Net Revenue of $134 Million
Fully Diluted Earnings Per Share of $0.22
India Tax Dispute Resolved
SCOTTSDALE, Ariz., May 9 /PRNewswire-FirstCall/ -- EFD (NYSE: EFD), the
company that delivers innovative enterprise payments and data & decisioning
solutions, today reported that operating income in the first quarter of 2007
increased 10% to $17 million, or 12.4% of net revenues, as compared to
$15 million, or 11% of net revenues, reported in the first quarter of 2006.
First quarter net income was $11 million, or $0.22 per diluted share, compared
to net income of $11 million, or $0.23 per diluted share, reported for the
same quarter in 2006. Revenues in the first quarter declined 4% from the
$140 million reported in the prior year quarter to $134 million due to
previously disclosed contract roll-offs that occurred in mid-2006.
The Company also reported that, subsequent to quarter end, it has resolved
the Indian Tax Dispute referenced in its prior public filings. This
resolution is not expected to have a material impact on the Company's
effective tax rate or results of operations in 2007.
'During the quarter, we continued to see revenue growth in our EFT
processing and software businesses and continued margin expansion on a
consolidated basis. We also launched our Integrated Fraud Platform solution
during the quarter and received a strong level of interest in the
marketplace,' said Paul F. Walsh, Chairman and Chief Executive Officer. 'We
feel that our first quarter results reflect progress towards meeting our full
year financial and operational objectives,' stated Walsh.
The Company also reported that it has recently been approached by certain
strategic and financial parties who have expressed a desire to explore
possible strategic alternatives. The Board of Directors has formed a Review
Committee and directed Goldman, Sachs & Co. and BlackRock, Inc., its
independent financial advisors, to assist it in exploring all of the Company's
strategic options, including potential merger opportunities. No decision with
respect to any transaction has been made and there can be no assurance that a
formal proposal or offer will be presented or, if any such proposal or offer
is presented, that a transaction will be approved by the Board.
For the full year 2007, the Company expects total net revenues and diluted
earnings per share to fall within its previously published ranges of
$591 million to $613 million of total revenues, with diluted earnings per
share between $1.30 and $1.42. The Company expects actual results to trend
towards the lower end of these ranges.
As a matter of policy, the Company does not comment on or provide the
public with updates as to the status of any informal expressions of interest
or formal proposals or offers presented to the Company from time to time, or
the course of discussions with any prospective counterparties, nor will it
comment upon rumors with regard to either of the foregoing or make any further
announcement regarding the Board's or the Review Committee's deliberations
until such time, if ever, that it enters into a definitive agreement regarding
a transaction or is otherwise required to make an announcement.
Conference Call
EFD|eFunds will hold a conference call today at 10:00 a.m. EDT to discuss
the Company's quarterly financial performance and provide additional
information regarding its rationale for exploring possible strategic
alternatives. To listen to the conference call, dial 800-399-5351
(International callers dial 706-643-1939) and provide the operator with the
Conference ID number 7265475. The call will also be broadcast on the
Company's Web site at www.efunds.com under the 'Investor Relations' tab.
Interested parties are encouraged to click on the web cast link 10 to 15
minutes prior to the start of the conference call. Please note that the
Company will not be taking questions during the call.
Replay Information
A replay of the conference call will be available beginning two hours
after the call's completion and will play through 11:59 p.m. EDT on May 23,
2007. You may access the replay by dialing 800-642-1687 (international
callers dial 706-645-9291) and entering the Conference ID number 7265475.
Additionally, a replay of the conference call will be available via the eFunds
Web site at www.efunds.com.
About EFD | eFunds Corporation
EFD is the payments solutions company. With the unique ability to take an
integrated view of enterprise payments and data & decisioning, EFD provides
financial services companies and other large enterprises with business insight
to make better new account decisions, improve fraud detection and management
and streamline payment processing. EFD's flexible delivery model means
solutions can be run in-house, outsourced or anything in between, helping
customers achieve operational efficiency and low cost of ownership while
building long-term customer value. From the point of account opening to the
settlement of every transaction -- debit, credit, or prepaid -- EFD helps
businesses win more of the right customers, serve them more efficiently and
keep them. Additional information is available at www.eFunds.com.
Statements made in this release concerning the Company's or management's
intentions, expectations, or predictions about future results or events are
'forward-looking statements' within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are necessarily subject to
risks and uncertainties that could cause actual results to vary from stated
expectations and such variations could be material and adverse. Factors that
could result in such a variation include, but are not limited to, the inherent
unreliability of earnings and revenue growth predictions due to numerous
factors, including many beyond the Company's control, potential difficulties,
delays and unanticipated expenses inherent in the development and marketing of
new products and services, competitive factors, the unpredictability of merger
and acquisition activity, and the numerous risks and potential additional
costs, disruptions and delays associated with the establishment of new
business initiatives. Additional information concerning these and other
factors that could cause actual results to differ materially from the
Company's current expectations is contained in the Company's Annual Report on
Form 10-K for the period ending December 31, 2006.
EFD|EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except Three Months Ended March 31,
per share amounts) 2007 2006
Net revenue $134,042 100.0% $139,738 100.0%
Operating expenses
Processing, communication
and service costs 34,579 25.8% 35,293 25.3%
Employee costs 57,607 43.0% 59,078 42.3%
Depreciation and
amortization 12,025 9.0% 11,778 8.4%
Other operating costs 13,200 9.8% 18,420 13.2%
Total operating expenses 117,411 87.6% 124,569 89.1%
Income from operations 16,631 12.4% 15,169 10.9%
Interest expense (1,431) -1.1% (1,576) -1.1%
Other income - net 967 0.7% 807 0.6%
Income before income taxes 16,167 12.1% 14,400 10.3%
Provision for income
taxes(1) (5,659) -4.2% (3,740) -2.7%
Net income $10,508 7.8% $10,660 7.6%
Shares outstanding
Basic 47,205 46,145
Diluted 48,084 47,026
Earnings per share
Basic $0.22 $0.23
Diluted $0.22 $0.23
(1) Our effective tax rate during the first three months of 2006 reflects
a $1.3 million tax benefit associated with our prepaid solutions
business.
EFD|EFUNDS CORPORATION
CONSOLIDATED BALANCE SHEET
March 31, December 31,
2007 2006
(in thousands)
Current assets:
Cash and cash equivalents $120,898 $126,740
Short term investments 20,440 7,000
Restricted cash 4,216 3,730
Settlement assets 21,695 58,328
Accounts receivable - net 102,447 107,188
Deferred income taxes 11,991 12,781
Prepaid expenses and other current assets 25,023 26,115
Total current assets 306,710 341,882
Property and equipment - net 66,448 60,145
Intangibles-net 393,903 395,785
Other non-current assets 28,526 26,726
Total assets $795,587 $824,538
Current liabilities:
Accounts payable $16,518 $24,021
Settlement liabilities 19,248 54,792
Accrued liabilities 39,486 50,577
Acquisition Holdbacks 6,080 6,053
Deferred revenue and gains 27,109 22,052
Long-term debt due within one year 4,071 4,438
Total current liabilities 112,512 161,933
Long-term deferred gains 15,689 18,078
Long-term debt 102,113 102,656
Other long-term liabilities 13,843 7,345
Total liabilities 244,157 290,012
Stockholders' equity:
Common stock 519 517
Additional paid-in capital 530,229 524,980
Treasury stock at cost (100,000) (100,000)
Retained earnings 116,199 105,690
Accumulated other comprehensive income 4,483 3,339
Stockholders' equity 551,430 534,526
Total liabilities and stockholders'
equity $795,587 $824,538
EFD|EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
2007 2006
(in thousands)
Cash flows from operating activities:
Net income $10,508 $10,660
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 4,139 4,380
Amortization 7,886 7,398
Stock-based compensation 2,040 2,594
Excess tax benefit from share-based
compensation (165) (912)
Deferred income taxes 4,866 10,828
Restructuring & other adjustments (2,022) --
Other - net 87 28
Changes in assets and liabilities
Restricted cash (486) (240)
Accounts receivable 4,741 6,082
Accounts payable (7,502) (2,885)
Deferred revenue gains 2,667 138
Accrued compensation and employee
benefits (1,841) (17,726)
Income taxes receivable/payable (4,428) (17,096)
Other assets and liabilities (4,321) 570
Net cash provided by operating
activities 16,169 3,819
Cash flows from investing activities:
Capital expenditures (10,681) (8,481)
Purchases of short-term investments (24,715)
Proceeds from sale of short-term
investments 11,275
Proceeds from sale of NDVS 2,000
Other - net (27) (815)
Net cash used in investing activities (24,148) (7,296)
Cash flows from financing activities:
Issuance of common stock 2,892 6,637
Excess tax benefit from share-based
compensation 165 912
Payments on long-term debt (920) (1,010)
Other 23
Net cash provided by financing
activities 2,137 6,562
Net increase (decrease) in cash and
cash equivalents (5,842) 3,085
Cash and cash equivalents at beginning
of period 126,740 85,987
Cash and cash equivalents at end of period $120,898 $89,072
EFD|EFUNDS CORPORATION
SEGMENT SUMMARY DATA
(Unaudited)
Three Months Ended
March 31, Change
2007(2) 2006 $ %
(in thousands)
Net revenue:
US Payments $67,660 $74,639 (6,979) -9%
US Risk Management 47,132 49,886 (2,754) -6%
International 19,250 15,213 4,037 27%
Total net revenue 134,042 139,738 (5,696) -4%
Operating expenses:
Processing, employee and
other costs -
US Payments 54,702 65,251 (10,549) -16%
US Risk Management 26,378 29,520 (3,142) -11%
International 21,134 15,322 5,812 38%
Total processing, employee
and other costs 102,214 110,093 (7,879) -7%
Allocated overhead -
US Payments 4,008 3,927 81 2%
US Risk Management 3,856 3,316 540 16%
International 2,162 1,926 236 12%
Corporate 5,171 5,307 (136) -3%
Total allocated overhead 15,197 14,476 721 5%
Income (loss) from operations:
US Payments 8,950 5,461 3,489 64%
US Risk Management 16,898 17,050 (152) -1%
International (4,046) (2,035) (2,011) 99%
Corporate (5,171) (5,307) 136 3%
Total income from
operations $16,631 $15,169 1,462 10%
(2) Beginning January 1, 2007, the financial results related to
international customers in the Prepaid Solutions business have been
reported in the international segment level results above. 2006
results have not been reclassified to this new presentation.
EFD|EFUNDS CORPORATION
SUPPLEMENTAL REVENUE DATA
Three Months Ended March 31,
2007(3) 2006 %
Change
(in millions)
US Payments
EFT processing $36.9 $34.9 6%
Prepaid solutions 18.2 21.8 -17%
Government 9.6 10.1 -5%
Software sales and other services 2.9 7.8 -63%
$67.6 $74.6 -9%
US Risk Management
Financial institution products $37.8 $38.0 -1%
Retail products 4.1 4.6 -11%
BPO 5.2 7.3 -29%
$47.1 $49.9 -6%
International
Software sales $7.9 $6.1 30%
BPO 7.1 7.8 -9%
Prepaid solutions 2.4 -- *
EFT processing 1.9 1.3 46%
$19.3 $15.2 27%
* Represents an increase or decrease greater than 100%.
(3) Beginning January 1, 2007, the financial results related to
international customers in the Prepaid Solutions business have been
reported in the international segment level results above. 2006
results have not been reclassified to this new presentation.
SOURCE EFD
