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Net Revenue of $133.2 Million SCOTTSDALE, Ariz., Nov. 2 /PRNewswire-FirstCall/ -- eFunds Corporation (NYSE:EFD), a leading provider of electronic payments, risk management and related outsourcing solutions, today reported third quarter 2005 net revenue of $133.2 million, an increase of approximately 25% over the $106.4 million of net revenues reported by the Company's current operating segments during the comparable quarter in 2004. Excluding the impact of the Company's acquisition of WildCard Systems in July, the revenues from the Company's current operating segments increased approximately 7% over the third quarter of 2004. Overall, revenues declined 5% from the $140.1 million reported for the third quarter of 2004 due to the impact from the sale of the Company's ATM deployment business in November 2004. Operating income during the quarter increased 18% to $17.9 million, or 13% of net revenue, as compared to operating income of $15.2 million, or 11% of net revenue, reported in the third quarter of 2004. Included in the Company's third quarter operating results was a $2.1 million operating loss attributable to WildCard. Third quarter 2005 net income increased 48% to $15.8 million, or $0.34 per diluted share, compared to net income of $10.7 million, or $0.22 per diluted share, reported for the same quarter in 2004. Results for the quarter ended September 30, 2005 include a non-recurring $4.7 million benefit from the adjustment of certain tax reserves. For the nine months ended September 30, 2005, eFunds reported net income of $43.1 million, or $0.90 per diluted share, compared with net income of $29.5 million, or $0.60 per diluted share, reported in the first nine months of 2004. Reported operating income for the nine months ended September 30, 2005 was $55.0 million, or 15% of net revenue, as compared to $42.1 million, or 10% of net revenue, for the same period in the prior year. Net revenue from the Company's continuing operating segments increased 14% to $363.7 million from the $318.3 million reported in the first nine months of 2004. Overall, revenues declined 14% from the $421.7 million recorded in the first nine months of 2004 as a result of the Company's sale of its ATM deployment business last fall. "Our results confirm we are building a very successful business. Our electronic payments segment continues to perform well, and we are seeing continued strong growth and margin improvement in our core EFT processing business. WildCard's performance is exceeding our original expectations and we believe this acquisition will help us further accelerate the performance profile of this segment," stated Paul Walsh, Chairman and Chief Executive Officer. "Our risk management business exhibited good revenue growth due to both organic improvement and our acquisition activity. Operating income for this segment was also up significantly over the comparable prior year period. As anticipated, we saw some softness in our global outsourcing business due to the loss of a customer that was acquired and the completion of a customer in-sourcing migration project last summer. We are continuing our efforts to build the pipeline and momentum of this business and we believe the prospects for accomplishing this goal are good," stated Walsh. The Company also completed a $100 million private placement of senior notes due 2012 during the quarter, the proceeds from which were used to repay the $100 million term loan incurred in connection with the acquisition of WildCard Systems. Forward-looking statements The Company also reported that it now expects full year net revenue for 2005 to increase approximately 18 percent on a combined organic and acquisitive basis over the $431 million baseline revenue achieved across the Company's three current operating segments following the sale of its ATM portfolio in November 2004. The Company is now anticipating that its 2005 net income will approximate the high end of its previously published range of 25 - 35 percent over its 2004 net income of $40.8 million. The Company has also raised its 2005 revenue projections for WildCard and now expects that the fourth quarter net revenues from this business should be between $24 and $27 million. This projection reflects an improvement of approximately 35 - 40 percent over the revenues of $56.5 million WildCard recorded last year. The earnings dilution resulting from the WildCard acquisition during 2005 should be slightly less than the $.03 to $.05 previously anticipated by the Company, with this acquisition being accretive during the fourth quarter. The foregoing expectations reflect the following assumptions: * An effective tax rate between 33 and 35 percent for the balance of 2005; * Cash outlays for capital expenditures and product development activities will be at or below the low end of the $35 to $40 million estimate included in the Company's prior guidance. Although the Company has not yet completed its annual operating plan for 2006, full year 2006 revenues are currently expected to increase 15 to 22 percent over currently projected full year 2005 revenues and the Company now anticipates that 2006 diluted earnings per share will exceed the $1.15 and $1.25 range referenced in the Company's prior guidance. 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 EST to discuss the Company's quarterly and year-to-date 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. EST on November 12, 2005. You may access the replay by dialing 800-642-1687 (international callers dial 706-645-9291) and entering the Conference ID number 1666541. 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, prepaid and stored value, 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 June 30, 2005. EFUNDS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended September 30, 2005 2004 (in thousands, except per share amounts) Net revenue $133,150 100.0% $140,054 100.0% Operating expenses Processing, communication and service costs 32,133 24.2% 57,634 41.2% Employee costs 54,753 41.1% 46,261 33.0% Depreciation and amortization 11,817 8.9% 9,722 6.9% Other operating costs 16,547 12.4% 11,230 8.0% Total operating expenses 115,250 86.6% 124,847 89.1% Income from operations 17,900 13.4% 15,207 10.9% Interest expense (2,089) -1.5% (114) -0.1% Other income - net 974 0.7% 177 0.1% Income before income taxes 16,785 12.6% 15,270 10.9% Provision for income taxes (1,007) -0.8% (4,581) -3.3% Net income $15,778 11.8% $10,689 7.6% Shares outstanding Basic 45,471 48,258 Diluted 46,741 49,424 Earnings per share Basic $0.35 $0.22 Diluted $0.34 $0.22 EFUNDS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Nine Months Ended September 30, 2005 2004 (in thousands, except per share amounts) Net revenue $363,682 100.0% $421,652 100.0% Operating expenses Processing, communication and service costs 88,648 24.4% 172,965 41.0% Employee costs 152,031 41.8% 142,990 33.9% Depreciation and amortization 28,041 7.7% 27,678 6.6% Other operating costs 39,929 11.0% 34,661 8.2% Restructuring and provision for contract loss charges -- 0.0% 1,253 0.3% Total operating expenses 308,649 84.9% 379,547 90.0% Income from operations 55,033 15.1% 42,105 10.0% Interest expense (2,340) -0.6% (217) -0.1% Other income - net 3,786 1.0% 241 0.1% Income before income taxes 56,479 15.5% 42,129 10.0% Provision for income taxes (13,395) -3.7% (12,638) -3.0% Net income $43,084 11.8% $29,491 7.0% Shares outstanding Basic 46,761 47,944 Diluted 48,111 49,151 Earnings per share Basic $0.92 $0.62 Diluted $0.90 $0.60 EFUNDS CORPORATION CONSOLIDATED BALANCE SHEETS September 30, December 31, 2005 2004 (in thousands) (Unaudited) Current assets: Cash and cash equivalents $92,307 $274,477 Short-term investments -- 88,140 Restricted cash 39,226 2,392 Accounts receivable - net 94,562 73,505 Other current assets 30,788 30,050 Total current assets 256,883 468,564 Property and equipment - net 64,516 50,320 Intangibles - net 396,138 103,672 Other non-current assets 24,134 20,405 Total assets $741,671 $642,961 Current liabilities: Accounts payable $23,343 $21,984 Accrued liabilities 90,830 85,021 Deferred revenue and gains 26,640 16,445 Long-term debt due within one year 5,102 1,955 Total current liabilities 145,915 125,405 Long-term deferred gains 29,767 37,539 Long-term debt 127,861 3,569 Other long-term liabilities 7,921 2,244 Total liabilities 311,464 168,757 Stockholders' equity: Common stock 503 493 Additional paid-in capital 461,067 446,825 Treasury stock at cost (100,000) -- Retained earnings 66,315 23,231 Accumulated other comprehensive income 2,322 3,655 Stockholders' equity 430,207 474,204 Total liabilities and stockholders' equity $741,671 $642,961 EFUNDS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2005 2004 (in thousands) Cash flows from operating activities: Net income $43,084 $29,491 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 11,710 10,848 Amortization 16,331 16,830 Deferred income taxes 3,807 (1,224) Other - net (274) 1,258 Changes in assets and liabilities Restricted cash 830 1,236 Accounts receivable (7,019) (7,027) Accounts payable (10,887) (1,442) Income taxes receivable/payable (26,416) 7,292 Other assets and liabilities (15,922) 2,336 Net cash provided by operating activities 15,244 59,598 Cash flows from investing activities: Capital expenditures (19,325) (20,569) Acquisitions (286,883) (6,079) Purchases of short-term investments (98,925) (84,335) Proceeds from sale of short-term investments 187,065 55,185 Other - net (2,875) (682) Net cash used in investing activities (220,943) (56,480) Cash flows from financing activities: Purchase of common stock (100,000) -- Issuance of common stock 11,619 17,513 Proceeds from long-term debt 235,000 -- Payments on long-term debt (122,742) (5,752) Other (348) -- Net cash provided by financing activities 23,529 11,761 Net (decrease) increase in cash and cash equivalents (182,170) 14,879 Cash and cash equivalents at beginning of period 274,477 104,456 Cash and cash equivalents at end of period(1) $92,307 $119,335 (1) Cash and cash equivalents at September 30, 2004 included $82.8 million that has beenreclassified to short-term investments to conform to 2005 presentation. EFUNDS CORPORATION SEGMENT SUMMARY DATA (Unaudited) Three Months Ended September 30, Change 2005 2004 $ % (in thousands) Net revenue: Electronic payments $71,274 $49,276 21,998 45% Risk management 41,974 36,839 5,135 14% Global outsourcing 19,902 20,305 (403) -2% ATM management(1) -- 33,634 (33,634) * Total net revenue 133,150 140,054 (6,904) -5% Operating expenses: Processing, employee and other costs - Electronic payments 64,042 40,355 23,687 59% Risk management 23,075 20,993 2,082 10% Global outsourcing 16,149 15,404 745 5% ATM management(1) -- 31,845 (31,845) * Total processing, employee and other costs 103,266 108,597 (5,331) -5% Allocated overhead - Electronic payments 3,159 2,962 197 7% Risk management 2,262 2,136 126 6% Global outsourcing 2,111 1,521 590 39% ATM management(1) -- 1,932 (1,932) * Corporate 4,452 7,699 (3,247) -42% Total allocated overhead 11,984 16,250 (4,266) -26% Income (loss) from operations: Electronic payments 4,073 5,959 (1,886) -32% Risk management 16,637 13,710 2,927 21% Global outsourcing 1,642 3,380 (1,738) -51% ATM management(1) -- (143) 143 * Corporate (4,452) (7,699) 3,247 42% Total income from operations $17,900 $15,207 2,693 18% (1) Includes operations through November 18, 2004. * Represents an increase or decrease greater than 100%. EFUNDS CORPORATION SEGMENT SUMMARY DATA (Unaudited) Nine Months Ended September 30, Change 2005 2004 $ % (in thousands) Net revenue: Electronic payments $174,422 $150,678 23,744 16% Risk management 119,835 106,996 12,839 12% Global outsourcing 69,425 60,611 8,814 15% ATM management(1) -- 103,367 (103,367) * Total net revenue 363,682 421,652 (57,970) -14% Operating expenses: Processing, employee and other costs - Electronic payments 152,378 122,536 29,842 24% Risk management 68,967 63,318 5,649 9% Global outsourcing 50,211 46,626 3,585 8% ATM management(1) -- 97,469 (97,469) * Total processing, employee and other costs 271,556 329,949 (58,393) -18% Allocated overhead - Electronic payments 9,950 8,341 1,609 19% Risk management 6,780 6,650 130 2% Global outsourcing 6,692 4,808 1,884 39% ATM management(1) -- 6,193 (6,193) * Corporate 13,671 22,353 (8,682) -39% Total allocated overhead 37,093 48,345 (11,252) -23% 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 12,094 18,623 (6,529) -35% Risk management 44,088 37,036 7,052 19% Global outsourcing 12,522 9,136 3,386 37% ATM management(1) -- (304) 304 * Corporate (13,671) (22,386) 8,715 39% Total income from operations $55,033 $42,105 12,928 31% (1) Includes operations through November 18, 2004. * Represents an increase or decrease greater than 100%. EFUNDS CORPORATION SUPPLEMENTAL REVENUE DATA (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 % Change 2005 2004 % Change (in millions) Electronic Payments EFT processing $32.6 $27.0 21% $92.4 $81.2 14% Prepaid and stored value 19.8 -- * 19.8 -- * Government services (EBT) 11.4 14.2 -20% 37.8 42.9 -12% Software sales 7.5 8.1 -7% 24.4 26.6 -8% $71.3 $49.3 45% $174.4 $150.7 16% Risk Management Financial Institution products $36.3 $32.1 13% $103.5 $93.0 11% Retail products 5.7 4.7 21% 16.3 14.0 16% $42.0 $36.8 14% $119.8 $107.0 12% Global Outsourcing BPO $13.8 $13.0 6% $44.6 $39.0 14% IT services 6.1 7.3 -16% 24.8 21.6 15% $19.9 $20.3 -2% $69.4 $60.6 15% ATM Management(1) $-- $33.6 * $-- $103.4 * (1) Includes operations through November 18, 2004. * Represents an increase or decrease greater than 100%. DATASOURCE: eFunds Corporation CONTACT: Helen Johnson, 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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