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Exhibit 99.1 RISK FACTORS AND CAUTIONARY STATEMENTS.
When used in this Annual Report on Form 10-K and in future filings by the
Company with the Securities and Exchange Commission, in our press releases,
letters and reports to stockholders and in oral statements made by our
representatives, the words or phrases should result, are expected to,
targeted, will continue, will approximate, is anticipated, estimate,
project or similar expressions are intended to identify forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are necessarily subject to certain risks and
uncertainties, including those discussed below, which could cause our actual
results to differ materially from our historical experience and our present
expectations or projections. Caution should be taken not to place undue
reliance on any such forward-looking statements, which speak only as of the
date made. The factors listed below could affect our financial performance and
could cause our actual results for future periods to differ from any opinions
or statements expressed with respect thereto. Such differences could be
material and adverse. We will not undertake and specifically decline any
obligation to publicly release the result of any revisions that may be made to
any forward-looking statements to reflect events or circumstances occurring
after the date of such statements or to reflect the occurrence of anticipated
or unanticipated events. WE ARE UNABLE TO PREDICT THE RESULTS OF THE INVESTIGATION BY THE SEC AND THE
PENDING STOCKHOLDERS LITIGATION. The Company is currently the subject of an investigation by the Securities and
Exchange Commission (SEC) with respect to restatements of its prior period
financial statements that occurred in 2002. The Company has been cooperating
fully with the SEC staff and intends to continue to do so. The Company may,
however, become subject to a fine or other remedies in connection with the
investigation. The Company has incurred, and may continue to incur,
significant legal expenses in connection with this investigation. The Company, its former chief executive and chief financial officers and its
current chief financial officer are defendants in a federal securities action
(the Federal Securities Action) pending in the U.S. District Court for the
District of Arizona. On December 30, 2003, the plaintiff in the Federal
Securities Action filed a Consolidated Amended Complaint (the Complaint). The
Complaint alleges, among other things, that during the period from July 21,
2000 through October 24, 2002 the defendants made false and misleading
statements and omissions of material facts and that the plaintiff and other
members of a putative class of shareholders suffered damages as a result. On
February 10, 2004, the defendants filed a motion to dismiss this action. The Company is also a nominal defendant in two substantially identical
shareholder derivative actions filed in the Superior Court of Arizona, Maricopa
County in January 2003 (the Shareholder Derivative Actions). The complaints
allege, among other things, that certain of the Companys current and former
directors named in the complaints as defendants breached their fiduciary duties
to the Company in connection with certain alleged issues involving the
Companys accounting practices and internal controls. The complaints also name
as a defendant




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the Companys former external auditor. With the agreement of the parties, the
Court has entered an order staying these actions pending the resolution of the
motions to dismiss the Federal Securities Action. The Company believes the Federal Securities Action and the Shareholder
Derivative Actions are without merit and intends to vigorously defend itself.
However, the Company cannot predict the outcome of these actions with
certainty. We are likely to incur significant legal expense in connection with
the defense of these claims. In addition, if we are not successful in our
efforts to seek dismissal of these actions, we could incur substantial other
expenses. ESTIMATES OF FUTURE FINANCIAL RESULTS ARE INHERENTLY UNRELIABLE.
From time to time, the Company and its representatives may make public
predictions or forecasts regarding the Companys future results, including
estimates regarding future revenues, expense levels, tax rates, capital
expenditures, earnings or earnings from operations. Any forecast regarding our
future performance reflects various assumptions. These assumptions are subject
to significant uncertainties, and, as a matter of course, many of them will
prove to be incorrect. Further, the achievement of any forecast depends on
numerous factors, including the considerations specific to our business that
are outlined in this discussion as well as general economic and geopolitical
trends that can adversely affect the market for our products and services. Many
of the factors that can adversely affect our business are beyond our control.
As a result, there can be no assurance that our performance will be consistent
with any management forecasts or that the variation from such forecasts will
not be material and adverse. Investors are cautioned not to base their entire
analysis of our business and prospects upon isolated predictions, but instead
are encouraged to utilize the entire available mix of historical and
forward-looking information made available by us, and other information
relating to our Company and our products and services, when evaluating our
prospective results of operations. WE ARE UNABLE TO PREDICT THE RESULTS OF THE PURPORTED CLASS ACTION LAWSUITS
FILED IN FLORIDA. The Company, along with numerous other defendants, is a defendant in an action
pending in the U.S. District Court for the Southern District of Florida. The
complaint in this action alleges the Company purchased motor vehicle records
from the State of Florida and used that data for marketing and other purposes
that are not permitted under the Federal Drivers Privacy Protection Act. The
plaintiffs are seeking liquidated damages of not less than $2,500 for each
affected member of a purported class, plus costs and attorneys fees. The
plaintiffs are also asking for injunctive relief to prevent further alleged
violations of the Federal Act. The Company cannot predict whether the
plaintiffs in this case will be successful in certifying their complaint as a
class action. The Company believes that it has meritorious defenses with
regard to the allegations made in this lawsuit and intends to vigorously defend
this action. Litigation is, however, by its nature uncertain and an
unfavorable resolution of this lawsuit could materially adversely affect our
business, results of operation or financial condition. CONSOLIDATION IN THE INDUSTRIES WE SERVE MAY ADVERSELY AFFECT OUR ABILITY TO
SELL OUR PRODUCTS AND SERVICES. 2




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Mergers, acquisitions and personnel changes at financial institutions and
electronic funds transfer networks may adversely affect our business, financial
condition and results of operations. Currently, the banking and EFT industries
are consolidating, causing the number of financial institutions and processing
networks to decline. This consolidation could cause us to lose:  
    
    current and potential customers;
    
    market share if an entity resulting from a combination of our
customers determines that it is more efficient to develop in-house
products and services similar to ours or to use our competitors
product and services; and
    
    revenue if such a combined institution is able to negotiate a
greater volume discount for, or discontinue the use of, our products
and services. For example, J.P. Morgan Chase and Banc One, both of which utilize our risk
management products, have agreed to merge. Similarly, the STAR network was one
of the larger processing customers of our electronic payments business before
it was purchased by one of our competitors, Concord EFS, during 2001. First
Data Corporation, which owns a substantial equity interest in the NYCE Network,
has now purchased Concord EFS, although it is a condition of this acquisition
that First Data divest its interest in the NYSE network. Both the STAR and NYCE
networks utilize our electronic funds transfer software. We cannot predict what
effect the combination of First Data and Concord EFS will have on our business. OUR EFFORTS TO IMPROVE THE MARGINS OF OUR ATM MANAGEMENT BUSINESS MAY NOT BE
SUCCESSFUL.
During 2001 and 2002, we acquired a number of independent ATM management
companies and our ATM Management segment now operates the largest network of
off-premise ATMs in North America. For 2003, this business segment contributed
revenues of $139.8 million, or 26% of our total revenues, at an operating
margin of 0.1%. Our strategy to improve margins of this business is directed towards providing
an end-to-end ATM management service to financial institutions and retailers.
We believe that effectively changing the focus of this business should allow us
to improve on its historical returns. We also expect improvement in our ATM
business to come from additional revenues from branding and other value-added
services. If we are not successful in our effort to improve the revenues and
profitability of our ATM business, our future results of operations will be
adversely affected and we could be required to write-down the value of the
goodwill we recorded as a result of our ATM management company acquisitions. 3




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OUR ABILITY TO EXPAND THROUGH ACQUISITIONS INVOLVES RISKS AND MAY NOT BE
SUCCESSFUL.
We are currently considering possible acquisitions to complement and grow our
existing businesses and we have recently acquired the assets of Oasis
Technology, Ltd., a provider of electronic funds transfer processing software.
Our ability to expand through acquisitions involves many risks, including:  
    
    the operations, technology and personnel of any acquired
companies may be difficult to integrate;
    
    the allocation of management resources to consummate these
transactions may disrupt our day to day business;
    
    the acquired businesses may not achieve anticipated revenues,
earnings or cash flow. Such a shortfall could require us to write-down
the goodwill associated with any acquired company, which would
adversely affect our reported earnings; and
    
    acquisitions may require us to record special charges that reduce
our earnings, such as the $1.5 million charge we recorded in 2004 to
write-off Oasis in-process research and development WE FACE INTENSE COMPETITION IN ALL AREAS OF OUR BUSINESS, AND IF WE DO NOT
COMPETE EFFECTIVELY, OUR BUSINESS WILL BE HARMED.
We face intense competition from a number of companies and we expect that
competition will intensify as the movement towards increasing consolidation
within the financial services industry continues. The high levels of
competition our businesses experience has led to pricing pressures in all
aspects of our business. Many of our competitors have significantly greater
financial, technical and marketing resources, greater name recognition and a
larger installed customer base than we do. In the electronic payments market, our principal competitors include:  
    
    third-party debit network processors, including First Data
Corporation/Concord EFS, VISA Debit Processing Services, Midwest
Payment Systems and Fiserv;
    
    financial institutions that have developed in-house processing
capabilities or services similar to ours, including Wells Fargo, M&I
Bank and Fifth Third National Bank;
    
    electronic funds transfer software providers, including
Transaction System Architects, S2, Mosaic and PaySys.
    
    government service providers including J.P. Morgan Chase and ACS. In the ATM management market, our competitors include First Data
Corporation/Concord EFS, Genpass, certain ATM equipment manufacturers and
numerous independent service organizations (ISOs). In the risk management market, our principal competitors include:  
    
    providers of fraud management data and software including Primary
Payment Systems (a subsidiary of Concord EFS), Equifax, Experian,
TransUnion and RiskWise (a division of Lexis-Nexis of Reed Elsevier) 4




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
    
    retail check verification and electronic check processing
providers, including Certegy and Telecheck, a subsidiary of First Data
Corporation. In the global outsourcing market, our competitors include:  
    
    outsourcing solutions companies, including Spectramind/Wipro Ltd,
Daksh and Infosys Technologies. In the market for electronic transaction processing, the principal factors on
which we compete are price and service levels. The future growth of our
revenues in this market is dependent upon securing an increasing volume of
transactions. If we cannot control our transaction processing expenses, we may
not remain price competitive and our revenues will be adversely affected. Our
revenues can also be adversely affected by pricing concessions, such as those
we made in 2003 to retain significant processing customers. In addition, some
of our competitors have indicated that they may be prepared to provide customer
prospects with up-front cash incentives to acquire or retain their processing
business. Given that these competitors have substantially greater financial
resources than we do, it will be difficult for us to obtain significant new
processing customers, or retain the customers we have, if this approach becomes
a significant competitive factor. We have also seen an effort by processors such as First Data
Corporation/Concord EFS and VISA that are affiliated with branded networks to
seek exclusive processing relationships with the debit card-issuing financial
institutions that subscribe to their networks. Ownership or control of a
branded network may also enable these competitors to influence the interchange
fees financial institutions receive from retailers who accept transactions from
the debit cards issued by these network participants. We are unable to predict
whether this trend towards an increasing level of vertical integration between
transaction processors and branded debit networks, and the horizontal
integration resulting from the combination of First Data Corporation and
Concord EFS, will have a positive or negative impact upon our processing
business over the long-term. Our software business competes primarily upon the
basis of the quality and reliability of our software and its conformance to the
current and future requirements of our customers. If we do not maintain the
technological relevance of our software offerings or fail to anticipate shifts
in customer requirements, our ability to sell our software products will be
impaired. In the market for ATM deployment, processing and management services, the
primary basis of competition is industry knowledge and experience, price and
service levels. Our ability to sell additional machines and processing
contracts in this market is dependant on our ability to control our costs while
maintaining effective levels of customer service. If we are not successful in
these efforts we will not achieve the growth objectives we have for our ATM
management business. Competition for our risk management products is based primarily on the quantity
and quality of the data available to us for this purpose and, to a somewhat
lesser degree, price. Our competitive position in these markets could be harmed
if our competitors were able to compile different data sources and analytical
capabilities that proved to be more effective than our products. In addition,
we continue to experience competitive pressure on the pricing for our check
verification service. 5




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Our business process management and information technology services offerings
compete primarily on the basis of the quality of service levels and, to some
degree, price. The future growth of this aspect of our business is dependent on
demonstrating to our current and prospective customers that we are a dependable
and efficient service provider. In addition to our current competitors, it is reasonable to expect that we will
encounter substantial competition from new companies. No assurance can be given
that we will be able to compete effectively against current and future
competitors. Increased competition could result in price reductions, reduced
gross margins or loss of market share. IF WE EXPERIENCE SYSTEM FAILURES, THE PRODUCTS AND SERVICES WE PROVIDE TO OUR
CUSTOMERS COULD BE DELAYED OR INTERRUPTED, WHICH WOULD HARM OUR BUSINESS AND
REPUTATION AND RESULT IN THE LOSS OF CUSTOMERS.
Our ability to provide reliable service largely depends on the efficient and
uninterrupted operations of our computer and telecommunications network systems
and our data centers. Any significant interruptions could severely harm our
business and reputation and result in a loss of revenue and customers. We could
also be required to apply substantial amounts of our available cash to fund our
settlement obligations and it is possible that we would not have sufficient
resources in the event of a severe and persistent outage. Our systems and
operations could be exposed to damage or interruption from fire, natural
disaster, unlawful acts, power loss, telecommunications failure, unauthorized
entry and computer viruses. Although we have taken steps to prevent system
failures, we cannot be certain that our measures will be successful and that we
will not experience service interruptions. Further, our property and business
interruption insurance may not be adequate to compensate us for all losses or
failures that may occur. We expect to expend significant amounts to upgrade the
redundancy of our data centers during 2004. OUR SALES TO DELUXE HAVE BEEN DECLINING.
The revenues we received from Deluxe declined by approximately $15 million
during 2003 compared to 2002. Although Deluxe has established minimum spending
targets of $43 million per year through March 31, 2005 for software development
and maintenance services it obtains from us, further efforts at expense
reduction by Deluxe could cause the revenues we receive from Deluxe to continue
to decline. We do not expect that sales to Deluxe in 2004 will expand
materially over the levels seen in 2003. A continuing material reduction in
the amount of services Deluxe orders from us would materially adversely affect
our future results of operations. Our current contract with Deluxe expires in
March 2005. We cannot predict whether this contract will be renewed or extended
after its scheduled expiration, although we would not expect any extension of
this contract to incorporate minimum spending targets approximating those in
the current agreement. LEGISLATION OR REGULATION COULD HARM OUR ABILITY TO COLLECT AND USE DATA,
INCREASE OUR OPERATING COSTS OR OTHERWISE HARM OUR BUSINESS.
Existing and new laws and regulations relating to consumer privacy protection
could harm our ability to collect and use consumer data, increase our operating
costs or otherwise harm our business. We collect personal data about consumers
for use in our risk management products. 6




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Due to the increasing public concern over consumer privacy rights, Congress and
state legislatures have adopted and are considering adopting laws and
regulations restricting the purchase, sale and sharing of personal information
about consumers. A material increase in the scope of these types of
restrictions could impair the efficacy of our risk management products. The federal financial modernization law, known as the Gramm-Leach-Bliley Act,
imposes significant consumer information privacy requirements on any entity
engaged in the business of providing financial services, including entities
that provide services to financial institutions. Federal agencies, such as the
Comptroller of the Currency and the Federal Trade Commission, have issued
regulations to implement these requirements. The Act requires covered companies
to develop and implement policies to protect the security and confidentiality
of consumers nonpublic personal information and to disclose those policies to
consumers before a customer relationship is established and annually
thereafter. In addition, the Act requires covered companies to give an opt-out
notice to consumers before sharing consumer information with third parties. The
opt-out notice requirement in the Act is subject to several exceptions for
credit reporting and fraud prevention purposes. Although we believe these
exceptions apply to our business, government agencies could interpret their
regulations in a manner that could expand the scope of the Act in ways that
could adversely affect our business. In addition, even if the regulations do
not affect us directly, uncertainty over the scope of the regulations could
make financial institutions unwilling or reluctant to share consumer-related
information with us. The Gramm-Leach-Bliley Act does not prohibit state legislation or regulations
that are more restrictive on our collection and use of data. More restrictive
legislation or regulations have been introduced in the past and could be
introduced in the future in Congress and the states. For example, in the past
legislation has been proposed which would require consumers to opt in to any
plan, which would allow their nonpublic personal information to be disclosed.
We are unable to predict whether more restrictive legislation or regulations
will be adopted in the future. Any future legislation or regulations could have
a negative impact on our business. Regulations are currently being considered regarding the application of the
Americans with Disabilities Act (ADA) to ATM networks. In addition, the
network rules that govern the transmission of transactions originating at ATMs
will require us and the customers of our ATM management business to upgrade the
encryption capabilities of our collective ATM devices by the end of 2006.
Although these regulations and requirements could result in increased
opportunities for ATM sales by us, they could also require us to retire or
retrofit portions of the ATM base we own and could motivate some of our
customers to elect to retire their ATMs. It is also possible that existing ATM
networks will be exempted from any future regulations under the ADA. We are
unable at this time to determine whether, and to what extent, any final
regulations issued under the ADA or the network rule revisions will impact our
business. IF THE SECURITY OF OUR DATABASES IS COMPROMISED, OUR REPUTATION COULD SUFFER
AND CUSTOMERS MAY NOT BE WILLING TO USE OUR PRODUCTS AND SERVICES.
If the security of our databases is compromised, our business could be
materially adversely affected. In our electronic payments and risk management
businesses, we collect personal consumer data, such as names and addresses,
social security numbers, drivers license numbers, 7




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checking and savings account numbers and payment history records. Unauthorized
access to our database could result in the theft or publication of personal
confidential information and the deletion or modification of personal records
or otherwise cause interruptions in our operations. These concerns about
security are increased when we transmit information overseas or over the
Internet. A security or privacy breach may:  
    
    deter customers from using our products and services;
    
    harm our reputation;
    
    expose us to liability;
    
    increase our operating expenses to remediate problems caused by the breach; and
    
    decrease market acceptance of electronic commerce transactions in general. WE MAY EXPERIENCE SOFTWARE DEFECTS, DEVELOPMENT DELAYS AND INSTALLATION
DIFFICULTIES, WHICH WOULD HARM OUR BUSINESS AND REPUTATION AND EXPOSE US TO
POTENTIAL LIABILITY.
Our services and products are based on sophisticated software and computing
systems and we often encounter delays when developing new products and
services. Further, the software underlying our products and services has
occasionally contained and may in the future contain undetected errors or
defects when first introduced or when new versions are released. In addition,
we may experience difficulties in installing or integrating our products and
technologies on platforms used by our customers or in new environments, such as
the Internet. Our acquisition of Oasis will increase our exposure to these
risks. Defects in our software products, errors or delays in the processing of
electronic transactions or other difficulties could result in:  
    
    delays in market acceptance;
    
    additional development costs;
    
    diversion of technical and other resources;
    
    loss of customers;
    
    negative publicity; and
    
    exposure to liability claims. Although we attempt to limit our potential liability for warranty claims
through disclaimers and limitation-of-liability provisions in our license and
client agreements, we cannot be certain that these measures will be successful
in limiting our liability. THERE ARE A NUMBER OF RISKS ASSOCIATED WITH OUR INTERNATIONAL SALES AND
OPERATIONS THAT COULD HARM OUR BUSINESS.
Because we currently sell some of our products and services on a global basis
and provide outsourcing services from India, our business is subject to risks
associated with doing business internationally. In 2003, we generated
approximately 9.4% of our net sales outside of the United States and we
presently anticipate that our international efforts will constitute a higher
percentage of our net sales in future periods. For example, the acquisition of
Oasis will increase the proportion of our revenues derived from sales made in
foreign jurisdictions. Our future results could be harmed by a variety of
factors, including: 8




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
    
    changes in foreign currency exchange rates;
    
    changes in a specific countrys or regions political and economic conditions, particularly in emerging markets;
    
    potentially unfavorable tax rules;
    
    tariffs, duties and other trade barriers;
    
    reduced protection for intellectual property rights;
    
    challenges in managing widespread operations;
    
    changes in foreign laws and regulatory requirements or in foreign policy; and
    
    varying business practices in foreign countries. In addition, the process of selling our outsourcing services typically involves
visits to our sites in India by prospective customers. Increased levels of
international tension can result in prospective clients postponing or canceling
plans to visit our facilities, lengthening the sales cycle and otherwise
inhibiting our ability to grow this business. Political opposition to the use
of offshore resources such as our India-based operations and domestic security
concerns that can make it more difficult for foreign nationals to obtain U.S.
visas can potentially have a similar effect. CHANGES IN INDIAN TAX LAWS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
Our Indian software development and business process management operations
qualify for tax incentives associated with businesses that operate within
designated geographic locations. These incentives generally provide us with
exemptions from Indian tax on certain business income generated from these
operations and phase out through March 2009. We cannot assure you that these
tax benefits will be continued in the future at their current levels or at all.
If our Indian tax benefits are reduced or eliminated, our taxes in future
periods would increase. Such an increase could reduce our profits. WE FACE TERMINATION AND COMPLIANCE RISKS WITH RESPECT TO OUR GOVERNMENT
CONTRACTS.
All of our government contracts can be terminated at any time, without cause,
by the contracting governmental entity. We realized approximately 9% of our net
sales in 2003 (before reimbursed expenses) pursuant to contracts of this type.
If a government contract is so terminated, we are generally entitled only to
receive compensation for the services provided or costs incurred at the time of
termination and a reasonable profit on the contract work performed prior to the
date of termination. In addition, all of our government contracts require us to
comply with various contract provisions and procurement regulations, and in
some cases, accounting requirements. Violations of some of these provisions
could, if not cured, result in termination of the contract and fines. WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS.
Despite our efforts to protect them, third parties may infringe or
misappropriate our intellectual property rights, or otherwise independently
develop substantially equivalent products and services. The loss of
intellectual property protection or the inability to secure or enforce
intellectual property protection could harm our business and ability to
compete. We rely on a combination of trademark and copyright laws, trade secret
protection and confidentiality and license agreements to protect our
trademarks, software and know-how. We have also applied for 9




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patent protection on some of the features of our newer products. We may be
required to spend significant resources to protect our trade secrets and
monitor and police our intellectual property rights. Third parties may assert infringement claims against us in the future. In
particular, there has been a substantial increase in the issuance of business
process patents, which may have broad commercial implications. Claims for
infringement of all types of patents are becoming an increasing source of
litigation. If we become subject to an infringement claim, we may be required
to modify our products, services and technologies or obtain a license to permit
our continued use of those rights. We may not be able to do either of these
things in a timely manner or upon reasonable terms and conditions. Failure to
do so could seriously harm our business and operating results. In addition,
future litigation relating to infringement claims could result in substantial
costs to us and a diversion of management resources. Adverse determinations in
any litigation or proceeding could also subject us to significant liabilities
and could prevent us from using some of our products, services or technologies. PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY DELAY OR PREVENT A
CHANGE IN CONTROL.
Provisions of our certificate of incorporation and bylaws and Delaware law may
delay or prevent a change in control of our Company that you may consider
favorable. These provisions include the following:  
    
    no cumulative voting by stockholders for directors;  
    
    a classified board of directors with three-year staggered terms;  
    
    the ability of our board to set the size of the board of
directors, to create new directorships and to fill vacancies;
    
    the ability of our board to issue preferred stock, without
stockholder approval, with rights and preferences that may be superior
to our common stock;  
    
    the ability of our board to amend our bylaws;  
    
    a prohibition of stockholder action by written consent;  
    
    advance notice requirements for stockholder proposals and for
nominating candidates to our board;
    
    restrictions under Delaware law on mergers and other business
combinations between us and any holder of 15% or more of our
outstanding common stock;
    
    a requirement that 66-2/3% of our stockholders and 66-2/3% of our
directors approve certain corporate transactions, including mergers
and consolidations, sales of assets or amendments to our certificate
of incorporation; and
    
    We have adopted a stockholder rights plan, which discourages the
unauthorized acquisition of 15% or more of our common stock or an
unauthorized exchange or tender offer. 10