eFunds Corporation

eFunds Corporation
Gainey Center II
8501 North Scottsdale Road
AZ 85253
United States
Tel: 1 480 629 7700
Fax: 1 602 629 7701
Web: www.efunds.com
New York Ticker: EFDS
No. Employees: 5,400
Turnover: (US$ Mn)532
Financial Year End: December
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A statement by Paul F. Walsh, chairman of the board and CEO of eFunds Corporation, follows. This statement has been taken from the compan�ys 2003 Annual Report.

We reported net income of $28.9 million, or $0.61 per diluted share in 2003, compared to net income of $24.6 million, or $0.53 per diluted share in 2002. We generated strong operating cash flow of approximately $73 million and we ended the year with $158 million in cash on our balance sheet. We continued to see positive shifts in our revenue mix, even though net revenues declined modestly to $532 million in 2003 from the $543 million we recorded in 2002. This decline is largely attributable to the loss of two large processing contracts during 2002 and a decline in IT consulting services revenue during 2003 compared to 2002.

We continued to strengthen our management team with the recent appointment of John B. (Jack) Benton to Senior Vice President, International. We also expanded the industry expertise and breadth of our board of directors with the addition of Richard J. Almeida, the former Chairman and CEO of Heller Financial. Finally, we selected KPMG LLP as our new independent auditors in November 2003 and I am pleased to report that the transition went very smoothly. We believe that our 2003 accomplishments and efforts better position eFunds to drive value for our shareholders in 2004 and beyond.

2003 Accomplishments vs. Key Initiatives As we stated previously, 2003 was a transition year for eFunds. Our agenda was highly focused on four key initiatives that crossed all of eFunds� businesses. I�d like to highlight the progress we made during 2003 on these various initiatives.

Build a Solid Operating Platform�We implemented a company-wide program called SmartWorks to improve our business processes and make eFunds a more responsive, more flexible, higher return organization. This effort exceeded our original expectations for generating ongoing cost savings, allowing us to improve returns and free up capital resources for reinvestment in our business. We made a number of fundamental changes to our operating processes during 2003, including the relocation and consolidation of certain call center sites; the insourcing of call center work that had previously been outsourced to another third party; the movement of the account management function to the business segments to increase customer focus and accountability for responding to customer needs; the strengthening of our sales leadership in each of our business segments and the realignment of our human resources organization to provide more convenient and lower cost service, self service options, as well as to improve associate access to our HR professionals.

Focus on the Customer�We spent a lot of time personally meeting and reengaging with our customers and our efforts were well received�as evidenced by the contract extensions we signed with CO-OP and Citishare and the new alliance relationships we established with BISYS and MasterCard. These new wins and renewals represent important progress towards the goal of building a sustainable base of profitable recurring revenue that will help serve as a platform from which we can grow.

Improve Business Performance Metrics�We introduced new business segment reporting, well-defined performance metrics and improved business analytics. We established return-oninvested- capital (ROIC) as the primary performance metric for how we make internal decisions and set priorities regarding the investment or deployment of capital for internal purposes and M&A activity. We understand fully that our fundamental obligation is to produce returns that exceed our cost of capital and ultimately produce returns consistent with the top performers in the industries we serve.

FutureWorks�Our strategic plan, which was approved by our Board of Directors in May 2003, established a clear direction for eFunds as a corporation and for each of our business segments. Within our plan, we defined our core value proposition as optimizing the value of consumer transaction accounts for our customers. We developed our philosophy that eFunds is best positioned as �One Company, Multiple Parts� and we determined that our customer emphasis will continue to be on the financial services, retail, telecommunications and government sectors.

While our primary focus in 2003 was to improve returns, particularly return on invested capital, we also made great progress as we executed against the strategy that forms the foundation for our future growth. We established a number of strategic alliances and/or channel partnerships that allow us to combine our respective capabilities to create unique opportunities in the marketplace and to provide better offerings to our customers. We pursued acquisitions in our core markets that complemented our existing solutions offerings while also providing access to new markets and we validated this strategy with acquisition of Oasis Technology Ltd. in Toronto, Canada. The acquisition of Oasis also affirmed our desire to expand internationally into targeted markets that offer significant opportunities for longterm growth.

Lastly, recognizing that the associates of eFunds are those really creating the value for our customers and shareholders, we focused on improving associate engagement through a number of initiatives, such as a renewed commitment to the purpose and values of eFunds, corporate-wide communications and recognition programs, as well as new benefit programs providing greater value and flexibility for our associates.

Focused on Our Future: In 2004, we will continue to focus on our business improvement initiatives and build upon our 2003 progress. We expect to see revenue growth and continued margin improvement as we reinvest in our business.

SmartWorks�We will continue to strengthen our operating platform as we implement additional SmartWorks recommendations in a number of key areas of our Company, such as Customer Care and Strategic Sourcing. Additionally, we will be launching efforts to re-architect our technical infrastructure to maintain and enhance eFunds� �technology edge� and to ensure �best of class� availability and reliability of our core systems. In this regard, we will be making fairly significant capital investments this year and will continue making similar investments over the next several years.

Improve Business Performance Metrics�We will continue to enhance our financial metrics, our operational and financial controls, our ability to prudently invest in our business, and our commitment to producing consistent and predictable results. We will also successfully complete the work necessary to comply with the requirements of Section 404 of the Sarbanes-Oxley Act.

Focus on the Customer�In 2004, eFunds will become even more �customer centric.� We will be developing and implementing a brand strategy that positions eFunds as the �best of breed� solutions provider in our industry. In conjunction with this effort, we will be implementing rigorous customer satisfaction measurements as a key decision factor throughout the company leadership. In addition, we will be implementing an �Enterprise Account Management� initiative to deepen and expand customer relationships by leveraging the full breadth of solutions available at eFunds.

FutureWorks�We will refine our strategic direction to better understand the impact of changing market dynamics on our business, as well as on our customers� businesses, while pursuing opportunities for long-term growth. As part of this effort, we will be developing specific product plans for each line of business that will add to our competitive position, improve customer satisfaction and enhance our profitability. We will also continue to pursue opportunities that expand our business reach, such as building new strategic alliances and partnerships and making highly targeted tuck-in acquisitions that complement our existing offerings.

Throughout 2004, we will also build upon efforts to improve associate engagement through the development of leadership models, improved associate communications and other efforts to solidify all associates acting as one team, focusing and executing against our top priorities.

This is a time of fundamental change in our industry. Consolidation among providers and buyers is a significant trend with technology and regulatory changes contributing to the shift to electronic payments. We believe our end-to-end payment, ATM, risk management and outsourcing solutions provide unmatched value to our customers.

The future for eFunds is bright. We have strong, stable core businesses that operate in large, growing markets. We believe that the transformation of eFunds into a global leader for payment solutions is a success story in the making, one that will benefit our investors, customers, employees and the markets we serve.
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