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eFunds Corporation Reports First Quarter 2005 Results Net Revenue of $114.2 Million SCOTTSDALE, Ariz., May 4 /PRNewswire-FirstCall/ -- eFunds Corporation (NYSE:EFD), a leading provider of risk management, electronic payments and related outsourcing solutions, today reported first quarter net revenue of $114.2 million. This amount represents an 8% improvement over the net revenues of $105.7 million reported by the Company's core operating segments during the first quarter of 2004. Overall, revenues declined by 19% from the $140.9 million reported for the first quarter of 2004 as a result of the sale of the Company's ATM deployment business in November 2004. Operating income increased to $16.8 million, or 15% of net revenue, as compared to operating income of $14.0 million, or 10% of net revenue, reported in the first quarter of 2004. First quarter net income was $13.2 million, or $0.26 per diluted share, compared to net income of $9.4 million, or $0.19 per diluted share, reported for the same quarter in 2004. "During the quarter, we saw revenue growth in our EFT processing and business process outsourcing businesses and steady improvement in the performance of our risk management operations. Overall, we feel that our first quarter results reflect solid progress towards meeting our full year financial and operational objectives," said Paul F. Walsh, Chairman and Chief Executive Officer. "We also executed against our stated strategy to deploy capital towards complimentary acquisitions and our share repurchase program," stated Walsh. "We acquired ClearCommerce Corporation, a provider of fraud prevention and payment processing solutions having particular application to card-not-present and online transactions. We executed an agreement to acquire India Switch Company, an India based provider of ATM management and processing services. This transaction, which is expected to close in the second quarter, will provide eFunds with a strong foothold into the emerging electronic payments market in India. Yesterday, we executed an agreement to acquire substantially all of the assets of National Check Protection Services, a provider of new account verification and employment screening services for financial services companies." The Company also announced that it has completed its $100 million share repurchase program. The Company bought back approximately 4.6 million shares pursuant to this initiative. Change to Reporting Segments The Company's segment reporting was revised during the first quarter to reflect the modifications in the Company's cost allocation structure. Operating expenses have been reclassified based on an assessment of the Company's technology and overhead costs and the realignment of these costs with the segments that receive the primary benefit from the use of the related resources. Prior year segment data has been reclassified to reflect this new presentation, which is detailed in the accompanying schedules. Forward-looking statements The Company expects full year net revenue for 2005 to increase approximately 8 to 12 percent on a combined organic and acquisitive basis over the $431 million baseline revenue achieved across the Company's three remaining segments following the sale of its ATM portfolio in November 2004. The Company expects net income to increase 17 to 22 percent in 2005 over net income of $40.8 million reported in 2004 and to generate operating cash flow in 2005 consistent with the level achieved in 2004, excluding the one-time payment of the tax liabilities associated with the ATM Portfolio sale. The foregoing expectations reflect the following assumptions: * An effective annualized tax rate of approximately 33 percent; and * Cash outlays for capital expenditures and product development of approximately $40 million. Conference call eFunds will hold a one-hour conference call today at 10:00 AM EDT to discuss the Company's first quarter financial performance. To listen to the conference call, dial 800-399-5351. (International callers dial 706-643-1939.) The call will also be broadcast on the company's Web site at http://www.efunds.com/ under the "Investor Relations" tab. Interested parties are encouraged to click on the web cast link 10 to 15 minutes prior to the start of the conference call. Replay Information A replay of the conference call will be available beginning two hours after the call's completion and will play through 11:59 p.m. EDT on May 18, 2005. You may access the replay by dialing 800-642-1687 (international callers dial 706-645-9291) and entering the Conference ID number 5539427. Additionally, a replay of the conference call will be available via the eFunds Web site at http://www.efunds.com/. About eFunds eFunds Corporation is an industry leader with nearly 30 years of experience and expertise in electronic payments and risk management. eFunds offers electronic funds transfer software and processing, risk management and related outsourcing solutions to financial institutions, electronic funds transfer networks, retailers, telecommunications providers, and government agencies around the world. Committed to providing excellent customer service and award-winning products, eFunds enables its clients to reduce transaction and infrastructure costs, detect potential fraud and enhance relationships with their customers. http://www.efunds.com/ Statements made in this release concerning the Company's or management's intentions, expectations, or predictions about future results or events are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are necessarily subject to risks and uncertainties that could cause actual results to vary from stated expectations, and such variations could be material and adverse. Factors that could result in such a variation include, but are not limited to, the inherent unreliability of earnings and revenue growth predictions due to numerous factors, including many beyond the Company's control, potential difficulties, delays and unanticipated expenses inherent in the development and marketing of new products and services, competitive factors, the unpredictability of merger and acquisition activity and the numerous risks and potential additional costs, disruptions and delays associated with the establishment of new business initiatives. Additional information concerning these and other factors that could cause actual results to differ materially from the Company's current expectations is contained in the Company's Annual Report on Form 10-K for the period ending December 31, 2004. EFUNDS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, 2005 2004 (in thousands, except per share amount) Net revenue $114,238 100.0% $140,886 100.0% Operating expenses Processing, communication and service costs 28,903 25.3% 58,670 41.7% Employee costs 49,244 43.1% 48,942 34.7% Depreciation and amortization 8,147 7.1% 8,929 6.3% Other operating costs 11,153 9.8% 10,323 7.3% Total operating expenses 97,447 85.3% 126,864 90.0% Income from operations 16,791 14.7% 14,022 10.0% Other income (expense) - net 1,475 1.3% (624) -0.5% Income before income taxes 18,266 16.0% 13,398 9.5% Provision for income taxes (5,102) -4.5% (4,019) -2.8% Net income $13,164 11.5% $9,379 6.7% Shares outstanding Basic 49,302 47,686 Diluted 50,964 49,115 Earnings per share Basic $0.27 $0.20 Diluted $0.26 $0.19 EFUNDS CORPORATION CONSOLIDATED BALANCE SHEETS March 31, December 31, 2005 2004 (in thousands) (Unaudited) Current assets: Cash and cash equivalents $200,441 $274,477 Short-term investments 102,360 88,140 Restricted custodial cash 6,019 2,392 Accounts receivable - net 73,282 73,505 Other current assets 24,014 30,050 Total current assets 406,116 468,564 Property and equipment - net 48,744 50,320 Intangibles-net 123,565 103,672 Other non-current assets 21,087 20,405 Total assets $599,512 $642,961 Current liabilities: Accounts payable $18,428 $21,984 Accrued liabilities 39,871 85,021 Accrued stock repurchase 24,788 -- Deferred revenue and gains 25,684 16,445 Long-term debt due within one year 1,602 1,955 Total current liabilities 110,373 125,405 Long-term deferred gains 35,101 37,539 Long-term debt 2,513 3,569 Other long-term liabilities 2,044 2,244 Total liabilities 150,031 168,757 Stockholders' equity: Common stock 497 493 Additional paid-in capital 453,150 446,825 Treasury stock at cost (43,752) -- Retained earnings 36,395 23,231 Accumulated other comprehensive income 3,191 3,655 Stockholders' equity 449,481 474,204 Total liabilities and stockholders' equity $599,512 $642,961 EFUNDS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2005 2004 (in thousands) Cash flows from operating activities: Net income $13,164 $9,379 Adjustments to reconcile net income to net cash (used in) provided by operating activities Depreciation 3,576 3,503 Amortization of intangibles 4,571 5,426 Changes in assets and liabilities Restricted custodial cash 73 1,533 Accounts receivable 1,111 (10,843) Accounts payable (3,877) 1,292 Income taxes receivable/payable (33,780) (1,995) Other assets and liabilities (4,355) (1,824) Net cash (used in) provided by operating activities (19,517) 6,471 Cash flows from investing activities: Capital expenditures (6,653) (4,531) Acquisitions (18,863) (775) Purchases of short-term investments (22,100) (15,500) Proceeds from sale of short-term investments 7,880 17,000 Other (236) -- Net cash used in investing activities (39,972) (3,806) Cash flows from financing activities: Purchase of common stock (18,965) -- Issuance of common stock 4,842 5,984 Payments on long-term debt (424) (1,977) Net cash (used in) provided by financing activities (14,547) 4,007 Net (decrease) increase in cash and cash equivalents (74,036) 6,672 Cash and cash equivalents at beginning of period 274,477 104,456 Cash and cash equivalents at end of period(1) $200,441 $111,128 1 Cash and cash equivalents at March 31, 2004 included $52.2 million that has been reclassified to short-term investments to conform to 2005 presentation. EFUNDS CORPORATION SEGMENT SUMMARY DATA (Unaudited) Three Months Ended March 31, Change 2005 2004 $ % (in thousands) Net revenue: Electronic payments $50,771 $49,683 1,088 2% Risk management 37,606 35,124 2,482 7% Global outsourcing 25,861 20,919 4,942 24% ATM management(1) -- 35,160 (35,160) * Total net revenue 114,238 140,886 (26,648) -19% Operating expenses: Processing, employee and other costs - Electronic payments 44,292 40,154 4,138 10% Risk management 22,206 21,480 726 3% Global outsourcing 17,603 16,064 1,539 10% ATM management(1) -- 33,189 (33,189) * Total processing, employee and other costs 84,101 110,887 (26,786) -24% Allocated overhead - Electronic payments 3,567 2,810 757 27% Riskmanagement 2,508 2,311 197 9% Global outsourcing 2,365 1,685 680 40% ATM management(1) -- 2,163 (2,163) * Corporate 4,906 7,008 (2,102) -30% Total allocated overhead 13,346 15,977 (2,631) -16% Income (loss) from operations: Electronic payments 2,912 6,719 (3,807) -57% Risk management 12,892 11,333 1,559 14% Global outsourcing 5,893 3,170 2,723 86% ATM management(1) -- (192) 192 * Corporate (4,906) (7,008) 2,102 -30% Total income from operations $16,791 $14,022 2,769 20% 1 Includes operations through November 18, 2004. * Represents an increase or decrease greater than 100%. EFUNDS CORPORATION SUPPLEMENTAL REVENUE DATA (Unaudited) Three Months Ended March 31, 2005 2004 % Change (in millions) Electronic Payments EFT processing $29.1 $25.6 14% Government services (EBT) 13.3 14.6 -9% Software sales 8.4 9.5 -12% $50.8 $49.7 2% Risk Management Financial Institution products $32.7 $30.5 7% Retail products 4.9 4.6 7% $37.6 $35.1 7% Global Outsourcing BPO $16.6 $13.1 27% IT services 9.3 7.8 19% $25.9 $20.9 24% ATM Management(1) $-- $35.2 * 1 Includes operations through November 18, 2004. * Represents an increase or decrease greater than 100%. EFUNDS CORPORATION Consolidated Quarterly Statement of Operations Information (Results Adjusted for Reclassification of Technology and Overhead Costs) (Unaudited) 2004 Quarter Ended(1) Year (in thousands) March June September December Ended 31 30 30 31 2004 Net revenue: Electronic payments $49,683 $51,719 $49,276 $52,931 $203,609 Risk management 35,124 35,033 36,839 33,103 140,099 Global outsourcing 20,919 19,387 20,305 26,510 87,121 ATM management(2) 35,160 34,573 33,634 17,952 121,319 Total net revenue 140,886 140,712 140,054 130,496 552,148 Operating expenses: Processing, employee and other costs - Electronic payments 40,154 42,027 40,355 42,211 164,747 Risk management 21,480 20,845 20,993 19,294 82,612 Global outsourcing 16,064 15,158 15,404 16,757 63,383 ATM management(2) 33,189 32,435 31,845 17,595 115,064 Total processing, employee and other costs 110,887 110,465 108,597 95,857 425,806 Allocated overhead - Electronic payments 2,810 2,569 2,962 2,460 10,801 Risk management 2,311 2,203 2,136 2,536 9,186 Global outsourcing 1,685 1,602 1,521 1,866 6,674 ATM management(2) 2,163 2,098 1,932 2,005 8,198 Corporate 7,008 7,646 7,699 7,006 29,359 Total allocated overhead 15,977 16,118 16,250 15,873 64,218 Restructuring and provision for contract losses - Electronic payments -- 1,178 -- 362 1,540 Risk management -- (8) -- 363 355 Global outsourcing -- 41 -- 1,062 1,103 ATM management(2) -- 9 -- 362 371 Corporate -- 33 -- 192 225 Total restructuring and provision for contract losses -- 1,253 -- 2,341 3,594 Income (loss) from operations: Electronic payments 6,719 5,945 5,959 7,898 26,521 Risk management 11,333 11,993 13,710 10,910 47,946 Global outsourcing 3,170 2,586 3,380 6,825 15,961 ATM management(2) (192) 31 (143) (2,010) (2,314) Corporate (7,008) (7,679) (7,699) (7,198) (29,584) Total income from operations $14,022 $12,876 $ 15,207 $16,425 $ 58,530 1 Technology and overhead costs have been reclassified among the segments to realign the costs with the segment receiving the primary benefits from the use of the related resources. 2 Includes operations through November 18, 2004. DATASOURCE: eFunds Corporation CONTACT: Helen Johnson, Director, Investor Relations, +1-480-629-7607, or George Gresham, Chief Financial Officer, +1-480-629-7662, both of eFunds Corporation Web site: http://www.efunds.com/

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