)    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(l)    Executive Employment Agreement between the Company and Lynn D.
               Busing. (Reference is made to Exhibit 10(f) to the Form 10-Q for
               the quarter ended March 31, 1996, filed with the Securities and
               Exchange Commission, and incorporated herein by reference.)

      10(m)    Loan and Security Agreement, dated as of May 13, 1997, among
               KeyBank National Association, the Company, CheckFree Software
               Solutions, Inc., CheckFree Services Corporation, Security APL,
               Inc., Servantis Systems, Inc., and Servantis Services, Inc.
               (Reference is made to Exhibit 10(ee) 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(n)    First Amendment to Loan and Security Agreement by and between
               KeyBank National Association, as Lender, and CheckFree
               Corporation, as Borrower, dated as of December 9, 1998.
               (Reference is made to Exhibit 10.1 to the Company's Form 10-Q for
               the quarter




                                      -28-
<PAGE>

               ended March 31, 1999, filed with the Securities and Exchange
               Commission on May 17, 1999, and incorporated herein by
               reference.)

      10(o)    CheckFree Corporation Incentive Compensation Plan. (Reference is
               made to Exhibit 10(ff) 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(p)    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(q)    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(r)    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(s)    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(t)    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(u)    CheckFree Corporation Third Amended and Restated 1995 Stock
               Option Plan. (Reference is made to Exhibit 4(d) 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.)

       13   *  Portions of the Annual Report to Stockholders for the year
               ended June 30, 2002.

       21   *  Subsidiaries of the Company.

       23   *  Consent of Deloitte & Touche LLP.

       24   *  Power of Attorney.

      99(a) *  Financial Statement Schedule and Independent Auditors' Report.

      99(b) *  Certification of CEO under Section 906 of the Sarbanes-Oxley
               Act of 2002.

      99(c) *  Certification of CFO under Section 906 of the Sarbanes-Oxley
               Act of 2002.






                                      -29-
<PAGE>

----------------

     *    Filed with this report.

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

          (b)  REPORTS ON FORM 8-K.

               We filed no Current Reports on Form 8-K since March 31, 2002.

          (c)  EXHIBITS.

          The exhibits to this report follow the Signature Page and the
certifications under Section 302 of the Sarbanes-Oxley Act of 2002.

          (d)  FINANCIAL STATEMENT SCHEDULES.

          The financial statement schedule and the independent auditors' report
thereon are included in Exhibit 99(a) to this Annual Report on Form 10-K.















                                      -30-
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, we have duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                         CHECKFREE CORPORATION

Date: September 25, 2002                 By: /s/ David E. Mangum
                                            ---------------------------------
                                                 David E. Mangum, Executive Vice
                                                 President and Chief Financial
                                                 Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on our behalf and in the
capacities indicated on the 25th day of September, 2002.


<TABLE>
<CAPTION>

       Signature                    Title
<S>                                <C>
       *Peter J. Kight              Chairman of the Board and Chief Executive Officer
-------------------------------     (Principal Executive Officer)
       Peter J. Kight


       *David E. Mangum             Executive Vice President and Chief Financial Officer
-------------------------------     (Principal Financial Officer)
       David E. Mangum


       *Joseph P. McDonnell         Vice President, Controller, and Chief Accounting Officer
-------------------------------     (Principal Accounting Officer)
       Joseph P. McDowell


       *William P. Boardman         Director
-------------------------------
       William P. Boardman


       *James D. Dixon              Director
-------------------------------
       James D. Dixon


       *Henry C. Duques             Director
-------------------------------
       Henry C. Duques


       *Mark A. Johnson             Director
-------------------------------
       Mark A. Johnson


       *Lewis C. Levin              Director
-------------------------------
       Lewis C. Levin


       *Eugene F. Quinn             Director
-------------------------------
       Eugene F. Quinn


       *Jeffrey M. Wilkins          Director
-------------------------------
       Jeffrey M. Wilkins


*By:   /s/ Curtis A. Loveland
    ---------------------------
       Curtis A. Loveland,
       Attorney-in-Fact

</TABLE>






                                      -31-
<PAGE>




                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter J. Kight, certify that:

     1.   I have reviewed this annual report on Form 10-K of CheckFree
          Corporation;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report; and

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.

Date: September 25, 2002


                                            /s/ Peter J. Kight
                                            ------------------------------------
                                            Peter J. Kight
                                            Chairman and Chief Executive Officer
                                            of CheckFree Corporation








<PAGE>




                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David E. Mangum, certify that:

     1.   I have reviewed this annual report on Form 10-K of CheckFree
          Corporation;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report; and

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.

Date: September 25, 2002


                                          /s/ David E. Mangum
                                          --------------------------------------
                                          David E. Mangum
                                          Executive Vice President and Chief
                                          Financial Officer of
                                          CheckFree Corporation