##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the quarterly period ended June 30, 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 incorporation or organization)
    
    (IRS Employer Identification Number)
 Gainey Center II
8501 N. Scottsdale Road, Suite 300
Scottsdale, Arizona
    
    85253(Address of principal executive offices)
    
    (Zip Code)
  þ o
  þ o o
 o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESIndex to ExhibitsExhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 10.6Exhibit 10.7Exhibit 10.8Exhibit 10.9Exhibit 10.10Exhibit 10.11Exhibit 31.1Exhibit 31.2Exhibit 32.1    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 EFUNDS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 June 30,
    
    
    December 31,(dollars in thousands)
    
    2006
    
    
    2005(revised)Current assets:Cash and cash equivalents
    
    $
    94,574
    
    
    $
    85,987Restricted cash
    
    
    26,966
    
    
    
    28,183Settlement assets
    
    
    14,128
    
    
    
    28,438Accounts receivable  net
    
    
    96,100
    
    
    
    96,115Deferred income taxes
    
    
    19,701
    
    
    
    27,422Prepaid expenses and other current assets
    
    
    21,543
    
    
    
    18,341Total current assets
    
    
    273,012
    
    
    
    284,486Property and equipment  net
    
    
    62,604
    
    
    
    63,721Intangible assets  net
    
    
    411,805
    
    
    
    398,337Other non-current assets
    
    
    13,667
    
    
    
    17,638Total non-current assets
    
    
    488,076
    
    
    
    479,696Total assets
    
    $
    761,088
    
    
    $
    764,182Current liabilities:Accounts payable
    
    $
    17,662
    
    
    $
    23,902Settlement liabilities
    
    
    14,476
    
    
    
    28,519Accrued liabilities
    
    
    36,344
    
    
    
    56,011Acquisition holdbacks and earn-outs
    
    
    28,677
    
    
    
    25,052Deferred revenue and gains
    
    
    25,716
    
    
    
    23,978Long-term debt due within one year
    
    
    4,720
    
    
    
    5,030Total current liabilities
    
    
    127,595
    
    
    
    162,492Long-term deferred gains
    
    
    22,858
    
    
    
    27,637Long-term debt
    
    
    105,275
    
    
    
    106,973Other long-term liabilities
    
    
    21,090
    
    
    
    15,481Total liabilities
    
    
    276,818
    
    
    
    312,583Commitments and contingencies (Notes 6 & 10)Stockholders equity:Preferred stock $.01 par value; 100,000,000 shares authorized; no shares
issued and outstanding
    
    
    
    
    
    
    Common stock $.01 par value (250,000,000 shares authorized; 51,145,344
shares issued and 46,554,101 shares outstanding June 30, 2006 and
50,529,045 shares issued and 45,937,802 shares outstanding at December
31, 2005)
    
    
    512
    
    
    
    505Additional paid-in capital
    
    
    512,030
    
    
    
    498,939Treasury stock at cost (4,591,243 shares)
    
    
    (100,000
    )
    
    
    (100,000
    )Retained earnings
    
    
    71,515
    
    
    
    51,144Accumulated other comprehensive income
    
    
    213
    
    
    
    1,011Stockholders equity
    
    
    484,270
    
    
    
    451,599Total liabilities and stockholders equity
    
    $
    761,088
    
    
    $
    764,182
  1




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##### Table of Contents



EFUNDS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands, except per share amounts)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005(revised)
    
    
    
    
    
    
    (revised)Net revenue
    
    $
    132,397
    
    
    $
    116,294
    
    
    $
    272,135
    
    
    $
    230,532Operating expenses:Processing, communication and service costs
    
    
    33,046
    
    
    
    27,612
    
    
    
    68,339
    
    
    
    56,515Employee costs
    
    
    55,699
    
    
    
    49,868
    
    
    
    114,777
    
    
    
    100,880Depreciation and amortization
    
    
    11,854
    
    
    
    8,077
    
    
    
    23,632
    
    
    
    16,224Other operating costs
    
    
    16,615
    
    
    
    12,229
    
    
    
    35,035
    
    
    
    23,382Total operating expenses
    
    
    117,214
    
    
    
    97,786
    
    
    
    241,783
    
    
    
    197,001Income from operations
    
    
    15,183
    
    
    
    18,508
    
    
    
    30,352
    
    
    
    33,531Interest expense
    
    
    (1,424
    )
    
    
    (130
    )
    
    
    (3,000
    )
    
    
    (251
    )Other income  net
    
    
    1,179
    
    
    
    1,216
    
    
    
    1,986
    
    
    
    2,812Income before income taxes
    
    
    14,938
    
    
    
    19,594
    
    
    
    29,338
    
    
    
    36,092Provision for income taxes
    
    
    (5,228
    )
    
    
    (6,662
    )
    
    
    (8,968
    )
    
    
    (11,270
    )Net income
    
    $
    9,710
    
    
    $
    12,932
    
    
    $
    20,370
    
    
    $
    24,822Weighted average shares outstanding
    
    
    46,517
    
    
    
    45,649
    
    
    
    46,332
    
    
    
    47,417Weighted average shares and potential dilutive shares outstanding
    
    
    47,260
    
    
    
    47,095
    
    
    
    47,130
    
    
    
    48,924Net income per share  basic
    
    $
    0.21
    
    
    $
    0.28
    
    
    $
    0.44
    
    
    $
    0.52Net income per share  diluted
    
    $
    0.21
    
    
    $
    0.27
    
    
    $
    0.43
    
    
    $
    0.51
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EFUNDS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months EndedJune 30,(in thousands)
    
    2006
    
    
    2005(revised)Cash flows from operating activities:Net income
    
    $
    20,370
    
    
    $
    24,822Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    8,728
    
    
    
    6,947Amortization
    
    
    14,904
    
    
    
    9,277Stock-based compensation
    
    
    4,662
    
    
    
    4,474Excess tax benefits from share-based compensation
    
    
    (1,130
    )
    
    
    (951
    )Deferred income taxes
    
    
    12,599
    
    
    
    3,657Other  net
    
    
    79
    
    
    
    (191
    )Changes in assets and liabilities, net of effects from acquisitions and dispositions:Restricted cash
    
    
    2,260
    
    
    
    6,715Accounts receivable
    
    
    (178
    )
    
    
    (187
    )Accounts payable
    
    
    (6,232
    )
    
    
    (5,344
    )Deferred revenue and gains
    
    
    (2,774
    )
    
    
    (547
    )Income taxes receivable/payable
    
    
    (13,159
    )
    
    
    (26,810
    )Other assets and liabilities
    
    
    (16,021
    )
    
    
    (16,903
    )Net cash provided by operating activities
    
    
    24,108
    
    
    
    4,959Cash flows from investing activities:Capital expenditures
    
    
    (20,983
    )
    
    
    (11,790
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    (54,598
    )Proceeds from dispositions
    
    
    2,356
    
    
    
    Purchase of short-term investments
    
    
    
    
    
    
    (98,925
    )Proceeds from sale of short-term investments
    
    
    
    
    
    
    187,065Other  net
    
    
    (4,533
    )
    
    
    (3,258
    )Net cash (used in) provided by investing activities
    
    
    (23,160
    )
    
    
    18,494Cash flows from financing activities:Purchase of common stock
    
    
    
    
    
    
    (100,000
    )Issuance of common stock
    
    
    8,442
    
    
    
    8,079Excess tax benefits from share-based compensation
    
    
    1,130
    
    
    
    951Payments on long-term debt
    
    
    (1,987
    )
    
    
    (984
    )Other
    
    
    54
    
    
    
    Net cash provided by (used in) financing activities
    
    
    7,639
    
    
    
    (91,954
    )Net increase (decrease) in cash and cash equivalents
    
    
    8,587
    
    
    
    (68,501
    )Cash and cash equivalents at beginning of period
    
    
    85,987
    
    
    
    274,477Cash and cash equivalents at end of period
    
    $
    94,574
    
    
    $
    205,976Supplemental disclosures:Cash paid for income taxes
    
    $
    10,654
    
    
    $
    32,810Cash paid for interest
    
    $
    3,012
    
    
    $
    236Noncash investing and financing activities:Purchase of assets under capital lease obligations
    
    $
    20
    
    
    $
    984
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EFUNDS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
    -
    
    US Payments-
    
    US Risk Management-
    
    International
   Share
Based Payments
  Recent accounting pronouncements
 Transition Election Relating to Accounting for the Tax Effects of Share-Based Payment
Awards
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Accounting for Uncertainty in
Income Taxesan interpretation of FASB Statement No. 109
 How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in
the Income Statement (That is, Gross versus Net Presentation).
 Stock incentive plans
     5




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##### Table of Contents



Deluxe Option Conversion Plan
  Employee stock purchase plan
  Adoption of SFAS No. 123R
 Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees.
   6




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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
 Three Months Ended June 30, 2005(in thousands, except per share data)
    
    
    
    
    
    Share-basedSelected Income Statement Data:
    
    As Reported
    
    Compensation
    
    As RevisedNet income
    
    $
    14,142
    
    
    $
    (1,210
    )
    
    $
    12,932Basic earnings per share
    
    
    0.31
    
    
    
    (0.03
    )
    
    
    0.28Diluted earnings per share
    
    
    0.30
    
    
    
    (0.03
    )
    
    
    0.27
 Six Months Ended June 30, 2005(in thousands, except per share data)
    
    
    
    
    
    Share-basedSelected Income Statement Data:
    
    As Reported
    
    Compensation
    
    As RevisedNet income
    
    $
    27,306
    
    
    $
    (2,484
    )
    
    $
    24,822Basic earnings per share
    
    
    0.58
    
    
    
    (0.06
    )
    
    
    0.52Diluted earnings per share
    
    
    0.56
    
    
    
    (0.05
    )
    
    
    0.51
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Expected volatility
    
    
    35.1
    %
    
    
    34.8
    %
    
    
    35.0
    %
    
    
    34.0
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate
    
    
    4.9
    %
    
    
    3.6
    %
    
    
    4.5
    %
    
    
    3.9
    %Expected life 1
    
    5 years
    
    7 years
    
    5 years
    
    7 yearsWeighted average fair value at grant date
    
    $
    10.04
    
    
    $
    9.37
    
    
    $
    9.27
    
    
    $
    9.45
 
 1
    
    The expected term assumption represents the estimated term of the options from grant
date. For the three and six month period ended June 30, 2006 and 2005, the expected life of
the options from vest date would be approximately 3 years and 5 years, respectively.   Wtd. Avg.ExerciseShares
    
    
    PriceOptions outstanding at January 1, 2006
    
    
    3,828,498
    
    
    $
    15.53Options granted
    
    
    905,316
    
    
    
    24.66Options exercised
    
    
    (513,876
    )
    
    
    13.48Options forfeited and cancelled
    
    
    (341,411
    )
    
    
    19.50Options outstanding at June 30, 2006
    
    
    3,878,527
    
    
    
    17.58Options exercisable
    
    
    1,940,399
    
    
    
    13.44
 7




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Ranges of
    
    Options
    
    
    Wtd. Avg.
    
    
    Wtd. Avg.
    
    
    Options
    
    
    Wtd. Avg.Exercise Prices
    
    Outstanding
    
    
    Remaining Life
    
    
    Exercise Price
    
    
    Exercisable
    
    
    Exercise Price$6.19-$12.87
    
    
    759,055
    
    
    
    6.2
    
    
    $
    8.95
    
    
    
    756,798
    
    
    $
    8.94$12.88-$15.99
    
    
    528,603
    
    
    
    3.5
    
    
    
    13.64
    
    
    
    518,943
    
    
    
    13.64$16.00-$17.75
    
    
    649,782
    
    
    
    7.6
    
    
    
    16.46
    
    
    
    409,724
    
    
    
    16.45$17.76-$22.95
    
    
    1,077,866
    
    
    
    8.6
    
    
    
    20.64
    
    
    
    248,151
    
    
    
    21.42$22.96-$27.00
    
    
    863,221
    
    
    
    9.6
    
    
    
    24.63
    
    
    
    6,783
    
    
    
    25.613,878,527
    
    
    
    
    
    
    
    
    
    
    
    1,940,399
       US
    
    
    US(in thousands)
    
    Payments
    
    

Risk
Management
    
    
    International
    
    
    Other
    
    
    TotalBalance as of December 31,
2005
    
    $
    180,935
    
    
    $
    43,425
    
    
    $
    32,363
    
    
    $
    10,462
    
    
    $
    267,185Goodwill acquired
    
    
    8,755
    
    
    
    3,174
    
    
    
    3,091
    
    
    
    
    
    
    
    15,020Balance as of June 30, 2006
    
    $
    189,690
    
    
    $
    46,599
    
    
    $
    35,454
    
    
    $
    10,462
    
    
    $
    282,205
  June 30, 2006
    
    December 31, 2005Wtd. Avg.Amort.
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    Gross(dollars in
    
    Period
    
    
    Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    Accumulatedthousands)
    
    In Years
    
    
    Amounts
    
    
    Amortization
    
    
    Net
    
    
    Amounts
    
    
    Amortization
    
    
    NetSoftware-internal use
    
    
    4
    
    
    $
    124,133
    
    
    $
    (83,967
    )
    
    $
    40,166
    
    
    $
    116,351
    
    
    $
    (78,944
    )
    
    $
    37,407Software-licensing
and resale
    
    
    5
    
    
    
    67,406
    
    
    
    (47,592
    )
    
    
    19,814
    
    
    
    64,325
    
    
    
    (45,218
    )
    
    
    19,107Acquired contracts
and other
    
    
    8
    
    
    
    102,501
    
    
    
    (32,881
    )
    
    
    69,620
    
    
    
    102,757
    
    
    
    (28,119
    )
    
    
    74,638$
    294,040
    
    
    $
    (164,440
    )
    
    $
    129,600
    
    
    $
    283,433
    
    
    $
    (152,281
    )
    
    $
    131,152
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##### Table of Contents



Restructuring charges
  Lease-RelatedSeverance
    
    
    Costs &(in thousands)
    
    Related
    
    
    Other
    
    
    TotalBalance at December 31, 2005
    
    $
    918
    
    
    $
    1,146
    
    
    $
    2,064Cash payments
    
    
    (150
    )
    
    
    (142
    )
    
    
    (292
    )Balance at March 31, 2006
    
    
    768
    
    
    
    1,004
    
    
    
    1,772Additional
accrual
    
    
    
    
    
    
    184
    
    
    
    184Reversal of severance-related provision
    
    
    (444
    )
    
    
    
    
    
    
    (444
    )Cash payments
    
    
    (109
    )
    
    
    (320
    )
    
    
    (429
    )Balance at June 30, 2006
    
    $
    215
    
    
    $
    868
    
    
    $
    1,083
 Acquisition exit activities
  Lease-RelatedSeverance
    
    
    Costs &(in thousands)
    
    Related
    
    
    Other
    
    
    TotalBalance at December 31, 2005
    
    $
    
    
    
    $
    2,444
    
    
    $
    2,444Additional
accrual
    
    
    1,343
    
    
    
    3,641
    
    
    
    4,984Cash payments
    
    
    (85
    )
    
    
    (117
    )
    
    
    (202
    )Balance at March 31, 2006
    
    
    1,258
    
    
    
    5,968
    
    
    
    7,226Reversal of lease-related provision
    
    
    
    
    
    
    (381
    )
    
    
    (381
    )Additional
accrual
    
    
    369
    
    
    
    
    
    
    
    369Cash payments
    
    
    (9
    )
    
    
    (118
    )
    
    
    (127
    )Balance at June 30, 2006
    
    $
    1,618
    
    
    $
    5,469
    
    
    $
    7,087
   June 30,
    
    
    December 31,(in thousands)
    
    2006
    
    
    20055.39% Senior Notes due 2012
    
    $
    100,000
    
    
    $
    100,000Capital leases and other
    
    
    9,995
    
    
    
    12,003Less capital lease and other amounts due within one year
    
    
    (4,720
    )
    
    
    (5,030
    )Total
    
    $
    105,275
    
    
    $
    106,973
  9




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands, except per share amounts)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Net income per share  basicNet income
    
    $
    9,710
    
    
    $
    12,932
    
    
    $
    20,370
    
    
    $
    24,822Weighted average shares outstanding
    
    
    46,517
    
    
    
    45,649
    
    
    
    46,332
    
    
    
    47,417Net income per share  basic
    
    $
    0.21
    
    
    $
    0.28
    
    
    $
    0.44
    
    
    $
    0.52Net income per share  dilutedNet income
    
    $
    9,710
    
    
    $
    12,932
    
    
    $
    20,370
    
    
    $
    24,822Weighted average shares outstanding
    
    
    46,517
    
    
    
    45,649
    
    
    
    46,332
    
    
    
    47,417Dilutive impact of options
    
    
    743
    
    
    
    1,446
    
    
    
    798
    
    
    
    1,507Weighted average shares and potential dilutive shares outstanding
    
    
    47,260
    
    
    
    47,095
    
    
    
    47,130
    
    
    
    48,924Net income per share  diluted
    
    $
    0.21
    
    
    $
    0.27
    
    
    $
    0.43
    
    
    $
    0.51
  10




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-
    
    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.-
    
    Licensing, maintenance and support of our EFT software and through the provision of ATM
managed services.
    11




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Net revenue:US Payments
    
    $
    68,149
    
    
    $
    56,395
    
    
    $
    142,788
    
    
    $
    111,212US Risk Management
    
    
    46,359
    
    
    
    48,199
    
    
    
    96,245
    
    
    
    96,709International
    
    
    17,889
    
    
    
    11,700
    
    
    
    33,102
    
    
    
    22,611Total net revenue
    
    
    132,397
    
    
    
    116,294
    
    
    
    272,135
    
    
    
    230,532Operating expenses before overhead:US Payments
    
    
    59,345
    
    
    
    40,644
    
    
    
    124,596
    
    
    
    82,556US Risk Management
    
    
    27,735
    
    
    
    31,488
    
    
    
    57,255
    
    
    
    62,857International
    
    
    16,008
    
    
    
    12,572
    
    
    
    31,330
    
    
    
    23,926Total operating expenses before overhead
    
    
    103,088
    
    
    
    84,704
    
    
    
    213,181
    
    
    
    169,339Allocated overhead:US Payments
    
    
    3,628
    
    
    
    3,931
    
    
    
    7,555
    
    
    
    8,383US Risk Management
    
    
    3,327
    
    
    
    3,059
    
    
    
    6,643
    
    
    
    6,616International
    
    
    2,190
    
    
    
    1,266
    
    
    
    4,116
    
    
    
    2,458Corporate
    
    
    4,981
    
    
    
    4,826
    
    
    
    10,288
    
    
    
    10,205Total allocated overhead
    
    
    14,126
    
    
    
    13,082
    
    
    
    28,602
    
    
    
    27,662Income (loss) from operations:US Payments
    
    
    5,176
    
    
    
    11,820
    
    
    
    10,637
    
    
    
    20,273US Risk Management
    
    
    15,297
    
    
    
    13,652
    
    
    
    32,347
    
    
    
    27,236International
    
    
    (309
    )
    
    
    (2,138
    )
    
    
    (2,344
    )
    
    
    (3,773
    )Corporate
    
    
    (4,981
    )
    
    
    (4,826
    )
    
    
    (10,288
    )
    
    
    (10,205
    )Income from operations
    
    $
    15,183
    
    
    $
    18,508
    
    
    $
    30,352
    
    
    $
    33,531
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Depreciation and amortization:US Payments
    
    $
    6,691
    
    
    $
    3,111
    
    
    $
    13,339
    
    
    $
    6,423US Risk Management
    
    
    2,653
    
    
    
    3,508
    
    
    
    5,390
    
    
    
    7,012International
    
    
    2,147
    
    
    
    1,207
    
    
    
    4,212
    
    
    
    2,232Corporate
    
    
    363
    
    
    
    251
    
    
    
    691
    
    
    
    557Total depreciation and amortization
    
    $
    11,854
    
    
    $
    8,077
    
    
    $
    23,632
    
    
    $
    16,224
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Stock based employee compensation:US Payments
    
    $
    563
    
    
    $
    459
    
    
    $
    1,464
    
    
    $
    898US Risk Management
    
    
    365
    
    
    
    553
    
    
    
    835
    
    
    
    1,079International
    
    
    258
    
    
    
    300
    
    
    
    566
    
    
    
    520Corporate
    
    
    386
    
    
    
    522
    
    
    
    939
    
    
    
    1,105Total stock based employee compensation
    
    $
    1,572
    
    
    $
    1,834
    
    
    $
    3,804
    
    
    $
    3,602
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005United States
    
    $
    114,508
    
    
    $
    104,594
    
    
    $
    239,033
    
    
    $
    207,921EMEA
    
    
    12,088
    
    
    
    8,564
    
    
    
    21,228
    
    
    
    17,195India
    
    
    2,379
    
    
    
    361
    
    
    
    5,004
    
    
    
    472Canada
    
    
    1,803
    
    
    
    1,437
    
    
    
    4,405
    
    
    
    2,558Latin America
    
    
    1,542
    
    
    
    1,254
    
    
    
    2,258
    
    
    
    2,146Asia
    
    
    77
    
    
    
    84
    
    
    
    207
    
    
    
    240Total consolidated
    
    $
    132,397
    
    
    $
    116,294
    
    
    $
    272,135
    
    
    $
    230,532
 12




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##### Table of Contents



June 30,
    
    
    December 31,(in thousands)
    
    2006
    
    
    2005United States
    
    $
    46,310
    
    
    $
    46,706India
    
    
    15,078
    
    
    
    15,650Canada
    
    
    877
    
    
    
    581United Kingdom and other
    
    
    339
    
    
    
    784Total consolidated
    
    $
    62,604
    
    
    $
    63,721
  Contractual cash obligations
  Payments Due by December 31,(in thousands)
    
    Total
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    ThereafterLong-term debt
    
    $
    100,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    100,000Capital lease obligations
    
    
    9,995
    
    
    
    3,027
    
    
    
    4,392
    
    
    
    2,452
    
    
    
    124
    
    
    
    
    
    
    
    Operating lease obligations1
    
    
    80,445
    
    
    
    6,694
    
    
    
    17,411
    
    
    
    13,228
    
    
    
    9,203
    
    
    
    7,121
    
    
    
    26,788Vendor obligations
    
    
    61,356
    
    
    
    15,113
    
    
    
    23,776
    
    
    
    14,235
    
    
    
    2,866
    
    
    
    2,733
    
    
    
    2,633Total
    
    $
    251,796
    
    
    $
    24,834
    
    
    $
    45,579
    
    
    $
    29,915
    
    
    $
    12,193
    
    
    $
    9,854
    
    
    $
    129,421
 
 1
    
    Future minimum lease payments for non-cancelable operating
leases are presented net of minimum sublease rentals of $2.3 million
due in the future under non-cancelable subleases.  Future commercial commitments
  Commitment Expiration by Period1(in thousands)
    
    Total
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    ThereafterLetters of credit and other
    
    $
    47,017
    
    
    $
    418
    
    
    $
    14
    
    
    $
    5
    
    
    $
    46,580
    
    
    $
    
    
    
    $
    Performance bonds
    
    
    11,852
    
    
    
    1,172
    
    
    
    10,490
    
    
    
    175
    
    
    
    15
    
    
    
    
    
    
    
    Total commitments
    
    $
    58,869
    
    
    $
    1,590
    
    
    $
    10,504
    
    
    $
    180
    
    
    $
    46,595
    
    
    $
    
    
    
    $
    
 
 1
    
    Represents commercial commitment expirations during the last six months of 2006 and
the respective years ending December 31, 2007 through 2010 and thereafter.  13




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##### Table of Contents



Acquisition
holdbacks
  Other commitments
    Other contingencies
  14




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   15




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##### Table of Contents



Our Business
    -
    
    US Payments-
    
    US Risk Management-
    
    International
    US Payments
  16




---



##### Table of Contents



US Risk Management
  ®
 International
  Key Events During the Three Months Ended June 30, 2006
 
    
    We reclassified our segments consistent with the way management internally disaggregates
its operations to assess performance and allocate resources and to reflect the ongoing
revisions of our organizational structure as part of our efforts to develop a more
customer-focused organization.
    
    The Indian taxing authorities issued a $32.6 million tax assessment against certain of
our U.S. companies and we amended our credit facilities to enable us to issue a $47
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.
    
    We adopted the eFunds Corporation 2006 Stock Incentive Plan and the eFunds Corporation
2006 Annual Incentive Plan following their approval by our stockholders at our annual
meeting in May.
 17




---



##### Table of Contents




    
    As part of the ongoing efforts to integrate our prepaid solutions business, we promoted
Larry Petersen to Chief Operating Officer, eFunds Prepaid Solutions and Gary Palmer to
Executive Vice President, Global Strategic Business Development.
 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 growth levels seen in this industry in future periods;
    
    increased fraud and regulatory requirements are driving sustained growth in the need for
risk management products;
    
    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 maintain the security of their data files.
 Risks and Challenges
  
    
    Changes in India tax laws or in 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.
    
    We face termination and compliance risks with respect to our government contracts.
    
    Provisions in our charter documents and Delaware law may delay or prevent a change in
control of our Company that you may consider favorable.
 18




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##### Table of Contents



Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    
    
    
    
    
    
    
    
    
    2005(dollars in millions)
    
    2006
    
    
    (revised)
    
    
    % Change
    
    
    2006
    
    
    (revised)
    
    
    % ChangeNet revenue
    
    $
    132.4
    
    
    $
    116.3
    
    
    
    14
    %
    
    $
    272.1
    
    
    $
    230.5
    
    
    
    18
    %Operating expenses:Processing, communication and
service costs
    
    
    33.0
    
    
    
    27.6
    
    
    
    20
    
    
    
    68.3
    
    
    
    56.5
    
    
    
    21Employee costs
    
    
    55.7
    
    
    
    49.9
    
    
    
    12
    
    
    
    114.8
    
    
    
    100.9
    
    
    
    14Depreciation and amortization
    
    
    11.9
    
    
    
    8.1
    
    
    
    47
    
    
    
    23.6
    
    
    
    16.2
    
    
    
    46Other operating costs
    
    
    16.6
    
    
    
    12.2
    
    
    
    36
    
    
    
    35.0
    
    
    
    23.4
    
    
    
    50Total operating expenses1
    
    
    117.2
    
    
    
    97.8
    
    
    
    20
    
    
    
    241.8
    
    
    
    197.0
    
    
    
    23Income from operations1
    
    
    15.2
    
    
    
    18.5
    
    
    
    (18
    )
    
    
    30.4
    
    
    
    33.5
    
    
    
    (9
    )Interest expense
    
    
    (1.4
    )
    
    
    (0.1
    )
    
    
    *
    
    
    
    (3.0
    )
    
    
    (0.3
    )
    
    
    *Other income  net
    
    
    1.2
    
    
    
    1.2
    
    
    
    
    
    
    
    2.0
    
    
    
    2.8
    
    
    
    (29
    )Income before income taxes1
    
    
    14.9
    
    
    
    19.6
    
    
    
    (24
    )
    
    
    29.3
    
    
    
    36.1
    
    
    
    (19
    )Provision for income taxes
    
    
    (5.2
    )
    
    
    (6.7
    )
    
    
    (22
    )
    
    
    (9.0
    )
    
    
    (11.3
    )
    
    
    (20
    )Net income1
    
    $
    9.7
    
    
    $
    12.9
    
    
    
    (25
    )
    
    $
    20.4
    
    
    $
    24.8
    
    
    
    (18
    )
 
 *
    
    Represents an increase or decrease in excess of 100%.1
    
    Amounts may not sum due to rounding. Net Revenue
  Three Months Ended June 30,
    
    Six Months Ended June 30,(dollars in millions)
    
    2006
    
    
    2005
    
    
    % Change
    
    
    2006
    
    
    2005
    
    
    % ChangeUS PaymentsEFT processing
    
    $
    36.2
    
    
    $
    30.7
    
    
    
    18
    %
    
    $
    71.1
    
    
    $
    59.7
    
    
    
    19
    %Prepaid Solutions
    
    
    17.8
    
    
    
    
    
    
    
    *
    
    
    
    39.6
    
    
    
    
    
    
    
    *Government services (EBT)
    
    
    10.2
    
    
    
    13.1
    
    
    
    (22
    )
    
    
    20.3
    
    
    
    26.4
    
    
    
    (23
    )Software sales and other
services
    
    
    3.9
    
    
    
    12.6
    
    
    
    (69
    )
    
    
    11.7
    
    
    
    25.1
    
    
    
    (53
    )68.1
    
    
    
    56.4
    
    
    
    21
    
    
    
    142.7
    
    
    
    111.2
    
    
    
    28US Risk ManagementFinancial institution products
    
    
    36.7
    
    
    
    34.5
    
    
    
    6
    
    
    
    74.7
    
    
    
    67.2
    
    
    
    11Retail products
    
    
    4.9
    
    
    
    5.7
    
    
    
    (14
    )
    
    
    9.5
    
    
    
    10.7
    
    
    
    (11
    )BPO
    
    
    4.8
    
    
    
    8.0
    
    
    
    (40
    )
    
    
    12.1
    
    
    
    18.8
    
    
    
    (36
    )46.4
    
    
    
    48.2
    
    
    
    (4
    )
    
    
    96.3
    
    
    
    96.7
    
    
    
    (1
    )InternationalSoftware sales
    
    
    9.1
    
    
    
    6.1
    
    
    
    49
    
    
    
    15.1
    
    
    
    12.5
    
    
    
    21BPO
    
    
    7.1
    
    
    
    5.5
    
    
    
    29
    
    
    
    15.0
    
    
    
    9.9
    
    
    
    52EFT processing
    
    
    1.7
    
    
    
    0.1
    
    
    
    *
    
    
    
    3.0
    
    
    
    0.2
    
    
    
    *17.9
    
    
    
    11.7
    
    
    
    53
    
    
    
    33.1
    
    
    
    22.6
    
    
    
    46Total net revenue1
    
    $
    132.4
    
    
    $
    116.3
    
    
    
    
    
    
    $
    272.1
    
    
    $
    230.5
 
 *
    
    Represents an increase or decrease in excess of 100%.1
    
    Amounts may not sum due to rounding. US Payments
  19




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##### Table of Contents



US Risk Management
  International
  Business Segment Operating Income
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,(dollars in millions)
    
    2006
    
    
    2005
    
    
    % Change
    
    
    2006
    
    
    2005
    
    
    % ChangeOperating income (loss)US Payments
    
    $
    5.2
    
    
    $
    11.8
    
    
    
    (56
    )%
    
    $
    10.6
    
    
    $
    20.3
    
    
    
    (48
    )%US Risk Management
    
    
    15.3
    
    
    
    13.7
    
    
    
    12
    
    
    
    32.3
    
    
    
    27.2
    
    
    
    19International
    
    
    (0.3
    )
    
    
    (2.1
    )
    
    
    86
    
    
    
    (2.3
    )
    
    
    (3.8
    )
    
    
    39Corporate
    
    
    (5.0
    )
    
    
    (4.8
    )
    
    
    (4
    )
    
    
    (10.3
    )
    
    
    (10.2
    )
    
    
    (1
    )Total operating income1
    
    $
    15.2
    
    
    $
    18.5
    
    
    
    (18
    )
    
    $
    30.4
    
    
    $
    33.5
    
    
    
    (9
    )
 
 1
    
    Amounts may not sum due to rounding. US Payments
  20




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##### Table of Contents



US Risk Management
  International
  Corporate
  Operating Expenses
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,(dollars in millions)
    
    2006
    
    
    2005
    
    
    % Change
    
    
    2006
    
    
    2005
    
    
    % ChangeOperating expenses:Processing, communication and
service costs
    
    $
    33.0
    
    
    $
    27.6
    
    
    
    20
    %
    
    $
    68.3
    
    
    $
    56.5
    
    
    
    21
    %Employee costs
    
    
    55.7
    
    
    
    49.9
    
    
    
    12
    
    
    
    114.8
    
    
    
    100.9
    
    
    
    14Depreciation and amortization
    
    
    11.9
    
    
    
    8.1
    
    
    
    47
    
    
    
    23.6
    
    
    
    16.2
    
    
    
    46Other operating costs
    
    
    16.6
    
    
    
    12.2
    
    
    
    36
    
    
    
    35.0
    
    
    
    23.4
    
    
    
    50Total operating expenses1
    
    $
    117.2
    
    
    $
    97.8
    
    
    
    20
    
    
    $
    241.8
    
    
    $
    197.0
    
    
    
    23
 
 1
    
    Amounts may not sum due to rounding. Processing, communication and service costs
  Employee costs
  Depreciation and amortization
  21




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##### Table of Contents



Other operating costs
  Interest expense
  Other income  net
  Provision for income taxes
      22




---



##### Table of Contents



Overview
  June 30,
    
    December 31,(dollars in millions)
    
    2006
    
    2005
    
    % Change(revised1)Cash and cash equivalents
    
    $
    94.6
    
    
    $
    86.0
    
    
    
    10
    %Long-term debt due within one year
    
    
    4.7
    
    
    
    5.0
    
    
    
    (6
    )Long-term debt
    
    
    105.3
    
    
    
    107.0
    
    
    
    (2
    )Stockholders equity
    
    
    484.3
    
    
    
    451.6
    
    
    
    7Net working capital
    
    
    145.4
    
    
    
    122.0
    
    
    
    19
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R. Cash Resources
   Sources and Uses of Cash
  Summary of Cash FlowsFor the Six MonthsEnded June 30,(in millions)
    
    2006
    
    
    2005(revised1)Cash provided by operating activities
    
    $
    24.1
    
    
    $
    5.0Cash (used in) provided by investing activities
    
    
    (23.1
    )
    
    
    18.5Cash provided by (used in) financing activities
    
    
    7.6
    
    
    
    (92.0
    )Net increase (decrease) in cash and cash equivalents
    
    $
    8.6
    
    
    $
    (68.5
    )
 
 1
    
    Amounts have been revised to reflect the adoption of SFAS No. 123R.  
    
    investment in projects 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.
  23




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##### Table of Contents



Operating Activities
   Investing Activities
  Financing Activities
  Long-term Debt
    24




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##### Table of Contents



Contractual Obligations and Commitments
  Payments Due by Period2Six months
    
    
    Three Years
    
    
    Three YearsEnded
    
    
    Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    December 31,Total
    
    
    2006
    
    
    2009
    
    
    2012
    
    
    Thereafter(in millions)Long-term debt
    
    $
    100.0
    
    
    $
    
    
    
    $
    
    
    
    $
    100.0
    
    
    $
    Capital lease obligations
    
    
    10.0
    
    
    
    3.0
    
    
    
    7.0
    
    
    
    
    
    
    
    Operating lease obligations1
    
    
    80.4
    
    
    
    6.7
    
    
    
    39.8
    
    
    
    19.2
    
    
    
    14.7Vendor obligations
    
    
    61.4
    
    
    
    15.1
    
    
    
    40.9
    
    
    
    5.4
    
    
    
    Total
    
    $
    251.8
    
    
    $
    24.8
    
    
    $
    87.7
    
    
    $
    124.6
    
    
    $
    14.7
 
 1
    
    Future minimum lease payments for non-cancelable operating
leases are presented net of minimum sublease rentals of $2.3 million
due in the future under non-cancelable subleases.2
    
    Amounts may not sum due to rounding.    Commitment Expiration by Period1(in millions)
    
    Total
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    ThereafterLetters of credit and other
    
    $
    47.0
    
    
    $
    0.4
    
    
    $
    
    
    
    $
    
    
    
    $
    46.6
    
    
    $
    
    
    
    $
    Performance bonds
    
    
    11.9
    
    
    
    1.2
    
    
    
    10.5
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    Total commitments
    
    $
    58.9
    
    
    $
    1.6
    
    
    $
    10.5
    
    
    $
    0.2
    
    
    $
    46.6
    
    
    $
    
    
    
    $
    
 
 1
    
    Represents commercial commitment expirations during the last six months of 2006 and
the respective years ending December 31, 2007 through 2010 and thereafter.  25




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##### Table of Contents



Stock-based
Compensation
 FORWARD-LOOKING STATEMENTS 
   
    
    An effective tax rate of approximately 35 percent for the balance of 2006;
    
    Cash outlays for capital expenditures and product development
activities in 2006 will be
approximately $40 million.
    
    Revenues from our prepaid business in the second half of 2006
should ramp up from those seen in the six months of this year in a
manner generally consistent with historical periods and the cost savings from
our integration activities related to this business should
exceed $4.0 million over the balance of the year.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 ITEM 4. CONTROLS AND PROCEDURES
  26




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Nominee
    
    
    For
    
    
    WithheldPaul F. Walsh
    
    
    42,411,432
    
    
    
    327,311John J.
(Jack) Boyle III
    
    
    41,332,759
    
    
    
    1,405,984
   For
    
    Against
    
    Abstain37,401,122
    
    717,064
    
    113,728
  For
    
    Against
    
    Abstain29,106,718
    
    9,010,578
    
    114,618
  For
    
    Against
    
    Abstain42,381,539
    
    330,147
    
    27,057
 
 ITEM
5. OTHER INFORMATION CAUTIONARY STATEMENTS
  27




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##### Table of Contents



ITEM 6. EXHIBITS
  ExhibitNo.
    
    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. 333-33992)
    
    *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),
Registration No. 333-33992)
    
    *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 Designation 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)
    
    *10.1
    
    Transition Agreement, dated May 19, 2006, by and between the
company and Larence Park
    
    Filed herewith10.2
    
    eFunds Corporation 2006 Stock
Incentive Plan (the 2006 SIP)
    
    Filed herewith10.3
    
    eFunds Corporation 2006 Annual Incentive Plan
    
    Filed herewith10.4
    
    Form of Paul F. Walsh Restricted Stock Unit Award Agreement
under the 2006 SIP
    
    Filed herewith10.5
    
    Amendment No. 1, dated May 10, 2006, to the Credit Agreement
dated July 1, 2005 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
    
    Filed herewith10.6
    
    Form of Employee Option Agreement under the 2006 SIP
    
    Filed herewith10.7
    
    Form of Independent Director Option Agreement under the 2006 SIP
    
    Filed herewith10.8
    
    Form of Paul F. Walsh Option Agreement under the 2006 SIP
    
    Filed herewith10.9
    
    Form of Employee Restricted Stock Unit (RSU) Agreement under
the 2006 SIP
    
    Filed herewith10.10
    
    Form of Independent Director RSU Agreement under the 2006 SIP
    
    Filed herewith10.11
    
    Employment Agreement, entered into as of May 29, 2001, by and
between Gary Palmer and Wildcard Systems, Inc.
    
    Filed herewith31.1
    
    Section 302 Certification by Mr. Paul F. Walsh
    
    Filed herewith
 28




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##### Table of Contents



ExhibitNo.
    
    Description
    
    Method of filing31.2
    
    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 29




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##### Table of Contents



SIGNATURES
  eFunds Corporation(Registrant)Date: August 9, 2006
    
    /s/ Paul F. WalshPaul F. WalshChief Executive Officer and Chairman(Principal Executive Officer)Date: August 9, 2006
    
    /s/ George W. GreshamGeorge W. GreshamChief Financial Officer(Principal Financial and Accounting Officer)
 30




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##### Table of Contents



Index to Exhibits
 ExhibitNo.
    
    Description
    
    Page Number10.1
    
    Transition Agreement, dated May 19, 2006, by and between the
company and Larence Park10.2
    
    eFunds Corporation 2006 Stock
Incentive Plan (the 2006 SIP)10.3
    
    eFunds Corporation 2006 Annual Incentive Plan10.4
    
    Form of Paul F. Walsh Restricted Stock Unit Award Agreement
under the 2006 SIP10.5
    
    Amendment No. 1, dated May 10, 2006, to the Credit Agreement
dated July 1, 2005 among eFunds Corporation, J.P. Morgan Chase
Bank, N.A., Bank of America N.A., Wells Fargo Bank National
Association and J.P. Morgan Securities10.6
    
    Form of Employee Option Agreement under the 2006 SIP10.7
    
    Form of Independent Director Option Agreement under the 2006 SIP10.8
    
    Form of Paul F. Walsh Option Agreement under the 2006 SIP10.9
    
    Form of Employee Restricted Stock Unit (RSU) Agreement under
the 2006 SIP10.10
    
    Form of Independent Director RSU Agreement under the 2006 SIP10.11
    
    Employment Agreement, entered into as of May 29, 2001, by and
between Gary Palmer and Wildcard Systems, Inc.31.1
    
    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
 31