##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark
One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006.
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to  .
 Commission file number 1-31951.
 eFunds Corporation
  Delaware
    
    39-1506286(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)Gainey Center II
    
    852538501 N. Scottsdale Road, Suite 300
    
    (Zip Code)Scottsdale, Arizona(Address of principal executive offices)
    þ o
 o þ
 þ o
 þ
  þ o o
 o þ
  Documents Incorporated by Reference




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESPART IIIPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESEXHIBIT INDEXEX-10.16EX-10.33EX-10.39EX-10.40EX-10.41EX-10.43EX-10.45EX-10.47EX-10.48EX-21.1EX-23.1EX-24.1EX-31.1EX-31.2EX-32.1    Table of Contents  
 PART I
 
      -
    
    US Payments-
    
    US Risk Management-
    
    International-
    
    Automated Teller Machine (ATM) Management
    -
    
    US Payments-
    
    US Risk Management-
    
    International
    1




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US Payments
    EFT Processing
    Prepaid Solutions
  2




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Government Services (EBT)
   Software Sales and Other Services
    US Risk Management
  ®
 3




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Financial Institutions
   Retail Products
  Business Process Outsourcing
  International
  ATM Management
  Sales and Marketing
   Customer Support, Technology and Infrastructure
  4




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Competition
  In the US Payments market, our principal competitors include:-
    
    third-party debit network processors, including First Data Corporation, VISA Debit
Processing Services, Fifth Third Processing Solutions, Metavante Corporation, Certegy and
Fiserv;-
    
    financial institutions that have developed in house processing capabilities or
services similar to ours, including Bank of America, M&I Bank and Fifth Third National
Bank;-
    
    prepaid providers, including First Data, VISA Debit Processing Services, Total Systems and Metavante;-
    
    government service (EBT) providers including J.P. Morgan Chase and ACS; and-
    
    electronic funds transfer software providers, including Transaction System Architects, S1 and ACI Worldwide.
  -
    
    providers of fraud management data and software including Equifax, Experian,
TransUnion, RiskWise (a division of Lexis-Nexis of Reed Elsevier) and Early Warning
Systems (f/k/a Primary Payment Systems);-
    
    retail check verification and electronic check processing providers, including
Certegy (a subsidiary of Fidelity National Information Services), and Telecheck, a
subsidiary of First Data Corporation; and-
    
    providers of outsourcing services including Spectramind/Wipro Ltd, Intelenet Global
Services Ltd., Progeon Ltd. (an Infosys Technologies company), WNS Global Services, Daksh
services (a subsidiary of IBM) and numerous other business process and outsourcing
service providers.
   5




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Government Regulation
       Intellectual Property Rights
  6




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Employees
  Financial Information About Industry Segment; Financial Information About Domestic Operations and
Export Sales
 Executive Officers
  EXECUTIVE OFFICERNAME
    
    POSITION
    
    AGE
    
    SINCEPaul F. Walsh
    
    Chairman of the Board and Chief
Executive Officer
    
    
    57
    
    
    
    2002George W. Gresham
    
    Chief Financial Officer, Executive Vice
President, Finance and Chief
Administration Officer
    
    
    40
    
    
    
    2005Nelson G. Eng
    
    President, eFunds U.S.
    
    
    44
    
    
    
    2006Shailesh M. Kotwal
    
    President, eFunds International
    
    
    42
    
    
    
    2006Kay J. Nichols
    
    Executive Vice President, Strategy,
Marketing and Product Development
    
    
    43
    
    
    
    2005Clyde L. Thomas
    
    Chief Information Officer and Executive
Vice President, Global Technology and
Operations
    
    
    54
    
    
    
    2002Steven F. Coleman
    
    Executive Vice President, General
Counsel and Secretary
    
    
    48
    
    
    
    2000Laura De Cespedes
    
    Executive Vice President, Human Resources
    
    
    50
    
    
    
    2005Tommy L. Andrews
    
    Executive Vice President, Corporate Development
    
    
    56
    
    
    
    2003
   7




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8




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-
    
    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.
    9




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-
    
    the operations, technology and personnel of any acquired companies may be difficult
to integrate;-
    
    the acquired businesses may not achieve anticipated revenues, earnings or cash
flow. Such a shortfall occurred in 2006 with respect to the prepaid business we acquired
in 2005. A material downturn in the performance or prospects of an acquired business
could require us to write-down the goodwill associated with the acquired company, which
would adversely affect our reported earnings;-
    
    the allocation of management resources to consummate these transactions may disrupt
our day to day business; and-
    
    acquisitions may require us to revise our published earnings guidance and record
special charges that reduce our earnings.
   -
    
    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 products 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.
     10




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-
    
    third-party debit network processors, including First Data Corporation, VISA Debit
Processing Services, Fifth Third Processing Solutions, Metavante Corporation, Certegy and
Fiserv;-
    
    financial institutions that have developed in house processing capabilities or
services similar to ours, including Bank of America, M&I Bank and Fifth Third National
Bank;-
    
    prepaid providers, including First Data, VISA Debit Processing Services, Total Systems and Metavante;-
    
    government service (EBT) providers including J.P. Morgan Chase and ACS; and-
    
    electronic funds transfer software providers, including Transaction System Architects, S1 and ACI Worldwide.
  -
    
    providers of fraud management data and software including Equifax, Experian,
TransUnion, RiskWise (a division of Lexis-Nexis of Reed Elsevier) and Early Warning
Systems (f/k/a Primary Payment Systems);-
    
    retail check verification and electronic check processing providers, including
Certegy (a subsidiary of Fidelity National Information Services) and Telecheck, a
subsidiary of First Data Corporation; and-
    
    providers of outsourcing services including Spectramind/Wipro Ltd, Intelenet Global
Services Ltd., Progeon Ltd. (an Infosys Technologies company), WNS Global Services, Daksh
services (a subsidiary of IBM) and numerous other business process and outsourcing
service providers.
    11




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12




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-
    
    delays in market acceptance;-
    
    additional development or installation costs;-
    
    loss of customers;-
    
    negative publicity; and-
    
    exposure to liability claims.
    -
    
    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.
     -
    
    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;
 13




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-
    
    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.
 
   
   Approximate
    
    Owned or LeaseLocation
    
    Square Feet
    
    Expiration Date
    
    FunctionScottsdale, Arizona1
    
    
    54,500
    
    
    February 2012
    
    Existing Corporate HeadquartersScottsdale, Arizona1
    
    
    101,000
    
    
    January 2017
    
    New Corporate HeadquartersPhoenix, Arizona2
    
    
    92,400
    
    
    Owned
    
    Shared data centerSunrise, Florida
    
    
    92,200
    
    
    Various July 2009-May 2010
    
    Prepaid solutionsMaitland, Florida
    
    
    16,500
    
    
    December 2008
    
    Data centerNew Berlin, Wisconsin
    
    
    82,600
    
    
    Owned
    
    Data centerMilwaukee, Wisconsin
    
    
    79,500
    
    
    January 2014
    
    Software development centerWoodbury, Minnesota3
    
    
    105,300
    
    
    September 2012
    
    Risk management and outsourcing
servicesChennai, India
    
    
    67,000
    
    
    Various July 2006  Oct 2008
    
    Shared software development centerMumbai, India
    
    
    85,000
    
    
    July 2007/April 2009
    
    Outsourcing servicesMumbai, India
    
    
    49,310
    
    
    April 2009
    
    Outsourcing servicesMumbai, India
    
    
    25,745
    
    
    April 2009
    
    Outsourcing servicesGurgaon, India
    
    
    62,200
    
    
    September 2007/January 2009
    
    Outsourcing servicesToronto, Canada
    
    
    27,500
    
    
    October 2008
    
    Software development center
 
 1
    
    The Company is scheduled to move into a new Corporate Headquarters in March 2007.2
    
    Approximately 42,100 square feet of this facility is leased to a third party.3
    
    Approximately 12,300 square feet of this facility is leased to a third party.  
  Florida Litigation
  14




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India Tax Dispute
      15




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PART II
 
  Market Information
  2006
    
    High
    
    Low
    
    CloseFirst Quarter
    
    $
    27.47
    
    
    $
    22.36
    
    
    $
    25.84Second Quarter
    
    $
    26.98
    
    
    $
    19.58
    
    
    $
    22.05Third Quarter
    
    $
    24.85
    
    
    $
    19.00
    
    
    $
    24.18Fourth Quarter
    
    $
    28.49
    
    
    $
    23.38
    
    
    $
    27.50
 2005
    
    High
    
    Low
    
    CloseFirst Quarter
    
    $
    24.25
    
    
    $
    20.77
    
    
    $
    22.32Second Quarter
    
    $
    22.88
    
    
    $
    17.10
    
    
    $
    17.99Third Quarter
    
    $
    20.72
    
    
    $
    17.75
    
    
    $
    18.83Fourth Quarter
    
    $
    24.10
    
    
    $
    18.60
    
    
    $
    23.44
  Dividend Policy
  Stock
Repurchase Plan
  Stock Incentive Plans
  16




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Number ofNumber of
    
    
    
    
    
    securities remainingsecurities to be
    
    
    
    
    
    available for futureissued upon
    
    Weighted-average
    
    issuance underexercise of
    
    exercise price of
    
    equity compensationoutstanding
    
    outstanding
    
    plans (excludingoptions, warrants
    
    options, warrants
    
    securities reflectedPlan Category
    
    and rights
    
    and rights2
    
    in column (a)1Equity
compensation plans
approved by
security holders
    
    
    3,598,149
    
    
    $
    16.71
    
    
    
    5,105,316Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    37,500Total
    
    
    3,598,149
    
    
    $
    16.71
    
    
    
    5,142,816
 
 1
    
    Assumes that all future awards under the 2006 SIP are made in the form of options.2
    
    Restricted stock units are assumed to have an exercise price of zero for the purpose
of this calculation. Annual Meeting
  
   Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002(in millions, except net income per share data)
    
    2006
    
    
    (revised(2))
    
    
    (revised(2))
    
    
    (revised(2))
    
    
    (revised(2))Statement of Income Data:Net revenue
    
    $
    552.4
    
    
    $
    501.7
    
    
    $
    552.1
    
    
    $
    532.1
    
    
    $
    543.1Operating expenses
    
    
    469.2
    
    
    
    434.4
    
    
    
    499.0
    
    
    
    497.0
    
    
    
    518.0Income from operations (1)
    
    
    83.2
    
    
    
    67.3
    
    
    
    53.1
    
    
    
    35.1
    
    
    
    25.1Other (expense) income  net
    
    
    (2.9
    )
    
    
    0.4
    
    
    
    (0.2
    )
    
    
    1.2
    
    
    
    0.7Income before income taxes (1)
    
    
    80.4
    
    
    
    67.7
    
    
    
    52.9
    
    
    
    36.3
    
    
    
    25.8Provision for income taxes
    
    
    (25.8
    )
    
    
    (17.3
    )
    
    
    (15.9
    )
    
    
    (10.0
    )
    
    
    (8.3
    )Net income (1)
    
    $
    54.5
    
    
    $
    50.4
    
    
    $
    37.0
    
    
    $
    26.3
    
    
    $
    17.5Net income per share  basic
    
    $
    1.17
    
    
    $
    1.08
    
    
    $
    0.77
    
    
    $
    0.56
    
    
    $
    0.38Net income per share  diluted
    
    $
    1.15
    
    
    $
    1.06
    
    
    $
    0.75
    
    
    $
    0.56
    
    
    $
    0.37Shares used in computing:Net income per share  basic
    
    
    46.6
    
    
    
    46.5
    
    
    
    48.2
    
    
    
    46.9
    
    
    
    46.6Net income per share  diluted
    
    
    47.4
    
    
    
    47.8
    
    
    
    49.4
    
    
    
    47.2
    
    
    
    46.7
 
 (1)
    
    Amounts may not sum due to rounding.(2)
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R 18




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December 31,2005
    
    2004
    
    2003
    
    2002(in millions)
    
    2006
    
    (revised(1))
    
    (revised(1))
    
    (revised(1))
    
    (revised(1))Balance Sheet Data:Cash and cash equivalents
    
    $
    126.7
    
    
    $
    86.0
    
    
    $
    274.5
    
    
    $
    104.5
    
    
    $
    119.5Short-term investments
    
    
    7.0
    
    
    
    
    
    
    
    88.1
    
    
    
    53.7
    
    
    
    Working capital
    
    
    179.9
    
    
    
    122.0
    
    
    
    343.2
    
    
    
    162.7
    
    
    
    149.8Total assets
    
    
    824.5
    
    
    
    764.2
    
    
    
    638.4
    
    
    
    512.3
    
    
    
    459.4Long-term debt, excluding current portion
    
    
    102.7
    
    
    
    107.0
    
    
    
    3.6
    
    
    
    1.7
    
    
    
    1.3Stockholders equity
    
    
    534.5
    
    
    
    451.6
    
    
    
    478.8
    
    
    
    406.9
    
    
    
    368.9
 
 (1)
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R. Non-GAAP
Financial Measures  Return on Invested Capital
    ROIC
    
    
    ROADecember 31,
    
    
    December 31,(dollars in millions)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005NumeratorIncome from operations
    
    $
    83.2
    
    
    $
    67.3
    
    
    $
    83.2
    
    
    $
    67.3Add: Stock option expense
    
    
    6.9
    
    
    
    7.9
    
    
    
    6.9
    
    
    
    7.9Other income (expense)  net
    
    
    
    
    
    
    
    
    
    
    (2.9
    )
    
    
    0.4Add: Implied interest on future obligations1
    
    
    8.0
    
    
    
    6.5
    
    
    
    
    
    
    
    98.1
    
    
    
    81.7
    
    
    
    87.2
    
    
    
    75.6Provision for income taxes excluding benefit from stock option expense2
    
    
    (31.7
    )
    
    
    (21.5
    )
    
    
    (28.2
    )
    
    
    (19.9
    )$
    66.4
    
    
    $
    60.2
    
    
    $
    59.0
    
    
    $
    55.7DenominatorAverage total assets
    
    $
    770.4
    
    
    $
    661.1
    
    
    $
    776.2
    
    
    $
    661.1Less average cash, cash equivalents and short-term investments3
    
    
    (108.1
    )
    
    
    (171.9
    )
    
    
    
    
    
    
    Less average current liabilities excluding debt4
    
    
    (127.9
    )
    
    
    (126.5
    )
    
    
    
    
    
    
    Plus average cash deployed in the business5
    
    
    63.4
    
    
    
    48.8
    
    
    
    
    
    
    
    Plus average net present value of future obligations1
    
    
    110.6
    
    
    
    128.1
    
    
    
    
    
    
    
    $
    708.4
    
    
    $
    539.6
    
    
    $
    776.2
    
    
    $
    661.19.4
    %
    
    
    11.2
    %
    
    
    7.6
    %
    
    
    8.4
    %
 
 1
    
    Implied interest on future obligations represents the assumed implicit interest
charge on the average present value of our future obligations using the Companys assumed
implicit interest rate (approximately 7% for 2006). The average net present value of
future obligations represents the average for the trailing four quarters of the present
value of total operating lease and vendor obligations discounted at the Companys assumed
implicit interest rate.2
    
    The tax rates used for this calculation are equal to our annualized effective tax
rates for the periods shown of 32.1% for 2006 and 25.6% for 2005.3
    
    Average total assets and cash, cash equivalents and short-term investments are the
average of the amounts shown in the Companys financial statements at the end of the four
quarters preceding the date of the calculation, excluding the impact of any deferred tax
asset associated with the expensing of stock options. 19




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4
    
    Average current liabilities excluding debt is the average of the current
liabilities recorded on the Companys balance sheet (excluding the current portion of
long-term debt) at the end of the four quarters preceding the date of the calculation.5
    
    Average cash deployed in the business is calculated as the average balance at the
end of the four fiscal quarters preceding the date of the calculation of the total amount
of cash we had in India plus the cash we had advanced to support the settlement obligations
of our processing customers. 
     Our Business
   -
    
    US Payments-
    
    US Risk Management-
    
    International-
    
    Automated Teller Machines (ATM) Management
  20




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-
    
    US Payments-
    
    US Risk Management-
    
    International
   US Payments
   US Risk Management
  International
  21




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ATM Management
  Key Events in 2006
 
    
    We entered into an agreement with American Express Travel Related Services Company, Inc.
pursuant to which eFunds Prepaid Solutions will act as the exclusive processor for the mall
and universal gift card programs managed by American Express in the U.S.
    
    Revenues from our prepaid business were below our expectations and this business
incurred a larger than expected loss in 2006.
    
    Nelson G. Eng joined the Company as President  US and Shailesh M. Kotwal joined the
Company as President of eFunds International.
    
    The Indian taxing authorities issued an approximately $24.1 million tax assessment, plus
interest of $9.8 million (based on the exchange rate between the U.S. and the Indian Rupee
on December 31, 2006) against certain of our U.S. companies and we amended our credit
facilities to enable us to issue a $48.5 million letter of credit needed to pursue our
appeal of this assessment.
    
    Paul F. Walsh and John J. (Jack) Boyle III were re-elected to our Board of Directors at
our annual meeting of stockholders.
    
    Sheila A. Penrose announced that she will not stand for re-election to the Board at the
Companys 2007 meeting of stockholders.
    
    The Companys Board of Directors was expanded by one and Angel Cabrera was elected to
fill the vacancy created thereby.
 Trends
  
    
    prepaid solution products are experiencing the highest growth rate of any payment card
product and this trend is expected to continue over the next several years, although we
expect to see some moderation in the growth levels seen in this industry in future periods;
    
    increased fraud and regulatory requirements are driving a sustained need for identity
verification and risk management products in the US and abroad;
    
    there continues to be a migration from the use of traditional paper checks and cash to
electronic payments;
    
    larger financial institutions are developing increasing expectations regarding the
ability of their payment technology providers to deliver complex, comprehensive solutions
addressing all forms of electronic payment types across multiple geographies; and
    
    there has been an increase in regulatory and legislative activity regarding notice
requirements associated with incidents involving the misappropriation of consumer data,
causing participants in the financial service and other industries to devote additional
efforts to maintaining the security of their data files.
 Risks and Challenges
  22




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
    
    Changes in Indian tax laws or the interpretation or enforcement of those laws could
adversely affect our results of operations.
    
    If the security of our databases is compromised, our reputation could suffer and
customers may not be willing to use our products and services.
    
    Estimates of future financial results are inherently unreliable.
    
    Our ability to expand through acquisitions involves risks and may not be successful.
    
    Consolidation in the industries we serve may adversely affect our ability to sell our products and services.
    
    We are unable to predict the results of the purported class action lawsuit filed in Florida.
    
    We may be unable to protect our intellectual property rights or others may claim that we
are infringing on their intellectual property.
    
    We face intense competition in all areas of our business, and if we do not compete
effectively, our business will be harmed.
    
    If we experience system failures, the products and services we provide to our customers
could be delayed or interrupted, which could harm our business and reputation and result in
the loss of customers.
    
    Legislation or regulation could impair our ability to collect and use data, increase our
operating costs or otherwise harm our business.
    
    We may experience software defects, development delays and installation difficulties,
which could harm our business and reputation and expose us to potential liability.
    
    There are a number of risks associated with our international sales and operations that
could harm our business.
    
    Provisions in our charter documents and Delaware law may delay or prevent a change in
control of our Company that you may consider favorable.
   Year Ended December 31,
    
    
    % Change2006

    
    
    2005
    
    
    2004
    
    
06-05
    
    
    05-04(dollars in millions)
    
    
    
    
    (revised(2))
    
    
    (revised(2))
    
    
    
    
    
    (revised(2))Net revenue
    
    $
    552.4
    
    
    $
    501.7
    
    
    $
    552.1
    
    
    
    10
    %
    
    
    (9
    )%Operating expenses:Processing, communication and service costs
    
    
    138.2
    
    
    
    120.4
    
    
    
    217.7
    
    
    
    15
    
    
    
    (45
    )Employee costs
    
    
    214.7
    
    
    
    215.6
    
    
    
    195.2
    
    
    
    
    
    
    
    10Depreciation and amortization
    
    
    47.7
    
    
    
    39.8
    
    
    
    36.2
    
    
    
    20
    
    
    
    10Other operating costs
    
    
    68.6
    
    
    
    58.6
    
    
    
    46.3
    
    
    
    17
    
    
    
    27Restructuring and other charges
    
    
    
    
    
    
    
    
    
    
    3.1
    
    
    
    
    
    
    
    *Contract loss provision (reversal)
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    *Total operating expenses
    
    
    469.2
    
    
    
    434.4
    
    
    
    499.0
    
    
    
    8
    
    
    
    (13
    )Income from operations
    
    
    83.2
    
    
    
    67.3
    
    
    
    53.1
    
    
    
    24
    
    
    
    27Interest expense
    
    
    (6.4
    )
    
    
    (4.3
    )
    
    
    (0.4
    )
    
    
    49
    
    
    
    *Other income  net
    
    
    3.6
    
    
    
    4.7
    
    
    
    0.2
    
    
    
    (23
    )
    
    
    *Income before income taxes(1)
    
    
    80.4
    
    
    
    67.7
    
    
    
    52.9
    
    
    
    19
    
    
    
    28Provision for income taxes
    
    
    (25.8
    )
    
    
    (17.3
    )
    
    
    (15.9
    )
    
    
    49
    
    
    
    9Net income(1)
    
    $
    54.5
    
    
    $
    50.4
    
    
    $
    37.0
    
    
    
    8
    
    
    
    36
 
 (1)
    
    Amounts may not sum due to rounding.(2)
    
    Amounts have been revised to reflect the adoption of SFAS 123R.*
    
    Represents an increase or decrease in excess of 100%. 23




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Net Revenue
  Year Ended December 31,
    
    
    % Change(dollars in millions)
    
    2006
    
    
    2005
    
    
    2004
    
    
    06-05
    
    
    05-04US PaymentsEFT processing
    
    $
    147.9
    
    
    $
    125.1
    
    
    $
    112.6
    
    
    
    18
    %
    
    
    11Prepaid solutions
    
    
    85.1
    
    
    
    45.0
    
    
    
    
    
    
    
    89
    
    
    
    *Government services (EBT)
    
    
    41.2
    
    
    
    48.3
    
    
    
    55.5
    
    
    
    (15
    )
    
    
    (13
    )Software sales
    
    
    9.5
    
    
    
    9.1
    
    
    
    7.3
    
    
    
    4
    
    
    
    25IT Services
    
    
    5.1
    
    
    
    29.0
    
    
    
    32.7
    
    
    
    (82
    )
    
    
    (11
    )ATM Managed Services
    
    
    3.7
    
    
    
    4.2
    
    
    
    1.7
    
    
    
    (12
    )
    
    
    *292.5
    
    
    
    260.7
    
    
    
    209.8
    
    
    
    12
    
    
    
    24US Risk ManagementFinancial institution products
    
    
    149.4
    
    
    
    136.7
    
    
    
    121.9
    
    
    
    9
    
    
    
    12Retail products
    
    
    19.3
    
    
    
    20.9
    
    
    
    18.2
    
    
    
    (8
    )
    
    
    15BPO
    
    
    20.4
    
    
    
    31.0
    
    
    
    39.3
    
    
    
    (34
    )
    
    
    (21
    )189.1
    
    
    
    188.6
    
    
    
    179.4
    
    
    
    
    
    
    
    5InternationalSoftware sales
    
    
    33.8
    
    
    
    26.1
    
    
    
    28.3
    
    
    
    30
    
    
    
    (8
    )BPO
    
    
    29.4
    
    
    
    24.6
    
    
    
    13.1
    
    
    
    20
    
    
    
    88EFT Processing
    
    
    7.6
    
    
    
    1.7
    
    
    
    0.2
    
    
    
    *
    
    
    
    *70.8
    
    
    
    52.4
    
    
    
    41.6
    
    
    
    35
    
    
    
    26ATM Management1
    
    
    
    
    
    
    
    
    
    
    121.3
    
    
    
    
    
    
    
    *Total net revenue
    
    $
    552.4
    
    
    $
    501.7
    
    
    $
    552.1
    
    
    
    10
    
    
    
    (9
    )
 
 1
    
    Includes revenues through November 18, 2004.*
    
    Represents an increase or decrease in excess of 100%. US Payments
    US Risk Management
  24




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International
   ATM Management
  Software Sales
  Year Ended December 31,(in millions)
    
    2006
    
    
    2005
    
    
    2004License fees
    
    $
    12.7
    
    
    $
    5.6
    
    
    $
    7.0Maintenance
    
    
    20.3
    
    
    
    20.6
    
    
    
    21.5Software services
    
    
    10.3
    
    
    
    9.0
    
    
    
    7.1$
    43.3
    
    
    $
    35.2
    
    
    $
    35.6
 Business Segment Operating Income
  Year Ended December 31,(dollars in millions)
    
    2006
    
    
    2005
    
    % Change(revised1)Operating income (loss)US Payments
    
    $
    37.7
    
    
    $
    37.1
    
    
    
    2
    %US Risk Management
    
    
    68.0
    
    
    
    54.5
    
    
    
    25International
    
    
    (2.9
    )
    
    
    (4.1
    )
    
    
    29Corporate
    
    
    (19.6
    )
    
    
    (20.2
    )
    
    
    3Total operating income2
    
    $
    83.2
    
    
    $
    67.3
    
    
    
    24
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.2
    
    Amounts may not sum due to rounding.   25




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Year Ended December 31,(dollars in millions)
    
    2005
    
    
    2004
    
    
    % Change(2005 presentation)
    
    
    (2005 presentation)(revised1)
    
    
    (revised1)Operating income (loss)Electronic payments
    
    $
    20.4
    
    
    $
    25.1
    
    
    
    (19
    )%Risk management
    
    
    55.0
    
    
    
    46.8
    
    
    
    18Global outsourcing
    
    
    12.0
    
    
    
    14.6
    
    
    
    (18
    )ATM management
    
    
    
    
    
    
    (2.3
    )
    
    
    *Corporate
    
    
    (20.1
    )
    
    
    (31.0
    )
    
    
    35Total operating income(2)
    
    $
    67.3
    
    
    $
    53.1
    
    
    
    27
 
 *
    
    Represents an increase or decrease in excess of 100%.1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.2
    
    Amounts may not sum due to rounding.  2006 versus 2005
 US Payments
  US Risk Management
  International
  Corporate
  2005 versus 2004
 Electronic Payments
  26




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Risk Management
  Global Outsourcing
  ATM Management
  Corporate
  Operating Expenses
  Year Ended December 31,
    
    
    % Change(dollars in millions)
    
    2006
    
    
    2005
    
    
    2004
    
    
    06-05
    
    
    05-04(revised1)
    
    
    (revised1)Operating expenses:Processing, communication and service costs
    
    $
    138.2
    
    
    $
    120.4
    
    
    $
    217.7
    
    
    
    15
    %
    
    
    (45
    )%Employee costs
    
    
    214.7
    
    
    
    215.6
    
    
    
    195.2
    
    
    
    
    
    
    
    10Depreciation and amortization
    
    
    47.7
    
    
    
    39.8
    
    
    
    36.2
    
    
    
    20
    
    
    
    10Other operating costs
    
    
    68.6
    
    
    
    58.6
    
    
    
    46.3
    
    
    
    17
    
    
    
    27Restructuring and other charges
    
    
    
    
    
    
    
    
    
    
    3.1
    
    
    
    
    
    
    
    *Contract loss provision
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    *Total operating expenses
    
    $
    469.2
    
    
    $
    434.4
    
    
    $
    499.0
    
    
    
    8
    
    
    
    (13
    )
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.*
    
    Represents an increase or decrease in excess of 100%. Processing, communication and service costs
     27




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Employee costs
   Depreciation and amortization
   Other operating costs
   Restructuring and other charges
  Contract loss provision
  Other income  net
  Provision for income taxes
  28




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(dollars in millions)
    
    2006
    
    2005
    
    % Change(revised1)Cash and cash equivalents
    
    $
    126.7
    
    
    $
    86.0
    
    
    
    47
    %Short-term investments
    
    
    7.0
    
    
    
    
    
    
    
    *Long-term debt due within one year
    
    
    4.4
    
    
    
    5.0
    
    
    
    (12
    )Long-term debt
    
    
    102.7
    
    
    
    107.0
    
    
    
    (4
    )Stockholders equity
    
    
    534.5
    
    
    
    451.6
    
    
    
    18Net working capital
    
    
    179.9
    
    
    
    122.0
    
    
    
    47
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.*
    
    Represents an increase or decrease in excess of 100%. Financial Condition
     29




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Sources and Uses of Cash
  Summary of Cash FlowsYear Ended December 31,(in millions)
    
    2006
    
    
    2005
    
    
    2004(revised1)
    
    
    (revised1)Cash provided by operating activities
    
    $
    75.1
    
    
    $
    42.6
    
    
    $
    68.2Cash (used in) provided by investing activities
    
    
    (47.7
    )
    
    
    (236.4
    )
    
    
    82.1Cash provided by financing activities
    
    
    13.4
    
    
    
    5.3
    
    
    
    19.7Net increase (decrease) in cash and cash
equivalents
    
    $
    40.8
    
    
    $
    (188.5
    )
    
    $
    170.0
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.  
    
    investment in projects, including our Oracle STS initiative, intended to increase our
product delivery and operational effectiveness, enhance our product suite and the security
and redundancy of our systems; and
    
    funding our liquidity needs and the implementation of significant customer contracts.
  Operating Activities
    Investing Activities
   Financing Activities
  30




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Long-term Debt
    Stock Repurchase Plan
  Contractual Obligations and Commitments
  Payments Due by Period(in millions)
    
    Total
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    ThereafterLong-term debt
    
    $
    100.0
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    100.0Capital lease obligations
    
    
    7.1
    
    
    
    4.4
    
    
    
    2.5
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations1
    
    
    76.0
    
    
    
    17.6
    
    
    
    14.2
    
    
    
    8.7
    
    
    
    7.5
    
    
    
    6.7
    
    
    
    21.3Vendor obligations
    
    
    57.6
    
    
    
    31.8
    
    
    
    16.0
    
    
    
    4.4
    
    
    
    2.7
    
    
    
    2.7
    
    
    
    Total
    
    $
    240.7
    
    
    $
    53.8
    
    
    $
    32.7
    
    
    $
    13.3
    
    
    $
    10.2
    
    
    $
    9.4
    
    
    $
    121.3
 
 1
    
    Future minimum lease payments for non-cancelable operating
leases are presented net of minimum sublease rentals of $4.5 million due
in the future under non-cancelable subleases. 31




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\

Commitment Expiration by Period(in millions)
    
    Total
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    ThereafterLetters of credit and other
    
    $
    49.5
    
    
    $
    1.0
    
    
    $
    
    
    
    $
    48.5
    
    
    $
    
    
    
    $
    
    
    
    $
    Performance bonds1
    
    
    11.9
    
    
    
    11.6
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    Total commitments1
    
    $
    61.4
    
    
    $
    12.6
    
    
    $
    0.2
    
    
    $
    48.6
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 1
    
    Amounts may not sum due to rounding.       32




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Revenue Recognition
  Software Revenue
Recognition Revenue
Arrangements with Multiple Deliverables
    Transaction
processing and related services
  33




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Prepaid solutions
  Software licensing and related services
    Risk management services
  Business
process outsourcing and information technology consulting
services
  Intangible Assets
  Goodwill
  34




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Software-internal use
 Accounting for
the Impairment or Disposal of Long-Lived Assets
 Software-licensing and resale
  Acquired contracts and other
  35




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Allowance for doubtful accounts
  Income Taxes
    Stock-based Compensation
  Disposition of ATM Portfolio
  36




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Revenue
Arrangements with Multiple Deliverables
 Recent Accounting Pronouncements
 Transition Election Relating to Accounting for the Tax Effects of Share-Based Payment
Awards
 How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in
the Income Statement (That is, Gross versus Net Presentation).
 Accounting for Uncertainty in
Income Taxesan interpretation of FASB Statement No. 109
 37




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Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 Fair Value Measurements
 FORWARD LOOKING STATEMENTS
  Business Outlook for 2007
   
    An effective tax rate of approximately 35 percent for 2007;
    Cash outlays for capital expenditures and product development activities will be somewhat
higher than the amounts disbursed in 2006.
 
    38




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39




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Report of Independent Registered Public Accounting Firm
 
    Share-Based Payment
  
 40




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Report of Independent Registered Public Accounting Firm
 
      41




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42




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\

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 EFUNDS CORPORATION
CONSOLIDATED BALANCE SHEETS
 December 31,(dollars in thousands)
    
    2006
    
    
    2005(revised)Current assets:Cash and cash equivalents
    
    $
    126,740
    
    
    $
    85,987Short-term investments
    
    
    7,000
    
    
    
    Restricted cash
    
    
    3,730
    
    
    
    28,183Settlement assets
    
    
    58,328
    
    
    
    28,438Accounts receivable  net
    
    
    107,188
    
    
    
    96,115Deferred income taxes
    
    
    12,781
    
    
    
    27,422Prepaid expenses and other current assets
    
    
    26,115
    
    
    
    18,341Total current assets
    
    
    341,882
    
    
    
    284,486Property and equipment  net
    
    
    60,145
    
    
    
    63,721Long-term deferred income taxes
    
    
    877
    
    
    
    Intangibles:Goodwill
    
    
    271,735
    
    
    
    267,185Other intangible assets
    
    
    124,050
    
    
    
    131,152Total intangibles  net
    
    
    395,785
    
    
    
    398,337Other non-current assets
    
    
    25,849
    
    
    
    17,638Total non-current assets
    
    
    482,656
    
    
    
    479,696Total assets
    
    $
    824,538
    
    
    $
    764,182Current liabilities:Accounts payable
    
    $
    24,021
    
    
    $
    23,902Settlement liabilities
    
    
    54,792
    
    
    
    28,519Accrued compensation and employee benefits
    
    
    14,614
    
    
    
    27,800Accrued income taxes
    
    
    13,715
    
    
    
    12,794Deferred revenue and gains
    
    
    22,052
    
    
    
    23,978Restructuring accruals
    
    
    2,744
    
    
    
    1,954Acquisition holdbacks and earn-outs
    
    
    6,053
    
    
    
    25,052Other
    
    
    19,504
    
    
    
    13,463Long-term debt due within one year
    
    
    4,438
    
    
    
    5,030Total current liabilities
    
    
    161,933
    
    
    
    162,492Long-term deferred gains
    
    
    18,078
    
    
    
    27,637Long-term debt
    
    
    102,656
    
    
    
    106,973Deferred income taxes
    
    
    
    
    
    
    4,716Other long-term liabilities
    
    
    7,345
    
    
    
    10,765Total liabilities
    
    
    290,012
    
    
    
    312,583Commitments and contingencies (Notes 3, 9, 12 and 13)
Stockholders equity:Preferred stock $.01 par value; 100,000,000 shares
authorized; no shares issued and outstanding
    
    
    
    
    
    
    Common stock
$.01 par value (authorized: 250,000,000 shares; 51,684,486 shares issued and 47,093,243 share
outstanding at December 31, 2006 and 50,529,045 shares issued
and 45,937,802 share outstanding at December 31, 2005
    
    
    517
    
    
    
    505Additional paid-in capital
    
    
    524,980
    
    
    
    498,939Treasury stock at cost (4,591,243 shares at December 31, 2006
and December 31, 2005)
    
    
    (100,000
    )
    
    
    (100,000
    )Retained earnings
    
    
    105,690
    
    
    
    51,144Accumulated other comprehensive income
    
    
    3,339
    
    
    
    1,011Stockholders equity
    
    
    534,526
    
    
    
    451,599Total liabilities and stockholders equity
    
    $
    824,538
    
    
    $
    764,182
  43




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EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
 Year Ended December 31,(in thousands, except per share amounts)
    
    2006
    
    
    2005
    
    
    2004(revised)
    
    
    (revised)Net revenue
    
    $
    552,414
    
    
    $
    501,708
    
    
    $
    552,148Operating expenses:Processing, communication and service costs
    
    
    138,156
    
    
    
    120,396
    
    
    
    217,736Employee costs
    
    
    214,697
    
    
    
    215,625
    
    
    
    195,174Depreciation and amortization
    
    
    47,732
    
    
    
    39,782
    
    
    
    36,201Other operating costs
    
    
    68,588
    
    
    
    58,584
    
    
    
    46,325Restructuring and other charges
    
    
    
    
    
    
    
    
    
    
    3,093Contract loss provision
    
    
    
    
    
    
    
    
    
    
    501Total operating expenses
    
    
    469,173
    
    
    
    434,387
    
    
    
    499,030Income from operations
    
    
    83,241
    
    
    
    67,321
    
    
    
    53,118Interest expense
    
    
    (6,449
    )
    
    
    (4,258
    )
    
    
    (426
    )Other income  net
    
    
    3,586
    
    
    
    4,680
    
    
    
    208Income before income taxes
    
    
    80,378
    
    
    
    67,743
    
    
    
    52,900Provision for income taxes
    
    
    (25,832
    )
    
    
    (17,331
    )
    
    
    (15,870
    )Net income
    
    $
    54,546
    
    
    $
    50,412
    
    
    $
    37,030Weighted average shares outstanding:Basic
    
    
    46,561
    
    
    
    46,508
    
    
    
    48,201Diluted
    
    
    47,420
    
    
    
    47,755
    
    
    
    49,405Net income per share:Basic
    
    $
    1.17
    
    
    $
    1.08
    
    
    $
    0.77Diluted
    
    $
    1.15
    
    
    $
    1.06
    
    
    $
    0.75
  44




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EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Year Ended December 31,(in thousands)
    
    2006
    
    
    2005
    
    
    2004(revised)
    
    
    (revised)Net income
    
    $
    54,546
    
    
    $
    50,412
    
    
    $
    37,030Other comprehensive income:Foreign currency translation adjustments
    
    
    2,328
    
    
    
    (2,296
    )
    
    
    3,375Derivative fair value adjustment
    
    
    
    
    
    
    (348
    )
    
    
    Comprehensive income
    
    $
    56,874
    
    
    $
    47,768
    
    
    $
    40,405
  45




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EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 RetainedAdditional
    
    
    
    
    
    
    earnings
    
    
    Accumulated
    
    
    Totalpaid-in
    
    
    
    
    
    
    (accumulated
    
    
    other
    
    
    StockholdersCommon Stock
    
    
    capital
    
    
    Treasury stock
    
    
    deficit)
    
    
    comprehensive
    
    
    equity(in thousands)
    
    Shares
    
    
    Amount
    
    
    (revised)
    
    
    at cost
    
    
    (revised)
    
    
    income (loss)
    
    
    (revised)Balance, December 31, 2003
    
    
    47,300
    
    
    
    473
    
    
    
    442,453
    
    
    
    
    
    
    
    (36,298
    )
    
    
    280
    
    
    
    406,908Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,030
    
    
    
    
    
    
    
    37,030Stock Options
    
    
    1,879
    
    
    
    19
    
    
    
    29,669
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,688Restricted stock units
    
    
    29
    
    
    
    
    
    
    
    323
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323Proceeds from employee stock purchase plan
    
    
    97
    
    
    
    1
    
    
    
    1,431
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,432Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,375
    
    
    
    3,375Balance, December 31, 2004
    
    
    49,305
    
    
    
    493
    
    
    
    473,876
    
    
    
    
    
    
    
    732
    
    
    
    3,655
    
    
    
    478,756Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,412
    
    
    
    
    
    
    
    50,412Stock Options
    
    
    1,084
    
    
    
    11
    
    
    
    22,892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,903Restricted stock units
    
    
    40
    
    
    
    
    
    
    
    438
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    438Repurchase of stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100,000
    )
    
    
    
    
    
    
    
    
    
    
    (100,000
    )Proceeds from employee stock purchase plan
    
    
    100
    
    
    
    1
    
    
    
    1,733
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,734Change in fair value of settled derivative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (348
    )
    
    
    (348
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,296
    )
    
    
    (2,296
    )Balance, December 31, 2005
    
    
    50,529
    
    
    
    505
    
    
    
    498,939
    
    
    
    (100,000
    )
    
    
    51,144
    
    
    
    1,011
    
    
    
    451,599Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,546
    
    
    
    
    
    
    
    54,546Stock options
    
    
    991
    
    
    
    10
    
    
    
    22,922
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,932Restricted stock units
    
    
    48
    
    
    
    1
    
    
    
    851
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    852Proceeds from employee stock purchase plan
    
    
    116
    
    
    
    1
    
    
    
    2,268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,269Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,328
    
    
    
    2,328Balance, December 31, 2006
    
    
    51,684
    
    
    $
    517
    
    
    $
    524,980
    
    
    $
    (100,000
    )
    
    $
    105,690
    
    
    $
    3,339
    
    
    $
    534,526
  46




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EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,(in thousands)
    
    2006
    
    
    2005
    
    
    2004(revised)
    
    
    (revised)Cash flows from operating activities:Net income
    
    $
    54,546
    
    
    $
    50,412
    
    
    $
    37,030Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    17,348
    
    
    
    16,241
    
    
    
    14,689Amortization
    
    
    30,384
    
    
    
    23,541
    
    
    
    21,512Stock-based compensation
    
    
    9,140
    
    
    
    9,768
    
    
    
    6,181Excess tax benefits from share-based compensation
    
    
    (2,288
    )
    
    
    (1,771
    )
    
    
    (1,437
    )Deferred income taxes
    
    
    18,436
    
    
    
    5,089
    
    
    
    (26,267
    )Other
    
    
    294
    
    
    
    (206
    )
    
    
    1,270Changes in assets and liabilities, net of effects from acquisitions and
dispositions:Restricted custodial cash
    
    
    1,956
    
    
    
    3,289
    
    
    
    1,776Accounts receivable
    
    
    (11,267
    )
    
    
    (8,572
    )
    
    
    (13,801
    )Accounts payable
    
    
    110
    
    
    
    (10,329
    )
    
    
    (1,999
    )Accrued compensation and employee benefits
    
    
    (14,605
    )
    
    
    487
    
    
    
    7,944Income taxes receivable/payable
    
    
    3,933
    
    
    
    (26,363
    )
    
    
    26,883Accrued contract losses
    
    
    
    
    
    
    (1,162
    )
    
    
    (1,230
    )Deferred revenue and gains
    
    
    (11,218
    )
    
    
    (9,267
    )
    
    
    (1,423
    )Other assets and liabilities
    
    
    (21,685
    )
    
    
    (8,514
    )
    
    
    (2,969
    )Net cash provided by operating activities
    
    
    75,084
    
    
    
    42,643
    
    
    
    68,159Cash flows from investing activities:Capital expenditures
    
    
    (36,734
    )
    
    
    (29,406
    )
    
    
    (28,651
    )Payments for acquisitions and investments, net of cash acquired
    
    
    
    
    
    
    (288,039
    )
    
    
    (6,079
    )Proceeds from sale of NDVS portfolio
    
    
    2,356
    
    
    
    
    
    
    
    Proceeds from sale of ATM portfolio
    
    
    
    
    
    
    
    
    
    
    152,056Purchases of short-term investments
    
    
    (24,600
    )
    
    
    (98,925
    )
    
    
    (103,135
    )Proceeds from sale of short-term investments
    
    
    17,600
    
    
    
    187,065
    
    
    
    68,645Other
    
    
    (6,332
    )
    
    
    (7,095
    )
    
    
    (712
    )Net cash (used in) provided by investing activities
    
    
    (47,710
    )
    
    
    (236,400
    )
    
    
    82,124Cash flows from financing activities:Purchase of common stock
    
    
    
    
    
    
    (100,000
    )
    
    
    Proceeds from exercise of stock options and employee stock purchase plan
    
    
    15,907
    
    
    
    14,999
    
    
    
    24,668Excess tax benefits from share-based compensation
    
    
    2,288
    
    
    
    1,771
    
    
    
    1,437Proceeds from long-term debt
    
    
    92,062
    
    
    
    295,110
    
    
    
    Payments on long-term debt
    
    
    (96,990
    )
    
    
    (206,265
    )
    
    
    (6,367
    )Other
    
    
    112
    
    
    
    (348
    )
    
    
    Net cash provided by financing activities
    
    
    13,379
    
    
    
    5,267
    
    
    
    19,738Net increase (decrease) in cash and cash equivalents
    
    
    40,753
    
    
    
    (188,490
    )
    
    
    170,021Cash and cash equivalents at beginning of period
    
    
    85,987
    
    
    
    274,477
    
    
    
    104,456Cash and cash equivalents at end of period
    
    $
    126,740
    
    
    $
    85,987
    
    
    $
    274,477Supplemental cash flow dataCash paid during the year for:Interest
    
    $
    6,478
    
    
    $
    2,619
    
    
    $
    548Income taxes
    
    
    2,437
    
    
    
    36,124
    
    
    
    16,268Noncash investing and financing activities:Purchase of assets under capital lease obligations
    
    $
    215
    
    
    $
    6,325
    
    
    $
    5,524
  47




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EFUNDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
    -
    
    US Payments-
    
    US Risk Management-
    
    International
    Consolidation
  Use of estimates
  -
    
    estimates involved in evaluating the appropriateness of revenue recognition involve
judgments about vendor specific objective evidence of fair value, collectibility of fees and
projections of costs to complete projects for our customers.;
 48




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-
    
    estimates of the fair value of the Companys reporting segments that are used to
determine whether the goodwill recorded in respect of these segments has been impaired;-
    
    estimates of the fair value and estimated costs of disposal of assets held for sale and their related liabilities;-
    
    estimates of the useful lives and residual values of property and equipment;-
    
    estimates of the fair value of intangible assets;-
    
    estimates of the fair value of stock options granted to employees;-
    
    estimates surrounding contract performance variables when determining whether a long-term
service contract is in a loss position; and-
    
    estimates regarding the likelihood and the extent to which the benefits associated with
deferred tax assets will be realized.
 Cash and cash equivalents
  Short-term investments
  Restricted cash
  Settlement assets and liabilities
  Accounts receivable
  49




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##### Table of Contents



Property and equipment
 Accounting for the Impairment or Disposal of Long-Lived Assets
  (in thousands)
    
    2006
    
    
    2005Land and improvements
    
    $
    3,070
    
    
    $
    3,070Buildings and improvements
    
    
    35,736
    
    
    
    35,094Machinery and equipment
    
    
    40,866
    
    
    
    33,641Computer equipment
    
    
    113,283
    
    
    
    106,455Total property and equipment
    
    
    192,955
    
    
    
    178,260Accumulated depreciation and amortization
    
    
    (132,810
    )
    
    
    (114,539
    )Property and equipment  net
    
    $
    60,145
    
    
    $
    63,721
 Intangible assets goodwill
  Goodwill and Other Intangible Assets
 Fair value of financial instruments
  Derivative instruments
 Accounting for Derivative Instruments and Hedging Activities, as
amended
   50




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Accrued contract losses
  Income taxes
   Revenue recognition
  Software Revenue
Recognition Revenue Arrangements with Multiple Deliverables
 51




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##### Table of Contents



Transaction processing and related services
  Prepaid solutions
  Software licensing and related services
   52




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##### Table of Contents



Year Ended December 31,(in thousands)
    
    2006
    
    
    2005
    
    
    2004License fees
    
    $
    12,650
    
    
    $
    5,633
    
    
    $
    7,026Maintenance
    
    
    20,347
    
    
    
    20,642
    
    
    
    21,496Software services
    
    
    10,285
    
    
    
    9,001
    
    
    
    7,146$
    43,282
    
    
    $
    35,276
    
    
    $
    35,668
 Risk management services
  Business process outsourcing and information technology consulting services
  Employee stock-based compensation
 Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees.
 Transition Election Relating to Accounting for the Tax Effects of Share-Based Payment
Awards
  53




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December 31, 2005(in thousands)
    
    
    
    
    
    Share-basedSelected Balance Sheet Data:
    
    As Reported
    
    Compensation (pre-tax)
    
    As RevisedLong-term deferred income tax liability
    
    $
    10,521
    
    
    $
    (5,805
    )
    
    $
    4,716Additional paid-in capital
    
    
    465,304
    
    
    
    33,635
    
    
    
    498,939Retained earnings
    
    
    78,974
    
    
    
    (27,830
    )
    
    
    51,144
 Year Ended December 31, 2005(in thousands, except per share data)
    
    
    
    
    
    Share-basedSelected Income Statement Data:
    
    As Reported
    
    Compensation
    
    As RevisedNet income
    
    $
    55,743
    
    
    $
    (5,331
    )
    
    $
    50,412Basic earnings per share
    
    
    1.20
    
    
    
    (0.12
    )
    
    
    1.08Diluted earnings per share
    
    
    1.17
    
    
    
    (0.11
    )
    
    
    1.06
 Year Ended December 31, 2004(in thousands, except per share data)
    
    
    
    
    
    Share-basedSelected Income Statement Data:
    
    As Reported
    
    Compensation
    
    As RevisedNet income
    
    $
    40,818
    
    
    $
    (3,788
    )
    
    $
    37,030Basic earnings per share
    
    
    0.85
    
    
    
    (0.08
    )
    
    
    0.77Diluted earnings per share
    
    
    0.83
    
    
    
    (0.08
    )
    
    
    0.75
   2006
    
    2005
    
    2004Expected volatility
    
    
    34.9
    %
    
    
    36.1
    %
    
    
    38.6
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate
    
    
    4.5
    %
    
    
    4.0
    %
    
    
    3.5
    %Expected term
    
    5 years
    
    7 years
    
    7 yearsWeighted average fair value at grant date
    
    $
    9.21
    
    
    $
    9.10
    
    
    $
    7.86
  Translation adjustments
  54




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Comprehensive income
  Recent accounting pronouncements
 How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in
the Income Statement (That is, Gross versus Net Presentation).
 Accounting for Uncertainty in
Income Taxesan interpretation of FASB Statement No. 109
 Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 Fair Value Measurements
 Reclassifications
 Share Based Payments
  Acquisitions during the years ended 2004
  55




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Acquisitions during the year ended December 31, 2005
     Wtd. Avg.(dollars in thousands)
    
    Amount
    
    
    Useful LivesCurrent assets
    
    $
    2,919Non-current assets
    
    
    9,014Intangible assets:Customer relationships
    
    
    12,402
    
    
    9 yearsDeveloped technology
    
    
    4,740
    
    
    4 yearsDatabase
    
    
    2,600
    
    
    10 yearsOther
    
    
    1,247
    
    
    3 yearsGoodwill
    
    
    32,753Total assets acquired
    
    
    65,675Current liabilities
    
    
    10,965Long-term liabilities
    
    
    112Net assets acquired
    
    $
    54,598
   56




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Wtd. Avg.(dollars in thousands)
    
    Amount
    
    
    Useful LivesCash and cash equivalents
    
    $
    2,968Accounts receivable
    
    
    12,102Other current assets
    
    
    12,557Non-current assets
    
    
    13,992Intangible assets:Customer relationships
    
    
    51,450
    
    
    10 yearsInternally developed software
    
    
    7,105
    
    
    3 yearsDeveloped technology
    
    
    7,100
    
    
    5 yearsGoodwill
    
    
    174,741Total assets acquired
    
    
    282,015Accounts payable
    
    
    5,384Other current liabilities
    
    
    21,424Long-term liabilities
    
    
    19,952Net assets acquired
    
    $
    235,255
  (unaudited)Year Ended December 31,2005
    
    2004(in thousands, except per share amounts)
    
    (revised1)
    
    (revised1)Net revenue
    
    $
    533,991
    
    
    $
    608,607Net income
    
    
    42,357
    
    
    
    24,173Net income per share:Basic
    
    $
    0.91
    
    
    $
    0.50Diluted
    
    $
    0.89
    
    
    $
    0.49
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.  57




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Revenue Arrangements with Multiple Deliverables
  58




---



##### Table of Contents



(unaudited)2004(in thousands, except per share amounts)
    
    (revised1)Net revenue
    
    $
    430,829Net income
    
    
    29,698Net income per share:Basic
    
    $
    0.62Diluted
    
    $
    0.60
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.   Goodwill
   US
    
    
    US Risk(in thousands)
    
    Payments
    
    
    Management
    
    
    International
    
    
    Other
    
    
    TotalBalance as of January 1, 2005
    
    $
    17,579
    
    
    $
    20,837
    
    
    $
    10,896
    
    
    $
    9,950
    
    
    $
    59,262Net goodwill acquired during year
    
    
    163,356
    
    
    
    22,588
    
    
    
    21,467
    
    
    
    512
    
    
    
    207,923Balance as of December 31, 2005
    
    
    180,935
    
    
    
    43,425
    
    
    
    32,363
    
    
    
    10,462
    
    
    
    267,185Net goodwill acquired and/or
adjusted during year
    
    
    (2,394
    )
    
    
    3,128
    
    
    
    3,638
    
    
    
    178
    
    
    
    4,550Balance as of December 31, 2006
    
    $
    178,541
    
    
    $
    46,553
    
    
    $
    36,001
    
    
    $
    10,640
    
    
    $
    271,735
 Software-internal use
  Software-licensing and resale
  59




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##### Table of Contents



Acquired contracts and other
    Wtd. Avg.
    
    
    December 31, 2006
    
    
    December 31, 2005Amort.
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    GrossPeriod
    
    
    Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    Accumulated(dollars in thousands)
    
    In Years
    
    
    Amounts
    
    
    Amortization
    
    
    Net
    
    
    Amounts
    
    
    Amortization
    
    
    NetSoftware-internal use
    
    
    4
    
    
    $
    140,336
    
    
    $
    (103,136
    )
    
    $
    37,200
    
    
    $
    124,478
    
    
    $
    (87,071
    )
    
    $
    37,407Software-licensing
and resale
    
    
    5
    
    
    
    71,849
    
    
    
    (50,113
    )
    
    
    21,736
    
    
    
    64,325
    
    
    
    (45,218
    )
    
    
    19,107Acquired contracts
and other
    
    
    8
    
    
    
    102,674
    
    
    
    (37,560
    )
    
    
    65,114
    
    
    
    102,757
    
    
    
    (28,119
    )
    
    
    74,638$
    314,859
    
    
    $
    (190,809
    )
    
    $
    124,050
    
    
    $
    291,560
    
    
    $
    (160,408
    )
    
    $
    131,152
    Long-lived assets to be held and used
  60




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Restructuring accruals
    Severance
    
    
    Lease Related(in thousands)
    
    Related
    
    
    Cost & Other
    
    
    TotalBalance at December 31, 2003
    
    $
    1,568
    
    
    $
    2,786
    
    
    $
    4,354Expense provision
    
    
    3,093
    
    
    
    
    
    
    
    3,093Cash payments
    
    
    (2,197
    )
    
    
    (844
    )
    
    
    (3,041
    )Balance at December 31, 2004
    
    
    2,464
    
    
    
    1,942
    
    
    
    4,406Cash payments
    
    
    (1,546
    )
    
    
    (796
    )
    
    
    (2,342
    )Balance at December 31, 2005
    
    
    918
    
    
    
    1,146
    
    
    
    2,064Expense provision
    
    
    
    
    
    
    196
    
    
    
    196Reversal of severance-related provision
    
    
    (482
    )
    
    
    
    
    
    
    (482
    )Cash payments
    
    
    (363
    )
    
    
    (564
    )
    
    
    (927
    )Balance at December 31, 2006
    
    $
    73
    
    
    $
    778
    
    
    $
    851
 Acquisition exit activities
  Severance
    
    
    Lease-Related(in thousands)
    
    Related
    
    
    Costs & Other
    
    
    TotalBalance at December 31, 2004
    
    $
    
    
    
    $
    
    
    
    $
    Initial accrual
    
    
    200
    
    
    
    2,623
    
    
    
    2,823Cash payments
    
    
    
    
    
    
    (179
    )
    
    
    (179
    )Balance at December 31, 2005
    
    
    200
    
    
    
    2,444
    
    
    
    2,644Additional accrual
    
    
    1,512
    
    
    
    2,783
    
    
    
    4,295Cash payments
    
    
    (643
    )
    
    
    (485
    )
    
    
    (1,128
    )Balance at December 31, 2006
    
    $
    1,069
    
    
    $
    4,742
    
    
    $
    5,811
   Year Ended December 31,(in thousands)
    
    2006
    
    
    2005
    
    
    2004(revised1)
    
    
    (revised1)Domestic
    
    $
    67,042
    
    
    $
    54,442
    
    
    $
    47,314Foreign
    
    
    13,336
    
    
    
    13,301
    
    
    
    5,586Total
    
    $
    80,378
    
    
    $
    67,743
    
    
    $
    52,900
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R. 61




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Year Ended December 31,(in thousands)
    
    2006
    
    
    2005
    
    
    2004(revised1)
    
    
    (revised1)Current tax provisionFederal
    
    $
    (3,471
    )
    
    $
    (12,966
    )
    
    $
    (37,679
    )Foreign
    
    
    (2,232
    )
    
    
    (59
    )
    
    
    (824
    )State
    
    
    (1,166
    )
    
    
    (548
    )
    
    
    (5,952
    )Total
    
    
    (6,869
    )
    
    
    (13,573
    )
    
    
    (44,455
    )Deferred tax (provision) benefitFederal
    
    
    (19,064
    )
    
    
    (3,712
    )
    
    
    24,946Foreign
    
    
    1,036
    
    
    
    421
    
    
    
    423State
    
    
    (935
    )
    
    
    (467
    )
    
    
    3,216Total
    
    $
    (25,832
    )
    
    $
    (17,331
    )
    
    $
    (15,870
    )
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.  Year Ended December 31,(in thousands)
    
    2006
    
    
    2005
    
    
    2004(revised1)
    
    
    (revised1)Income tax at Federal statutory rate
    
    $
    (28,132
    )
    
    $
    (23,710
    )
    
    $
    (18,515
    )State income taxes net of Federal income tax benefit
    
    
    (1,365
    )
    
    
    (725
    )
    
    
    (1,873
    )Difference between Federal statutory rate and
foreign tax rate
    
    
    2,058
    
    
    
    2,810
    
    
    
    2,416Resolution of tax contingencies
    
    
    
    
    
    
    4,200
    
    
    
    Extraterritorial income exclusion
    
    
    
    
    
    
    
    
    
    
    265Other
    
    
    1,607
    
    
    
    94
    
    
    
    1,837Provision for income taxes
    
    $
    (25,832
    )
    
    $
    (17,331
    )
    
    $
    (15,870
    )
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.  Year Ended December 31,(in thousands)
    
    2006
    
    
    2005(revised1)Deferred income tax assets:Net operating loss carryforwards
    
    $
    26,214
    
    
    $
    22,008Restructuring and other accruals
    
    
    3,060
    
    
    
    2,020Property and equipment
    
    
    894
    
    
    
    Stock based compensation
    
    
    6,075
    
    
    
    5,805Employee benefit and incentive plans
    
    
    5,169
    
    
    
    9,062Deferred revenue
    
    
    14,434
    
    
    
    17,581All other
    
    
    1,399
    
    
    
    1,93657,245
    
    
    
    58,412Valuation allowance
    
    
    (10,059
    )
    
    
    (9,128
    )Deferred income tax assets
    
    $
    47,186
    
    
    $
    49,284Deferred income tax liabilities:Intangibles
    
    
    31,320
    
    
    
    25,189Prepaid expenses
    
    
    2,196
    
    
    
    1,307Property and equipment
    
    
    
    
    
    
    82All other
    
    
    12
    
    
    
    Deferred income tax liabilities
    
    
    33,528
    
    
    
    26,578Net deferred income tax assets
    
    $
    13,658
    
    
    $
    22,706Amount included in:Current assets
    
    $
    12,781
    
    
    $
    27,422Non-current assets
    
    
    877
    
    
    
    Non-current liabilities
    
    
    
    
    
    
    (4,716
    )$
    13,658
    
    
    $
    22,706
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.   62




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##### Table of Contents



(in thousands)
    
    Federal
    
    
    State
    
    
    Total2007-2009
    
    $
    
    
    
    $
    242
    
    
    $
    2422010-2014
    
    
    
    
    
    
    65,607
    
    
    
    65,6072015
    
    
    
    
    
    
    
    
    
    
    2016
    
    
    
    
    
    
    2,996
    
    
    
    2,9962017
    
    
    1,193
    
    
    
    19,727
    
    
    
    20,9202018
    
    
    
    
    
    
    1,085
    
    
    
    1,0852019
    
    
    
    
    
    
    11,929
    
    
    
    11,9292020
    
    
    
    
    
    
    14,733
    
    
    
    14,7332021
    
    
    4,129
    
    
    
    5,740
    
    
    
    9,8692022
    
    
    1,678
    
    
    
    2,749
    
    
    
    4,4272023
    
    
    4,852
    
    
    
    4,885
    
    
    
    9,7372024
    
    
    34,305
    
    
    
    33,988
    
    
    
    68,2932025
    
    
    
    
    
    
    221
    
    
    
    221Total
    
    $
    46,157
    
    
    $
    163,902
    
    
    $
    210,059
     Stock purchase plan
  Stock incentive plans
  63




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##### Table of Contents



64




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##### Table of Contents



Year Ended December 31,2006
    
    2005
    
    2004Wtd. Avg.
    
    
    
    
    
    Wtd. Avg.
    
    
    
    
    
    Wtd. Avg.Exercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOptions outstanding at beginning of year
    
    
    3,828,498
    
    
    $
    15.53
    
    
    
    3,885,927
    
    
    $
    12.88
    
    
    
    5,221,872
    
    
    $
    12.09Options granted
    
    
    1,036,816
    
    
    
    24.55
    
    
    
    1,517,465
    
    
    
    20.35
    
    
    
    912,045
    
    
    
    16.52Options exercised
    
    
    (989,271
    )
    
    
    13.44
    
    
    
    (1,083,731
    )
    
    
    12.42
    
    
    
    (1,878,914
    )
    
    
    12.39Options cancelled
    
    
    (567,235
    )
    
    
    20.05
    
    
    
    (491,163
    )
    
    
    16.67
    
    
    
    (369,076
    )
    
    
    13.14Options outstanding at end of year
    
    
    3,308,808
    
    
    
    18.17
    
    
    
    3,828,498
    
    
    
    15.53
    
    
    
    3,885,927
    
    
    
    12.88Options exercisable
    
    
    1,604,456
    
    
    
    13.96
    
    
    
    1,806,297
    
    
    
    12.27
    
    
    
    2,358,946
    
    
    
    12.53
   Ranges of
    
    Options
    
    Wtd. Avg.
    
    Wtd. Avg.
    
    Options
    
    Wtd. Avg.Exercise Prices
    
    Outstanding
    
    Remaining Life
    
    Exercise Price
    
    Exercisable
    
    Exercise Price$6.19-$12.87
    
    
    595,875
    
    
    
    5.7
    
    
    $
    8.92
    
    
    
    595,875
    
    
    $
    8.92$12.88-$15.99
    
    
    336,457
    
    
    
    3.9
    
    
    
    13.56
    
    
    
    334,744
    
    
    
    13.55$16.00-$17.75
    
    
    547,627
    
    
    
    6.5
    
    
    
    16.48
    
    
    
    371,433
    
    
    
    16.52$17.76-$22.95
    
    
    1,010,235
    
    
    
    8.1
    
    
    
    20.75
    
    
    
    284,999
    
    
    
    21.00$22.95-$25.41
    
    
    818,614
    
    
    
    9.0
    
    
    
    24.76
    
    
    
    17,405
    
    
    
    24.063,308,808
    
    
    
    
    
    
    
    
    
    
    
    1,604,456
  Nonvested
    
    Wtd. Avg. GrantShares
    
    Date Fair ValueNonvested shares at December 31, 2005
    
    
    302,967
    
    
    $
    19.18Granted
    
    
    141,219
    
    
    
    23.87Vested
    
    
    (80,114
    )
    
    
    17.68Forfeited
    
    
    (74,731
    )
    
    
    20.38Non-vested shares at December 31, 2006
    
    
    289,341
    
    
    
    21.16
  Profit sharing, defined contribution and 401(k) plans
   65




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##### Table of Contents



December 31,(in thousands)
    
    2006
    
    
    20055.39% Senior Notes due 2012
    
    $
    100,000
    
    
    $
    100,000Capital leases and other
    
    
    7,094
    
    
    
    12,003Less capital lease and other amounts due within one year
    
    
    (4,438
    )
    
    
    (5,030
    )Total
    
    $
    102,656
    
    
    $
    106,973
    66




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##### Table of Contents



Year Ended December 31,(in thousands, except per share amounts)
    
    2006
    
    
    2005
    
    
    2004(revised1)
    
    
    (revised1)Net income per share  basicNet income
    
    $
    54,546
    
    
    $
    50,412
    
    
    $
    37,030Weighted average shares outstanding
    
    
    46,561
    
    
    
    46,508
    
    
    
    48,201Net income per share  basic
    
    $
    1.17
    
    
    $
    1.08
    
    
    $
    0.77Net income per share  dilutedNet income
    
    $
    54,546
    
    
    $
    50,412
    
    
    $
    37,030Weighted average shares outstanding
    
    
    46,561
    
    
    
    46,508
    
    
    
    48,201Dilutive impact of options
    
    
    859
    
    
    
    1,247
    
    
    
    1,204Weighted average shares and potential
dilutive shares outstanding
    
    
    47,420
    
    
    
    47,755
    
    
    
    49,405Net income per share  diluted
    
    $
    1.15
    
    
    $
    1.06
    
    
    $
    0.75
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.      -
    
    Processing electronic payment transactions including electronic funds transfers (EFT),
automated clearinghouse (ACH) and other payment processing services;-
    
    processing and other activities associated with prepaid cards (such as payroll cards and
gift cards) following the acquisition of the Companys prepaid solutions business in July
2005;-
    
    providing electronic benefit transfer (EBT) services to government agencies; and-
    
    licensing, maintaining and supporting EFT software and providing ATM management services
and other business process outsourcing (BPO) services related to payment transactions.
 67




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##### Table of Contents



Year Ended
    
    
    Year Ended(in thousands)
    
    December 31, 2006
    
    
    December 31, 2005(revised1)Net revenue:US Payments
    
    $
    292,453
    
    
    $
    260,661US Risk Management
    
    
    189,104
    
    
    
    188,601International
    
    
    70,857
    
    
    
    52,446Total net revenue
    
    
    552,414
    
    
    
    501,708Operating expenses before overhead:US Payments
    
    
    240,530
    
    
    
    207,311US Risk Management
    
    
    107,186
    
    
    
    121,210International
    
    
    65,243
    
    
    
    50,586Total operating expenses before overhead
    
    
    412,959
    
    
    
    379,107Allocated overhead:US Payments
    
    
    14,266
    
    
    
    16,207US Risk Management
    
    
    13,883
    
    
    
    12,921International
    
    
    8,487
    
    
    
    5,945Corporate
    
    
    19,578
    
    
    
    20,207Total allocated overhead
    
    
    56,214
    
    
    
    55,280Income (loss) from operations:US Payments
    
    
    37,657
    
    
    
    37,143US Risk Management
    
    
    68,035
    
    
    
    54,470International
    
    
    (2,873
    )
    
    
    (4,085
    )Corporate
    
    
    (19,578
    )
    
    
    (20,207
    )Income from operations
    
    $
    83,241
    
    
    $
    67,321
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.  68




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##### Table of Contents



Year Ended
    
    
    Year Ended(in thousands)
    
    December 31, 2005
    
    
    December 31, 2004(2005 Presentation)
    
    
    (2005 Presentation)(revised2)
    
    
    (revised2)Net revenue:Electronic payments
    
    $
    254,846
    
    
    $
    203,609Risk management
    
    
    158,272
    
    
    
    140,099Global outsourcing
    
    
    88,590
    
    
    
    87,121ATM management1
    
    
    
    
    
    
    121,319Total net revenue
    
    
    501,708
    
    
    
    552,148Operating expenses before
overhead, restructuring,
other charges and contract
loss provision:Electronic payments
    
    
    219,857
    
    
    
    165,584Risk management
    
    
    92,954
    
    
    
    82,992Global outsourcing
    
    
    65,621
    
    
    
    63,517ATM management1
    
    
    
    
    
    
    115,064Total operating expenses
before overhead,
restructuring, other
charges and contract loss
provision
    
    
    378,432
    
    
    
    427,157Allocated overhead:Electronic payments
    
    
    14,542
    
    
    
    11,396Risk management
    
    
    10,341
    
    
    
    9,952Global outsourcing
    
    
    10,947
    
    
    
    7,936ATM management1
    
    
    
    
    
    
    8,198Corporate
    
    
    20,125
    
    
    
    30,797Total allocated overhead
    
    
    55,955
    
    
    
    68,279Restructuring, other charges
and contract loss provision
(reversal):Electronic payments
    
    
    
    
    
    
    1,540Risk management
    
    
    
    
    
    
    355Global outsourcing
    
    
    
    
    
    
    1,103ATM management1
    
    
    
    
    
    
    371Corporate
    
    
    
    
    
    
    225Total restructuring, other
charges and contract loss
provision (reversal)
    
    
    
    
    
    
    3,594Income (loss) from operations:Electronic payments
    
    
    20,447
    
    
    
    25,089Risk management
    
    
    54,977
    
    
    
    46,800Global outsourcing
    
    
    12,022
    
    
    
    14,565ATM management1
    
    
    
    
    
    
    (2,314
    )Corporate
    
    
    (20,125
    )
    
    
    (31,022
    )Income from operations
    
    $
    67,321
    
    
    $
    53,118
 
 1
    
    See Note 4.2
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.   Year Ended December 31,in thousands)
    
    2006
    
    
    2005Depreciation and amortization:US payments
    
    $
    26,927
    
    
    $
    19,134US Risk management
    
    
    10,677
    
    
    
    13,657International
    
    
    8,675
    
    
    
    5,822Corporate
    
    
    1,453
    
    
    
    1,169Total depreciation and amortization
    
    $
    47,732
    
    
    $
    39,782
 69




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##### Table of Contents



Year Ended December 31,(in thousands)
    
    2006
    
    
    2005Stock based employee compensation:US Payments
    
    $
    2,334
    
    
    $
    2,662US Risk Management
    
    
    1,617
    
    
    
    2,065International
    
    
    1,126
    
    
    
    1,083Corporate
    
    
    1,786
    
    
    
    2,104Total stock based employee compensation
    
    $
    6,863
    
    
    $
    7,914
  Year Ended December 31,(in thousands)
    
    2006
    
    
    2005
    
    
    2004United States
    
    $
    481,557
    
    
    $
    449,262
    
    
    $
    494,998EMEA
    
    
    47,016
    
    
    
    35,385
    
    
    
    31,668India
    
    
    10,695
    
    
    
    5,078
    
    
    
    1,794Canada
    
    
    7,594
    
    
    
    6,855
    
    
    
    19,359Latin America
    
    
    4,354
    
    
    
    4,401
    
    
    
    3,857Asia
    
    
    1,198
    
    
    
    727
    
    
    
    472Total consolidated
    
    $
    552,414
    
    
    $
    501,708
    
    
    $
    552,148
  December 31,(in thousands)
    
    2006
    
    
    2005United States
    
    $
    44,278
    
    
    $
    46,706India
    
    
    14,869
    
    
    
    15,650Canada
    
    
    458
    
    
    
    581United Kingdom and other
    
    
    540
    
    
    
    784Total consolidated
    
    $
    60,145
    
    
    $
    63,721
     70




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##### Table of Contents



Contractual cash obligations
  Payments Due by Period(in thousands)
    
    Total
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    ThereafterLong-term debt
    
    $
    100,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    100,000Capital lease obligations
    
    
    7,094
    
    
    
    4,438
    
    
    
    2,499
    
    
    
    157
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations1
    
    
    76,019
    
    
    
    17,590
    
    
    
    14,188
    
    
    
    8,740
    
    
    
    7,537
    
    
    
    6,732
    
    
    
    21,232Vendor obligations
    
    
    57,564
    
    
    
    31,810
    
    
    
    15,947
    
    
    
    4,441
    
    
    
    2,733
    
    
    
    2,633
    
    
    
    Total
    
    $
    240,677
    
    
    $
    53,838
    
    
    $
    32,634
    
    
    $
    13,338
    
    
    $
    10,270
    
    
    $
    9,365
    
    
    $
    121,232
 
 1
    
    Future minimum lease payments for non-cancelable operating
leases are presented net of minimum sublease rentals of $4.5 million due
in the future under non-cancelable subleases.   71




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##### Table of Contents



Commitment Expiration by Period(in thousands)
    
    Total
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    ThereafterLetters of credit and other
    
    $
    49,464
    
    
    $
    989
    
    
    $
    22
    
    
    $
    48,453
    
    
    $
    
    
    
    $
    
    
    
    $
    Performance bonds
    
    
    11,852
    
    
    
    11,542
    
    
    
    180
    
    
    
    95
    
    
    
    35
    
    
    
    
    
    
    
    Total commitments
    
    $
    61,316
    
    
    $
    12,531
    
    
    $
    202
    
    
    $
    48,548
    
    
    $
    35
    
    
    $
    
    
    
    $
    
  Acquisition holdbacks
  Other commitments
     72




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##### Table of Contents



Other contingencies
      73




---



##### Table of Contents



2006 Quarters Ended(1)(in thousands except per share amounts)
    
    March 31
    
    June 30
    
    September 30
    
    December 31Net revenue
    
    $
    139,738
    
    
    $
    132,397
    
    
    $
    139,368
    
    
    $
    140,911Operating expenses
    
    
    124,569
    
    
    
    117,214
    
    
    
    117,498
    
    
    
    109,892Net income
    
    
    10,660
    
    
    
    9,710
    
    
    
    14,601
    
    
    
    19,575Per share of common stock:Net income  basic
    
    $
    0.23
    
    
    $
    0.21
    
    
    $
    0.31
    
    
    $
    0.42Net income  diluted
    
    $
    0.23
    
    
    $
    0.21
    
    
    $
    0.31
    
    
    $
    0.41
 2005 Quarters Ended(1)(in thousands except per share amounts)
    
    March 31
    
    June 30
    
    September 30(2)
    
    December 31(revised(3))
    
    (revised(3))
    
    (revised(3))
    
    (revised(3))Net revenue
    
    $
    114,238
    
    
    $
    116,294
    
    
    $
    133,150
    
    
    $
    138,026Operating expenses
    
    
    99,215
    
    
    
    97,786
    
    
    
    117,595
    
    
    
    119,791Net income
    
    
    11,890
    
    
    
    12,932
    
    
    
    14,230
    
    
    
    11,360Per share of common stock:Net income  basic
    
    $
    0.24
    
    
    $
    0.28
    
    
    $
    0.31
    
    
    $
    0.25Net income  diluted
    
    $
    0.23
    
    
    $
    0.27
    
    
    $
    0.30
    
    
    $
    0.24
 
 (1)
    
    The sum of quarterly earnings per share may not equal annual earnings per share, due
to rounding.(2)
    
    Net income includes a tax benefit of $4.7 million primarily due to the execution of
an Advanced Pricing Agreement with the Internal Revenue Service.(3)
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R. 
   
  Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
   74




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##### Table of Contents



PART III
 
 Form 10-K.
 
 PART IV
 
  (a)
    
    The following financial statements, schedules and independent auditors report and consent
are filed with or incorporated by reference in this report:
 Financial Statements
    
    Page in This ReportReports of Independent Registered Public Accounting FirmsConsolidated Balance Sheets at December 31, 2006 and 2005Consolidated Statements of Income for each of the three years
in the period ended December 31, 2006Consolidated Statements of Comprehensive Income for each of
the three years in the period ended December 31, 2006Consolidated Statements of Stockholders EquityConsolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 2006Notes to Consolidated Financial StatementsSupplemental Information:Summarized Quarterly Financial Data (Unaudited)Schedule II Re: Valuation and Qualifying Accounts
  75




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##### Table of Contents



EXHIBIT NUMBER
    
    DESCRIPTION
    
    METHOD OF FILING3.1
    
    Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to the Registration Statement on Form S-1 the
(S-1) filed by the Company with the Commission on April 4, 2000,
Registration No. 33-333992)
    
    *3.2
    
    Bylaws (incorporated by reference to Exhibit 3.2 to the S-1)
    
    *4.1
    
    Form of common stock certificate (incorporated by reference to Exhibit
4.1 to Amendment No. 1 to the S-1 filed by the Company with the
Commission on May 15, 2000 (Amendment No. 1))
    
    *4.2
    
    Form of Rights Agreement by and between the Company and Rights Agent,
(incorporated by reference to Exhibit 4.2 to Amendment No. 1)
    
    *4.3
    
    Certificate of Designations of Series A Participating Preferred Stock
(incorporated by reference to Exhibit 4.3 to the Companys Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000 (the June 2000
10-Q))
    
    *4.4
    
    Shareholder Agreement, dated as of November 19, 2003, by and between
the Company and MasterCard International Incorporated (incorporated by
reference to Exhibit 4.4 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2003 (the 2003 10-K))
    
    *10.1
    
    Tax Sharing Agreement, dated as of April 1, 2000, by and between the
Company and Deluxe (incorporated by reference to Exhibit 10.3 to
Amendment Number 1)
    
    *10.2
    
    Amendment, dated as of December 2000, to Tax Sharing Agreement, dated
effective April 1, 2000, by and between Deluxe and the Company
(incorporated by reference to Exhibit 10.42 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2000 (the 2000
10-K))
    
    *10.3
    
    ONE Application Development and Support Agreement, dated as of January
1, 2000 (the ONE Agreement, by and between the Company and DFSI
(incorporated by reference to Exhibit 10.11 to Amendment No. 1))
    
    *10.4
    
    Letter Agreement, dated November 19, 2001, extending the ONE Agreement
(incorporated by reference to Exhibit 10.28 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2001 (the 2001
10-K))
    
    *10.5
    
    Amendment, dated December 20, 2005, to the ONE Agreement (incorporated
by reference to Exhibit 10.20 to the Companys Annual Report on Form
10-K for the year ended December 31, 2004 (the 2004 10-K))
    
    *10.6
    
    eFunds Corporation Deferred Compensation Plan (incorporated by
reference to Exhibit 4.1 to the Companys Registration Statement on
Form S-8 filed on December 8, 2000, Registration Statement No.
333-51564)
    
    *10.7
    
    Amendment No. 1 to eFunds Deferred Compensation Plan Trust
(incorporated by reference to Exhibit 10.33 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2001 (the 2001
10-K)
    
    *10.8
    
    eFunds Corporation 2005 Deferred Compensation Plan, first effective
January 1, 2005 and as amended November 1, 2006 (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
filed with the Commission on November 3, 2006)
    
    *10.9
    
    eFunds Corporation Non-Employee Directors Deferred Compensation
Program, as amended September 22, 2006 (incorporated by reference to
the Current Report on Form 8-K filed by the Company on September 28,
2006 (the September 2006 8-K)
    
    *
 76




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##### Table of Contents



EXHIBIT NUMBER
    
    DESCRIPTION
    
    METHOD OF FILING10.10
    
    eFunds Corporation Stock Incentive Plan for Deluxe Conversions Awards,
as amended December 8, 2000 (incorporated by reference to Exhibit 4.1
to the Companys Registration Statement on Form S-8 filed on December
8, 2000, Registration No. 333-51536)
    
    *10.11
    
    eFunds Corporation 2000 Stock Incentive Plan (the 2000 SIP), as
amended as of May 20, 2005 (incorporated by reference to Exhibit 10.5
to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2005)
    
    *10.12
    
    eFunds Corporation 2005 Special Supplemental Employment Inducement
Award Plan (incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-8 filed by the Company with the
Commission on August 10, 2005, Registration No. 333-127433)
    
    *10.13
    
    eFunds Corporation 2006 Stock Incentive Plan (the 2006 SIP), as
amended September 22, 2006 (incorporated by reference to the September
2006 8-K)
    
    *10.14
    
    eFunds Corporation 2006 Annual Incentive Plan (incorporated by
reference to Exhibit 10.3 to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2006 (the June 2006 10-Q)
    
    *10.15
    
    eFunds Corporation Strategic Performance Incentive Plan (incorporated
by reference to Exhibit 10.14 to the 2003 10-K)
    
    *10.16
    
    Description of compensation program for Non-Employee Directors
    
    Filed Herewith10.17
    
    Form of Employee Stock Option under the 2006 SIP (incorporated by
reference to Exhibit 10.6 to the June 2006 10-Q)
    
    *10.18
    
    Form of Independent Director Option Agreement under the 2006 SIP
(incorporated by reference to Exhibit 10.7 to the June 2006 10-Q)
    
    *10.19
    
    Form of Paul F. Walsh Option Agreement under the 2006 SIP (incorporated
by reference to Exhibit 10.8 to the June 2006 10-Q)
    
    *10.20
    
    Form of Employee Restricted Stock Unit (RSU) Award Agreement under the
2006 SIP (incorporated by reference to Exhibit 10.9 to the June 2006
10-Q)
    
    *10.21
    
    Form of Independent Director RSU Award Agreement under the 2006 SIP
(incorporated by reference to Exhibit 10.10 to the June 2006 10-Q)
    
    *10.22
    
    Form of Paul F. Walsh RSU Award Agreement under the 2006 SIP
(incorporated by reference to Exhibit 10.4 to the June 2006 10-Q)
    
    *10.23
    
    Form of Stock Option Award Agreement under the 2000 SIP (incorporated
by reference to Exhibit 10.1 to the Companys Current Report on Form
8-K filed with the Commission on February 22, 2006 (the February 2006
8-K))
    
    *10.24
    
    Form of RSU Agreement under the 2000 SIP (incorporated by reference to
Exhibit 10.2 to the February 2006 8-K)
    
    *10.25
    
    Form of Independent Director Stock Option Award Agreement (incorporated
by reference to Exhibit 10.3 to the February 2006 8-K)
    
    *10.26
    
    Restricted Stock Right Award Agreement, dated as of November 3, 2004,
between the Company and Paul F. Walsh (incorporated by reference to
Exhibit 10.11 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2004 (the 2004 10-K))
    
    *10.27
    
    Restricted Stock Unit Agreement, dated as of January 13, 2005 between
the Company and Paul F. Walsh (incorporated by reference to Exhibit
10.4 to the Companys Quarterly Report on Form 10-Q for the quarter
ended March 31, 2005 (the March 2005 10-Q)
    
    *
 77




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##### Table of Contents



EXHIBIT NUMBER
    
    DESCRIPTION
    
    METHOD OF FILING10.28
    
    Amendment to February 2004 Option Award Agreement, dated as of November
3, 2004, between the Company and Paul F. Walsh (incorporated by
reference to Exhibit 10.12 to the 2004 10-K)
    
    *10.29
    
    Option Agreement, dated as of January 13, 2005, between the Company and
Paul F. Walsh (incorporated by reference to Exhibit 10.5 to the March
2005 10-Q)
    
    *10.30
    
    Option Agreement, dated February 16, 2006, by and between the Company
and Paul F. Walsh (incorporated by reference to Exhibit 10.4 to the
Companys Quarterly Report on Form 10-Q for the quarter ended March 31,
2006 (the March 2006 10-Q)
    
    *10.31
    
    Amendment, dated March 2006, to that certain Option Agreement, dated
February 16, 2006, by and between the Company and John B. (Jack) Benton
(incorporated by reference to Exhibit 10.5 to the March 2006 10-Q)
    
    *10.32
    
    Retention Agreement, dated as of November 3, 2004 (the Walsh Retention
Agreement), by and between the Company and Paul F. Walsh incorporated
by reference to Exhibit 10.10 to the 2004 10-K)
    
    *10.33
    
    Amendment, dated December 4, 2006, to the Walsh Retention Agreement
    
    Filed Herewith10.34
    
    Employment Agreement, entered into as of May 29, 2001 by and between
Gary L. Palmer and WildCard Systems, Inc. (incorporated by reference to
Exhibit 10.11 to the June 2006 10-Q)
    
    *10.35
    
    Independent Consultant Agreement, dated October 3, 2006, by and between
the Company and John B. (Jack) Benton (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the
Commission on October 5, 2006
    
    *10.36
    
    Transition Assistance Agreement, dated as of December 7, 2001, by and
between the Company and Steven F. Coleman (incorporated by reference to
Exhibit 10.29 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2001)
    
    *10.37
    
    Restricted Stock Unit Award Agreement, dated January 20, 2005, by and
between the Company and Clyde L. Thomas (incorporated by reference to
Exhibit 10.42 to the Companys Annual Report on Form 10-K for the
year-ended December 31, 2005)10.38
    
    Transition Assistance Agreement (the Thomas Transition Agreement),
dated as of November 4, 2002, by and between the Company and Clyde L.
Thomas (incorporated by reference to Exhibit 10.34 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2002 (the
2002 10-K))
    
    *10.39
    
    Schedule identifying additional Transition Assistance Agreements
omitted pursuant to Instruction 2 to Item 601 of Regulation S-K
    
    Filed Herewith10.40
    
    Amendment No. 1, dated December 2006, to the Thomas Transition Agreement
    
    Filed Herewith10.41
    
    Schedule identifying additional Amendments to Transition Assistance
Agreements omitted pursuant to instruction 2 to Item 601 of Regulation
S-K
    
    Filed Herewith10.42
    
    Release, dated February 22, 2006, by and between Michelle J. Langstaff
and the Company (incorporated by reference to Exhibit 10.3 to the March
2006 10-Q)
    
    *10.43
    
    Supplemental Transition Assistance Agreement, dated December 1, 2006,
by and between the Company and Nelson G. Eng
    
    Filed Herewith10.44
    
    Release, dated July 8, 2006, by and between the Company and Larence
Park (incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 2006
(the September 2006 10-Q)
    
    *10.45
    
    Separation Agreement, dated December 15, 2006, by and between the
Company and Rahul Gupta
    
    Filed Herewith
 78




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##### Table of Contents



EXHIBIT NUMBER
    
    DESCRIPTION
    
    METHOD OF FILING10.46
    
    Amended and Restated Change in Control Agreement, dated as of November
3, 2004 (the Walsh CIC Agreement), between the Company and Paul F.
Walsh (incorporated by reference to Exhibit 10.9 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2004 (the
2004 10-K))
    
    *10.47
    
    Amendment, dated December 4, 2006, to the Walsh CIC Agreement
    
    Filed Herewith10.48
    
    Schedule identifying Change in Control Agreements omitted pursuant to
Instruction 2 to Item 601 of Regulation S-K
    
    Filed Herewith10.49
    
    Asset Purchase Agreement, dated January 30, 2004 (the Benton
Acquisition Agreement), by and between the Company and Benton
Consulting Partners (incorporated by reference to Exhibit 10.3 to the
Companys Quarterly Report on Form 10-Q for the quarter ended March 31,
2004 (the March 2004
10-Q))
    
    *10.50
    
    Amendment, dated March 18, 2004, to the Benton Acquisition Agreement
(incorporated by reference to Exhibit 10.4 to the March 2004 10-Q)
    
    *10.51
    
    Earnout Reconciliation Agreement, dated as of July 17, 2006, by and
between the Company and Jack Mac, Inc. (f/k/a Benton Consulting
Partners) (incorporated by reference to Exhibit 10.2 to the September
2006 10-Q)
    
    *10.52
    
    Credit Agreement, dated July 1, 2005 (the Credit Agreement), among
eFunds Corporation, J.P. Morgan Chase Bank, N.A., Bank of America,
N.A., Wells Fargo Bank, National Association and J.P. Morgan
Securities, Inc. (incorporated by reference to Exhibit 10.4 to the
Companys Quarterly Report on Form 10-Q for the quarter ended September
30, 2005 (the September 2005 10-Q))
    
    *10.53
    
    Amendment No. 1, dated May 10, 2006, to the Credit Agreement
(incorporated by reference to Exhibit 10.5 to the June 2006 10-Q)
    
    *10.54
    
    Note Purchase Agreement, dated September 30, 2005, among eFunds
Corporation and the purchasers of the Notes thereunder (incorporated by
reference to Exhibit 10.6 to the September 2005, 10-Q)
    
    *21.1
    
    Subsidiaries of the Company
    
    Filed herewith23.1
    
    Consent of KPMG LLP
    
    Filed herewith24.1
    
    Power of Attorney
    
    Filed herewith31.1
    
    Section 302 Certification by Mr. Paul F. Walsh
    
    Filed herewith31.2
    
    Section 302 Certification by Mr. George W. Gresham
    
    Filed herewith32.1
    
    Section 906 Certification by Mr. Paul F. Walsh and Mr. George W. Gresham
    
    Filed herewith
 
 *
    
    Incorporated by reference   79




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##### Table of Contents



eFunds CorporationDate: February 28, 2007
    
    By:
    
    /s/ Paul F. WalshPaul F. WalshChairman of the Board of Directors andChief Executive Officer
  SIGNATURE
    
    
    
    TITLEBy:
    
    /s/ Paul F. Walsh

Paul F. Walsh
    
    
    
    Chairman of the Board and Chief Executive
Officer
(Principal Executive Officer)By:
    
    /s/ George W. Gresham

George W. Gresham
    
    
    
    Chief Financial Officer (Principal
Financial and Accounting Officer)By:
    
    *
    
    
    
    DirectorRichard J. AlmeidaBy:
    
    *
    
    
    
    DirectorJohn J. (Jack) Boyle IIIBy:
    
    *
    
    
    
    DirectorAngel CabreraBy:
    
    *
    
    
    
    DirectorJanet M. ClarkeBy:
    
    *
    
    
    
    DirectorRichard J. LehmannBy:
    
    *
    
    
    
    DirectorRobert C. NakasoneBy:
    
    *
    
    
    
    DirectorSheila A. PenroseBy:
    
    *
    
    
    
    DirectorHatim A. Tyabji*By:
    
    /s/ Paul F. Walsh

Paul F. Walsh 
Attorney-in-Fact
    
    
    
    Director
 80




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##### Table of Contents



Balance
    
    Charged to
    
    Other
    
    
    
    
    
    Balanceat beginning
    
    costs and
    
    (deductions)
    
    
    
    
    
    at end of(in thousands)
    
    Year
    
    of period
    
    expenses
    
    charges
    
    Deductions(1)
    
    periodAllowance for Doubtful Accounts
    
    
    2006
    
    
    $
    3,375
    
    
    $
    184
    
    
    $
    
    
    
    $
    (412
    )
    
    $
    3,1472005
    
    
    
    2,356
    
    
    
    813
    
    
    
    507
    (2)
    
    
    (301
    )
    
    
    3,3752004
    
    
    
    3,149
    
    
    
    18
    
    
    
    (145
    )(3)
    
    
    (666
    )
    
    
    2,356
 
 (1)
    
    Deductions from the reserve represent write-offs and recoveries of amounts for which specific
reserves had been previously established.(2)
    
    Amounts primarily represent the balance of allowance for doubtful accounts acquired during
2005.(3)
    
    Amount represents the balance of allowance for doubtful accounts eliminated upon the
disposition of the ATM Portfolio. F-1




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##### Table of Contents



EXHIBIT NUMBER
    
    DESCRIPTION OF EXHIBIT
    
    PAGE NO.10.16
    
    Description of compensation program for
Non-Employee Directors10.33
    
    Amendment, dated December 4, 2006 to the Walsh
Retention Agreement10.39
    
    Schedule identifying additional Transition
Assistance Agreements omitted pursuant to
Instruction 2 to Item 601 of Regulation S-K10.40
    
    Amendment No. 1, dated December 2006, to the
Thomas Transition Agreement10.41
    
    Schedule identifying additional Amendments to
Transition Assistance Agreements omitted pursuant
to instruction 2 to Item 601 of Regulation S-K10.43
    
    Supplemental Transition Assistance Agreement,
dated December 1, 2006, by and between the
Company and Nelson G. Eng10.45
    
    Separation Agreement, dated December 15, 2006, by
and between the Company and Rahul Gupta10.47
    
    Amendment, dated December 4, 2006, to the Walsh
CIC Agreement10.48
    
    Schedule identifying Change in Control Agreements
omitted pursuant to Instruction 2 to Item 601 of Regulation S-K21.1
    
    Subsidiaries of the Company23.1
    
    Consent of KPMG LLP24.1
    
    Power of Attorney31.1
    
    Section 302 Certification by Mr. Paul F. Walsh31.2
    
    Section 302 Certification by Mr. George W. Gresham32.1
    
    Section 906 Certification by Mr. Paul F. Walsh
and Mr. George W. Gresham
 F-2