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Check Solutions Company And Subsidiaries (a General Partnership)

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EXHIBIT 99.1


CHECK SOLUTIONS COMPANY AND SUBSIDIARIES (A General Partnership)


CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2001, DECEMBER 31, 2000 AND 1999 TOGETHER WITH AUDITORS' REPORT


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Governing Committee and Partners of Check Solutions Company:


We have audited the accompanying consolidated statements of condition of CHECK SOLUTIONS COMPANY (a New York general partnership) and subsidiaries as of March 31, 2001, December 31, 2000 and 1999, and the related consolidated statements of income, partners' capital and cash flows for the three months ended March 31, 2001 and for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


As discussed in Note 9, the accompanying financial statements as of December 31, 1999 and 1998 and for the years then ended have been restated with respect to the revenue recognition on certain software license arrangements and the treatment of certain related party transactions.


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Check Solutions Company and subsidiaries as of March 31, 2001, December 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for the three months ended March 31, 2001 and for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.


/s/ ARTHUR ANDERSEN, LLP


Memphis, Tennessee, April 19, 2001.


CHECK SOLUTIONS COMPANY AND SUBSIDIARIES


(A GENERAL PARTNERSHIP)


CONSOLIDATED STATEMENTS OF CONDITION


AS OF


March 31, December 31, December 31,
2001 2000 1999
------------ ------------ ------------
(Restated)
ASSETS
------


CURRENT ASSETS:


Cash and cash equivalents:
Cash $ 8,443,857 $ 11,155,352 $ 671,948
Securities purchased under agreements to resell 20,356,367 3,058,733 9,424,185
------------ ------------ -----------
28,800,224 14,214,085 10,096,133
Investments 91,169 89,404 82,113
Accounts receivable, less allowances for doubtful
accounts of $1,000,000, $1,000,000 and $750,000 14,812,720 34,076,812 9,527,018
Receivable from FTBNA (Note 4) 1,525,441 883,708 1,540,753
Receivable from IBM (Note 4) 51,084 6,490 229,264
Deferred selling costs 603,912 1,939,801 1,497,850
Other current assets 444,809 141,894 373,185
------------ ------------ ----------- TOTAL CURRENT ASSETS 46,329,359 51,352,194 23,346,316


DEFERRED SELLING COSTS 27,936 1,186,443 573,781


PROPERTY AND EQUIPMENT, net of accumulated depreciation
and amortization of $5,610,503, $5,306,092 and $3,962,338 2,371,663 2,592,696 2,768,896


SOFTWARE COSTS CAPITALIZED, net of accumulated
amortization of $834,109, $834,109 and $1,463,281 - - 42,693


OTHER ASSETS 73,700 73,700 73,698
------------ ------------ -----------


TOTAL ASSETS $ 48,802,658 $ 55,205,033 $26,805,384
============ ============ ===========


LIABILITIES AND PARTNERS' CAPITAL
---------------------------------


CURRENT LIABILITIES:


Accounts payable $ 1,031,995 $ 1,119,510 $ 952,210
Accrued royalties 527,452 627,744 1,159,410
Accrued compensation and benefits 9,402,071 11,674,000 6,703,813
Deferred income 24,904,826 37,203,935 13,589,357
Other accrued liabilities 675,376 673,149 437,214
------------ ------------ ----------- TOTAL CURRENT LIABILITIES 36,541,720 51,298,338 22,842,004


DEFERRED INCOME 1,427,688 15,595,889 8,650,143


COMMITMENTS (Note 3)


EQUITY:
Partners' capital 10,832,690 (11,689,795) (4,686,047)
Accumulated other comprehensive income/(loss) 560 601 (716)
------------ ------------ ----------- TOTAL EQUITY 10,833,250 (11,689,194) (4,686,763)
------------ ------------ ----------- TOTAL LIABILITIES AND EQUITY $ 48,802,658 $ 55,205,033 $26,805,384
============ ============ ===========


The accompanying notes to consolidated financial statements are an integral part of these financial statements.


CHECK SOLUTIONS COMPANY AND SUBSIDIARIES


(A GENERAL PARTNERSHIP)


CONSOLIDATED STATEMENTS OF INCOME


For the three
months ended For the years ended December 31,
March 31, ----------------------------------------------
2001 2000 1999 1998
------------- ------------ ------------ ------------
(Restated) (Restated)


REVENUES:


Software licensing fees $36,798,037 $ 9,569,440 $ 9,433,289 $ 6,246,156
Software maintenance fees 4,555,656 17,481,254 14,370,297 9,724,899
Software implementation fees 3,377,880 13,047,355 13,060,358 11,767,579
------------- ------------ ------------ ------------
Total Revenues 44,731,573 40,098,049 36,863,944 27,738,634
------------- ------------ ------------ ------------


COST OF REVENUES:


Software licensing fees 2,144,779 599,373 1,118,598 857,327
Software maintenance fees 968,676 4,028,472 2,391,393 3,017,600
Software implementation fees 1,997,528 8,159,408 8,774,090 7,637,464
------------- ------------ ------------ ------------
Total Cost of Revenues 5,110,983 12,787,253 12,284,081 11,512,391
------------- ------------ ------------ ------------


GROSS PROFIT 39,620,590 27,310,796 24,579,863 16,226,243
------------- ------------ ------------ ------------


OPERATING COSTS AND EXPENSES:


Compensation 3,338,608 14,471,681 7,512,425 4,672,911
Benefits 410,463 1,536,798 1,437,606 944,634
Research and development 1,808,407 6,149,313 8,232,360 5,650,744
Professional services 168,960 684,827 580,670 652,888
Marketing 12,807 445,307 421,643 346,339
Travel 518,798 2,308,773 1,929,655 1,559,547
Occupancy 393,376 1,599,814 1,602,611 1,057,376
Information systems 173,420 874,705 955,828 240,771
General and administrative 195,649 1,254,871 1,135,743 1,238,717
Depreciation and amortization 360,256 1,405,327 1,379,127 1,203,424
Merger related costs - - 1,200,000 2,964,791
Miscellaneous 14,952 20,791 2,528 8,180
------------- ------------ ------------ ------------
Total Operating Costs and Expenses 7,395,696 30,752,207 26,390,196 20,540,322


Income from Operations 32,224,894 (3,441,411) (1,810,333) (4,314,079)
Interest expense - - (122,781) (217,453)
Other income 297,591 761,970 785,770 603,078
------------- ------------ ------------ ------------
Income Before Provision for Income Taxes 32,522,485 (2,679,441) (1,147,344) (3,928,454)


Provision for Income Taxes - 91,287 573,236 13,800
------------- ------------ ------------ ------------


NET INCOME/(LOSS) $32,522,485 $ (2,770,728) $ (1,720,580) $ (3,942,254)
============= ============ ============ ============


The accompanying notes to consolidated financial statements are an integral part of these financial statements.


CHECK SOLUTIONS COMPANY AND SUBSIDIARIES


(A GENERAL PARTNERSHIP)


CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL


FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000 AND THE


THREE MONTHS ENDED MARCH 31, 2001


Accumulated
Other Check Consultants
Comprehensive Company of IPSS
Income/(Loss) Tennessee, Inc. Corporation Total
--------------- ------------------- ------------- ------------


BALANCE - December 31, 1997 $ 205 $ 5,987,486 $ 3,991,656 $ 9,979,347


Capital contribution - - 333,000 333,000
Excess of cash distribution to IBM over
book value of transferred assets - (2,516,032) (1,677,355) (4,193,387)
Distributions to partners - (2,619,359) (1,746,239) (4,365,598)
Taxes paid on behalf of partners - (29,810) (19,873) (49,683)
Comprehensive income:
Net loss - (2,365,352) (1,576,902) (3,942,254)
Change in net unrealized gain
on investments 987 - - 987
-----------


Total comprehensive loss (3,941,267)


Transfer of equity in earnings - 1,574,930 (1,574,930) -
----------- ----------- ------------ -----------


BALANCE - December 31, 1998 (Restated) 1,192 31,863 (2,270,643) (2,237,588)


Taxes paid on behalf of partners - (145,701) (580,986) (726,687)
Comprehensive income:
Net loss - (1,032,348) (688,232) (1,720,580)
Change in net unrealized loss
on investments (1,908) - - (1,908)
-----------


Total comprehensive loss (1,722,488)


Transfer of equity in earnings - 687,372 (687,372) -
----------- ----------- ------------ -----------


BALANCE - December 31, 1999 (Restated) (716) (458,814) (4,227,233) (4,686,763)


CHECK SOLUTIONS COMPANY AND SUBSIDIARIES


(A GENERAL PARTNERSHIP)


CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (CONTINUED)


FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000 AND THE


THREE MONTHS ENDED MARCH 31, 2001


Accumulated
Other Check Consultants
Comprehensive Company of IPSS
Income/(loss) Tennessee, Inc. Corporation Total
--------------- ----------------- ------------ ------------ BALANCE - December 31, 1999 (Restated) (716) (458,814) (4,227,233) (4,686,763)


Capital contribution - - 1,767,000 1,767,000
Distributions to partners - (1,203,004) (4,797,016) (6,000,020)
Comprehensive income:
Net loss - (1,662,437) (1,108,291) (2,770,728)
Change in net unrealized gain
on investments 1,317 - - 1,317
-----------


Total comprehensive loss (2,769,411)


Transfer of equity in earnings - 1,106,906 (1,106,906) -
------- ------------- ------------ -----------


BALANCE - December 31, 2000 601 (2,217,349) (9,472,446) (11,689,194)


Distributions to partners - (2,005,000) (7,995,000) (10,000,000)
Comprehensive income:
Net income - 19,513,491 13,008,994 32,522,485
Change in net unrealized gain
on investments (41) - - (41)
-----------


Total comprehensive income 32,522,444


Transfer of equity in earnings (12,992,733) 12,992,733 -
------- ------------- ------------ -----------


BALANCE - March 31, 2001 $ 560 $ 2,298,409 $ 8,534,281 $10,833,250
======= ============= ============ ===========


The accompanying notes to consolidated financial statements are an integral part of these financial statements.


CHECK SOLUTIONS COMPANY AND SUBSIDIARIES
(A GENERAL PARTNERSHIP)


CONSOLIDATED STATEMENTS OF CASH FLOWS


For the three
months ended For the years ended December 31,
March 31, -----------------------------------------------
2001 2000 1999 1998
------------ ------------- ------------ -------------
(Restated) (Restated) CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 32,522,485 $ (2,770,728) $(1,720,580)
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