EFD AB Svensk Exportkr Acclrtd Rtrn NT Lkd Tomsci

Net Revenue of $116.3 Million SCOTTSDALE, Ariz., Aug. 3 /PRNewswire-FirstCall/ -- eFunds Corporation (NYSE:EFD), a leading provider of electronic payments, risk management, and related outsourcing solutions, today reported second quarter 2005 net revenue of $116.3 million. This amount represents a 10% improvement over net revenues of $106.1 million reported by the Company's three remaining operating segments during the second quarter of 2004. Overall, revenues declined 17% from the $140.7 million reported for the second quarter of 2004 as a result of the sale of the Company's ATM deployment business in November 2004. Operating income during the quarter increased to $20.3 million, or 18% of net revenue, as compared to operating income of $12.9 million, or 9% of net revenue, reported in the second quarter of 2004. Second quarter 2005 net income was $14.1 million, or $0.30 per diluted share, compared to net income of $9.4 million, or $0.19 per diluted share, reported for the same quarter in 2004. Results for the second quarter ended June 30, 2005 include a business and occupancy state tax refund of $1.8 million. For the six months ended June 30, 2005, eFunds reported net income of $27.3 million, or $0.56 per diluted share, compared with net income of $18.8 million, or $0.38 per diluted share, reported in the first six months of 2004. Reported operating income for the first half of 2005 was $37.1 million, or 16% of net revenue, as compared to $26.9 million, or 10% of net revenue, for the same period in the prior year. Net revenue from the Company's core operating segments increased 9% to $230.5 million, as compared to $211.9 million reported in the first six months of 2004. Overall, revenues declined 18% from the $281.6 million in revenue recorded in the first half of 2004, as a result of the sale of the ATM deployment business. "We are pleased with our accomplishments so far in 2005. All of our businesses continue to show strong financial results and we have made notable progress against our strategic plan," said Paul F. Walsh, Chairman and Chief Executive Officer. "During the second quarter, new customer wins included Societe Generale and we acquired India Switch Company and National Check Protection Services and signed the agreement to purchase WildCard Systems. These transactions have enabled the Company to establish a framework for the expansion of our processing business to Europe, gain entry into the emerging payments market in India, and expand the breadth of our payments offerings in the U.S. We are excited about the opportunities ahead for eFunds for the balance of 2005 and beyond as we integrate WildCard Systems and our other recent acquisitions, and execute against our customer initiatives in the U.S. and Europe," stated Walsh. Forward-looking statements The Company reconfirmed it previous outlook that full year net revenue for 2005 is expected to increase approximately 18 to 22 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 has raised its 2005 net income estimate from a range of 15 to 19 percent over the net income of $40.8 million reported in 2004 to 25 to 35 percent over its 2004 net income due to its anticipated recognition of a $4 to $6 million tax benefit in the third quarter. The foregoing expectations reflect the following assumptions: * The net revenues of WildCard increase approximately 30 percent over the revenues of $56.5 million recorded last year, with a slight majority of this revenue being recognized in the latter half of 2005; because the business of WildCard is notably more seasonal than eFunds, nearly all of the expected $.03 - $.05 earnings dilution resulting from the transaction in 2005 will be seen in the third quarter; * An effective tax rate between 33 and 35 percent for the balance of 2005 excluding the effects of the anticipated recognition of the $4 to $6 million tax benefit in the third quarter; * Cash outlays for capital expenditures and product development activities of approximately $35 to $40 million. The Company also updated its outlook for 2006. Full year 2006 revenues are expected to increase 15 to 22 percent over currently projected full year 2005 revenues. Diluted earnings per share are expected to range between $1.15 and $1.25 for 2006. The foregoing guidance does not include the effects of the adoption of SFAS 123R, which requires the expensing of stock options beginning January 1, 2006. 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 August 17, 2005. You may access the replay by dialing 800-642-1687 (international callers dial 706-645-9291) and entering the Conference ID number 8037564. 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 Quarterly Report on Form 10-Q for the period ending March 31, 2005. EFUNDS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended June 30, 2005 2004 (in thousands, except per share amounts) Net revenue $116,294 100.0% $140,712 100.0% Operating expenses Processing, communication and service costs 27,612 23.8% 56,661 40.3% Employee costs 48,034 41.3% 47,787 33.9% Depreciation and amortization 8,077 6.9% 9,027 6.4% Other operating costs 12,229 10.5% 13,108 9.3% Restructuring and provision for contract loss charges -- 0.0% 1,253 0.9% Total operating expenses 95,952 82.5% 127,836 90.8% Income from operations 20,342 17.5% 12,876 9.2% Other income -- net 1,086 0.9% 585 0.4% Income before income taxes 21,428 18.4% 13,461 9.6% Provision for income taxes (7,286) -6.2% (4,038) -2.9% Net income $14,142 12.2% $9,423 6.7% Shares outstanding Basic 45,649 47,886 Diluted 47,095 49,268 Earnings per share Basic $ 0.31 $ 0.20 Diluted $ 0.30 $ 0.19 EFUNDS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Six Months Ended June 30, 2005 2004 (in thousands, except per share amounts) Net revenue $230,532 100.0% $281,598 100.0% Operating expenses Processing, communication and service costs 56,515 24.6% 115,331 40.9% Employee costs 97,278 42.2% 96,729 34.4% Depreciation and amortization 16,224 7.0% 17,956 6.4% Other operating costs 23,382 10.1% 23,431 8.3% Restructuring and provision for contract loss charges -- 0.0% 1,253 0.4% Total operating expenses 193,399 83.9% 254,700 90.4% Income from operations 37,133 16.1% 26,898 9.6% Other income (expense) -- net 2,561 1.1% (39) -0.1% Income before income taxes 39,694 17.2% 26,859 9.5% Provision for income taxes (12,388) -5.4% (8,057) -2.8% Net income $27,306 11.8% $18,802 6.7% Shares outstanding Basic 47,417 47,786 Diluted 48,924 49,192 Earnings per share Basic $0.58 $ 0.39 Diluted $0.56 $ 0.38 EFUNDS CORPORATION CONSOLIDATED BALANCE SHEETS June 30, December 31, 2005 2004 (in thousands) (Unaudited) Current assets: Cash and cash equivalents $205,976 $274,477 Short-term investments -- 88,140 Restricted cash 3,877 2,392 Accounts receivable -- net 75,628 73,505 Other current assets 25,603 30,050 Total current assets 311,084 468,564 Property and equipment -- net 54,354 50,320 Intangibles - net 155,732 103,672 Other non-current assets 24,175 20,405 Total assets $545,345 $642,961 Current liabilities: Accounts payable $20,665 $21,984 Accrued liabilities 51,471 85,021 Deferred revenue and gains 22,447 16,445 Long-term debt due within one year 2,315 1,955 Total current liabilities 96,898 125,405 Long-term deferred gains 32,676 37,539 Long-term debt 3,052 3,569 Other long-term liabilities 1,894 2,244 Total liabilities 134,520 168,757 Stockholders' equity: Common stock 500 493 Additional paid-in capital 456,500 446,825 Treasury stock at cost (100,000) -- Retained earnings 50,537 23,231 Accumulated other comprehensive income 3,288 3,655 Stockholders' equity 410,825 474,204 Total liabilities and stockholders' equity $545,345 $ 642,961 EFUNDS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2005 2004 (in thousands) Cash flows from operating activities: Net income $27,306 $18,802 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 6,947 6,488 Amortization 9,277 11,468 Deferred income taxes 3,594 303 Other -- net (191) 837 Changes in assets and liabilities Restricted cash 6,715 872 Accounts receivable (187) (6,834) Accounts payable (5,344) (977) Income taxes receivable/payable (25,629) 2,097 Other assets and liabilities (16,578) (2,250) Net cash provided by operating activities 5,910 30,806 Cash flows from investing activities: Capital expenditures (11,790) (11,423) Acquisitions (57,095) (6,079) Purchases of short-term investments (98,925) (57,035) Proceeds from sale of short-term investments 187,065 46,985 Other -- net (761) (508) Net cash provided by (used in) investing activities 18,494 (28,060) Cash flows from financing activities: Purchase of common stock (100,000) -- Issuance of common stock 8,079 8,225 Payments on long-term debt (984) (4,185) Net cash (used in) provided by financing activities (92,905) 4,040 Net (decrease) increase in cash and cash equivalents (68,501) 6,786 Cash and cash equivalents at beginning of period 274,477 104,456 Cash and cash equivalents at end of period(1) $ 205,976 $111,242 (1) Cash and cash equivalents at June 30, 2004 included $63.7 million that has been reclassified to short-term investments to conform to 2005 presentation. EFUNDS CORPORATION SEGMENT SUMMARY DATA (Unaudited) Three Months Ended June 30, Change 2005 2004 $ % (in thousands) Net revenue: Electronic payments $52,377 $51,719 658 1% Risk management 40,255 35,033 5,222 15% Global outsourcing 23,662 19,387 4,275 22% ATM management(1) -- 34,573 (34,573) * Total net revenue 116,294 140,712 (24,418) -17% Operating expenses: Processing, employee and other costs -- Electronic payments 44,044 42,027 2,017 5% Risk management 23,686 20,845 2,841 14% Global outsourcing 16,459 15,158 1,301 9% ATM management(1) -- 32,435 (32,435) * Total processing, employee and other costs 84,189 110,465 (26,276) -24% Allocated overhead -- Electronic payments 3,224 2,569 655 25% Risk management 2,010 2,203 (193) -9% Global outsourcing 2,216 1,602 614 38% ATM management(1) -- 2,098 (2,098) * Corporate 4,313 7,646 (3,333) -44% Total allocated overhead 11,763 16,118 (4,355) -27% Restructuring and provision for contract loss charges -- Electronic payments -- 1,178 (1,178) * Risk management -- (8) 8 * Global outsourcing -- 41 (41) * ATM management(1) -- 9 (9) * Corporate -- 33 (33) * Total restructuring and provision for contract loss charges -- 1,253 (1,253) * Income (loss) from operations: Electronic payments 5,109 5,945 (836) -14% Risk management 14,559 11,993 2,566 21% Global outsourcing 4,987 2,586 2,401 93% ATM management(1) -- 31 (31) * Corporate (4,313) (7,679) 3,366 44% Total income from operations $20,342 $12,876 7,466 58% (1) Includes operations through November 18, 2004. * Represents an increase or decrease greater than 100%. EFUNDS CORPORATION SEGMENT SUMMARY DATA (Unaudited) Six Months Ended June 30, Change 2005 2004 $ % (in thousands) Net revenue: Electronic payments $103,148 $101,402 1,746 2% Risk management 77,861 70,157 7,704 11% Global outsourcing 49,523 40,306 9,217 23% ATM management(1) -- 69,733 (69,733) * Total net revenue 230,532 281,598 (51,066) -18% Operating expenses: Processing, employee and other costs -- Electronic payments 88,336 82,181 6,155 7% Risk management 45,892 42,325 3,567 8% Global outsourcing 34,062 31,222 2,840 9% ATM management(1) -- 65,624 (65,624) * Total processing, employee and other costs 168,290 221,352 (53,062) -24% Allocated overhead -- Electronic payments 6,791 5,379 1,412 26% Risk management 4,518 4,514 4 0% Global outsourcing 4,581 3,287 1,294 39% ATM management(1) -- 4,261 (4,261) * Corporate 9,219 14,654 (5,435) -37% Total allocated overhead 25,109 32,095 (6,986) -22% Restructuring and provision for contract loss charges -- Electronic payments -- 1,178 (1,178) * Risk management -- (8) 8 * Global outsourcing -- 41 (41) * ATM management(1) -- 9 (9) * Corporate -- 33 (33) * Total restructuring and provision for contract loss charges -- 1,253 (1,253) * Income (loss) from operations: Electronic payments 8,021 12,664 (4,643) -37% Risk management 27,451 23,326 4,125 18% Global outsourcing 10,880 5,756 5,124 89% ATM management(1) -- (161) 161 * Corporate (9,219) (14,687) 5,468 37% Total income from operations $37,133 $26,898 10,235 38% (1) Includes operations through November 18, 2004. * Represents an increase or decrease greater than 100%. EFUNDS CORPORATION SUPPLEMENTAL REVENUE DATA (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2005 2004 % Change 2005 2004 % Change (in millions) Electronic Payments EFT processing $30.7 $28.6 7% $59.8 $ 54.2 10% Government services (EBT) 13.2 14.1 -6% 26.4 28.7 -8% Software sales 8.5 9.0 -6% 16.9 18.5 -9% $52.4 $51.7 1% $103.1 $101.4 2% Risk Management Financial Institution products $34.5 $30.3 14% $67.2 $ 60.9 10% Retail products 5.8 4.7 23% 10.7 9.3 15% $40.3 $35.0 15% $77.9 $ 70.2 11% Global Outsourcing BPO $14.2 $12.9 10% $30.8 $ 26.0 18% IT services 9.5 6.5 46% 18.7 14.3 31% $23.7 $19.4 22% $49.5 $ 40.3 23% ATM Management(1) $-- $34.6 * $-- $ 69.7 * (1) Includes operations through November 18, 2004. * Represents an increase or decrease greater than 100%. 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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