EFUNDS CORP, S-4, 2000-08-25

EFUNDS CORP
S-4, 2000-08-25
BUSINESS SERVICES, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on August 25, 2000

Registration No. 333-

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

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eFUNDS CORPORATION
(Exact name of Registrant as specified in its charter)

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Delaware 7374 39-1506286
(Primary Standard Industrial (I.R.S. Employer
(State or Jurisdiction of Classification Code Number) Identification No.)
Inorporationcor Organization)

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400 W. Deluxe Parkway
P. O. Box 12536
Milwaukee, Wisconsin 53212
(414) 341-5000
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)

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John A. Blanchard III
Chairman and Chief Executive Officer
eFunds Corporation
400 W. Deluxe Parkway
P.O. Box 12536
Milwaukee, Wisconsin 53212
(414) 341-5000
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent For Service)

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Copy to:
Robert A. Rosenbaum, Esq. John D. Lobrano, Esq.
Jonathan B. Abram, Esq. Simpson Thacher & Bartlett
Dorsey & Whitney LLP 425 Lexington Avenue
220 South Sixth Street New York, New York 10017
Minneapolis, MN 55402 (212) 455-2000
(612) 340-2600

--------------

Approximate date of commencement of proposed sale to the public: As promptly
as practicable after this Registration Statement becomes effective and the
other conditions to the commencement of the exchange offer described herein
have been satisfied or waived.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
CALCULATION OF REGISTRATION FEE:
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<TABLE>
<CAPTION>
Proposed
maximum Proposed
aggregate maximum
Title of each class of offering aggregate Amount of
securities to be Amount to be price per unit offering registration
registered registered (1) (2) price (2) fee
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share (3)..... up to 40,000,000 shares $9.22 $368,800,000 $97,364
</TABLE>
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(1) The maximum number of eFunds Corporation shares offered by Deluxe
Corporation in exchange for Deluxe Corporation shares, as described in the
Offering Circular-Prospectus filed as part of this Registration Statement.
(2) Estimated solely for purposes of calculating the registration fee and
computed pursuant to Rule 457(f)(1) under the Securities Act of 1933, based
on the average of the high and low per share sale prices reported on the
Nasdaq National Market on August 18, 2000.
(3) Includes corresponding rights to acquire shares of eFunds Corporation
common stock pursuant to the Rights Agreement, dated as of May 1, 2000,
between eFunds Corporation and EquiServe Trust Company N.A.

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this offering circular-prospectus is not complete and may +
+be changed. Deluxe may not sell these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This offering circular-prospectus is not an offer to sell these securities +
+and is not a solicitation of an offer to buy these securities in any state or +
+other jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
(Subject to Completion, dated August 25, 2000)

Offering Circular-Prospectus

shares of eFunds Corporation common stock
for each share of
Deluxe Corporation common stock
up to a maximum of shares of Deluxe common stock

The exchange offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on , 2000, unless extended.

Deluxe Corporation has announced a plan to establish its eFunds subsidiary as
a fully independent public company. In order to implement this plan, Deluxe is
offering you, as a shareholder of Deluxe, the opportunity to exchange (on a
tax-free basis) Deluxe shares which you own for eFunds shares owned by Deluxe.
Deluxe currently owns 40,000,000 eFunds shares. As of August 11, 2000 there
were 72,331,268 Deluxe shares outstanding and 45,500,000 eFunds shares
outstanding. Deluxe shares are listed on the New York Stock Exchange under the
symbol "DLX" and eFunds shares are listed on the Nasdaq National Market under
the symbol "EFDS".

Deluxe will exchange eFunds shares for each Deluxe share that is validly
tendered and accepted by Deluxe in the exchange offer. If the collective
response of shareholders is such that more than Deluxe shares are validly
tendered and not properly withdrawn, then the number of Deluxe shares to be
accepted from each shareholder who tendered shares will be reduced on a pro
rata basis, except for tenders by holders of less than 100 Deluxe shares who
tender and do not properly withdraw all of their shares. If the conditions to
the exchange offer are satisfied and fewer than but more than Deluxe
shares are validly tendered and not properly withdrawn, Deluxe will accept all
shares validly tendered and not properly withdrawn, and will distribute its
remaining eFunds shares to its remaining shareholders, as of a record date to
be determined following the completion of the exchange offer, on a pro rata
basis through a "spin-off" transaction. The exchange offer is subject to
certain conditions, including a condition that at least Deluxe shares are
validly tendered and not properly withdrawn pursuant to the exchange offer.

In order to facilitate a successful distribution of eFunds shares, Deluxe has
established the exchange ratio at a level that, as of , 2000, would provide
tendering shareholders with eFunds shares having a market value greater than
the market value of Deluxe shares tendered. We refer to this greater value as
the "anticipated premium." Based on the closing sale prices for eFunds and
Deluxe shares on , 2000, the anticipated premium would be approximately %.
No one can, however, predict what the amount of the actual premium, if any,
will be upon completion of the exchange offer.

Investing in the eFunds shares or Deluxe shares involves risks. You should
carefully read the discussion entitled "Risk Factors" beginning on page 18.

None of Deluxe, eFunds, the dealer manager, the information agent, the
exchange agent or any soliciting dealer makes any recommendation as to whether
you should tender your Deluxe shares. You must make your own decision after
reading this document and consulting with your advisors based on your own
financial position and requirements. We urge you to read this offering
circular-prospectus very carefully.

Neither the Securities and Exchange Commission nor any state or foreign
securities commission has approved or disapproved of these securities or
determined if this offering circular-prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

Deluxe has retained the services of Lehman Brothers Inc., as dealer manager,
and Morrow & Co., Inc., as information agent, to assist you in connection with
the exchange offer. You may call the information agent at 1-800-566-9061,
(toll-free) directly to request additional documents and to ask any questions.

The dealer manager for this exchange offer is:

LEHMAN BROTHERS

, 2000
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Questions and Answers About the Exchange Offer........................... 3
Summary.................................................................. 9
Risk Factors............................................................. 18
Cautionary Statement Concerning Forward-Looking Statements............... 36
The Exchange Offer....................................................... 37
Terms of the Exchange Offer.............................................. 40
The Spin-Off............................................................. 53
Market Prices and Dividend Information................................... 54
Capitalization of Deluxe................................................. 56
Unaudited Pro Forma Condensed Consolidated Financial Statements of
Deluxe.................................................................. 57
Selected Financial Data of Deluxe........................................ 60
Management's Discussion and Analysis of Financial Condition and Results
of Operations of Deluxe................................................. 61
Selected Financial Data of eFunds........................................ 73
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management's Discussion and Analysis of Financial Condition and Results
of Operations of eFunds................................................. 75
Business of Deluxe....................................................... 90
Business of eFunds....................................................... 98
Management of eFunds..................................................... 117
Executive Compensation for eFunds........................................ 126
Shares Eligible for Future Sales......................................... 128
Description of Capital Stock of eFunds................................... 129
Comparison of Rights of Shareholders of eFunds and Shareholders of
Deluxe.................................................................. 134
Agreements Between Deluxe and eFunds..................................... 144
Certain United States Federal Income Tax Consequences.................... 152
Legal Matters............................................................ 153
Experts.................................................................. 153
Where You Can Find More Information...................................... 153
Index to Consolidated Financial Statements............................... F-1
</TABLE>

You should rely only on the information contained in this document. None of
Deluxe, eFunds, the dealer manager, the information agent, the exchange agent
or any soliciting dealer has authorized anyone to provide you with information
different from that contained in this document. Deluxe is offering to sell, and
seeking offers to buy, the securities offered by this document only in
jurisdictions where offers and sales are permitted under the laws of those
jurisdictions. The information contained in this document is accurate only as
of the date of this document regardless of the time of delivery or of any sale
of the securities offered by this document.

----------------

This document incorporates by reference important business, financial and
other information about Deluxe that is not included in or delivered with this
document. See "Where You Can Find More Information" on page 153 for a list of
the documents that have been incorporated by reference into this document.

Documents incorporated by reference are available from Deluxe without
charge, excluding all exhibits unless specifically incorporated by reference as
exhibits in this document.

1
<PAGE>

Written and telephone requests for any of these documents should be directed
to Deluxe as indicated below:

Deluxe Corporation
3680 Victoria Street North
Shoreview, Minnesota 55126
Attn: Shareowner Services
Telephone: (651) 450-4053

If you would like to request copies of these documents, please do so by
, 2000 in order to receive them before the expiration of the exchange offer.
In the event that the exchange offer period is extended by Deluxe, you must
submit your request no later than five business days before the expiration
date, as extended by Deluxe.

Deluxe(R), Deluxe logo(R), SecureMailSM, ONE(R), Checks Unlimited(TM),
Designer Checks(R), Plaid MoonSM, PlaidMoon.comSM and Plaid Moon logo are
trademarks and service marks of Deluxe.

AccountChex P1usSM, Connex(TM), ChexSystems logo, DebitBureau(R), eFunds,
FraudFinderSM, Integreat!SM, New AccountChexSM, SCANSM, QualiFileSM and
DataNavigator(TM) are eFunds' trademarks and service marks. Other trademarks
and trade names referred to in this document are the property of their
respective owners.

2
<PAGE>

QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER

Q1: Why has Deluxe decided to separate eFunds from the rest of Deluxe?

A1: In the past, eFunds' businesses were conducted through various operating
units of Deluxe. On January 31, 2000, Deluxe announced a plan to combine
these businesses into a separate publicly-traded company. As part of the
separation, eFunds completed an initial public offering of its common stock
on June 30, 2000.

The following are the principal reasons Deluxe decided to separate eFunds
from Deluxe:

. Facilitate access to capital. eFunds must be able to raise substantial
capital in cost effective ways in order to compete effectively and
achieve its growth objectives, expand its capabilities to serve new
customers, markets and geographic areas, create new product and service
offerings, successfully complete strategic acquisitions and enter other
alliances such as joint ventures. Deluxe and eFunds believe that the
separation of the two businesses will improve coverage of eFunds by
investment analysts and facilitate the public market valuation of
eFunds. As a result, it is anticipated that eFunds will benefit from
improved access to public markets and lower its cost of capital.
Further, the separated business units will eliminate existing
competition between Deluxe and eFunds for available cash of Deluxe.
Deluxe believes that this competition has been an impediment to both
businesses.

. Achieve greater strategic focus. Deluxe and eFunds believe that the
separation will allow each of them to concentrate on their core
businesses. As a result, each company should have a sharper focus on
its business and growth opportunities.

. Diminished synergies. Although financial institutions form a common
customer base for both Deluxe and eFunds, Deluxe found that financial
institution customers did not fully value the combination of products
and services offered by Deluxe and eFunds. As a result, Deluxe did not
realize the synergies associated with being a single vendor of the
combined products and services to its financial institution customers.
In addition, as the businesses of eFunds and Deluxe separately
established themselves with their customers as viable, distinct
operations, synergistic benefits of retaining both businesses as part
of a single enterprise further diminished.

. Increase ability to attract, retain and motivate employees. Deluxe and
eFunds believe that incentive compensation arrangements for key eFunds
employees that are directly related to the market performance of
publicly traded eFunds shares will enable eFunds to provide such
employees with enhanced incentives for performance. The separation will
enable eFunds to offer its key employees compensation directly linked
to the performance of its businesses, which eFunds expects will enhance
its ability to attract and retain qualified personnel.

. Provide eFunds with an acquisition currency. Deluxe and eFunds believe
that the separation will enhance eFunds' ability to engage in future
acquisitions in which eFunds shares are issued as consideration,
although eFunds currently does not have any agreements or
understandings for any acquisitions. Provisions of the Internal Revenue
Code may limit the number of eFunds shares available for such
acquisitions for a period of time. Deluxe and eFunds also believe that
the separation will facilitate future partnerships, alliances and other
arrangements between eFunds and other entities.

Q2: Why did Deluxe choose the exchange offer as the way to separate eFunds?

A2: Deluxe believes that the exchange offer is a tax efficient way to achieve
the goals outlined in A1 above. The exchange offer also allows you to
allocate your Deluxe investment between Deluxe and eFunds on a tax-free
basis for United States federal income tax purposes and provides you with
the opportunity to receive any anticipated premium referred to in Q9.

Q3: What other alternatives did Deluxe consider before choosing the exchange
offer?

A3: As part of its analysis of a separation of eFunds, the board of directors
of Deluxe, in consultation with its advisors, considered a number of
alternative structures, including a tracking stock alternative and the sale

3
<PAGE>

of certain of Deluxe's businesses, before it decided to pursue a complete
separation of eFunds through either an exchange offer or a spin-off.
Deluxe decided that a spin-off was not the preferred alternative because
it would not allow you to decide whether to retain your investment in
Deluxe or to exchange all or a portion of your investment in Deluxe for an
investment in eFunds on a tax-free basis.

Q4: Who is offering to buy my securities?

A4: Deluxe is offering you the opportunity to exchange all or some of your
Deluxe shares for eFunds shares that Deluxe currently owns. You may elect
to retain all of your Deluxe shares by not participating in the exchange
offer.

Q5: What are the classes and amounts of securities sought in the exchange
offer?

A5: Deluxe is offering to exchange all of the 40,000,000 eFunds shares that it
owns for Deluxe shares that are validly tendered and not properly
withdrawn in the exchange offer. In light of the exchange ratio of
eFunds shares for each Deluxe share, a maximum of Deluxe shares may be
accepted for exchange in the exchange offer. As of August 11, 2000, there
were 72,331,268 Deluxe shares outstanding.

Q6: What is the exchange ratio?

A6: The exchange ratio of represents the number of eFunds shares which
Deluxe shareholders will receive for each Deluxe share validly tendered
and not properly withdrawn in the exchange offer.

Q7: How many eFunds shares will I receive for each Deluxe share that I tender?

A7: You will receive eFunds shares for each Deluxe share that you validly
tender and do not properly withdraw that is accepted by Deluxe. No
fractional eFunds shares will be issued in this exchange offer. Instead,
you will be paid cash in exchange for any fraction of an eFunds share to
which you would otherwise be entitled.

Q8: How do I decide whether to participate in the exchange offer?

A8: Whether you should participate in the exchange offer depends on many
factors. You should consider, among other things:

. your view of the relative values of a single Deluxe share and of a
single eFunds share;

. your individual investment strategy with regard to the two stocks; and

. your opportunity to receive the anticipated premium, if any.

In addition, you should consider all of the factors described under "Risk
Factors" starting at page 18. None of Deluxe, eFunds, the dealer manager,
the information agent, the exchange agent, soliciting dealers, the board
of directors of Deluxe or the board of directors of eFunds makes any
recommendation as to whether you should tender or refrain from tendering
your Deluxe shares. You must make your own decision after reading this
document and consulting with your advisors based on your own financial
position and requirements.

Q9: What is the anticipated premium?

A9: Based on the closing sale prices for Deluxe (NYSE: DLX) and eFunds shares
(NASDAQ: EFDS) on , 2000, the exchange ratio would result in a
Deluxe shareholder receiving eFunds shares with a market value greater
than the market value of Deluxe shares tendered for exchange. No one can,
however, predict the amount of the actual premium in the exchange offer or
whether in fact there will be a premium at the expiration of the exchange
offer. In addition, no one can predict the prices at which eFunds or
Deluxe shares will trade over time.

You can calculate the anticipated premium, if any, as a percentage, by
using the following formula:

<TABLE>
<C> <S>
Exchange Ratio x Price of one eFunds share -1 x 100
------------------------------------------
Price of one Deluxe share
</TABLE>

4
<PAGE>

For example: Assume a price of $ for a Deluxe share and a price of $
for an eFunds share, the closing sale prices of Deluxe and eFunds shares
on , 2000. At the exchange ratio of eFunds shares for each Deluxe
share, the anticipated premium would be approximately % or $ for each
Deluxe share tendered.

Q10: Is the financial condition of either Deluxe or eFunds relevant to my
decision whether to participate in the exchange offer?

A10: Yes. Whether you should participate in the exchange offer depends on many
factors, including your views of the financial condition and prospects of
Deluxe and eFunds. See Q8 for additional factors to consider.

Q11: Can I participate with only a portion of my Deluxe shares in the exchange
offer?

A11: Yes. You may tender all, some or none of your Deluxe shares.

Q12: Do I do anything if I want to retain all of my Deluxe shares?

A12: No. If you want to retain all of your Deluxe shares, you do not need to
take any action.

Q13: Will executive officers and directors of Deluxe be tendering their Deluxe
shares in the exchange offer?

A13: All shareholders of Deluxe, including shareholders who are executive
officers and directors of Deluxe or eFunds, are eligible to participate in
the exchange offer. As of the date of this offering circular-prospectus,
Lawrence J. Mosner, who currently serves as the Vice Chairman of Deluxe
and who will serve as the chairman and chief executive officer of Deluxe
upon completion of the exchange offer and spin-off, if any, has indicated
that he does not intend to tender any of his Deluxe shares in the
exchange offer. As of the date of this offering circular-prospectus, John
A. Blanchard III, the current chairman and chief executive officer of
Deluxe and chairman and chief executive officer of eFunds, has indicated
that he intends to tender all of the Deluxe shares he holds in the
exchange offer. In addition, other executive officers and directors of
Deluxe have indicated that they intend to tender Deluxe shares out of
the Deluxe shares they own, although the actual number of Deluxe
shares tendered by executive officers and directors of Deluxe may vary.

Q14: How do I participate in the exchange offer?

A14: Complete and sign the letter of transmittal designating the number of
Deluxe shares you wish to tender. Send the completed and signed letter of
transmittal, together with your share certificates and any other documents
required by the letter of transmittal, so that it is received by the
exchange agent at one of the addresses specified on the back cover of this
offering circular-prospectus before the expiration of the exchange offer.
Do not send your certificates to Deluxe, eFunds, the dealer manager, the
information agent or any soliciting dealer. If your broker holds your
shares, please see Q17 for information concerning how you can participate
in the exchange offer. If you are an employee or former employee of Deluxe
and its subsidiaries and you hold uncertificated shares, please see Q18
for information concerning how you can tender uncertificated "book-entry"
Deluxe shares in the exchange offer.

Q15: Will participants in Deluxe's Employee Stock Purchase Plan be able to
participate in the exchange offer?

A15: Yes, so long as the shares you wish to tender are no longer subject to a
holding period. Participants in the Deluxe Employee Stock Purchase Plan
may tender all, some or none of the Deluxe shares attributable to their
stock purchase accounts, other than shares which are still subject to a
holding period, by completing a letter of transmittal and complying with
the procedures outlined in Q14.

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Q16: Some of the Deluxe shares I purchased through the Deluxe Employee Stock
Purchase Plan remain subject to a holding period. Can I tender these
shares in the exchange offer?

A16: No. You may tender shares you acquired through the Deluxe Employee Stock
Purchase Plan only if the one-year holding period applicable to the Deluxe
shares you acquired under the Plan has been satisfied.

Q17: My shares are held by my broker. What should I do if I want to participate
in the exchange offer?

A17: If your shares are held by your broker and are not certificated in your
name, that is, your shares are in "street name," you should receive
instructions from your broker on how to participate in the exchange offer.
If your Deluxe shares are held through your broker, you cannot tender your
shares directly to the exchange agent. If you have not yet received
instructions from your broker, please contact your broker directly.

Q18: My shares are uncertificated "book-entry" shares held by Deluxe's transfer
agent. What should I do if I want to participate in the exchange offer?

A18: This circumstance will most often apply to current and former employees of
Deluxe and its subsidiaries who purchased Deluxe shares under various
Deluxe employee plans, such as the Deluxe Employee Stock Purchase Plan. If
you are the registered owner of Deluxe shares and your shares are
uncertificated "book-entry" shares held by Deluxe's transfer agent, you
should complete and sign the letter of transmittal designating the number
of Deluxe shares you wish to tender. Send the completed and signed letter
of transmittal, together with any other documents required by the letter
of transmittal, so that it is received by the exchange agent at one of the
addresses specified on the back cover of this offering circular-prospectus
before the expiration of the exchange offer. Remember that you may not
tender shares that remain subject to a holding period. Do not send your
documents to Deluxe, eFunds, the dealer manager, the information agent or
any soliciting dealer.

Q19: Can I change my mind after I tender my Deluxe shares?

A19: Yes. You may withdraw tenders of your Deluxe shares any time before the
expiration of the exchange offer by following the withdrawal procedures.
If you change your mind again, you can re-tender your Deluxe shares by
following the tender procedures again prior to the expiration of the
exchange offer. For information on tendering and withdrawing tenders of
Deluxe shares see "Terms of the Exchange Offer--Procedures for Tendering
Deluxe Shares and--Withdrawal Rights" on pages 44 and 47.

Q20: Are there any conditions to Deluxe's obligation to complete the exchange
offer?

A20: Yes. Deluxe's obligation to complete the exchange offer is subject to the
conditions outlined on page 49. In particular, Deluxe is not required to
close the exchange offer unless at least Deluxe shares are validly
tendered and not properly withdrawn pursuant to the exchange offer. In the
event that only this minimum number of Deluxe shares is validly tendered
and not properly withdrawn, and the other conditions to the exchange offer
are satisfied or waived, approximately eFunds shares in the aggregate
would be distributed pursuant to the exchange offer. We refer to the
minimum number of Deluxe shares that must be validly tendered and not
properly withdrawn pursuant to the exchange offer as the "minimum amount."
Deluxe may waive any or all of the conditions to the exchange offer,
including the requirement that the minimum amount of Deluxe shares be
tendered.

Q21: What happens if less than the minimum amount of Deluxe shares is validly
tendered and not properly withdrawn in the exchange offer?

A21: In the event that fewer than Deluxe shares are validly tendered and
not properly withdrawn or if the other conditions to the exchange offer
are not satisfied, Deluxe may waive the applicable condition

6
<PAGE>

or terminate the exchange offer. If the exchange offer is terminated, no
Deluxe shares will be exchanged for eFunds shares. If Deluxe decides to
terminate the exchange offer, it will make a public announcement and
return tendered Deluxe shares as promptly as is practical.

Q22: What happens if the exchange offer is completed but less than all of the
eFunds shares owned by Deluxe are issued in the exchange offer?

A22: Deluxe will distribute any eFunds shares held by it after completion of
the exchange offer to its remaining shareholders, as of a record date to
be determined following the completion of the exchange offer, on a pro
rata basis. We refer to this distribution as the "spin-off." For more
details on the spin-off, see the section entitled "The Spin-Off" on page
53.

Q23: What happens if more than Deluxe shares are validly tendered and not
properly withdrawn, such that more than 40,000,000 shares of eFunds would
be exchanged, i.e., the exchange offer is oversubscribed?

A23: If the exchange offer is oversubscribed, assuming that all of the
conditions of the exchange offer are satisfied or waived, Deluxe shares
which are validly tendered and not properly withdrawn will be accepted
for exchange on a pro rata basis, except for tenders by holders of less
than 100 Deluxe shares who tender and do not properly withdraw all of
their shares. We refer to this pro rata reduction as proration. If the
exchange offer is completed and if you hold of record as of , 2000
less than 100 Deluxe shares, or an odd lot, and you validly tender all of
your shares and do not properly withdraw them, all of your shares will be
accepted for exchange notwithstanding any proration. Any Deluxe shares
not accepted for exchange will be returned to tendering shareholders
promptly following the expiration or termination of the exchange offer.

Q24: When does the exchange offer expire?

A24: The exchange offer and withdrawal rights will expire at 5:00 p.m., New
York City time, on , 2000, unless the exchange offer is extended by
Deluxe. Your tendered Deluxe shares, the letter of transmittal and other
required documents must be received before that time in order to
participate in the exchange offer.

Q25: Can the offer be extended, and under what circumstances?

A25: Yes. Deluxe can extend the offer at any time in its sole discretion and
regardless of whether any condition to the offer has been satisfied or
waived. If Deluxe extends the exchange offer, it will make a public
announcement of the extension no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled expiration
date.

Q26: When will tendering shareholders know the outcome of the exchange offer?

A26: Preliminary results of the exchange offer, including any preliminary
proration factor, will be announced by press release promptly after the
expiration of the exchange offer. Announcement of any final proration
factor should occur approximately five business days after the expiration
of the exchange offer.

Q27: Will I be taxed on the shares of eFunds that I receive in the exchange
offer?

A27: Deluxe has received a private letter ruling from the Internal Revenue
Service to the effect that the exchange offer and any subsequent pro rata
spin-off distribution of eFunds shares will generally be tax-free for
U.S. federal income tax purposes to Deluxe and its shareholders. You
should note that this private letter ruling does not address all aspects
of United States federal income taxation related to the exchange offer
and any spin-off and does not address any state, local or foreign tax
consequences. See "Certain United States Federal Income Tax Consequences"
on page 152 for more information. You should consult your tax advisor as
to the particular tax consequences to you of the exchange offer and any
spin-off.

7
<PAGE>

Q28: What will be the tax basis and holding period of eFunds shares I receive
in exchange for my Deluxe shares?

A28: If you tender all of your Deluxe shares, and they are all accepted for
exchange, the tax basis in the eFunds shares you receive will equal your
tax basis in your Deluxe shares before the exchange.

If you tender fewer than all of your Deluxe shares, or fewer than all of
your Deluxe shares are accepted for exchange, the total tax basis in the
Deluxe shares and eFunds shares that you hold immediately after the
exchange will equal your tax basis in your Deluxe shares before the
exchange. The tax basis of the eFunds shares you receive will not,
however, necessarily equal the tax basis of the Deluxe shares that are
accepted for exchange. The portion of your total tax basis allocated to
eFunds shares you receive in the exchange offer will equal your old tax
basis in all of your old Deluxe shares multiplied by a fraction. This
fraction will be equal to (a) the fair market value of eFunds shares you
receive in the exchange offer divided by (b) the fair market value of
eFunds shares received in the exchange offer plus the fair market value of
the Deluxe shares held immediately after the exchange offer. Stated as a
formula, the basis in your eFunds shares received in the exchange offer
may be determined as follows:

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Basis of Basis of FMV of eFunds shares you receive in the
eFunds your exchange offer
shares you Deluxe --------------------------------------------------
receive in = shares X
the prior to the FMV of eFunds FMV of Deluxe shares
exchange exchange shares you receive in + held by you immediately
offer offer the exchange offer after the exchange offer
</TABLE>

If you receive additional eFunds shares in the spin-off, the same
calculation must be repeated using the tax basis in your remaining Deluxe
shares, as determined following the exchange offer, as the starting point
in the calculation.

For the purposes of determining whether you qualify for long- or short-
term capital gains treatment, your holding period in the eFunds shares you
receive in the exchange offer generally will include your holding period
for the Deluxe shares you exchanged to receive them.

Q29: What will be the tax basis in Deluxe shares that are not exchanged under
the exchange offer?

A29: If you tender fewer than all of your Deluxe shares, or fewer than all of
your Deluxe shares are accepted for exchange, the aggregate tax basis in
your remaining Deluxe shares will equal your aggregate tax basis in your
Deluxe shares before the exchange, less the basis allocated to eFunds
shares as determined under the calculation described in Q28.

Q30: Will I receive dividends from Deluxe after the exchange offer?

A30: You will not receive a Deluxe dividend for any Deluxe shares you exchange
in the exchange offer because you will no longer own these Deluxe shares.
You will continue to receive any dividends, when, as and if declared by
the Deluxe board of directors on any Deluxe shares that you do not
exchange in the exchange offer. eFunds does not currently pay a dividend
on its shares.

Q31: What happens if Deluxe declares a quarterly dividend on Deluxe shares
during the exchange period and I have previously tendered my Deluxe
shares?

A31: If a dividend is declared with a record date before the completion of the
exchange offer, you will be entitled to that dividend with respect to any
Deluxe shares you have tendered in the exchange offer. Tendering your
Deluxe shares in the exchange offer is not a sale or transfer of your
Deluxe shares until they are accepted by Deluxe for exchange upon
completion of the exchange offer.

Q32: Who should I call if I have questions or want copies of additional
documents?

A32: You may call the information agent toll-free at 1-800-566-9061 to request
additional documents and to ask any questions.

8
<PAGE>

SUMMARY

This summary highlights selected information from this offering circular-
prospectus and may not contain all the information that is important to you. To
understand the exchange offer fully and for a more complete description of the
legal terms of the exchange offer, you should carefully read this entire
document and the documents to which we refer you. See "Where You Can Find More
Information" on page 153.

Deluxe Corporation

Deluxe is the largest provider of checks in the United States, both in terms
of revenues and number of checks produced. Deluxe sells checks to financial
institutions who then resell these checks to their customers. Deluxe also sells
checks directly to consumers. In addition, Deluxe sells checks and related
products to small businesses. Excluding net sales related to the eFunds
businesses and businesses sold in 1999, sales of checks and check-related
products and services accounted for approximately 97% of Deluxe's 1999 net
sales and virtually all of its 1999 profits. Deluxe has announced a strategy to
develop and market new products and services based on its personalization, e-
commerce and direct marketing expertise gained in the check printing business.
Deluxe's first initiative under this strategy is a direct-to-consumer
personalization website, PlaidMoon.com.

In addition to its checks business, Deluxe currently owns 40,000,000 eFunds
shares representing approximately 88% of eFunds outstanding shares. Deluxe is
offering all of its eFunds shares in exchange for Deluxe shares in the exchange
offer. Following the completion of the exchange offer and any subsequent spin-
off, Deluxe will cease to own any eFunds shares.

Deluxe's principal executive office is located at 3680 Victoria Street
North, Shoreview, Minnesota 55126 and its telephone number is (651) 483-7111.

eFunds Corporation

eFunds provides transaction processing and risk management services to
financial institutions, retailers, electronic funds transfer networks, e-
commerce providers and government agencies. eFunds' electronic payments
segment, which accounted for approximately 70% of its total net sales during
the first six months of 2000, provides a comprehensive suite of transaction
processing services and decision support and risk management products for debit
transactions. A debit transaction involves the withdrawal or deposit of funds
from or into a person's checking or savings account. eFunds' decision support
and risk management tools enable its clients to combat identity fraud and
account abuse in debit transactions by screening checking account applicants
and debit transactions for possible identity manipulation and other forms of
fraud and account abuse. In eFunds' professional services segment, which
accounted for approximately 18% of its total net sales during the first six
months of 2000, eFunds provides information technology consulting and business
process management services. eFunds also provides online electronic transfer of
benefits under entitlement programs on behalf of state and local governments
and Medicaid eligibility verification services under eFunds' government
services segment. This segment accounted for approximately 11% of eFunds' total
net sales during the first six months of 2000.

eFunds' principal executive office is presently located at 400 W. Deluxe
Parkway, P.O. Box 12536, Milwaukee, Wisconsin 53212 and its telephone number is
(414) 341-5000. eFunds expects to relocate its principal executive offices to
Phoenix, Arizona in the fall of 2000.

Background and Reasons for the Exchange Offer

For the past several years, Deluxe has pursued a strategy of:

. divesting unprofitable or marginally profitable businesses and assets;

. controlling costs and other efforts to increase efficiency and
profitability;

9
<PAGE>

. diversifying into new products and services through internal initiatives
and acquisitions; and

. adjusting its organizational structure.

Although Deluxe's net income has increased since 1997, Deluxe believes that
the price of Deluxe shares has not fully reflected the results of these efforts
or the inherent value of Deluxe's various businesses. After consideration of
several alternatives to address these issues, Deluxe determined that the
complete separation of eFunds from Deluxe would be in the best interests of
Deluxe, eFunds and their shareholders. Deluxe chose to pursue the exchange
offer to accomplish this separation because it believes the exchange offer
gives you a choice to adjust your investment between Deluxe and eFunds on a
tax-free basis and provides you with the opportunity to receive the anticipated
premium, if any.

To review the reasons for the exchange offer in greater detail, see page 37.

The Exchange Offer

<TABLE>
<C> <S>
Effects of the Exchange Offer.. The exchange offer will affect Deluxe
shareholders regardless of whether they
tender their Deluxe shares in the exchange
offer.

. If you exchange all of your Deluxe shares for
eFunds shares in the exchange offer, you will
only have an interest in the future financial
performance of eFunds. You will no longer
participate in any change in the value of Deluxe
because you will no longer own any Deluxe
shares.

. If you exchange some, but not all of your Deluxe
shares, you will have a direct interest in the
financial performance of eFunds and may reduce
your interest in the financial performance of
Deluxe.

. If you do not exchange any of your Deluxe
shares, you will not receive eFunds shares and
you will not have any direct interest in the
eFunds businesses unless the spin-off is
necessary. If you do not tender any of your
Deluxe shares and the exchange offer is
completed, your ownership interest in Deluxe
will increase on a percentage basis as a result
of the exchange offer.

Whether you tender your Deluxe shares or not, the
shares you hold after the exchange offer will be in
a company which is very different from the company
in which you held shares before the exchange offer.

The Position of Deluxe and
eFunds on the Exchange Offer.. None of Deluxe, eFunds, the dealer manager,
the information agent, the exchange agent or
any soliciting dealer makes any
recommendation as to whether you should
tender your Deluxe shares. You must make your
own decision as to whether to tender, and, if
so, how many shares to tender after reading
this offering circular-prospectus and
consulting with your advisors based on your
own financial position and requirements. We
urge you to read this offering circular-
prospectus very carefully.

Whether you participate in the exchange offer
depends on many factors. You should consider,
among other factors:

. your view of the relative values of a
single Deluxe share and of a single eFunds
share;

. your individual investment strategy with
regard to the two stocks; and
</TABLE>

10
<PAGE>

<TABLE>
<C> <S>
.your opportunity to receive the anticipated
premium, if any.

Based on the New York Stock Exchange closing
sale price of Deluxe shares and the Nasdaq
National Market closing sale price of eFunds
shares on , 2000, the anticipated
premium would have been approximately %. No
one can, however, predict the amount of the
actual premium in the exchange offer or
whether in fact there will be a premium at
the expiration of the exchange offer. In
addition, no one can predict the prices at
which Deluxe shares or eFunds shares will
trade over time.

No Dissenters' Rights
(See Page 38)................. No dissenters' rights are available to
shareholders of Deluxe in connection with the
exchange offer or any spin-off.

Certain United States Federal
Income Tax Consequences
(See Page 152)................ Deluxe has received a private letter ruling
from the Internal Revenue Service to the
effect that the exchange offer and any
subsequent spin-off, generally will be tax-
free to Deluxe and its shareholders. You
should consult your tax advisor as to the
particular consequences of the exchange offer
and spin-off to you.
</TABLE>

Terms of the Exchange Offer

<TABLE>
<C> <S>
Exchange Ratio (See Page 40)... If the exchange offer is completed, you will
receive eFunds shares for each Deluxe share
that you validly tender and do not properly
withdraw that is accepted for exchange.

All Deluxe shares validly tendered and not
properly withdrawn will be exchanged, on the
terms and subject to the conditions of the
exchange offer, including the proration
provisions. Any Deluxe shares not accepted
for exchange will be returned to shareholders
promptly following the expiration or
termination of the exchange offer.

Procedures for Tendering Deluxe
Shares (See Page 44).......... If you decide to tender all or some of your
Deluxe shares and you hold certificates for
Deluxe shares, complete and sign the letter
of transmittal designating the number of
Deluxe shares you wish to tender. Send the
letter of transmittal, together with your
share certificates and any other documents
required by the letter of transmittal, so
that it is received by the exchange agent at
one of the addresses set forth on the back
cover of this offering circular-prospectus
before the expiration of the exchange offer.
Alternatively, you may comply with the
procedures for guaranteed delivery. Do not
send your certificates to Deluxe, eFunds, the
dealer manager, the information agent or any
soliciting dealer.
</TABLE>

11
<PAGE>

<TABLE>
<C> <S>
If you decide to tender all or some of your
Deluxe shares and your shares are held by
your broker and are not certificated in your
name, that is, your shares are in "street
name," ask your broker how to participate. If
you hold your Deluxe shares in street name,
some financial institutions may also effect
tenders by book-entry transfer through the
book-entry transfer facility.
If you decide to tender all or some of your
Deluxe shares and your shares are
uncertificated "book-entry" shares held by
Deluxe's transfer agent, you should complete
and sign the letter of transmittal
designating the number of Deluxe shares you
wish to tender. Send the completed and signed
letter of transmittal, together with any
other documents required by the letter of
transmittal, so that it is received by the
exchange agent at one of the addresses
specified on the back cover of this offering
circular-prospectus before the expiration of
the exchange offer. Do not send your
documents to Deluxe, eFunds, the dealer
manager, the information agent or any
soliciting dealer.
If you are not a U.S. shareholder and you
wish to tender your Deluxe shares, special
procedures may need to be followed, depending
on the laws of the jurisdiction in which you
tender your shares.

Expiration Date; Extension;
Termination (See Pages 40 and
48)........................... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 2000, unless
extended by Deluxe. You must validly tender
and not properly withdraw your Deluxe shares
prior to such time if you wish to participate
in the offer. The exchange offer may also
terminate or be terminable in some
circumstances, including that at least
Deluxe shares are not validly tendered for
exchange and not properly withdrawn.

Withdrawal Rights You may withdraw tenders of Deluxe shares any
(See Page 47)................. time before the expiration of the exchange
offer by following the withdrawal procedures.
If you change your mind again, you may re-
tender your Deluxe shares by following the
tender procedures again prior to the
expiration or termination of the exchange
offer.

Conditions of the Exchange
Offer (See Page 49)........... The exchange offer is subject to certain
conditions, including the condition that at
least Deluxe shares are validly
tendered and not properly withdrawn. Deluxe
may in its discretion waive one or more of
the conditions to the exchange offer.

Proration (See Page 40)........ Assuming that the conditions of the exchange
offer are satisfied or waived, if more than
Deluxe shares are validly tendered and
not properly withdrawn, Deluxe will accept
Deluxe shares that are validly tendered and
not properly withdrawn on a pro rata basis,
except for tenders by holders of less than
100 Deluxe shares who tender and do not
properly withdraw all of their shares. If you
hold of record as of , 2000 less than
100 Deluxe shares and you tender all of your
Deluxe shares and do not properly withdraw
these shares, all of your Deluxe shares
</TABLE>

12
<PAGE>

<TABLE>
<C> <S>
will be accepted for exchange and none of your shares
will be subject to proration. If proration is necessary,
the preliminary proration factor will be announced by
press release promptly after the expiration of the
exchange offer. Announcement of any final proration
factor should occur approximately five business days
after the expiration date.

No Fractional Shares (See
Page 41)...................... No fractional eFunds shares will be distributed. The
exchange agent, acting as the agent for the tendering
shareholders, will aggregate any fractional shares and
sell them for the accounts of the persons who would
otherwise be entitled to receive fractional shares. Any
proceeds realized by the exchange agent on the sale of
fractional shares will be distributed in accordance with
the shareholder's fractional interest, net of
commissions.

The Exchange Agent............. Wells Fargo Bank Minnesota, N.A. is serving as the
exchange agent in connection with the exchange offer.

The Information Agent.......... Morrow & Co., Inc. is serving as the information agent in
connection with the exchange offer. Morrow's telephone
number is 1-800-566-9061 (toll-free) for calls in the
United States.

The Dealer Manager............. Lehman Brothers Inc. is serving as the dealer manager for
the exchange offer.

Soliciting Dealers Deluxe will pay soliciting dealers a solicitation fee of
(See Page 51)................. $ per share, up to a maximum of 1,000 shares per
tendering shareholder, for each Deluxe share tendered and
accepted for exchange provided that specified conditions
are met.
</TABLE>

The Spin-Off

If more than Deluxe shares but fewer than Deluxe shares are validly
tendered and not properly withdrawn and the other conditions of the exchange
offer are satisfied or waived, Deluxe will accept all shares validly tendered
and not properly withdrawn. Deluxe will distribute any eFunds shares that it
continues to own following the exchange offer to its remaining shareholders, as
of a record date to be determined following the completion of the exchange
offer, on a pro rata basis.

Comparative Per Share Market Price Information

Deluxe shares are listed and traded on the New York Stock Exchange and
eFunds shares are listed and quoted on the Nasdaq National Market. On ,
2000, the last trading day before the start of the exchange offer, the closing
sale price per Deluxe share on the NYSE was $ and the closing sale price per
eFunds share on the Nasdaq was $ .

13
<PAGE>

COMPARATIVE PER SHARE DATA

The following table presents historical per share data for Deluxe and eFunds
and unaudited pro forma per share data for Deluxe giving effect to the
transactions and events described below. The Deluxe pro forma net income per
share information assumes that the transactions and events described below and
in the notes to the unaudited pro forma condensed consolidated financial
statements occurred on January 1, 1999. The Deluxe pro forma book value per
share information assumes that these transactions and events occurred as of
June 30, 2000. The table should be read in conjunction with Deluxe's and
eFunds' consolidated financial statements and related notes, their
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the "Unaudited Pro Forma Condensed Consolidated Financial
Statements of Deluxe" and related notes appearing elsewhere in this offering
circular-prospectus. As of August 11, 2000 there were 72,331,268 Deluxe shares
outstanding and 45,500,000 eFunds shares outstanding.

Deluxe's unaudited pro forma per share data gives effect to the completion
of the exchange offer at an exchange ratio of eFunds shares for each Deluxe
share validly tendered and not properly withdrawn and assumes, based on
alternative levels of participation in the exchange offer, the exchange of a
minimum of Deluxe shares and a maximum of Deluxe shares for eFunds
shares. At the minimum assumed participation level, the eFunds shares not
exchanged are assumed to be distributed on a pro rata basis to all remaining
Deluxe shareholders through the spin-off following completion of the exchange
offer. The number of Deluxe shares assumed to be exchanged for the purposes of
the Deluxe pro forma data may not be indicative of the actual number of Deluxe
shares that may be exchanged pursuant to the exchange offer.

The pro forma information is provided to aid in your analysis of the
financial aspects of the exchange offer and is presented to show you what
Deluxe might have looked like if the transactions described in this offering
circular-prospectus had occurred at the times outlined above. You should not
rely on the Deluxe pro forma information as being indicative of the historical
results that would have been achieved had the transactions described in this
offering circular-prospectus occurred at the times outlined above. Furthermore,
this information may not necessarily reflect the results of operations,
financial position and cash flows of Deluxe in the future. Interim results are
not necessarily indicative of results for a full year.

<TABLE>
<CAPTION>
Twelve Months Ended or At Six Months Ended or At
December 31, 1999 June 30, 2000
---------------------------- ----------------------------
Deluxe Deluxe
Deluxe eFunds Pro Deluxe eFunds Pro
Historical Historical Forma Historical Historical Forma
---------- ---------- ------ ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) per
share:
Basic................. $2.65 $(0.21) $ -- $1.44 $(0.08) $ --
Minimum............. -- -- -- --
Maximum............. -- -- -- --
Diluted............... 2.64 (0.21) -- 1.44 (0.08) --
Minimum............. -- -- -- --
Maximum............. -- -- -- --
Book value per share
(A):
Basic................. 5.44 4.98 -- 6.59 6.92 --
Minimum............. -- -- -- --
Maximum............. -- -- -- --
Diluted............... 5.42 4.98 -- 6.58 6.92 --
Minimum............. -- -- -- --
Maximum............. -- -- -- --
Cash dividends per
share.................. 1.48 -- 1.48 0.74 -- 0.74
</TABLE>
--------
(A) Represents shareholders equity divided by the weighted average shares
outstanding for basic book value per share and by the weighted average
shares outstanding plus potential dilutive shares outstanding, for diluted
book value per share.

14
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA OF DELUXE

The following table presents summary historical and unaudited pro forma
financial data for Deluxe as of the dates and for the periods indicated. The
pro forma statement of income data assumes that the transactions and events
described below and in the notes to the unaudited pro forma condensed
consolidated financial statements occurred on January 1, 1999. The pro forma
balance sheet data assumes that these transactions and events occurred as of
June 30, 2000. The information is only a summary, and you should read it
together with Deluxe's consolidated financial statements and related notes, the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Deluxe" and the "Unaudited Pro Forma Condensed Consolidated
Financial Statements of Deluxe" and related notes appearing elsewhere in this
offering circular-prospectus.

Deluxe's unaudited pro forma data gives effect to the completion of the
exchange offer at an exchange ratio of eFunds shares for each Deluxe share
validly tendered and not properly withdrawn and assumes, based on alternative
levels of participation in the exchange offer, the exchange of a minimum of
Deluxe shares and a maximum of Deluxe shares for eFunds shares. At the
minimum assumed participation level, the eFunds shares not exchanged are
assumed to be distributed on a pro rata basis to all remaining Deluxe
shareholders through the spin-off following completion of the exchange offer.
The number of Deluxe shares assumed to be exchanged for the purposes of the
Deluxe pro forma data may not be indicative of the actual number of Deluxe
shares that may be exchanged pursuant to the exchange offer.

<TABLE>
<CAPTION>
Unaudited Six Months
Year Ended December 31, Ended June 30,
---------------------------------------------- -----------------------------
Pro Forma
1999 Pro Forma
1997 1998 1999 Unaudited 1999 2000 2000
---------- ---------- ---------- ---------- -------- -------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Net sales............... $1,920,629 $1,933,659 $1,650,500 $1,356,999 $821,918 $811,182 $640,399
---------- ---------- ---------- ---------- -------- -------- --------
Cost of sales,
excluding loss
contract and asset
impairment charges.... 897,313 895,050 732,541 549,113 370,221 342,194 224,636
Loss contract and asset
impairment charges.... 2,470 40,949 8,700 -- 117 9,700 --
---------- ---------- ---------- ---------- -------- -------- --------
Total cost of sales.... 899,783 935,999 741,241 549,113 370,338 351,894 224,636
---------- ---------- ---------- ---------- -------- -------- --------
Gross margin............ 1,020,846 997,660 909,259 807,886 451,580 459,288 415,763
---------- ---------- ---------- ---------- -------- -------- --------
Selling, general and
administrative........ 766,403 753,290 602,157 503,452 294,044 323,964 278,496
Research and
development........... 2,175 1,361 5,008 1,252 2,377 1,955 1,033
Asset impairment
charges............... 96,549 -- -- -- -- -- --
---------- ---------- ---------- ---------- -------- -------- --------
Total operating
expenses.............. 865,127 754,651 607,165 504,704 296,421 325,919 279,529
---------- ---------- ---------- ---------- -------- -------- --------
Income from operations.. 155,719 243,009 302,094 303,182 155,159 133,369 136,234
Other income (expense)..
Gain on sale of
subsidiary shares..... -- -- -- -- -- 30,113 --
Legal proceedings...... (40,050) 4,157 2,094 -- 2,094 -- --
Other income
(expense)............. 8,303 4,022 28,973 33,582 2,027 540 1,014
Interest income
(expense)............. (8,822) (8,273) (8,506) (7,621) (3,458) (7,248) (6,717)
---------- ---------- ---------- ---------- -------- -------- --------
Income before income
taxes.................. 115,150 242,915 324,655 329,143 155,822 156,774 130,531
Provision for income
taxes.................. 70,478 99,852 121,633 123,204 60,010 52,751 49,042
---------- ---------- ---------- ---------- -------- -------- --------
Net income.............. $ 44,672 $ 143,063 $ 203,022 $ 205,939 $ 95,812 $104,023 $ 81,489
========== ========== ========== ========== ======== ======== ========
</TABLE>

15
<PAGE>

<TABLE>
<CAPTION>
Unaudited Six Months
Year Ended December 31, Ended June 30,
------------------------------ -----------------------
Pro Forma
1999 Pro Forma
1997 1998 1999 Unaudited 1999 2000 2000
------ ------ ------ --------- ------ ------ ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income per share-
basic.................. $ 0.55 $ 1.77 $ 2.65 $ -- $ 1.22 $ 1.44 $ --
Minimum................ -- -- -- -- --
Maximum................ -- -- -- -- --
Net income per share-
diluted................ $ 0.55 $ 1.77 $ 2.64 -- $ 1.21 $ 1.44 --
Minimum................ -- -- -- -- --
Maximum................ -- -- -- -- --
Cash dividends per
share.................. $ 1.48 $ 1.48 $ 1.48 -- $ 0.74 $ 0.74 --
Shares used in
computing:
Basic net income per
share................. 81,854 80,648 76,710 -- 78,790 72,203 --
Minimum................ -- -- -- -- --
Maximum................ -- -- -- -- --
Diluted net income per
share................. 81,957 80,855 77,009 -- 79,079 72,279 --
Minimum................ -- -- -- -- --
Maximum................ -- -- -- -- --
</TABLE>

<TABLE>
<CAPTION>
December 31, Unaudited June 30,
------------------------------ -------------------------------
Pro Forma
1997 1998 1999 1999 2000 2000
---------- ---------- -------- -------- ---------- ---------
(in thousands, except operating data)
<S> <C> <C> <C> <C> <C> <C>
Operating Data:
Number of employees at
period end............. 18,937 15,296 11,691 14,801 10,998 8,302
Number of production and
service facilities at
period end............. 68 58 46 60 46 23
Balance Sheet Data:
Cash, cash equivalents
and marketable
securities (1)......... $ 179,459 $ 309,522 $166,178 $115,770 $ 109,339 $ 19,806
Working capital......... 131,058 177,385 14,083 (29,928) (111,454) (179,923)
Total assets............ 1,148,364 1,171,519 992,643 990,604 1,030,833 641,839
Long-term debt,
excluding current
portion................ 109,986 106,321 115,542 105,327 13,499 10,576
Total shareholders'
equity................. 610,248 606,565 417,308 462,648 475,557 230,269
</TABLE>
--------
(1) Excludes restricted cash which represents cash that eFunds has supplied to
ATMs managed by a client and cash that it temporarily holds in custodial
accounts on behalf of clients.

16
<PAGE>

SUMMARY HISTORICAL FINANCIAL DATA OF eFUNDS

The following table presents summary historical financial data for eFunds as
of the dates and for the periods indicated. The information is only a summary,
and you should read it together with eFunds' consolidated financial statements
and related notes and the "Management's Discussion and Analysis of Financial
Condition and Results of Operations of eFunds" appearing elsewhere in this
offering circular-prospectus. Interim results are not necessarily indicative of
results for a full year.

<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31 June 30,
---------------------------- ------------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
(in thousands, except per share and
operating data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales.................... $229,065 $267,520 $302,340 $140,423 $201,225
-------- -------- -------- -------- --------
Cost of sales, excluding
loss contract and asset
impairment charges......... 143,966 171,359 185,590 88,123 118,197
Loss contract and asset
impairment charges......... 2,470 40,949 8,700 117 9,700
-------- -------- -------- -------- --------
Total cost of sales......... 146,436 212,308 194,290 88,240 127,897
-------- -------- -------- -------- --------
Gross margin................. 82,629 55,212 108,050 52,183 73,328
-------- -------- -------- -------- --------
Selling, general and
administrative............. 70,542 81,198 105,382 42,731 75,271
Research and development.... 1,398 625 3,756 2,054 922
Asset impairment charges.... 9,361 -- -- -- --
-------- -------- -------- -------- --------
Total operating expenses.... 81,301 81,823 109,138 44,785 76,193
-------- -------- -------- -------- --------
Income (loss) from
operations.................. 1,328 (26,611) (1,088) 7,398 (2,865)
Other income (expense).......
Legal proceedings........... (40,050) 4,157 2,094 2,094 --
Other income (expense)...... (918) (3,495) (4,609) (1,286) (474)
Interest income (expense)... (825) 2,789 963 1,078 (1,296)
-------- -------- -------- -------- --------
Income (loss) before income
taxes....................... (40,465) (23,160) (2,640) 9,284 (4,635)
Provision (benefit) for
income taxes................ (6,397) (8,569) 5,586 7,949 (1,285)
-------- -------- -------- -------- --------
Net income (loss)............ $(34,068) $(14,591) $ (8,226) $ 1,335 $ (3,350)
======== ======== ======== ======== ========
Net income (loss) per share--
basic and diluted........... $ (0.85) $ (0.36) $ (0.21) $ 0.03 $ (0.08)
Shares used in computing
basic and diluted net income
(loss) per share............ 40,000 40,000 40,000 40,000 40,030
Operating Data:
Account verification
inquiries (millions)........ 28.6 30.3 32.1 16.1 18.9
Transactions processed
(millions).................. 3,313 3,944 5,019 2,343 2,803
ATMs driven at period end.... 5,766 5,623 8,626 9,302 9,153
<CAPTION>
Unaudited
December 31, June 30,
---------------------------- ------------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents
(1)......................... $ 23,843 $ 16,055 $ 35,849 $ 28,213 $ 93,289
Working capital.............. 39,686 1,869 25,607 37,972 68,469
Total assets................. 187,810 186,335 289,929 264,925 394,304
Long-term debt, excluding
current portion............. 4,571 4,029 3,597 3,419 2,923
Total stockholders' equity... 87,690 89,803 199,105 187,191 277,170
</TABLE>
--------
(1) Excludes restricted cash which represents cash that eFunds has supplied to
ATMs managed by a client and cash that it temporarily holds in custodial
accounts on behalf of clients.

17
<PAGE>

RISK FACTORS

In considering whether or not to tender Deluxe shares pursuant to the
exchange offer, you should consider carefully all of the information set forth
or incorporated in this offering circular-prospectus and, in particular, the
risk factors discussed below. The following risks and uncertainties relate
principally to:

. this exchange offer;

. Deluxe's business, excluding eFunds' business; and

. eFunds' business.

The risks and uncertainties described below are not the only ones relating
to the exchange offer or facing Deluxe and eFunds. You should carefully review
the information set forth elsewhere in this offering circular-prospectus and in
the other documents which are incorporated by reference into this document.
Additional risks and uncertainties not presently known to Deluxe or eFunds or
that Deluxe or eFunds currently believe to be immaterial may also materially
adversely affect Deluxe or eFunds.

This offering circular-prospectus contains forward-looking statements that
involve risks and uncertainties. Deluxe's and eFunds' actual results could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including the risks and uncertainties described
below and elsewhere in this offering circular-prospectus.

Risks related to the Exchange Offer

Deluxe cannot assure you that you will receive a premium for the Deluxe shares
tendered in the exchange offer.

The amount of any premium to be received by Deluxe shareholders
participating in the exchange offer will depend on the relative prices for
Deluxe shares and eFunds shares upon the completion of the exchange offer.
Deluxe cannot predict what the amount of the actual premium will be at that
time or whether in fact there will be a premium at the end of the exchange
offer. Changes in the prices of eFunds shares or Deluxe shares over time may
also affect your ability to realize the premium through sales in the market.

Attempts to sell eFunds shares received in the exchange offer may adversely
affect the market price of the eFunds shares.

If a significant number of Deluxe shareholders who receive eFunds shares in
the exchange offer attempt to sell their eFunds shares on the open market after
the exchange offer, the market price of eFunds shares could be adversely
affected. We cannot assure you that market prices for the eFunds shares will
not fluctuate significantly after the exchange offer. The exchange offer and
any spin-off will substantially increase the number of publicly held eFunds
shares and the number of eFunds shareholders. The eFunds shares to be issued to
Deluxe shareholders in the exchange offer and any spin-off will generally be
eligible for immediate resale in the open market.

Market prices for Deluxe shares may decline following the completion of the
exchange offer.

Investors purchasing Deluxe shares in order to participate in the exchange
offer may have the effect of artificially raising market prices for Deluxe
shares during the pendency of the exchange offer. Following the completion of
the exchange offer, the market prices for the Deluxe shares may decline because
exchange offer-related demand for Deluxe shares will cease. Market prices for
Deluxe shares may also decline following the completion of the exchange offer
and any spin-off because the Deluxe shares will no longer include an investment
in the eFunds businesses. In addition, upon completion of the exchange offer,
the number of publicly held Deluxe shares may be decreased substantially. We
cannot assure you that this reduction in the number of outstanding Deluxe
shares will not result in possible decreased liquidity or increased volatility
nor that the market prices for Deluxe shares will not fluctuate significantly
after the exchange offer.

The historical and pro forma financial information of Deluxe and eFunds may not
necessarily reflect their results as separate companies.

The historical financial information of eFunds has been carved out from
Deluxe's consolidated financial statements and may not necessarily reflect what
the results of operations, financial condition and cash flows of

18
<PAGE>

eFunds would have been had the companies been separate, stand-alone entities
pursuing independent strategies during the periods presented. Similarly, the
pro forma financial information presented for Deluxe in this offering circular-
prospectus may not be indicative of the historical results Deluxe would have
achieved had the transactions described in this offering circular-prospectus
occurred at the dates and times suggested. Following the exchange offer, each
of Deluxe and eFunds will generally be required to provide their own financial,
administrative and other resources to operate as independent public companies.
Further, although Deluxe and eFunds have entered into a number of agreements
providing for services by one party to the other that will continue after
completion of this exchange offer, as these agreements expire or terminate
there can be no assurance that either party will subsequently be able to enter
into agreements on similar or more advantageous terms. As a result, historical
and pro forma financial information is not necessarily indicative of future
results of operation, financial condition and cash flows of Deluxe or eFunds.

You will be affected by the exchange offer whether or not you tender your
Deluxe shares.

Your investment will be subject to different risks as a result of the
exchange offer, regardless of whether you tender all, some or none of your
Deluxe shares in the exchange offer.

. If you exchange all of your Deluxe shares for eFunds shares in the
exchange offer, you will only have an interest in the future financial
performance of eFunds. You will no longer participate in any change in
the value of Deluxe because you will no longer own any Deluxe shares.

. If you exchange some, but not all of your Deluxe shares, you will have a
direct interest in the financial performance of eFunds and may reduce
your interest in the financial performance of Deluxe.

. If you do not exchange any of your Deluxe shares, you will not receive
eFunds shares and you will not have any direct interest in the eFunds
businesses unless the spin-off is necessary. If you do not tender any of
your Deluxe shares and the exchange offer is completed, your ownership
interest in Deluxe will increase on a percentage basis as a result of
the exchange offer.

Whether you tender your Deluxe shares or not, the shares you hold after the
exchange offer will be in a company which is very different from the company in
which you held shares before the exchange offer.

The IRS may treat the exchange offer and any subsequent spin-off as taxable to
Deluxe and its shareholders if representations made to the IRS are inaccurate
or if undertakings made to the IRS or the requirements of the Internal Revenue
Code are not fulfilled.

Deluxe has received a private letter ruling from the IRS to the effect that,
for United States federal income tax purposes, the exchange offer and any
subsequent spin-off will generally be tax-free to Deluxe and its shareholders.
The ruling is premised on a number of representations and undertakings made by
Deluxe and eFunds to the IRS, including representations with respect to each
company's intention not to engage in certain transactions in the future. The
exchange offer and any subsequent spin-off may be held to be taxable to Deluxe
and its shareholders who receive eFunds shares if the IRS determines that any
of the representations made to the IRS are incorrect or untrue in any respect,
or if any undertakings made are not complied with. If Deluxe completes the
exchange offer and any subsequent spin-off, and, notwithstanding the private
letter ruling, the exchange offer and any subsequent spin-off are held to be
taxable, both Deluxe and its shareholders who receive eFunds shares could be
subject to a material amount of taxes. eFunds will be liable to Deluxe for any
such taxes incurred by Deluxe to the extent such taxes are attributable to
specific actions or failures to act by eFunds, or to specific transactions
involving eFunds following the exchange offer and any subsequent spin-off. In
addition, eFunds will be liable to Deluxe for a portion of any taxes incurred
by Deluxe if the exchange offer or some of the related transactions fail to
qualify as tax-free as a result of retroactive change of law or other reason
unrelated to the action or inaction of either eFunds or Deluxe. eFunds may not,
however, have adequate funds to perform its indemnification obligations.
Further, eFunds' indemnification obligations are only for the benefit of
Deluxe, not individual shareholders. For a description of the agreement between
eFunds and Deluxe relating to these tax-sharing arrangements, see "Agreements
Between eFunds and Deluxe--Tax-Sharing Agreements." For a description of
certain United States federal income tax consequences to Deluxe's shareholders
of the exchange offer and any subsequent spin-off, see "Certain United States
Federal Income Tax Consequences."

19
<PAGE>

There are potential conflicts between Deluxe and eFunds.

Conflicts may arise between Deluxe and eFunds as a result of on-going
agreements between the companies. Deluxe and eFunds may not be able to resolve
any potential conflicts, and even if they are able to, the resolution may be
less favorable to one party or the other than if they were dealing with
unaffiliated third parties. Matters that could give rise to conflicts include,
among other things:

. past and ongoing relationships between Deluxe and eFunds, including tax
matters, employee benefits, indemnification, data sharing, and other
matters arising from eFunds' separation from Deluxe;

. the nature, quality and pricing of transitional services Deluxe has
agreed to provide to eFunds; and

. the quality and pricing of services eFunds has agreed to provide to
Deluxe.

The shareholder rights plans of Deluxe or eFunds may be triggered if any person
or group acquires more than 15% of their shares and does not report their
holdings on Schedule 13G or if any person or group acquires more than 20% of
their outstanding shares by reason of the exchange offer and any spin-off.

Persons who acquire or hold securities in either Deluxe or eFunds in excess
of the ownership thresholds prescribed by their shareholder rights plans will
suffer immediate and substantial dilution of their interests.

Both Deluxe and eFunds have shareholder rights plans that discourage the
acquisition of 15% or more of their shares without the prior approval of the
applicable company's board of directors. Deluxe and eFunds anticipate, subject
to approval by the applicable board of directors, amending their rights plans
in connection with the exchange offer to exempt acquisitions by any person who
becomes a holder of more than 15%, but less than 20%, of their shares by reason
of the exchange offer and spin-off if such person reports its holdings on
Schedule 13G under the Exchange Act. Deluxe anticipates additionally amending
its rights plan to exempt any person who becomes a holder of more than 15% but
less than 20% of the outstanding Deluxe shares by reason of the exchange offer
and spin-off if such person reports its holding on Schedule 13D, but only if
that person's Schedule 13D does not state any intention to or reserve the right
to control or influence the management or policies of Deluxe or engage in any
of the actions specified in Item 4 of Schedule 13D. Under the Exchange Act,
persons who acquire more than 5% of the outstanding shares of Deluxe or eFunds
are required to report that ownership on a Schedule 13D or a Schedule 13G,
which they file with the SEC. Only persons who acquire Deluxe shares or eFunds
shares in the ordinary course of their business and not with the purpose or the
effect of changing or influencing the control of eFunds or Deluxe are eligible
to report their ownership on Schedule 13G. In addition, Schedule 13G is only
available if an acquiring person does not acquire 20% or more of the
outstanding shares of a public company.

Accordingly, any person who holds more than 6,825,000 eFunds shares and who
does not report this ownership on Schedule 13G will trigger the eFunds
shareholder rights plan, with the result that its interest in eFunds will be
substantially diluted. The acquisition by any person of more than 9,110,000
eFunds shares, or 20% of the outstanding eFunds shares, will also trigger the
eFunds shareholder rights plan. Acquisitions of more than 9,110,000 eFunds
shares would also constitute a change in control of eFunds for the purposes of
the agreements described in "Management of eFunds--Change in Control
Agreements" and accelerate the vesting and exercisability of all of eFunds'
outstanding options.

Conversely, the completion of the exchange offer could result in a
substantial reduction in the number of Deluxe shares outstanding. Significant
shareholders in Deluxe who do not tender a portion of their Deluxe shares or
whose Deluxe shares are not accepted for exchange could exceed the 15% and 20%
thresholds that will be applicable under the Deluxe shareholder rights plan by
reason of this reduction in the number of outstanding Deluxe shares.

Tendering shareholders may have to make antitrust regulatory filings.

Subject to certain exceptions, persons who acquire more than $15 million of
eFunds shares in the exchange offer and any spin-off may be required to make
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 unless
all of the eFunds shares held by the acquiring person, whether acquired through
the exchange offer and any spin-off or otherwise, constitute 10% or less of the
total outstanding voting

20
<PAGE>

shares of eFunds and such shareholder acquires its eFunds shares solely for the
purpose of investment or other exemptions apply. The need to make Hart-Scott
filings would require the incurrence of additional expenses by the acquiring
shareholder and may delay their acquisition of eFunds shares in the
transactions.

Risks related to Deluxe, excluding eFunds

The paper check industry overall is a mature industry and if the industry
declines faster than expected, Deluxe's business will be harmed.

Excluding net sales related to eFunds' businesses and businesses sold in
1999, check and check-related products and services accounted for approximately
97% of Deluxe's 1999 net sales and virtually all of its 1999 profits. Check
printing is expected to continue to be an essential part of Deluxe's business
and the principal source of its operating income. According to Deluxe's
estimates, growth in total checks written by individuals and small business,
the primary purchasers of Deluxe's checks, was flat in 1999 and the total
number of personal, business and government checks written in the United States
has been in decline since 1997. Deluxe believes that the individual and small
business segments of the check industry will eventually decline due to the
increasing use of alternative payment methods. Deluxe believes the decline in
personal, business and government checks is due to the increasing use of these
alternative payment methods, increasing use of direct deposits for payroll and
government transfer payments, and changing payment practices at large
businesses and government agencies. The rate and extent to which alternative
payment methods will achieve consumer acceptance and replace checks cannot be
predicted with certainty. An unexpected increase in the popularity of any of
these alternative payment methods could have a material adverse effect on the
demand for checks and a material adverse effect on Deluxe's business, results
of operation and prospects.

Deluxe faces intense competition in all areas of its business, and if it does
not compete effectively, its business will be harmed.

The check printing industry is intensely competitive. In addition to
competition from alternative payment methods, Deluxe also faces considerable
competition from other check printers in its traditional sales channel to
financial institutions such as John H. Harland Company, Clarke American Checks,
Inc. and Liberty Share Draft & Check Printers, Inc.; from direct sellers of
checks, such as Clarke American Checks, Inc. and MDC Corporation Inc. in its
direct-to-consumer check business; and from the sellers of business checks and
forms, such as NEBS, Inc. and Ennis Business Forms, Inc., in its forms
business. Additionally, Deluxe faces competition from check printing software
vendors and, increasingly, from Internet-based sellers of checks to consumers
and small businesses. In the check printing industry, the principal factors on
which Deluxe competes are service, convenience, quality, product range and
price. From time to time, some of Deluxe's check printing competitors have
reduced the prices of their products in an attempt to gain greater volume.
Price reductions by these competitors have resulted in reduced profit margins
for Deluxe in the past. Deluxe has also experienced some loss of business due
to its refusal to meet competitive prices that fell below Deluxe's per unit
revenue and profitability targets. Similar pressures may result in margin
reductions in the future, particularly since Deluxe does not believe that it
can continue to achieve cost reductions of a magnitude similar to those that it
has achieved in recent years. Deluxe cannot assure you that it will be able to
compete effectively against current and future competitors. Continued
competition could result in price reductions, reduced margins and loss of
customers.

Consolidation among financial institutions may adversely affect Deluxe's
ability to sell its products.

Mergers, acquisitions and personnel changes at financial institutions may
adversely affect Deluxe's business, financial condition and results of
operations. In 1999, excluding net sales related to eFunds' businesses and
businesses sold in 1999, financial institutions accounted for approximately 68%
of Deluxe's net sales. Financial institutions have been undergoing large-scale
consolidation, causing the number of financial institutions to decline. Margin
pressure arises from the consolidation in the financial institutions industry
is a result of merged entities seeking not only the most favorable prices
formerly offered to the predecessor institutions but also additional discounts
due to the greater volume represented by the combined company. Consolidation
among financial institutions could also cause Deluxe to lose current and
potential customers. In 1999, net sales through the financial institution
channel declined by 10% and unit sales declined by 13%.

21
<PAGE>

Representatives of Deluxe have made forecasts involving Deluxe's future results
which reflect various assumptions that may turn out to be incorrect.

From time to time, representatives of Deluxe have made predictions or
forecasts regarding Deluxe's future results. The forecasts include statements
that Deluxe's revenues and operating income for 2001, excluding eFunds, are
anticipated to be comparable to or slightly lower than its revenues and
operating income in 2000, that Deluxe's PlaidMoon.com website is not expected
to generate significant revenues through 2001, that Deluxe's capital
expenditures, excluding eFunds, are estimated to remain relatively flat between
2000 and 2001 and that, if the exchange offer is completed, the reduced number
of Deluxe shares outstanding may result in higher earnings per share than would
have been the case without the effect of the exchange offer. Any forecast
regarding Deluxe's future performance reflects a variety of different
assumptions. These assumptions are subject to significant uncertainties, and,
as a matter of course, many of them will prove to be incorrect. Further, the
achievement of any forecast depends on numerous factors, many of which are
beyond Deluxe's control. As a result, Deluxe cannot assure you that its
performance will be consistent with prior management forecasts or that the
variation from such forecasts will not be material and adverse. You are
cautioned not to base your analysis of Deluxe's business and prospects upon
isolated predictions, but are instead encouraged to use the entire mix of
historical and forward-looking material made available by Deluxe, including the
risk factors set forth in this offering circular-prospectus.

Deluxe's investments in Internet commerce may not be successful.

Deluxe is developing and evaluating plans and pursuing initiatives intended
to achieve future growth through an expansion into Internet commerce. These
plans and initiatives will involve increased investment in the development of
Internet commerce capabilities for new ventures and infrastructure. There is no
assurance that the amount of this investment will not exceed Deluxe's
expectations and result in materially increased levels of expenses. Also,
because these Internet commerce initiatives involve new technologies and
business methods, are dependent on product and service innovations and serve
new or developing markets, there is no assurance that they will achieve
targeted revenue or profit levels or result in positive returns on Deluxe's
investment. Internet commerce is rapidly evolving and Deluxe's products and
services may not achieve widespread acceptance or be competitive with the
current or future offerings of existing or emerging competitors. Internet
commerce is also a recent phenomenon and may not continue to expand or could
decline as a medium of commerce.

Most of the products currently offered on Deluxe's PlaidMoon.com website are
obtained from a single source of supply.

Most of the products currently offered on the PlaidMoon.com website are
supplied by Taylor Corporation. Nearly all of these products are subject to a
noncompetition agreement between Deluxe and Taylor Corporation. Deluxe and
Taylor entered into this noncompetition agreement as part of the sale of two
businesses by Deluxe to Taylor in 1998. Under the terms of this noncompetition
agreement, Deluxe has agreed that, through December 2003, it will not sell
printed design papers and social expression products, such as greeting and note
cards, gift wrap, small gifts and other seasonal items in the United States. If
Deluxe wishes to sell these products on the PlaidMoon.com site, it must obtain
them from Taylor at a price set by Taylor. To date, Taylor has not agreed to
supply Deluxe with all of the products Deluxe might wish to offer on its
PlaidMoon.com website that could be subject to Deluxe's agreement not to
compete with Taylor. In some cases, Deluxe has agreed that Taylor would act as
the sole supplier of items that are not subject to the non-competition
agreement. Deluxe may enter into additional sole supplier agreements with
Taylor or other parties for products that may be sold over the PlaidMoon.com
website. In addition, Taylor is not prohibited from selling the products for
which it acts as Deluxe's sole supplier in a manner that is directly
competitive with Deluxe's PlaidMoon.com website. There can be no assurance that
Deluxe will be able to sign agreements with Taylor to provide additional
products or that the terms of such agreements will not be disadvantageous to
Deluxe.

Deluxe may experience software defects that could harm its business and
reputation.

Deluxe uses sophisticated software and computing systems to process check
orders for its customers. Deluxe may experience difficulties in installing or
integrating its technologies on platforms used by its

22
<PAGE>

customers or in new environments, such as the Internet. Errors or delays in the
processing of check orders or other difficulties could result in:

. loss of customers;

. additional development costs;

. diversion of technical and other resources;

. negative publicity; or

. exposure to liability claims.

In addition, Deluxe's PlaidMoon.com website uses a software application from
a vendor that has only a limited operating history. The software application
must be able to accommodate a large number of transactions, consumers and
product offerings in order for Deluxe's PlaidMoon.com website to operate
successfully. If Deluxe experiences difficulty with this software application
during periods of high traffic or usage, the prospects of Deluxe's
PlaidMoon.com initiative could be materially adversely affected.

Deluxe is experiencing significant turnover in its key management.

Deluxe's chairman and chief executive officer, John A. Blanchard III, became
the chief executive officer of eFunds on March 1, 2000 and will cease acting as
chairman and chief executive officer of Deluxe upon completion of the exchange
offer and any spin-off. Upon completion of the exchange offer and any spin-off,
Lawrence J. Mosner, Deluxe's vice chairman who has had overall responsibility
for the day-to-day operations of Deluxe since July 1997, will become chairman
and chief executive officer of Deluxe. In addition, Deluxe's chief financial
officer and general counsel have indicated that they will depart from Deluxe by
the end of 2000 and Deluxe is currently conducting a search for replacements
for its chief financial officer and general counsel. In connection with the
planned separation of eFunds from Deluxe, two of Deluxe's outside directors did
not stand for reelection in August 2000. These directors are currently serving
on eFunds' board of directors. Deluxe is also currently conducting a search for
a chief executive for its PlaidMoon.com business. Deluxe's future success will
depend on its ability to attract qualified persons to fill its chief financial
officer and general counsel positions and other key management roles. If Deluxe
is delayed in finding these individuals, is unable to retain other key officers
or is unable or delayed in finding additional qualified individuals to serve as
outside directors, its results of operations, financial condition and prospects
could be materially affected.

Deluxe faces uncertainties with respect to future acquisitions.

Deluxe has acquired complementary businesses in the past as part of its
business strategy and intends to continue to pursue acquisitions of
complementary businesses in the future. Deluxe cannot predict whether suitable
acquisition candidates can be acquired on acceptable terms or whether future
acquisitions, even if completed, will be successful. Future acquisitions by
Deluxe could result in the potentially dilutive issuance of equity securities,
the incurrence of contingent liabilities, the incurrence of debt or the
incurrence of amortization expenses relating to goodwill and other intangible
assets which could materially adversely affect Deluxe's business, results of
operations and financial condition. Moreover, the success of any acquisition
will depend upon Deluxe's ability to integrate effectively the acquired
businesses into Deluxe. The process of integrating acquired businesses may
involve numerous risks, including, among others:

. difficulties in assimilating operations and products;

. diversion of management's attention from other business concerns;

. risks of operating businesses in which Deluxe has limited or no direct
prior experience;

. potential loss of key employees of acquired businesses or of Deluxe;

. potential exposure to unknown liabilities; and

. possible loss of customers of Deluxe or the acquired businesses as the
result of any acquisition.

Deluxe cannot predict whether any acquired products, technologies or
businesses will contribute to its revenues or earnings to any material extent.
In addition, under Section 355(e) of the Internal Revenue Code, the exchange
offer and any subsequent spin-off would be treated as a taxable transaction to
Deluxe if 50% or more

23
<PAGE>

of the Deluxe shares are acquired as part of a plan or series of related
transactions that include the exchange offer and any subsequent spin-off. For
this purpose, any acquisitions of Deluxe shares within two years before or
after this exchange offer and any subsequent spin-off are presumed to be part
of such a plan, although Deluxe may be able to rebut that presumption. As a
result of such possible adverse tax consequences, following the exchange offer
and any subsequent spin-off, Deluxe may be restricted in its ability to effect
certain acquisitions, issuances of Deluxe shares or other transactions that
would result in a change of control of Deluxe.

Deluxe faces restrictions on its ability to acquire or issue Deluxe shares.

Deluxe may be limited in the amount of Deluxe shares that it can acquire or
issue because the acquisition or issuance of Deluxe shares may cause the
exchange offer and any subsequent spin-off to be taxable to Deluxe under
Section 355(e) of the Internal Revenue Code. As a result of such possible
adverse tax consequences, following the exchange offer and any subsequent spin-
off, Deluxe may be restricted in its ability to effect certain acquisitions,
issuance of Deluxe shares or other transactions that would result in a change
of control of Deluxe.

Deluxe depends on a limited source of supply for its printing plate material
and the unavailability of this material could have an adverse effect on its
results of operations.

Deluxe uses a printing plate material in its check printing business that is
available from only a limited number of sources. If Deluxe's current supplier
becomes unable or unwilling to supply the printing plate material at an
acceptable price and Deluxe is unable to locate a suitable alternative source
with a reasonable time frame, Deluxe would be forced to convert its facilities
to an alternative printing process. Any such conversion would require the
unanticipated investment of significant sums and could result in product delays
and loss of business to the extent that Deluxe's inventory of printing plate
material proved to be inadequate.

Increased production and delivery costs could materially adversely affect
Deluxe's operating results.

Deluxe's contracts with financial institution customers typically have a
term of several years or more and do not allow Deluxe to pass through increased
production costs to the financial institutions. Increases in production costs
such as labor and paper could adversely affect the profitability of Deluxe's
businesses. In addition, events such as the strike by United Parcel Service in
1997, may also adversely impact Deluxe's margins by imposing higher delivery
costs. Competitive pressures in the check industry may have the effect of
inhibiting Deluxe's ability to reflect these increased costs in the prices of
its products.

Deluxe may be unable to protect its intellectual property.

Despite efforts by Deluxe to protect its intellectual property, third
parties may infringe or misappropriate Deluxe's intellectual property or
otherwise independently develop substantially equivalent products and services.
The loss of intellectual property protection or the inability to secure or
enforce intellectual property protection could harm Deluxe's business and
ability to compete. Deluxe relies on a combination of trademark and copyright
laws, trade secret protection and confidentiality and license agreements to
protect its trademarks, software and know-how. Deluxe has also applied for
patent protection on some of the systems and methods of its PlaidMoon.com
website. Deluxe may be required to spend significant resources to protect its
trade secrets and monitor and police its intellectual property rights.

Third parties may assert infringement claims against Deluxe in the future.
In particular, there has been a substantial increase in the issuance of patents
for Internet-related systems and business methods, which may have broad
implications for participants in Internet commerce. Claims for infringement of
these patents are increasingly becoming a subject of litigation. If Deluxe
becomes subject to an infringement claim, it may be required to modify its
products, services and technologies or obtain a license to permit its continued
use of those rights. Deluxe may not be able to do either of these things in a
timely manner or upon reasonable terms and conditions. Failure to do so could
seriously harm Deluxe's business, operating results and prospects as a result
of lost business, increased expenses or being barred from offering its products
or implementing its

24
<PAGE>

systems or business methods. In addition, future litigation relating to
infringement claims could result in substantial costs to Deluxe and a diversion
of management resources. Adverse determinations in any litigation or proceeding
could also subject Deluxe to significant liabilities and could prevent Deluxe
from using some of its products, services or technologies.

Deluxe's results of operations could be adversely affected if it is required to
make indemnification payments to eFunds.

Deluxe has agreed to indemnify eFunds for future losses arising from any
litigation based on the conduct of eFunds' government services business prior
to eFunds' IPO on June 30, 2000 and future losses incurred in eFunds'
government services business on identified loss contracts in excess of eFunds'
$29.2 million loss contract reserves as of April 30, 2000. This indemnification
obligation does not apply to losses contemplated by the existing reserve and is
subject to a $14.6 million limit, so that it would not apply to any future
losses on eFunds' existing unprofitable contracts in excess of $43.8 million.
Deluxe does not have any control over the occurrence of events which could
require it to indemnify eFunds. If Deluxe is required to indemnify eFunds, the
amount and timing of such indemnification expense may be unexpected. Further,
the amount of such indemnification will directly affect Deluxe's results of
operations and could adversely affect the market price of Deluxe's shares.

Deluxe is dependent upon eFunds for much of its information technology needs.

Deluxe has agreed with eFunds to minimum spending targets of $43 million per
year through March 31, 2005 for the provision of software development,
maintenance and support services from eFunds' professional services business.
In the event that eFunds is not able to provide adequate information technology
services to Deluxe, Deluxe's business would be adversely affected. Although
Deluxe believes that information technology services are available from
numerous sources, a failure to perform by eFunds could cause a disruption in
Deluxe's business while it obtains an alternative source of supply.

Legislation relating to consumer privacy protection could harm Deluxe's
business.

In July 2001, Deluxe will be subject to regulations implementing the privacy
requirements of a new federal financial modernization law known as the Gramm-
Leach-Bliley Act. Under the regulations, Deluxe must develop and implement
policies to protect the security and confidentiality of consumers' nonpublic
personal information relating to check printing orders and to disclose those
policies to its consumers before a customer relationship is established and
annually thereafter. The regulations may limit Deluxe's ability to use its
direct checks data in its other businesses. The new regulations may have the
effect of increasing Deluxe's expenses and foreclosing future business
initiatives.

The Act does not prohibit state legislation or regulations that are more
restrictive on Deluxe's use of data. More restrictive legislation or
regulations have been introduced in the past and could be introduced in the
future in Congress and the states. For example, legislation has been proposed
in the past which would require consumers to opt-in to any plan that would
allow their nonpublic personal information to be disclosed. Deluxe is unable to
predict whether more restrictive legislation or regulations will be adopted in
the future. Any future legislation or regulations could have a negative impact
on the Deluxe business, results of operations and prospects.

Laws and regulations may be adopted in the future with respect to the
Internet or e-commerce covering issues such as user privacy. New laws or
regulations may impede the growth of the Internet. This could decrease traffic
to Deluxe's websites and decrease the demand for Deluxe's products. Moreover,
the applicability to the Internet of existing laws governing property
ownership, taxation, libel and personal privacy is uncertain and may remain
uncertain for a considerable length of time.

Deluxe's direct-to-consumer businesses may be subject to sales and other taxes
which could have adverse effects on the businesses.

In accordance with current federal, state and local tax laws, and the
constitutional limitations thereon, Deluxe currently collects sales, use or
other similar taxes in state and local jurisdictions where Deluxe's direct

25
<PAGE>

checks business and PlaidMoon.com business have a physical presence. One or
more state or local jurisdictions may seek to impose sales tax collection
obligations on Deluxe and other out of state companies which engage in remote
or online commerce. Further, federal tax law and the interpretation of the
constitutional limitations thereon, are subject to change. In addition, any new
operations of these Deluxe businesses in states where they do not presently
have physical presence could subject shipments of goods by these Deluxe
businesses into such states to sales taxes under current or future laws. If one
or more state or local jurisdictions successfully assert that Deluxe must
collect sales or other taxes beyond its current practices, it could have a
material adverse affect on Deluxe's business.

Deluxe may be subject to environmental risks.

Deluxe's check printing plants are subject to many existing and proposed
federal and state regulations designed to protect the environment. In some
instances, Deluxe has owned and operated its check printing plants before the
environmental regulations came into existence. Deluxe has sold former check
printing plants to third parties and in most instances has agreed to indemnify
the current owner of the facility for on-site environmental liabilities.
Although Deluxe is not aware of any fact or circumstance which would require
the expenditure of material amounts for environmental compliance in the future,
if environmental liabilities are discovered at its check printing plants, it
could be required to spend material amounts for environmental compliance in the
future.

Provisions in Deluxe's charter documents and Minnesota law may delay or prevent
a change in control of Deluxe.

Provisions of Deluxe's articles of incorporation and bylaws and Minnesota
law may delay or prevent a change in control of Deluxe that you may consider
favorable. These provisions include the following:

. no cumulative voting by shareholders for directors;

. the ability of Deluxe's board to set the size of the board of directors,
to create new directorships and to fill vacancies;

. the ability of Deluxe's board to issue preferred stock, without
shareholder approval, with rights and preferences that may be superior
to Deluxe shares;

. the ability of Deluxe's board to amend the bylaws;

. advance notice requirements for shareholder proposals and for nominating
candidates to Deluxe's board; and

. restrictions under Minnesota law on mergers and other business
combinations between Deluxe and any holder of 10% or more of Deluxe's
outstanding common stock.

In addition, Deluxe has adopted a shareholder rights plan which, subject to
certain exceptions, discourages the unauthorized acquisition of 15% or more of
its common stock or an unauthorized exchange or tender offer. Deluxe
anticipates, subject to approval by its board of directors, amending this plan
in connection with the exchange offer to exempt any person who becomes a holder
of more than 15%, but less than 20%, of the outstanding Deluxe shares by reason
of the exchange offer and the spin-off and who is either entitled to report,
and reports its ownership on Schedule 13G under the Exchange Act or reports its
holdings on Schedule 13D, but only if that person's Schedule 13D does not state
any intention to or reserve the right to control or influence the management or
policies of Deluxe or engage in any of the actions specified in Item 4 of
Schedule 13D.

Risks related to eFunds

eFunds had net losses over the past several years, and it may not achieve or
sustain profitability.

eFunds had net losses of $3.4 million for the six months ended June 30,
2000, $8.2 million in 1999, $14.6 million in 1998 and $34.1 million in 1997,
and it may not achieve or maintain profitability. eFunds' ability to achieve
profitability will depend on growth in electronic debit payments, its ability
to attract new clients, the market acceptance of its new products and services
and its ability to control further losses on government

26
<PAGE>

services contracts. In addition, the professional services business, which
eFunds began to offer in September 1997, contributed operating losses of $2.3
million for the six months ended June 30, 2000, $10.7 million in 1999, $3.4
million in 1998 and $1.6 million in 1997. As a consequence, the prospects for
eFunds' business must be considered in light of the risks and uncertainties
encountered by businesses in the early stage of development in new and rapidly
evolving markets.

eFunds' government services business has not been profitable and Deluxe's
indemnification may not be adequate.

eFunds' government services business contributed operating losses of $5.8
million for the six months ended June 30, 2000, $6.6 million in 1999, $47.7
million in 1998 and $12.3 million in 1997. These amounts include losses eFunds
recognized in 2000, 1999 and 1998 that represent probable future losses from
unprofitable long-term service contracts and the write-off of assets associated
with this business. The losses on the long-term service contracts result from
the revenues from the contracts being lower than expected and the expenses to
service the contracts being higher than anticipated. The assets associated with
the government services business were written-off because this business has a
negative overall cash flow and its assets have no resale value. eFunds intends
to exit the government services business after completing its obligations under
its long-term contracts in 2006.

eFunds recorded additional loss contract charges of $9.7 million in the
second quarter of 2000 primarily due to the execution of a definitive long-term
agreement with Citibank relating to a coalition of states for whom eFunds has
been providing electronic benefit transfer services. Citibank is the prime
contractor for this coalition and eFunds had been serving as a subcontractor to
Citibank without a binding contract for approximately three years. Although
eFunds believes that it did not have a legal obligation to provide services to
this coalition, the states included in this coalition did not have alternate
means of delivering benefits under their entitlement programs. As a result,
eFunds believes it could not terminate the provision of services during its
contract negotiations with Citibank because any unilateral decision to do so
would have subjected eFunds to a substantial risk of litigation by the
coalition states as well as potential claims by Citibank. The execution of the
contract allowed eFunds to avoid the possibility that its future losses
associated with the provision of these services would be larger than the charge
eFunds recorded if Citibank ultimately prevailed on all of the points pursued
by it during negotiations. The $12.2 million charge associated with this
contract was partially offset by productivity improvements and infrastructure
cost savings that reduced prior accruals by $2.5 million, resulting in net
charges of $9.7 million.

Deluxe has agreed to indemnify eFunds for future losses arising from any
litigation based on the conduct of its government services business prior to
eFunds' IPO on June 30, 2000 and future losses on identified loss contracts in
excess of eFunds' $29.2 million loss contract reserves as of April 30, 2000,
which amount includes net charges of $9.7 million recorded by eFunds in the
second quarter of 2000. This indemnification obligation does not apply to
losses contemplated by the existing reserve and is subject to a $14.6 million
limit so that it would not apply to any future losses on eFunds' existing
unprofitable contracts in excess of $43.8 million. In addition, Deluxe's
indemnification does not apply to any contract that was not in a loss position
as of April 30, 2000 and so if any of these profitable contracts were to become
unprofitable, no indemnification would be available. eFunds' loss contract
reserves are based on estimates of future performance of identified contracts,
and the estimated results may not be realized. As a result, eFunds may incur
losses beyond its current reserves and Deluxe's indemnification. For example, a
continuing strong economy could further reduce the number of welfare recipients
below eFunds' current expectations, increasing eFunds' projected future losses.
These excess losses would be recognized in future periods and decrease eFunds'
earnings for those future periods. In addition, eFunds may be unable to
effectively manage its exit from the government services business if eFunds is
unable to retain key employees and reduce its costs as currently projected,
which could result in further losses.

eFunds has only a limited history with its current business plan.

eFunds' business model is still new and developing. In April 1999, eFunds
began the process of combining five of Deluxe's former operating units into an
integrated electronic debit payment business. The businesses eFunds combined
were Deluxe Electronic Payment Systems, Inc., DebitBureau, ChexSystems, Inc.,

27
<PAGE>

Deluxe Payment Protection Systems, Inc. and an electronic check conversion
company that was acquired in February 1999. Deluxe Electronic Payment Systems,
Inc. and the electronic check conversion company primarily process debit
transactions. The other companies maintain databases that help financial
institutions and retailers to determine whether to open a new checking or
savings account for or accept a check from a consumer. eFunds combined these
businesses in order to couple its risk management products with its transaction
processing capabilities in an effort to create more products and services than
the businesses would have created as independent operating units. In January
2000, eFunds decided to combine its professional services business with its
electronic payments business because the addition of the information technology
expertise of this business would enhance eFunds' ability to develop, customize,
install and maintain its products. eFunds may not be able to realize the
anticipated strategic and other benefits of these combinations in a timely
manner, or at all. eFunds management has been and will continue to be required
to devote substantial attention to the process of integrating its operations,
technologies and personnel and consolidating its infrastructure. The diversion
of management's attention and any difficulties encountered during the
transition could have an adverse impact on eFunds on-going business activities
and limit its growth.

If eFunds fails to develop and introduce new and enhanced products and
services, it will not be able to compete effectively and its ability to
generate revenues will suffer.

eFunds' success will depend in part on its ability to continue to develop
and introduce new and enhanced electronic debit payment products and services
that keep pace with competitive introductions, technological changes and
changing customer preferences. If eFunds fails to anticipate or respond
adequately to new developments, it may lose opportunities for business with
both current and potential customers.

Legislation relating to consumer privacy protection could harm the ability of
eFunds to collect and use data, increase its operating costs or otherwise harm
its business.

Existing and new laws and regulations relating to consumer privacy
protection could harm eFunds ability to collect and use consumer data, increase
its operating costs or otherwise harm its business. eFunds collects personal
data about consumers for use in its decision support and risk management
products. The information eFunds collects includes names and addresses, social
security numbers, drivers license numbers, checking and savings account numbers
and payment history records such as account closures and returned checks. Due
to the increasing public concern over consumer privacy rights, Congress and
state legislatures have adopted and are considering adopting laws and
regulations restricting the purchase, sale and sharing of personal information
about consumers.

The Gramm-Leach-Bliley Act imposes significant new consumer information
privacy requirements on any entity engaged in the business of providing
financial services, including entities that provide services to financial
institutions. Federal agencies, such as the Comptroller of the Currency and the
Federal Trade Commission, have issued regulations to implement these
requirements. The Act requires covered companies to develop and implement
policies to protect the security and confidentiality of consumers' nonpublic
personal information and to disclose those policies to consumers before a
customer relationship is established and annually thereafter. In addition, the
Act requires covered companies to give an opt-out notice to consumers before
sharing their consumer information with third parties. The opt-out notice
requirement in the Act is subject to several exceptions for credit reporting
and fraud prevention purposes. Although eFunds believes these exceptions apply
to its business, government agencies could interpret their regulations in a
manner that could expand the scope of the Act in ways which could adversely
affect eFunds' business. In addition, even if the regulations do not affect
eFunds directly, uncertainty over the scope of the regulations could make
financial institutions unwilling to share consumer-related information with
eFunds.

The Act does not prohibit state legislation or regulations that are more
restrictive on the collection and use of data by eFunds. More restrictive
legislation or regulations have been introduced in the past and could be
introduced in the future in Congress and the states. For example, some states
have restricted the sale of motor vehicle records, including driver license
lists, and some states refuse to disclose this information at all. In addition,
legislation has been introduced in the U.S. Senate to restrict the collection
and disclosure of social security numbers. eFunds is unable to predict whether
more restrictive legislation or regulations will be adopted in the future. Any
future legislation or regulations could have a negative impact on eFunds'
business, results of operations and prospects.

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<PAGE>

eFunds faces intense competition in all areas of its business, and if eFunds
does not compete effectively, its business will be harmed.

eFunds faces intense competition from a number of companies. Further, eFunds
expects that competition will intensify as the e-commerce and Internet markets
continue to develop and expand. Many of eFunds' competitors have significantly
greater financial, technical and marketing resources, greater name recognition
and a larger installed customer base than eFunds.

In the electronic payment management market, eFunds' principal competitors
include:

. third party network and credit card processors, including First Data,
Equifax, Total System Services, Electronic Data Systems, Concord EFS and
Alliance Data Systems;

. financial institutions that have developed internal processing
capabilities or services similar to eFunds, including Bank of America,
Marshall and Illsley and Fifth Third National Bank;

. electronic data interchange and cash management providers, including
Fiserv, CheckFree, M&I Data, EDS and Fundtech;

. electronic bill payment providers, including CheckFree, EDS, MasterCard,
Spectrum and Visa;

. electronic funds transfer software providers, including Transaction
Systems Architects, SLMsoft, Oasis, Mosaic and PaySys; and

. national information database companies and other content providers,
including Equifax, Experian and Trans Union.

In the market for electronic transaction processing, the principal factors
on which eFunds competes are price and service levels. The future growth of its
revenues in this market is dependent upon securing an increasing volume of
transactions. If eFunds cannot control its transaction processing expenses,
eFunds may not remain price competitive and its revenues will be adversely
affected. Competition for eFunds' decision support and risk management products
is based primarily on the quantity and quality of the data available to it for
this purpose and, to a somewhat lesser degree, price. eFunds' competitive
position in these markets could be harmed if its competitors were able to
compile different data sources and analytical capabilities that proved to be
more effective than eFunds' products.

In the fragmented information technology professional services market,
eFunds competes with numerous firms. eFunds believes that its principal
competition to date has been the internal information technology departments of
current and potential clients. In addition, eFunds competes with systems
consulting and integration firms, application software firms, Internet
professional service companies, services divisions of computer hardware and
software vendors, facilities management and outsourcing companies, "Big 5"
accounting firms and strategic consulting firms. Competition in this area is
primarily based on the continued availability of qualified technical personnel
in an extremely competitive U.S. labor market. eFunds' professional services
business will suffer if it is unable to attract and retain personnel with the
advanced technology skills eFunds requires.

In addition to current competitors, eFunds expects substantial competition
from established and new companies as the e-commerce and Internet markets
continue to develop and expand. eFunds cannot assure you that it will be able
to compete effectively against current and future competitors. Increased
competition could result in price reductions, reduced gross margins or loss of
market share.

eFunds is dependent on Deluxe for both business support and a significant
portion of its revenue.

Following the completion of the exchange offer, Deluxe will continue to
provide eFunds with some services, such as tax, accounting and treasury
services, for transitional periods. If Deluxe fails to perform these services
adequately or effectively, eFunds' business could be adversely affected. In
addition, eFunds will continue to derive a substantial portion of its revenues
from Deluxe in future periods. During the first six months of 2000, Deluxe
represented 15.1% of eFunds' total net sales and 80.9% of the net sales of
eFunds' professional services segment. In 1999, net sales to Deluxe represented
3% of eFunds' total net sales and 43% of the net sales of its professional
services segment. Deluxe has established minimum spending targets of $43
million per year through March 31, 2005 for software development, maintenance
and support services from

29
<PAGE>

eFunds' professional services business. If Deluxe fails to reach this spending
target, Deluxe will be obligated to make payments for a portion of eFunds' fees
based on eFunds' estimate of lost profits. eFunds also will provide Deluxe with
business process management services, including accounts receivable, accounts
payable and other general accounting services and data entry services. Deluxe's
annual minimum spending target for these business process management services
will range from $8.1 million in 2000 to $4.2 million in 2004. The loss of
Deluxe as a customer or a material reduction in the amount of services it
orders from eFunds would materially adversely affect the future results of
operations and financial condition of eFunds.

eFunds' revolving credit facility will expire upon the completion of the
exchange offer and if eFunds is not able to obtain a new credit facility on
acceptable terms, its liquidity would be adversely affected.

Deluxe currently provides eFunds' with an unsecured revolving credit
facility in the amount of $75 million. This facility will expire upon the
earlier to occur of completion of the exchange offer or December 31, 2000. As
of June 30, 2000 the outstanding balance on this facility was $3.8 million at
an interest rate of 6.87%. eFunds intends to replace this facility with a new
credit facility with one or more financial institutions. If eFunds is not able
to find a replacement credit facility on a timely basis or on terms acceptable
to it, its future liquidity and prospects could be materially adversely
affected.

eFunds' future profitability is dependent upon the continued growth in the
market for electronic debit payment services.

If the electronic debit payment services market does not grow or grows more
slowly than expected, eFunds' business will suffer. Several factors could
inhibit the acceptance and growth of electronic debit payment services,
including:

. these types of payments are relatively new alternatives to the more
familiar cash, check and credit card payment options. Consumers and
businesses may be unwilling to change their established payment
preferences and adopt these new forms of payment as quickly as eFunds
expects; and

. consumers may be concerned that these newer payment options are not as
safe or reliable as more traditional payment methods. Consumers may also
believe that these payment technologies offer a lower level of privacy.

The success of eFunds' strategy to expand its Internet delivery channels
depends on product development efforts and increased adoption by businesses and
consumers of the Internet as a means for commerce.

eFunds believes that the Internet will become an increasingly important
means by which consumers and businesses buy and sell products and services.
Accordingly, developing the means to process debit-based Internet transactions
is an important factor in eFunds' ability to increase sales of its electronic
payment services. In order to be successful with this initiative, eFunds must
develop efficient ways for participants in Internet-based transactions to send
and receive debit payments with a minimum level of risk or inconvenience.
eFunds' products for Internet applications are currently in development and
eFunds cannot assure you that it can complete the development of these products
or that its Internet applications will be accepted in the market. In addition,
the success of eFunds' Internet strategy depends on the continued growth and
use of the Internet as a means of commerce. If commerce over the Internet does
not become more accepted and widespread or declines, eFunds' business and
results of operations could suffer.

Factors that may affect Internet commerce adoption include:

. inadequate network infrastructure;

. security, privacy and authentication concerns;

. changes in, or insufficient availability of, telecommunication services
to support the Internet; and

. increased government regulations or taxation.

eFunds may be required to expend significant sums to protect its trademarks.

In May 1999, eFunds filed a trademark infringement lawsuit seeking to
prevent Citizens Advisers, Inc. from using the "E FUND" mark and efund.com
Internet domain. Citizen's has recently amended its answer to

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<PAGE>

eFunds' complaint to assert claims against eFunds based on eFunds' use of the
trademark "eFunds." This action and any future litigation could be costly and
time consuming. If eFunds is unsuccessful in preventing Citizens from using its
name or defeating Citizen's counterclaims, its business could be harmed because
customers and potential customers are confused about the origin of goods and
services offered by Citizens and eFunds and wrongfully attribute any
dissatisfaction with Citizens' services to eFunds. Further, if eFunds is not
successful in this lawsuit, eFunds may not be able to obtain a registered
federal trademark for the eFunds mark, which could restrict its ability to
protect its name and reputation from infringement by others, or eFunds could be
required to cease using the eFunds trademark and name and to change its
corporate name. Loss of the use of the eFunds trademark and name could
adversely affect brand awareness in the marketplace, result in the loss of
goodwill and adversely affect eFunds' business and prospects. Any such name
change would involve the incurrence of significant levels of expense and the
loss of the investment made in establishing the eFunds name.

If the security of eFunds' databases is compromised, eFunds' reputation could
suffer and customers may not be willing to use its products and services.

If the security of eFunds' databases is compromised, its business could be
materially adversely affected. In its electronic payments business, eFunds
collects personal consumer data, such as names and addresses, social security
numbers, drivers license numbers, checking and savings account numbers and
payment history records. Unauthorized access to eFunds' databases could result
in the theft or publication of personal confidential information and the
deletion or modification of personal records or otherwise cause interruptions
in eFunds' operations. These concerns about security are increased when eFunds
transmits or receives information over the Internet. A security or privacy
breach may:

. deter customers from using eFunds' products and services;

. harm eFunds' reputation;

. expose eFunds to liability;

. increase eFunds' operating expenses to remediate problems caused by the
breach in security; and

. decrease market acceptance of electronic commerce transactions in
general.

If eFunds experiences system failures, the products and services eFunds
provides to its customers could be delayed or interrupted, which would harm its
business and reputation and result in the loss of customers.

eFunds' ability to provide reliable service largely depends on the efficient
and uninterrupted operations of its computer network systems and data centers.
Any significant interruptions could severely harm eFunds' business and
reputation and result in a loss of customers. eFunds' systems and operations
could be exposed to damage or interruption from fire, natural disaster, power
loss, telecommunications failure, unauthorized entry and computer viruses.
Although eFunds has taken steps to prevent a system failure, it cannot be
certain that its measures will be successful and that it will not experience
system failures. Further, eFunds' property and business interruption insurance
may not be adequate to compensate eFunds for all losses or failures that may
occur.

eFunds may experience software defects, development delays and installation
difficulties, which would harm its business and reputation and expose eFunds to
potential liability.

eFunds' services and products are based on sophisticated software and
computing systems and eFunds often encounters delays when developing new
products and services. Further, the software underlying eFunds' products and
services has occasionally contained and may in the future contain undetected
errors or defects when first introduced or when new versions are released. In
addition, eFunds may experience difficulties in installing or integrating its
products and technologies on platforms used by its customers or in new
environments, such as the Internet. Defects in eFunds' software products,
errors or delays in the processing of electronic transactions or other
difficulties could result in:

. delay in market acceptance;

. additional development costs;

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<PAGE>

. diversion of technical and other resources;

. loss of customers;

. negative publicity; or

. exposure to liability claims.

Although eFunds attempts to limit its potential liability for warranty
claims through disclaimers and limitation-of-liability provisions in its
license and client agreements, eFunds cannot be certain that these measures
will be successful in limiting its liability.

Consolidation in the banking industry may adversely affect eFunds' ability to
sell its products and services.

Mergers, acquisitions and personnel changes at financial institutions may
adversely affect eFunds' business, financial condition and results of
operations. In 1999, the banking industry accounted for approximately 37% of
eFunds' net sales. Currently, the banking industry is undergoing large-scale
consolidation, causing the number of financial institutions to decline. This
consolidation could cause eFunds to lose:

. current and potential customers;

. market share if the combined financial institution determines that it is
more efficient to develop in-house products and services similar to
eFunds or use its competitors' product and services; and

. revenue if the combined financial institution is able to negotiate a
greater volume discount for, or discontinue the use of, eFunds' products
and services.

eFunds depends on the continued services of its key officers.

eFunds' future success depends upon the continued services of a number of
key officers, including John A. Blanchard III, its Chairman and Chief Executive
Officer, Paul Bristow, its Executive Vice President and Chief Financial
Officer, and Dr. Nikhil Sinha, its Executive Vice President for Global
Corporate Development. The loss of the technical knowledge and industry
expertise of any of these officers could seriously harm eFunds' business.

eFunds' attempts to expand by means of acquisitions and strategic alliances may
not be successful.

Under Section 355(e) of the Internal Revenue Code, the exchange offer and
any subsequent spin-off would be treated as a taxable transaction to Deluxe if
50% or more of the eFunds shares are acquired as part of a plan or series of
related transactions that include the exchange offer and any subsequent spin-
off. For this purpose, any acquisitions of eFunds shares within two years
before or after the exchange offer and any subsequent spin-off are presumed to
be part of such a plan, although eFunds may be able to rebut that presumption.
If such an acquisition of eFunds shares triggers the application of Section
355(e), under the tax sharing agreement, eFunds would be required to indemnify
Deluxe for the resulting tax. As a result of such possible adverse tax
consequences, following the exchange offer and any subsequent spin-off, eFunds
may be restricted in its ability to effect certain acquisitions, issuances of
eFunds shares or other transactions that would result in a change of control of
eFunds. Further, eFunds' ability to expand through acquisitions and strategic
alliances involves many risks, including:

. the operations, technology and personnel of any acquired companies may
be difficult to integrate;

. the allocation of resources to consummate these transactions may disrupt
its business;

. acquired businesses may not achieve anticipated revenues, earnings or
cash flow;

. strategic alliances may not be successful or eFunds may not realize
anticipated benefits in a timely manner, or at all; and

. eFunds' relationships with existing customers and business partners may
be weakened or terminated as a result of these transactions.

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<PAGE>

There are a number of risks associated with eFunds' international sales and
operations that could harm its business.

Because eFunds currently sells some of its products and services in Europe,
Australia and Latin America, eFunds business is subject to risks associated
with doing business internationally. Also, eFunds may not be successful in
selling its services outside of the United States. In 1999, eFunds generated
approximately 6.7% of its net sales outside of the United States. eFunds future
results could be harmed by a variety of factors, including:

. 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.

Conditions in India could adversely affect eFunds' operations.

eFunds maintains software development and business process management
facilities in India with approximately 680 employees. Political and economic
conditions in India could adversely affect eFunds' operations. In the past,
India has experienced significant increases in inflation, shortages of foreign
exchange, civil unrest and conflicts with other countries in South Asia. The
continuation or recurrence of these conditions could have a materially adverse
affect on eFunds' business, result of operations and prospects.

eFunds' software development centers are located in software technology
parks in India. Tax incentives associated with businesses which operate within
these technology parks and engage in software development generally provide
eFunds with a complete exemption from Indian tax on business income generated
through these facilities through the end of 2006. eFunds cannot assure you that
these tax benefits will be continued in the future at their current levels or
at all. If these tax benefits were reduced or eliminated, eFunds' taxes in
future periods would likely increase.

eFunds faces collection risks on some payments.

A debt collection service eFunds commenced in 2000 exposes it to collection
risks. For three clients of eFunds' check authorization service, eFunds
purchases returned checks at a discounted price to the stated check amount and
assumes the collection risk on the checks. eFunds bases its discounted purchase
price on the collection history of each client. If eFunds is unable to collect
on returned checks at the historical rate of its clients or the payment quality
of the portfolio of returned checks deteriorates, eFunds may incur a loss on
the portfolio of purchased checks. Although eFunds may expand this service to
additional customers, it does not expect that revenues from its debt collection
services will exceed 5% of total net sales in 2000.

eFunds has also recently commenced efforts directed towards a pilot check
guarantee program. Under this program, eFunds will purchase checks presented as
payment at selected merchant sites at a discount to their face amount and
assume the collection risk on the tendered checks. eFunds could incur losses in
connection with this activity if bad check losses exceed the amount of the
discounts. eFunds does not expect revenues from this initiative to be material
in 2000, but if the pilot is successful, eFunds would likely seek to expand
this business in future periods and the risk of losses from bad checks may then
become more significant.

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<PAGE>

eFunds faces termination and compliance risks with respect to its government
contracts.

All of eFunds' government contracts can be terminated at any time, without
cause, by the contracting governmental entity. eFunds realized 16% of its net
sales in 1999 pursuant to contracts of this type. If a government contract is
so terminated, the contractor generally is entitled to receive compensation
only for the services provided or costs incurred at the time of termination and
a reasonable profit on the contract work performed prior to the date of
termination. In addition, all of eFunds' government contracts require it to
comply with various contract provisions and procurement regulations, and in
some cases, accounting requirements. Violations of some of these provisions
could, if not cured, result in termination of the contract and fines.

eFunds' government services business could be harmed by cost overruns on fixed-
price contracts.

In 1999, approximately 16% of eFunds' net sales were derived from fixed-
price, variable volume contracts of its government services business. Under
these contracts, eFunds agrees to perform services for an agreed unit price and
eFunds bears the entire risk of cost overruns and changing volumes. If eFunds
does not successfully manage these project and contract risks or if its
original contract estimates turn out to be inaccurate, eFunds could suffer cost
overruns and penalties and its reputation and results of operations could be
harmed. eFunds recorded net charges of $40.9 million in 1998, $8.7 million in
1999 and $9.7 million in the second quarter of 2000 as a result of these risks.
No assurance can be given that eFunds will not incur additional charges of this
type or that the indemnification Deluxe has agreed to provide it with respect
to eFunds' existing contracts will be sufficient.

eFunds may be unable to protect its intellectual property.

Despite eFunds efforts to protect its intellectual property, third parties
may infringe or misappropriate eFunds intellectual property, or otherwise
independently develop substantially equivalent products and services. The loss
of intellectual property protection or the inability to secure or enforce
intellectual property protection could harm eFunds' business and ability to
compete. eFunds relies on a combination of trademark and copyright laws, trade
secret protection and confidentiality and license agreements to protect its
trademarks, software and know-how. eFunds has also applied for patent
protection on some of the features of its newer products. eFunds may be
required to spend significant resources to protect its trade secrets and
monitor and police its intellectual property rights.

Third parties may assert infringement claims against eFunds in the future.
In particular, there has been a substantial increase in the issuance of
business process patents for Internet-related business processes, which may
have broad implications for all participants in Internet commerce. Claims for
infringement of these patents are becoming an increasing subject of litigation.
If eFunds becomes subject to an infringement claim, it may be required to
modify its products, services and technologies or obtain a license to permit
its continued use of those rights. eFunds may not be able to do either of these
things in a timely manner or upon reasonable terms and conditions. Failure to
do so could seriously harm eFunds business, operating results and prospects. In
addition, future litigation relating to infringement claims could result in
substantial costs to eFunds and a diversion of management resources. Adverse
determinations in any litigation or proceeding could also subject eFunds to
significant liabilities and could prevent eFunds from using some of its
products, services or technologies.

Provisions in eFunds' charter documents and Delaware law and tax considerations
related to the exchange offer may delay or prevent a change in control eFunds.

Provisions of eFunds' certificate of incorporation and bylaws and Delaware
law may delay or prevent a change in control of eFunds that you may consider
favorable. These provisions include the following:

. no cumulative voting by shareholders for directors;

. a classified board of directors with three-year staggered terms;

34
<PAGE>

. the ability of eFunds' board to set the size of the board of directors,
to create new directorships and to fill vacancies;

. the ability of eFunds' board to issue preferred stock, without
shareholder approval, with rights and preferences that may be superior
to eFunds' shares;

. the ability of eFunds' board to amend the bylaws;

. a prohibition of shareholder action by written consent;

. advance notice requirements for shareholder proposals and for nominating
candidates to eFunds' board;

. restrictions under Delaware law on mergers and other business
combinations between eFunds and any holder of 15% or more of the
outstanding eFunds shares; and

. a requirement that 66 2/3% of eFunds' shareholders and 66 2/3% of
eFunds' directors approve certain corporate transactions, including
mergers and consolidations, sales of assets or amendments to its
certificate of incorporation.

In addition, eFunds has adopted a shareholder rights plan which discourages
the unauthorized acquisition of 15% or more of its common stock or an
unauthorized exchange or tender offer. eFunds anticipates, subject to approval
of its board of directors, amending this plan in connection with the exchange
offer to exempt acquisitions by persons who become holders of more than 15%,
but less than 20%, of its shares through the exchange offer and the spin-off
and who report their holdings on Schedule 13G under the Exchange Act.

The tax sharing agreement between Deluxe and eFunds also provides that
eFunds will indemnify Deluxe for any taxes due if the exchange offer or some of
the related transactions fail to qualify as tax-free because of eFunds' actions
or inactions. An acquisition of eFunds by a third party could have such an
effect. As a result, these tax considerations may delay or prevent a third
party from acquiring eFunds in a transaction you may otherwise have considered
favorable or reduce the amount you receive as part of the transaction. eFunds
has also agreed to indemnify Deluxe for a portion of any taxes due from Deluxe
if the exchange offer or some of the related transactions fail to qualify as
tax-free as a result of a retroactive change of law or other reason unrelated
to the action or inaction of either eFunds or Deluxe.

35
<PAGE>

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This document and the documents incorporated by reference into this document
contain both historical and forward-looking statements. All statements other
than statements of historical fact are, or may be deemed to be, forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are not based on historical facts, but rather reflect the current
expectations of Deluxe or eFunds, as the case may be, concerning future results
and events. These forward-looking statements generally can be identified by use
of statements that include statements that include phrases such as "believe,"
"expect," "anticipate," "intend," "plan," "foresee," "likely," "project,"
"estimate," "will," or other similar words or phrases and variations thereof.
Similarly, statements that describe the plans, strategies and objectives of
Deluxe and eFunds with respect to growth or product development or future
market position, expenditures or financial results are forward-looking
statements. Deluxe and eFunds have based many of these forward-looking
statements on current expectations, estimates and projections about each
company and their industries in general. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of Deluxe or eFunds to be
different from any future results, performance and achievements expressed or
implied by these statements. You should review carefully all information,
including the financial statements and the notes to the financial statements
included or incorporated by reference into this document.

For a discussion identifying some important factors that could cause actual
results to vary materially from those anticipated in the forward-looking
statements, see "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations of Deluxe" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
eFunds." Also, see Deluxe's and eFunds' SEC filings, including the cautionary
statements included in Deluxe's and eFunds' Quarterly Reports on Form 10-Q for
the quarter ended June 30, 2000. These factors, including the risk factors
described in this document, are not necessarily all of the important factors
that could cause actual results to differ materially from those expressed in
any of the forward-looking statements contained in this offering circular-
prospectus. Other unknown or unpredictable factors also could have material
adverse effects on Deluxe's and eFunds' future results.

The forward-looking statements included in this document are made only as of
the date of this document and under Section 27A of the Securities Act and
Section 21E of the Exchange Act. Deluxe and eFunds do not have any obligation
to publicly update any forward-looking statements to reflect subsequent events
or circumstances. Deluxe and eFunds cannot assure you that projected results or
events will be achieved.

36
<PAGE>

THE EXCHANGE OFFER

Background and Reasons for the Exchange Offer

For the past several years, Deluxe has pursued a strategy directed at
improving profitability and creating and taking advantage of business
opportunities. This strategy has involved:

. divesting unprofitable or marginally profitable businesses and assets;

. controlling costs and other efforts to increase efficiency and
profitability;

. diversifying into new products and services through internal initiatives
and acquisitions; and

. adjusting its organizational structure.

Although Deluxe's net income has increased since 1997, Deluxe believes that
the Deluxe share price has not fully reflected results of these efforts or the
inherent value of Deluxe's various businesses.

In August 1999, Deluxe began an analysis of the various alternatives
available with respect to the Deluxe and eFunds businesses. On January 31,
2000, following a thorough review of various alternatives, Deluxe's board of
directors announced a plan to combine eFunds' businesses into a separate
publicly-traded company. The decision to separate eFunds completely from Deluxe
was based on several factors, the most important of which are listed below.

. Synergies between Deluxe and eFunds as a combined company have
diminished. Although financial institutions form a common customer base
for both Deluxe and eFunds, Deluxe found that financial institution
customers did not fully value the benefits of the combination of
products and services offered by Deluxe and eFunds. As a result, Deluxe
did not realize the synergies associated with being a single vendor of
combined products and services to its financial institution customers.
In addition, as the businesses of eFunds and Deluxe separately
established themselves with their customers as viable, distinct
operations, synergistic benefits of retaining both businesses as part of
a single enterprise further diminished.

. Increase ability to attract, retain and motivate employees. Deluxe and
eFunds believe that incentive compensation arrangements for key eFunds
employees that are directly related to the market performance of
publicly-traded eFunds shares will enable eFunds to provide such
employees with enhanced incentives for performance. The separation will
also enable eFunds to offer its key employees compensation directly
linked to the performance of its businesses, which eFunds expects will
enhance its ability to attract and retain qualified personnel.

. Provide eFunds with an acquisition currency. Deluxe and eFunds believe
that the separation will enhance eFunds' ability to engage in future
acquisitions in which eFunds' shares are issued as consideration,
although eFunds currently does not have any agreements or understandings
for any acquisitions. Provisions of the Internal Revenue Code may limit
the number of eFunds shares

37
<PAGE>

available for such acquisitions for a period of time. Deluxe and eFunds
also believe that the separation will facilitate future partnerships,
alliances and other arrangements between eFunds and other entities.

As part of its analysis of a separation of eFunds, the board of directors of
Deluxe, in consultation with its advisors, considered a number of alternative
structures, including a tracking stock alternative and the sale of certain of
Deluxe's businesses, before concluding that only two methods of disposing of
Deluxe's holdings in eFunds would satisfy all of the factors set forth above:
an exchange offer or a pro rata spin-off. The board determined to pursue the
exchange offer because, in its view, the exchange offer was superior to a spin-
off. In reaching its decision, the board:

. believed that the exchange offer addressed the business factors
discussed above;

. recognized that the exchange offer, as opposed to a spin-off, would give
Deluxe shareholders the ability to adjust their investment between
Deluxe and eFunds based on individual financial considerations in a tax-
efficient manner; and

. recognized that completion of the exchange offer will reduce the number
of Deluxe shares outstanding.

In view of the range of factors considered in connection with its evaluation
of the exchange offer and the complexity of these matters, the board of
directors of Deluxe did not attempt to quantify, rank or otherwise assign
relative weights to these factors.

On June 30, 2000, eFunds completed its IPO, selling to the public 5,500,000
eFunds shares, representing approximately 12% of eFunds' total shares
outstanding. Deluxe, through its ownership of 40,000,000 eFunds shares,
retained approximately 88% of eFunds' total shares outstanding.

Deluxe is seeking to divest its ownership interest in eFunds through this
exchange offer. If all of the conditions to the exchange offer are satisfied or
waived but less than all of the eFunds shares owned by Deluxe are distributed
by Deluxe pursuant to the exchange offer because too few Deluxe shares are
tendered, Deluxe will distribute its remaining eFunds shares in a pro rata
spin-off to all of its shareholders as of a record date to be determined
following the completion of the exchange offer.

Effects of this Exchange Offer

The exchange offer will affect Deluxe shareholders regardless of whether
they tender their Deluxe shares for exchange pursuant to the exchange offer.

. If you exchange all of your Deluxe shares for eFunds shares in the
exchange offer, you will only have an interest in the future financial
performance of eFunds. You will no longer participate in any change in
the value of Deluxe because you will no longer own any Deluxe shares.

. If you exchange some, but not all of your Deluxe shares, you will have a
direct interest in the financial performance of eFunds and may reduce
your interest in the financial performance of Deluxe.

. If you do not exchange any of your Deluxe shares, you will not receive
eFunds shares and you will not have any direct interest in the eFunds
businesses unless the spin-off is necessary. If you do not tender any of
your Deluxe shares and the exchange offer is completed, your ownership
interest in Deluxe will increase on a percentage basis as a result of
the exchange offer.

Whether you tender your Deluxe shares or not, the shares you hold after the
exchange offer will be in a company which is very different from the company in
which you held shares before the exchange offer.

No Dissenters' Rights

Dissenters' rights are a statutory remedy available to shareholders in
connection with some corporate actions. This remedy allows dissenting
shareholders to require the corporation to repurchase their shares at a price
equivalent to its value immediately prior to the corporate action. No
dissenters' rights are available under the Minnesota Business Corporation Act
to shareholders of Deluxe in connection with the exchange offer or spin-off.

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<PAGE>

Regulatory Approvals

No filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
are required in connection with the exchange offer generally. If a shareholder
of Deluxe decides to participate in the exchange offer and acquires enough
eFunds shares to exceed any threshold stated in the regulations under the Hart-
Scott-Rodino Act, and if an exemption under those regulations does not apply,
that shareholder and Deluxe would be required to make filings under the Hart-
Scott-Rodino Act, and the waiting period under the Hart-Scott-Rodino Act would
have to expire or be terminated before any exchanges of shares with that
shareholder could be effected. A filing requirement could delay exchanges with
that shareholder for several months. See "Risk Factors--Risks related to the
Exchange Offer--Tendering shareholders may have to make antitrust regulatory
filings."

Apart from the IRS private letter ruling that the exchange offer will be
tax-free to Deluxe and the tendering shareholders, which has already been
obtained, the registration of the eFunds shares offered in the exchange offer
under federal and state securities laws and the filing of a Schedule TO by
Deluxe, Deluxe and eFunds do not believe that any other material federal or
state regulatory filings or approvals will be necessary to consummate the
exchange offer or subsequent spin-off, if any.

Accounting Treatment

Deluxe shares acquired in the exchange offer will be canceled and thereafter
constitute authorized and unissued Deluxe shares. This means that these shares
will generally be available for issuance by Deluxe without further shareholder
approval, except as may be required by applicable law or the rules of the New
York Stock Exchange. The shares may be issued for general or other corporate
purposes, including stock splits and dividends, acquisitions, the raising of
additional capital for use in Deluxe's businesses and pursuant to employee
benefit plans.

The Deluxe shares received by Deluxe pursuant to the exchange offer will be
recorded as a decrease in shareholders' equity in an amount equal to the market
value of the eFunds shares exchanged pursuant to the exchange offer. Any
difference between the fair market value and the net book value of the eFunds
shares owned by Deluxe at the commencement of this exchange offer will be
recognized as a gain or loss on disposal of discontinued operations for
accounting purposes.

Any eFunds shares that are distributed through a subsequent spin-off will be
accounted for as a dividend through a direct charge to retained earnings. The
amount of the dividend will be equal to Deluxe's net carrying value of the
eFunds shares distributed.

Deluxe's disposition of its eFunds shares will not in and of itself affect
eFunds' financial position or results of operations.

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<PAGE>

TERMS OF THE EXCHANGE OFFER

Terms Of The Exchange Offer

Upon the terms and subject to conditions described in this offering
circular-prospectus and the related letter of transmittal, which together
constitute the exchange offer, Deluxe is offering to exchange eFunds shares
for each Deluxe share, validly tendered by the expiration date and not properly
withdrawn or deemed withdrawn, as described below under the section entitled
"--Withdrawal Rights" on page 47, up to a maximum of Deluxe shares
tendered. This is a voluntary exchange offer, which means that Deluxe
shareholders may tender all, some or none of their Deluxe shares in the
exchange offer. All persons holding Deluxe shares are eligible to participate
in the exchange offer if they validly tender their Deluxe shares during the
exchange offer period in a jurisdiction where the exchange offer is permitted
under the laws of that jurisdiction.

Expiration Date

The exchange offer will expire at 5:00 p.m., New York City time, on ,
2000, unless the exchange offer is extended by Deluxe. Deluxe may extend this
deadline for any reason. This date and time is referred to in this offering
circular-prospectus as the expiration date. Unless applicable law and the terms
of the exchange offer provide otherwise, if the exchange offer is extended, the
expiration date will be the latest date and time at which the exchange offer,
as so extended, will expire. For more information, see the section entitled "--
Extension of Tender Period; Termination; Amendment" on page 48.

Number of Shares Accepted

Deluxe will accept up to Deluxe shares for exchange and will issue up
to 40,000,000 eFunds shares in the exchange offer. In determining the exchange
ratio, Deluxe considered, among other things:

. recent market prices on the NYSE for Deluxe shares and on the Nasdaq for
eFunds shares; and

. consultations with its financial advisors as to what exchange ratio
might attract enough Deluxe shareholders to participate in the exchange
offer and cause Deluxe to distribute all 40,000,000 eFunds shares held
by Deluxe.

Deluxe's obligation to complete the exchange offer is subject to important
conditions that are described in the section entitled "--Conditions to
Consummation of the Exchange Offer," on page 49.

If Deluxe's shareholders validly tender and do not properly withdraw more
than Deluxe shares, the exchange offer will be oversubscribed, and the
Deluxe shares validly tendered and not properly withdrawn will be subject to
proration except for tenders by holders of less than 100 Deluxe shares who
tender all of their shares and do not properly withdraw these shares. Assuming
that the conditions to the exchange offer are satisfied or waived, if you hold
of record as of , 2000 less than 100 Deluxe shares and validly tender and
do not properly withdraw all of your Deluxe shares, all of your shares will be
accepted for exchange and none of your shares will be subject to proration.

At the expiration of the exchange offer, Deluxe will calculate the number of
Deluxe shares validly tendered and not properly withdrawn. If the aggregate
number of Deluxe shares tendered is equal to or greater than and all other
conditions of the exchange offer are satisfied or waived, Deluxe will be
obligated to accept the Deluxe shares validly tendered and not properly
withdrawn pursuant to the exchange offer, subject to proration, if applicable.

Deluxe will return to the tendering shareholders, promptly after the
expiration date, all Deluxe shares which were tendered but are not exchanged,
including shares not exchanged due to proration. All Deluxe shares accepted for
exchange will be returned to the status of authorized but unissued shares of
Deluxe.

If the result of the exchange offer is that more than Deluxe shares but
fewer than Deluxe shares are exchanged, promptly after the consummation of
the exchange offer, Deluxe will distribute its remaining

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<PAGE>

eFunds shares to its remaining shareholders, as of a record date to be
determined following the completion of the exchange offer on a pro rata basis,
based on their holdings of Deluxe shares on such record date. For more
information, see the section entitled "The Spin-Off" on page 53.

If proration of the tendered Deluxe shares is required, Deluxe does not
expect that it will be able to announce the final proration factor or commence
delivery of any eFunds shares, until approximately five business days after the
expiration date. This delay results from the difficulty in determining the
number of Deluxe shares validly tendered for exchange, including Deluxe shares
tendered for exchange under the guaranteed delivery procedure described in the
section entitled "--Guaranteed Delivery Procedure" on page 46, and not properly
withdrawn before the expiration date. Deluxe will announce the preliminary
results of proration by press release as promptly as practicable after the
expiration date. You may also obtain this preliminary information from the
information agent or the dealer manager, and you may also be able to obtain
this information from your broker.

Deluxe will not distribute fractional eFunds shares pursuant to the exchange
offer. The exchange agent, acting as agent for shareholders of Deluxe otherwise
entitled to receive fractional eFunds shares, will aggregate all fractional
shares and sell them for the accounts of these shareholders. The proceeds, if
any, realized by the exchange agent at the sale of these fractional shares will
be distributed, net of commissions, to these shareholders in accordance with
their fractional interests. These cash payments will be made through the
exchange agent. None of Deluxe, eFunds, the dealer manager, the information
agent or the exchange agent or any soliciting dealer guarantees any minimum
proceeds from the sale of eFunds shares, and none will pay any interest on
these proceeds.

If the minimum amount is reached and if the conditions described in the
section entitled "--Conditions to Consummation of the Exchange Offer" on page
49 are satisfied, Deluxe will consummate the exchange offer. If these
conditions are not satisfied, Deluxe may:

. terminate the exchange offer and, as promptly as practicable, return all
tendered Deluxe shares to the tendering shareholders;

. waive any condition and, subject to any requirement to extend the period
of time during which the exchange offer is open, exchange all Deluxe
shares validly tendered and not properly withdrawn by the expiration
date; or

. extend the exchange offer until all conditions to the exchange offer are
satisfied or waived and, subject to the withdrawal rights described in
the section entitled "--Withdrawal Rights" on page 47, retain all Deluxe
shares validly tendered and not properly withdrawn until expiration of
the exchange offer as extended.

The Securities Exchange Act of 1934 requires that Deluxe pay the
consideration offered or return the tendered Deluxe shares promptly after the
expiration or termination of the exchange offer. You should read the section
entitled "--Extension of Tender Period; Termination; Amendment" on page 48 for
a description of Deluxe's right to extend the period of time during which the
exchange offer is open and to amend, delay or terminate the exchange offer.

Deluxe is sending this offering circular-prospectus and the letter of
transmittal to persons who were holders of record of Deluxe shares at the close
of business on , 2000. As of that date, there were Deluxe shares
outstanding. Deluxe will also furnish this offering circular-prospectus and
related letter of transmittal to brokers, banks and similar persons whose names
or the names of whose nominees appear on the shareholder list of Deluxe or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Deluxe
shares.

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<PAGE>

Exchange of Deluxe Shares

Upon the terms and subject to the satisfaction or waiver of the conditions
of the exchange offer, Deluxe will accept for exchange, and exchange eFunds
shares for, Deluxe shares that have been validly tendered and not properly
withdrawn prior to the expiration date. As provided by the Exchange Act, Deluxe
also reserves the right, in its sole discretion, to delay the acceptance for
exchange or to delay the exchange of any Deluxe shares to comply in whole or in
part with any applicable law. For a description of Deluxe's right to terminate
the exchange offer or to delay acceptance for exchange or to delay exchange of
any Deluxe shares, you should read the section entitled "--Extension of Tender
Period; Termination; Amendment" on page 48.

Pursuant to the terms of the exchange offer, Deluxe will be deemed, subject
to the proration provisions of the exchange offer, to have accepted for
exchange and exchanged Deluxe shares validly tendered and not properly
withdrawn when Deluxe gives oral or written notice to the exchange agent of its
acceptance of these tendered shares. Deluxe will exchange Deluxe shares
accepted for exchange on the business day following the announcement by Deluxe
of the final results of the exchange offer or, if proration of the Deluxe
shares tendered is required, the final proration factor, by depositing the
eFunds shares representing the consideration payable in the exchange offer with
the exchange agent, who will act as agent for the tendering shareholders in
receiving the eFunds shares and transmitting these shares to the tendering
shareholders. This business day will be less than ten business days after the
expiration date.

Deluxe will exchange the tendered Deluxe shares accepted for exchange only
after timely receipt by the exchange agent of:

. certificates for these Deluxe shares, or a confirmation of a book-entry
transfer of these shares into the exchange agent's account at the book-
entry transfer facility referred in "--Procedures for Tendering Deluxe
Shares--Depositary Trust Company;" and

. a properly completed and duly executed letter of transmittal, or its
manually signed facsimile, or an agent's message in connection with a
book-entry transfer of shares, along with any other documents required
by the letter of transmittal.

You should read the section entitled "--Procedures for Tendering Deluxe
Shares" on page 44, "--Special Procedures for Certain Jurisdictions Outside the
United States" at page 46, and "--Special Procedures for Participants in
Deluxe's Stock Option Plans" on page 47 for a description of the procedures for
tendering Deluxe shares. Under no circumstances will Deluxe pay interest
pursuant to the terms of the exchange offer, regardless of any delay in making
any exchange.

If Deluxe does not exchange, for any reason, any tendered Deluxe shares, or
if you submitted certificates for more Deluxe shares than are tendered for
exchange or accepted for exchange due to the proration provisions, Deluxe will
return certificates for the unexchanged or untendered shares as promptly as
practicable after the expiration or termination of the exchange offer. In the
case of Deluxe shares tendered by book-entry transfer, Deluxe will credit these
Deluxe shares to an account maintained at the book-entry transfer facility.

Deluxe will pay any stock transfer taxes payable on the transfer to Deluxe
of Deluxe shares and on the transfer to tendering shareholders of eFunds
shares. The tendering shareholder must pay any stock transfer taxes whether
imposed on the registered owner or another person, which may become payable if:

. the tendered certificates for Deluxe shares are registered in the name
of any person other than the person signing the letter of transmittal;
or

. eFunds shares to be received in the exchange offer are registered in the
name of any person other than the registered holder of the Deluxe shares
tendered for those eFunds shares.

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<PAGE>

Determining to Participate in the Exchange Offer

Whether to Participate in the Exchange Offer

Whether you should participate in the exchange offer depends on many
factors. You should consider, among other things:

. your view of the relative values of a single Deluxe share and of a
single eFunds share;

. your individual investment strategy regarding the two stocks; and

. your opportunity to receive the anticipated premium, if any.

You should also consider the factors described under the section entitled
"Risk Factors" on page 18.

Based on the closing sale prices for Deluxe shares on the New York Stock
Exchange or NYSE and eFunds shares on the Nasdaq National Market or Nasdaq on
, 2000, the exchange ratio would result in a Deluxe shareholder receiving
eFunds shares with a market value greater than the Deluxe shares tendered for
exchange. We refer to this greater market value as the anticipated premium.
Based on these closing sale prices, the anticipated premium would be
approximately % or $ for each Deluxe share tendered. No one can, however,
predict the amount of the actual premium in the exchange offer or whether in
fact there will be a premium at the end of the exchange offer. In addition, no
one can predict the prices at which the Deluxe shares or eFunds shares will
trade over time.

You can calculate the anticipated premium, as a percentage, by using the
following formula:

<TABLE>
<S> <C> <C>
Anticipated Premium = Exchange Ratio x Price of one eFunds share -1 x 100
------------------------------------------
Price of one Deluxe share
</TABLE>

For example: Assume that the price of one Deluxe share is $ and the price
for one eFunds share is $ , the closing sale prices of Deluxe shares on the
NYSE and eFunds shares on the Nasdaq on , 2000. At the exchange ratio of
of an eFunds share for each Deluxe share, the anticipated premium would be
approximately % or $ for each Deluxe share tendered.

The anticipated premium depends on the prevailing stock prices for Deluxe
shares and eFunds shares. The table below shows the anticipated premium at
various prices for Deluxe shares and eFunds shares.

<TABLE>
<CAPTION>
Anticipated Premium
Deluxe share price
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $
---- ---- ---- ---- ---- ----
eFunds share price $ % % % % % %
$ % % % % % %
$ % % % % % %
$ % % % % % %
$ % % % % % %
$ % % % % % %
</TABLE>

You should obtain current market quotations for Deluxe shares and eFunds
shares. No one can assure you what the market prices of these shares will be
before, on or after the date the exchange offer is completed.

None of Deluxe, eFunds, the dealer manager, the information agent, the
exchange agent, the soliciting dealers, the board of directors of Deluxe or the
board of directors of eFunds makes any recommendation as to whether you should
tender or refrain from tendering your Deluxe shares. You must make your own
decision as to whether to tender Deluxe shares based on your own financial
position and requirements and, if you decide to tender shares in the exchange
offer, how many shares you should tender. All of these decisions should be made
only after you read this offering circular-prospectus and consult with your
advisors.

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<PAGE>

Procedures For Tendering Deluxe Shares

General

To tender Deluxe shares in the exchange offer:

. Prior to the expiration date, the exchange agent must receive all of the
following items at one of its addresses specified on the back cover of
this offering circular-prospectus:

. a properly completed and duly executed letter of transmittal, or
manually signed facsimile, with any required signature guarantees,
or in the case of a book-entry transfer of shares held in street
name, an agent's message;

. any documents required by the letter of transmittal; and

. certificates for the Deluxe shares to be tendered, or with respect
to shares held in street name, by the expiration date, a delivery of
the Deluxe shares as provided under the procedures for book-entry
transfer described below, with a confirmation of this delivery; or

. Prior to the expiration date, you must comply with the guaranteed
delivery procedure described below.

Participants in the Deluxe Employee Stock Purchase Plan may also participate
in the exchange offer if the holding period applicable to any Deluxe shares
they purchased through this Plan and wish to tender has been satisfied, and
should complete a letter of transmittal to tender the Deluxe shares held for
their account under the Deluxe Employee Stock Purchase Plan.

If your shares are held by your broker and are not certificated in your
name, that is, your shares are in "street name," you should receive
instructions from your broker on how to participate in the exchange offer. If
your Deluxe shares are held through your broker, you cannot tender your shares
directly to the exchange agent. If you have not yet received instructions from
your broker, please contact your broker directly.

If you are the registered owner of Deluxe shares or your shares are
uncertificated "book-entry" shares held by Deluxe's transfer agent, you should
complete and sign the letter of transmittal designating the number of Deluxe
shares you wish to tender. Send the completed and signed letter of transmittal,
together with any other documents required by the letter of transmittal, so
that it is received by the exchange agent at one of the addresses specified on
the back cover of this offering circular-prospectus before the expiration of
the exchange offer. Do not send your documents to Deluxe, eFunds, the dealer
manager, the information agent or any soliciting dealer.

Letters of transmittal and certificates for Deluxe shares should not be sent
to Deluxe, eFunds, the dealer manager, the information agent or any soliciting
dealer. Delivery of any of these required documents to any address other than
the address of the exchange agent set forth on the back cover of this offering
circular-prospectus will not constitute a valid tender.

The Exchange Act provides that a person who tenders Deluxe shares for his
own account violates the law, unless this person:

. owns the Deluxe shares;

. owns other securities convertible into or exchangeable for the Deluxe
shares and intends to acquire the Deluxe shares for tender by conversion
or exchange of the securities or by exercise of the option, warrant or
right; or

. owns an option, warrant or right to purchase the Deluxe shares.

The Exchange Act provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.

If you tender Deluxe shares under any method of delivery in the exchange
offer and Deluxe accepts these shares for exchange under the procedures
described in the exchange offer and in the letter of transmittal, a binding
agreement will exist between you and Deluxe under the terms and conditions of
the exchange offer, including your representations that:

. you own the Deluxe shares that you are tendering within the meaning of
the Exchange Act; and

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. the tender of these Deluxe shares complies with the Exchange Act.

Depository Trust Company Participants

The exchange agent will establish an account for the Deluxe shares at The
Depository Trust Company, which we will refer to as the book-entry transfer
facility, within two business days after the date of this offering circular-
prospectus. Any financial institution that is a participant in the system of
the book-entry transfer facility may make delivery of Deluxe shares by
requesting that this book-entry transfer facility transfer Deluxe shares into
the exchange agent's account in accordance with the procedures of the book-
entry transfer facility.

Although delivery of Deluxe shares may be effected through book-entry
transfer to the exchange agent's account at the book-entry transfer facility, a
properly completed and duly executed letter of transmittal, or manually signed
facsimile, and any other required documents, or an agent's message, must, in
any case, be transmitted to and received or confirmed by the exchange agent at
one of its addresses specified on the back cover of this offering circular-
prospectus prior to the expiration date, or the guaranteed delivery procedure
described below must be complied with.

An agent's message is a message transmitted through electronic means by the
book-entry transfer facility to, and received by, the exchange agent, and
forming a part of a book-entry confirmation. The agent's message states that
the book-entry transfer facility has received an express acknowledgment from
the participant in the book-entry transfer facility tendering the shares that
the participant has received and agrees to be bound by the letter of
transmittal. Delivery of documents to the book-entry transfer facility in
accordance with its procedures alone does not constitute delivery to the
exchange agent as required by this exchange offer.

Signature Guarantee

An eligible institution must guarantee the signatures on a letter of
transmittal unless the Deluxe shares tendered under the letter of transmittal
are tendered:

. by the registered holder of the Deluxe shares tendered with the letter
of transmittal and the holder has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on
the letter of transmittal; or

. for the account of an eligible institution.

A verification by a notary public alone is not acceptable.

An eligible institution is a participant in:

. the Security Transfer Agents Medallion Program; or

. the New York Stock Exchange Medallion Signature Guarantee Program.

The stock certificate must be endorsed or accompanied by an appropriate
stock power, and the signature on the stock certificate or stock power must
appear exactly as the name of the registered owner appears on the certificate
with the signature on the certificate or stock power guaranteed by an eligible
institution if:

. a certificate representing the Deluxe shares is registered in the name
of a person other than the signer of a letter of transmittal; or

. delivery of the eFunds shares is to be made or Deluxe shares not
tendered or not accepted for exchange are to be returned to a person
other than the registered owner.

If the trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, sign the letter of transmittal or notice of guaranteed delivery or
any certificates or stock powers, these persons should so indicate when signing
and, unless waived by Deluxe, proper evidence satisfactory to Deluxe of their
authority to so act must be submitted.

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Special Procedures for Certain Jurisdictions Outside the United States

If you wish to tender your Deluxe shares in a jurisdiction other than the
United States, certain special procedures may need to be followed, depending
on the laws of the particular jurisdiction in which you tender your shares.
For example, the laws of some foreign jurisdictions may require that a local
bank or similar institution be engaged as a local exchange agent for that
jurisdiction. In cases where special procedures are applicable to a
jurisdiction outside the United States, we have included special instructions
regarding such procedures with this document. If you wish to tender your
Deluxe shares in a jurisdiction other than the United States, you should also
read carefully the information applicable to you at "--Certain Matters
Relating to Foreign Jurisdictions."

Deluxe's Interpretations are Binding

Deluxe will determine in its sole discretion all questions as to the form
of documents, including notices of withdrawal, and the validity, form,
eligibility, including time of receipt, and acceptance for exchange of any
tender of Deluxe shares. Deluxe's determination will be final and binding on
all tendering shareholders.

Deluxe reserves the absolute right to:

. determine whether a tendering shareholder is eligible;

. reject any and all tenders of any Deluxe shares not properly tendered or
the acceptance of which, in the opinion of Deluxe's counsel may be
unlawful;

. waive any defects or irregularities in the tender of Deluxe shares or
any conditions of the exchange offer either before or after the
expiration date; and

. request any additional information from any record or beneficial owner
of Deluxe shares that Deluxe deems necessary or appropriate.

None of Deluxe, eFunds, the dealer manager, the information agent or the
exchange agent or any other person will be under any duty to notify tendering
shareholders of any defect or irregularity in tenders or notices of
withdrawal.

Destroyed or Lost Certificates

If any certificate representing the Deluxe shares has been mutilated,
destroyed, lost or stolen, you must:

. furnish to the exchange agent satisfactory evidence, subject to its
discretion, of the ownership of and destruction, loss or theft of that
certificate;

. furnish indemnity satisfactory to the exchange agent and Deluxe in their
discretion; and

. comply with other reasonable conditions that the exchange agent may
prescribe.

Guaranteed Delivery Procedure

If:

. you wish to tender Deluxe shares and the certificates for these shares
are not immediately available; or

. your shares are held in street name and the procedure for delivery by
book-entry transfer cannot be completed on a timely basis; or

. time will not permit all required documents to reach the exchange agent
prior to the expiration date,

you may nevertheless tender these shares if all of the following conditions
are met:

. the tender is made by or through an eligible institution;

. the exchange agent receives prior to the expiration date a properly
completed and duly executed notice of guaranteed delivery substantially
in the form provided by Deluxe:

. specifying the name and address of the holder and the number of
Deluxe shares tendered;

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<PAGE>

. specifying that the tender is being made; and

. guaranteeing that, within three business days after the date of the
notice of guaranteed delivery, the certificate(s) representing the
Deluxe shares accompanied by all other documents required by the
letter of transmittal will be deposited by the eligible institution
with the exchange agent or the eligible institution instituting that
book-entry transfer will confirm that transfer; and

. the exchange agent receives within three business days after the date of
the notice of guaranteed delivery:

. the certificate(s) for the Deluxe shares, or in the case of Deluxe
shares held in "book-entry" or street name, a confirmation of a
book-entry transfer of the shares into the exchange agent's account
at the book-entry transfer facility; and

. a properly completed and duly executed letter of transmittal, or a
manually signed facsimile, and any required signature guarantees or
an agent's message in connection with a book-entry transfer, and any
other documents required by the letter of transmittal.

The notice of guaranteed delivery may be delivered by hand, telegram,
facsimile transmission or mail to the exchange agent and must include a
guarantee by an eligible institution as described in the notice.

The method of delivery of Deluxe shares and all other required documents is
at the option and risk of the tendering shareholder. If certificates
representing the Deluxe shares are sent by mail, Deluxe recommends that the
tendering shareholders use registered mail, with return receipt requested, and
allow sufficient time to ensure timely receipt.

Special Procedures for Participants in Deluxe's Stock Option Plans

Holders of vested but unexercised options to purchase Deluxe shares may
exercise these options under the terms of the stock option plans of Deluxe and
they may tender the Deluxe shares received upon the exercise as provided under
the general instructions for tendering Deluxe shares discussed in the section
entitled "--Procedures for Tendering Deluxe Shares" on page 44.

Withdrawal Rights

You may withdraw your tendered Deluxe shares at any time prior to the
expiration date and, unless they have been accepted for exchange as provided in
this offering circular-prospectus and the accompanying documents, you may also
withdraw after the expiration of 40 business days from the commencement of the
exchange offer if the exchange offer has not expired or been terminated prior
to that time.

If Deluxe:

. extends the period of time during which the exchange offer is open;

. is delayed in its acceptance of Deluxe shares for exchange; or

. is unable to accept Deluxe shares for exchange under the exchange offer
for any reason,

then, without prejudice to Deluxe's rights under the exchange offer, the
exchange agent may, on behalf of Deluxe, retain all Deluxe shares tendered, and
your Deluxe shares may not be withdrawn except as otherwise provided in this
offering circular-prospectus, subject to the Exchange Act which provides that
the person making an exchange offer will either pay the consideration offered
or return the tendered securities promptly after the expiration or termination
of the exchange offer.

To be effective, the exchange agent must timely receive at one of its
addresses specified on the back cover of this offering circular-prospectus, a
written, telegraphic or facsimile transmission notice of withdrawal, specifying
the name of the person who tendered the Deluxe shares to be withdrawn and the
number of Deluxe shares to be withdrawn precisely as they appear in the letter
of transmittal.

If the Deluxe shares to be withdrawn have been delivered to the exchange
agent, you must submit a signed notice of withdrawal with signatures guaranteed
by an eligible institution prior to the release of these Deluxe shares.
However, the signature guarantee requirement is not applicable in the case of
Deluxe shares tendered by an eligible institution.

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This notice must also specify:

. in the case of Deluxe shares tendered by delivery of certificates, the
name of the registered holder, if different from that of the tendering
shareholder, and the serial numbers shown on the particular certificates
evidencing the Deluxe shares to be withdrawn; or

. in the case of uncertificated Deluxe shares tendered by the registered
holder and held by the transfer agent, the name of the registered
holder, the number of Deluxe shares withdrawn and the account number of
the registered holder; or

. in the case of Deluxe shares tendered by book-entry transfer, the name
and number of the account at the book-entry transfer facility.

Withdrawals may not be rescinded, although you may re-tender withdrawn
Deluxe shares by again following one of the procedures described in the
sections entitled "--Procedures for Tendering Deluxe Shares" on page 44, "--
Special Procedures for Certain Jurisdictions Outside the United States" on page
46 or "--Special Procedures for Participants in Deluxe's Stock Option Plans" on
page 47, at any time before the expiration date.

Except as otherwise provided above, any tender of Deluxe shares made under
this exchange offer is irrevocable.

Extension of Tender Period; Termination; Amendment

Deluxe expressly reserves the right, at any time or from time to time, in
its sole discretion, and regardless of whether any of the conditions specified
in the section entitled "--Conditions to Consummation of the exchange offer"
beginning on page 49, have been satisfied or waived, to:

. extend the period of time during which the exchange offer is open, by
giving oral or written notice of this extension to the exchange agent,
and by making a public announcement of this extension; or

. amend the exchange offer by making a public announcement of the
amendment.

If Deluxe materially changes the terms of, or information concerning, the
exchange offer, Deluxe will extend the exchange offer. Depending on the
substance and nature of such change, Deluxe will extend the offer for at least
five to ten business days following the announcement of the change provided
that the exchange offer would have otherwise expired within such five to ten
business days. If the change involves a change in the exchange ratio, the
amount of Deluxe shares sought, the soliciting dealer's fee, or some similarly
significant change, the exchange offer will remain open for ten business days
from the date of distribution of the revised information to Deluxe
shareholders. If the change is a material change, other than to the exchange
ratio, the number of Deluxe shares sought, the dealer's soliciting fee or a
similarly significant charge, the exchange offer will remain open for five
business days from the date of distribution of revised information to Deluxe
shareholders.

Deluxe also reserves the right, in its reasonable discretion, if any of the
conditions specified in the section entitled "--Conditions to Consummation of
the Exchange Offer" below have not been satisfied, and as long as Deluxe shares
have not been accepted for exchange, to delay the expiration date or to
terminate the exchange offer and not accept for exchange or exchange any Deluxe
shares.

If Deluxe:

. extends the period of time during which the exchange offer is open;

. is delayed in accepting for exchange or exchanging any Deluxe shares; or

. is unable to accept for exchange or to exchange any Deluxe shares under
the exchange offer for any reason,

then, without prejudice to the rights of Deluxe under this exchange offer, the
exchange agent may, on behalf of Deluxe, retain all Deluxe shares validly
tendered and not properly withdrawn and these Deluxe shares may not be
withdrawn except as provided in the section entitled "--Withdrawal Rights" on
page 47.

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The reservation by Deluxe of the right to delay acceptance for exchange or
to delay exchange of any Deluxe shares is subject to applicable law, which
requires that Deluxe pay the consideration offered or return the Deluxe shares
deposited by or on behalf of shareholders promptly after the expiration or
termination of the exchange offer.

Deluxe will make a public announcement as promptly as practicable after any
extension, termination or amendment of the exchange offer. Without limiting the
manner in which Deluxe may choose to make any public announcement, Deluxe will
have no obligation, except as required by applicable law, to publish, advertise
or communicate this public announcement other than by making a press release.
In the case of an extension of the exchange offer, SEC regulations require a
public announcement of this extension no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled expiration date.

Conditions to Consummation of the Exchange Offer

In addition to any other provisions of this exchange offer and without
prejudice to Deluxe's other rights under this exchange offer, Deluxe is not
required to accept for exchange or to exchange any Deluxe shares, subject to
any applicable rules and regulations of the SEC under the Exchange Act,
including Rule 14e-1(c) relating to Deluxe's obligation to exchange or return
the tendered Deluxe shares promptly after the expiration or termination of the
exchange offer. Deluxe may terminate this exchange offer, if, on or before the
expiration date, any of the following conditions exist:

. the minimum amount is not validly tendered or is validly tendered, but
is properly withdrawn;

. an action, proceeding or litigation seeking to enjoin, make illegal or
delay completion of the exchange offer or otherwise relating in any
manner to the exchange offer is instituted or threatened;

. a court, governmental, regulatory or administrative authority issued an
order, stay, judgment and decree, which is still in effect or a statute,
rule, regulation, governmental order or injunction was proposed,
enacted, enforced or deemed applicable to this exchange offer, any of
which would or might restrain, prohibit or delay completion of the
exchange offer or materially impair the contemplated benefits of the
exchange offer to Deluxe or eFunds;

. any of the following has occurred, and the adverse effect of this
occurrence will, in the judgment of Deluxe, be continuing:

. a general suspension of trading in, or limitation on prices for,
securities on a national securities exchange or in the over-the-
counter market in the United States;

. an extraordinary or material adverse change in U.S. financial
markets generally, including, without limitation, a decline of at
least 20% in either the Dow Jones average of industrial stocks or
the Standard & Poor's 500 Index from , 2000;

. a declaration of a banking moratorium or suspension of payments
regarding banks in the United States;

. a limitation, whether or not mandatory, by any governmental entity,
on, or any other event that would reasonably be expected to
materially adversely affect, the extension of credit by banks or
other lending institutions;

. a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United
States, which would reasonably be expected to affect materially and
adversely, or to delay materially, the consummation of the exchange
offer; or

. in the case of any of the foregoing events existing at the time of
the commencement of the exchange offer, a material acceleration or
worsening;

. a tender or exchange offer for some or all of the outstanding Deluxe
shares, other than the exchange offer, or the eFunds shares, or a
merger, acquisition or other business combination proposal for Deluxe or
eFunds, was proposed, announced or made by any person or entity;

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<PAGE>

. the IRS notifies Deluxe that the private letter ruling has been
withdrawn or revoked in whole or in part, or Deluxe determines that any
of the representations, undertakings or assumptions underlying the
private letter ruling or any of it is not true and correct in all
respects;

. any event(s) occurred that resulted, or may, in the sole judgment of
Deluxe, result, in an actual or threatened change in the business,
condition, financial or other, income, operations, stock ownership or
prospects of Deluxe and its subsidiaries, taken as a whole, or of eFunds
and its subsidiaries, taken as a whole;

. any person, entity or group, as that term is used in the Exchange Act,
has acquired, or proposed to acquire, beneficial ownership of more than
5% of the outstanding Deluxe shares or eFunds shares (other than a
person, entity or group which had publicly disclosed this ownership in a
Schedule 13G (or an amendment thereto) on file with the SEC prior to
, 2000, which persons, entities and groups are referred to as an
existing person, entity or group);

. any existing person, entity or group has acquired, or proposed to
acquire, beneficial ownership of additional Deluxe shares constituting
more than 2% of the outstanding Deluxe shares with any options, warrants
or similar rights to acquire Deluxe shares being deemed for this purpose
to be immediately exercisable; or

. any new group has been formed which beneficially owns more than 5% of
the outstanding Deluxe shares or eFunds shares,

the occurrence of which event, in the judgment of Deluxe in any such
case and regardless of the circumstance, makes it inadvisable to
proceed with the exchange offer or with the acceptance of Deluxe shares
tendered for exchange.

The foregoing conditions are for the sole benefit of Deluxe and may only be
asserted by Deluxe regarding all or any portion of the exchange offer
regardless of the circumstances giving rise to these conditions. Deluxe may
waive in whole or in part in its sole discretion at any time and from time to
time these conditions. Any determination by Deluxe concerning the conditions
described above will be final and binding on all parties.

If Deluxe fails at any time to exercise any of the foregoing rights, this
failure will not constitute a waiver of Deluxe's right and this right will be
deemed an ongoing right that Deluxe may assert at any time and from time to
time.

Deluxe will also not accept any Deluxe shares tendered, and will not
exchange eFunds shares for Deluxe shares, at any time at which the SEC issued a
stop order that remains in effect for the registration statement of which this
offering circular-prospectus is a part.

Legal Limitation

This offering circular-prospectus is not an offer to sell, and is not
soliciting any offer to buy, any eFunds or Deluxe shares in any jurisdiction in
which the offer or sale is not permitted. Deluxe is not aware of any U.S.
jurisdiction where the making of the exchange offer or its acceptance would not
be legal. If Deluxe learns of any jurisdiction where making the exchange offer
or its acceptance would not be permitted, Deluxe intends to make a good faith
effort to comply with the relevant law of such jurisdiction. If, after a good
faith effort, Deluxe cannot comply with such law, Deluxe will determine whether
the exchange offer will be made to, and whether tenders will be accepted from
or on behalf of, persons who are holders of Deluxe shares residing in the
jurisdiction.

In any U.S. jurisdiction where the securities or blue sky laws require the
exchange offer to be made by a licensed broker or dealer, the exchange offer
shall be deemed to be made by Lehman Brothers and, in other jurisdictions, may
be made on Deluxe's behalf by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.

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Fees and Expenses

Dealer Manager. Lehman Brothers is acting as the dealer manager in this
exchange offer. Lehman Brothers is also acting as financial advisor to Deluxe
for the transaction. As dealer manager, Lehman Brothers will receive a fee of
$1,000,000, and will be reimbursed by Deluxe for its out-of-pocket expenses,
including attorneys' fees, in connection with this exchange offer. Lehman
Brothers is also receiving customary compensation in connection with acting as
financial advisor in connection with the separation of eFunds from Deluxe.
Deluxe and eFunds have also agreed to indemnify Lehman Brothers against certain
liabilities, including civil liabilities under the federal securities laws, and
to contribute to payments that Lehman Brothers may be required to make.

Lehman Brothers has from time to time provided investment banking services
to Deluxe and eFunds, including acting as the lead underwriter of the eFunds
IPO, for which Lehman Brothers received customary compensation. Lehman Brothers
may from time to time hold Deluxe shares in its proprietary accounts, and if it
owns Deluxe shares in these accounts at the time of the exchange offer, Lehman
Brothers may tender these shares in the exchange offer.

Solicitating Dealers. Deluxe will pay to soliciting dealers solicitation
fees of $ per Deluxe share, up to a maximum of 1,000 shares per tendering
shareholder, for each Deluxe share validly tendered, not properly withdrawn and
accepted for exchange if the soliciting dealer has affirmatively solicited this
tender.

Deluxe will not pay a solicitation fee:

. in connection with a tender of Deluxe shares by a shareholder:

. tendering more than 1,000 Deluxe shares; or

. tendering from a country outside of the United States; or

. to the dealer manager.

Soliciting dealers include:

. any broker or dealer in securities who is a member of any national
securities exchange in the United States or of the National Association
of Securities Dealers, Inc.; or

. any bank or trust company located in the United States.

To receive a solicitation fee for the tender of Deluxe shares, the exchange
agent must receive a properly completed and duly executed letter of
transmittal, including a completed box entitled "Notice of Solicited Tenders"
(Box #8).

Deluxe will not pay a solicitation fee to a soliciting dealer if the
soliciting dealer is required, for any reason, to transfer the amount of this
fee to a tendering shareholder, other than itself. Soliciting dealers are not
entitled to a solicitation fee on the Deluxe shares that they beneficially own
or for any shares registered in their name, unless they hold the shares as
nominee and tender them for the benefit of beneficial holders identified in the
letter of transmittal. Brokers, dealers, banks, trust companies or fiduciaries
acting as soliciting dealers are not agents of Deluxe, eFunds, the exchange
agent, the dealer manager or of the information agent.

Information Agent and Exchange Agent. Deluxe has retained Morrow & Co.,
Inc., to act as information agent, and Wells Fargo Bank Minnesota, N.A. to act
as exchange agent for the exchange offer. The information agent may contact
holders of Deluxe shares by mail, telephone, facsimile transmission and
personal interviews. It may also request that brokers, dealers and other
nominee shareholders forward materials relating to the exchange offer to
beneficial owners.

The information agent and the exchange agent will each:

. receive reasonable and customary compensation for their respective
services;

. be reimbursed for some reasonable out-of-pocket expenses; and

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. be indemnified against certain liabilities in connection with their
services, including liabilities under federal securities laws.

Neither the information agent nor the exchange agent has been retained to
make solicitations or recommendations in their respective roles as information
agent and exchange agent, and the fees to be paid to them will not be based on
the number of Deluxe shares tendered under the exchange offer. The exchange
agent will, however, be compensated in part on the basis of the number of
letters of transmittal received and on the number of stock certificates
distributed under the exchange offer.

Other. Deluxe will not pay any fees or commissions to any broker or dealer
or any other person, other than the dealer manager, the soliciting dealers, the
information agent and the exchange agent, for soliciting tenders of Deluxe
shares under the exchange offer. Brokers, dealers, commercial banks and trust
companies will, after request, be reimbursed by Deluxe for reasonable and
necessary costs and expenses that they incurred in forwarding materials to
their customers.

Certain Matters Relating to Foreign Jurisdictions

Deluxe is currently unaware of any foreign jurisdiction where the making of
the exchange offer to, or its acceptance by, current shareholders of record
would not be legal.

In any jurisdiction where the securities or blue sky laws require the
exchange offer to be made by a licensed broker or dealer, the exchange offer
may be made on Deluxe's behalf, but only with its prior written consent, by one
or more registered brokers or dealers licensed under the laws of that
jurisdiction.

In Australia, France, Germany, Luxembourg, Ireland, Italy, Japan,
Philippines, United Kingdom and Bermuda, Deluxe is conducting the exchange
offer in reliance upon a private placement or other similar exemption or
exception under the applicable laws of such jurisdictions. Deluxe is also
seeking exemptive relief from the applicable laws in the Canadian provinces of
Ontario, British Columbia and Quebec. In the event that Deluxe determines at
any time that any exemption or exception would not be available, Deluxe
reserves the right in its sole and absolute discretion to determine not to
conduct the exchange offer in that jurisdiction and to reject any tenders in
such jurisdiction.

If Deluxe learns of any other jurisdiction where making the exchange offer
to, or its acceptance by, current shareholders of record would not be permitted
without further action to be taken by Deluxe, Deluxe intends to make a good
faith effort to comply with the relevant law of such jurisdiction. If, after a
good faith effort, Deluxe cannot comply with this law, Deluxe will not extend
the exchange offer to holders of Deluxe shares residing in that jurisdiction.

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THE SPIN-OFF

If the exchange offer is completed and fewer than 40,000,000 eFunds shares
are exchanged, Deluxe will distribute all the remaining eFunds shares that it
owns, pro rata to its remaining shareholders. Any distribution will be made to
Deluxe shareholders of record at the close of business on a date to be
determined following the completion of the exchange offer. This distribution is
referred to as the spin-off. As soon as practicable after Deluxe has determined
the record date for any spin-off distribution, Deluxe will publicly announce
the record date and the date of the distribution.

Deluxe will not distribute fractional eFunds shares under the spin-off. The
exchange agent, acting as agent for the Deluxe shareholders otherwise entitled
to receive fractional shares, will aggregate all fractional shares and sell
them for the accounts of these shareholders. The proceeds that the exchange
agent may realize at the sale of the fractional shares will be distributed, net
of commissions, to the shareholders entitled thereto in accordance with the
shareholder's fractional interest.

None of Deluxe, eFunds, the dealer manager, the information agent, the
exchange agent or any soliciting dealer will guarantee any minimum proceeds
from the sale of eFunds shares, and will not pay interest on any of the
proceeds.

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MARKET PRICES AND DIVIDEND INFORMATION

Deluxe Shares

The following table describes, for the calendar periods indicated, the per
share range of high and low closing sale prices for Deluxe shares, as reported
on the NYSE Composite Tape. The Deluxe shares are listed and traded on the NYSE
under the symbol "DLX."

<TABLE>
<CAPTION>
NYSE Price Cash
------------- Dividend
Calendar Year High Low Per Share
------------- ------ ------ ---------
<S> <C> <C> <C>
1998
1st Quarter........................................ $35.69 $32.50 $0.37
2nd Quarter........................................ $35.75 $31.38 $0.37
3rd Quarter........................................ $37.94 $28.38 $0.37
4th Quarter........................................ $37.00 $26.38 $0.37
1999
1st Quarter........................................ $37.38 $29.13 $0.37
2nd Quarter........................................ $38.81 $28.31 $0.37
3rd Quarter........................................ $40.50 $33.13 $0.37
4th Quarter........................................ $34.81 $24.75 $0.37
2000
1st Quarter........................................ $29.00 $22.19 $0.37
2nd Quarter........................................ $26.56 $23.31 $0.37
3rd Quarter (through August 23, 2000).............. $24.00 $21.31 $ --
</TABLE>

The number of holders of record of Deluxe shares as of , 2000 was .

On , 2000, the closing sale price per Deluxe share as reported on the NYSE
was $ . You should obtain current market quotations for Deluxe shares. No one
can assure you what the market price of Deluxe shares will be before, on or
after the date on which the exchange offer is completed.

eFunds Shares

The following table describes, for the calendar periods indicated, the per
share range of high and low sale prices for eFunds shares, as reported on the
Nasdaq National Market. The eFunds shares are quoted and traded on Nasdaq under
the symbol "EFDS."

<TABLE>
<CAPTION>
Nasdaq Price
-------------
Calendar Year High Low
------------- ------ ------
<S> <C> <C>
2000
2nd Quarter (from June 27, 2000 through June 30, 2000)...... $14.00 $10.88
3rd Quarter (through August 23, 2000)....................... $11.69 $ 8.25
</TABLE>

On , 2000, the last reported sale price per eFunds shares as reported on
Nasdaq was . You should obtain current market quotations for eFunds shares.
No one can assure you what the market price of eFunds shares will be before, on
or after the date on which the exchange offer is completed.

Dividend Policies

Deluxe has paid quarterly dividends of $0.37 per Deluxe share during the
past several years. Deluxe has announced that on September 5, 2000 it will pay
a dividend of $0.37 for each outstanding Deluxe share to shareholders of record
on August 21, 2000. With respect to dividend record dates occurring after the
completion of the exchange offer, shareholders whose Deluxe shares are
exchanged under this exchange offer will not be entitled to any dividend on the
exchanged shares. Deluxe shareholders will continue to receive any regular
quarterly dividend declared and paid in relation to Deluxe shares for Deluxe
shares which are not exchanged under the exchange offer.

54
<PAGE>

If a dividend is declared with a record date before the completion of the
exchange offer, Deluxe shareholders will be entitled to that dividend with
respect to Deluxe shares which are tendered in the exchange offer. Tendering
your Deluxe shares in the exchange offer is not a sale or transfer of the
Deluxe shares until they are accepted by Deluxe for exchange upon completion of
the exchange offer.

The payment of dividends by Deluxe in the future will depend on business
considerations, its financial conditions and earnings, as well as other
factors. Deluxe cannot provide any assurances regarding the payment of
dividends in the future, and the actual amount of any dividends declared and
paid in the future may be more or less than the amount discussed above.
However, Deluxe has no present intention to change the amount of its quarterly
per share dividend during 2000.

eFunds does not currently pay a dividend on its shares. eFunds has stated
that it does not anticipate paying any cash dividend on the eFunds shares for
the foreseeable future. eFunds intends to retain future earnings to fund the
development and growth of its business.

55
<PAGE>

CAPITALIZATION OF DELUXE

The following table presents historical and unaudited pro forma
capitalization for Deluxe giving effect to the transactions and events
described below. The pro forma capitalization assumes that these transactions
and events occurred as of June 30, 2000. The table should be read in
conjunction with Deluxe's consolidated financial statements and related notes,
the "Management's Discussion and Analysis of Financial Condition and Results of
Operations of Deluxe" and the "Unaudited Pro Forma Condensed Consolidated
Financial Statements of Deluxe" and related notes appearing elsewhere in this
offering circular-prospectus.

Deluxe's unaudited pro forma data gives effect to the completion of the
exchange offer at an exchange ratio of eFunds shares for each Deluxe
share validly tendered and not properly withdrawn and assumes, based on
alternative levels of participation in the exchange offer, the exchange of a
minimum of Deluxe shares and a maximum of Deluxe shares for eFunds
shares. At the minimum assumed participation level, the eFunds shares not
exchanged are assumed to be distributed on a pro rata basis to all remaining
Deluxe shareholders through the spin-off following completion of the exchange
offer. The number of Deluxe shares assumed to be exchanged for the purposes of
the Deluxe pro forma data may not be indicative of the actual number of Deluxe
shares that may be exchanged pursuant to the exchange offer.

<TABLE>
<CAPTION>
Unaudited
June 30, 2000
------------------------------------------------------
Minimum Maximum
--------------------- ---------------------
Deluxe Deluxe Deluxe
Historical Adjustments Pro Forma Adjustments Pro Forma
---------- ----------- --------- ----------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Long-term debt,
excluding current
portion............... $ 13,499 -- $13,499 -- $13,499
-------- --- ------- --- -------
Shareholders' equity
Common shares, $1 par
value
Authorized
500,000,000 shares
Historical,
72,331,225 shares
issued and
outstanding....... 72,331
Minimum, shares
issued and
outstanding....... --
Maximum, shares
issued and
outstanding....... --
Additional paid-in
capital............... 8,823
Retained earnings...... 396,045
Accumulated other
comprehensive income
(loss)................ (1,642)
--------
Total shareholders'
equity.............. 475,557
--------
Total
capitalization...... $489,056
========
</TABLE>

56
<PAGE>

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF DELUXE

The following unaudited pro forma condensed consolidated financial
statements for Deluxe give effect to the transactions and events described
below and in the notes to the unaudited pro forma condensed consolidated
financial statements. The unaudited pro forma condensed consolidated statements
of income assume that the transactions and events occurred on January 1, 1999.
The unaudited pro forma condensed consolidated balance sheet assumes that these
transactions and events occurred as of June 30, 2000.

Deluxe's unaudited pro forma condensed consolidated financial statements
give effect to the completion of the exchange offer, the exchange of a minimum
of Deluxe shares and a maximum of Deluxe shares. At the minimum assumed
participation level, the eFunds shares not exchanged are assumed to be
distributed on a pro rata basis to all remaining Deluxe shareholders through
the spin-off following completion of the exchange offer. The number of Deluxe
shares assumed to be exchanged for the purposes of the Deluxe pro forma data
may not be indicative of the actual number of Deluxe shares that may be
exchanged pursuant to the exchange offer.

The pro forma adjustments are based on available information and certain
estimates and assumptions. Therefore, it is likely that the actual adjustments
will differ from the pro forma adjustments. Deluxe believes that such
assumptions provide a reasonable basis for presenting all of the significant
effects of the transactions and events and that the pro forma adjustments give
appropriate effect to those assumptions and are properly applied in the
unaudited pro forma condensed consolidated financial statements. Historical
amounts for Deluxe and eFunds were derived from the historical consolidated
financial statements included elsewhere in this offering circular-prospectus.

57
<PAGE>

DELUXE CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
Year Ended December 31, 1999 Six Months Ended June 30, 2000
-------------------------------------------------- --------------------------------------------------
Deluxe eFunds Deluxe Deluxe eFunds Deluxe
Historical Historical (A) Adjustments Pro Forma Historical Historical (A) Adjustments Pro Forma
---------- -------------- ----------- ---------- ---------- -------------- ----------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............. $1,650,500 $302,340 $ 8,839(B) $1,356,999 $811,182 $201,225 $ 30,442 (B) $640,399
Total cost of sales.. 741,241 194,290 2,162(B) 549,113 351,894 127,897 639 (B) 224,636
---------- -------- ------- ---------- -------- -------- -------- --------
Gross margin.......... 909,259 108,050 6,677 807,886 459,288 73,328 29,803 415,763
Total operating
expenses............ 607,165 109,138 6,677(B) 504,704 325,919 76,193 29,803 (B) 279,529
---------- -------- ------- ---------- -------- -------- -------- --------
Income (loss) from
operations........... 302,094 (1,088) -- 303,182 133,369 (2,865) -- 136,234
Other income (expense)
Gain on sale of
subsidiary shares... -- -- -- -- 30,113 -- (30,113)(E) --
Legal proceedings.... 2,094 2,094 -- -- -- -- -- --
Other income
(expense)........... 28,973 (4,609) -- 33,582 540 (474) -- 1,014
Interest income
(expense)........... (8,506) 963 1,848(C) (7,621) (7,248) (1,296) (765)(C) (6,717)
---------- -------- ------- ---------- -------- -------- -------- --------
Income (loss) before
income taxes......... 324,655 (2,640) 1,848 329,143 156,774 (4,635) (30,878) 130,531
Provision (benefit)
for income taxes..... 121,633 5,586 7,157(D) 123,204 52,751 (1,285) (4,994)(D) 49,042
---------- -------- ------- ---------- -------- -------- -------- --------
Net income (loss)..... $ 203,022 $ (8,226) $(5,309) $ 205,939 $104,023 $ (3,350) $(25,884) $ 81,489
========== ======== ======= ========== ======== ======== ======== ========
Net income per share--
basic................ $ 2.65 $ -- $ 1.44 $ --
Minimum(F)...........
Maximum(F)...........
Net income per share--
diluted.............. $ 2.64 -- $ 1.44
Minimum(F)...........
Maximum(F)...........
Shares used in
computing:
Basic net income per
share............... 76,710 -- 72,203 --
Minimum(F)...........
Maximum(F)...........
Diluted net income
per share........... 77,009 -- 72,279 --
Minimum(F)...........
Maximum(F)...........
</TABLE>
-------
The following notes are an integral part of these unaudited pro forma condensed
consolidated statements of income.

(A) Represents eFunds' statements of operations which will not be consolidated
in Deluxe's consolidated statements of income subsequent to the separation
of eFunds from Deluxe. This separation of eFunds from Deluxe is expected to
be treated as a disposal of a line of business.
(B) Represents the addition of intercompany net sales and intercompany expenses
previously eliminated from Deluxe's consolidated historical results.
(C) Represents eFunds' interest income earned or interest (expense) paid on its
intercompany account previously eliminated from Deluxe's historical
consolidated results.
(D) Represents the tax impact to Deluxe for the above adjustments and the
elimination of eFunds' results using an assumed effective tax rate equal to
the federal statutory rate of 35% and the elimination of the impact of the
gain on eFunds' IPO on Deluxe's effective tax rate.
(E) Represents the elimination of the gain associated with eFunds' IPO. The
separation of eFunds from Deluxe is expected to be treated as a disposal
of a line of business.
(F) Deluxe's unaudited pro forma condensed consolidated financial statements
give effect to the completion of the exchange offer and the exchange of a
minimum of Deluxe shares and a maximum of Deluxe shares. At the
minimum assumed participation level, the eFunds shares not exchanged are
assumed to be distributed on a pro rata basis to all remaining Deluxe
shareholders through the spin-off following completion of the exchange
offer. The number of Deluxe shares assumed to be exchanged for the purposes
of the Deluxe pro forma data may not be indicative of the actual number of
Deluxe shares that will be exchanged pursuant to the exchange offer.

58
<PAGE>

DELUXE CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
At June 30, 2000
-------------------------------------------------
Maximum
-----------------------
Deluxe eFunds Deluxe
Historical Historical(A) Adjustments Pro Forma
---------- ------------- ----------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash, cash equivalents
and marketable
securities.............. $ 109,339 $ 93,289 $ 3,756(B) $ 19,806
Restricted custodial
cash.................... 6,311 6,311 -- --
Trade accounts
receivable.............. 126,141 60,665 -- 65,476
Inventories and
supplies................ 25,377 -- -- 25,377
Deferred advertising..... 11,776 -- -- 11,776
Deferred income taxes.... 19,215 13,948 -- 5,267
Prepaid expenses and
other current assets.... 45,567 8,417 -- 37,150
---------- -------- ------- --------
Total current assets... 343,726 182,630 3,756 164,852
Long-term assets........... 65,335 25,318 1,554(C) 41,571
Restricted cash............ 28,748 28,748 -- --
Property, plant and
equipment, net............ 272,351 69,195 -- 203,156
Intangibles, net........... 320,673 88,413 -- 232,260
---------- -------- ------- --------
Total assets........... $1,030,833 $394,304 $ 5,310 $641,839
========== ======== ======= ========
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable......... $ 55,285 $ 22,809 $ -- $ 32,476
Accrued liabilities...... 277,327 80,635 -- 196,692
Short-term debt.......... 19,813 8,568 3,756(B) 15,001
Long-term debt due within
one year................ 102,755 2,149 -- 100,606
---------- -------- ------- --------
Total current
liabilities........... 455,180 114,161 3,756 344,775
Long-term debt............. 13,499 2,923 -- 10,576
Deferred income taxes...... 46,571 -- 1,554(C) 48,125
Other long-term
liabilities............... 8,144 50 -- 8,094
Minority interests in net
assets of subsidiary...... 31,882 -- (31,882)(D) --
Shareholders equity:
Common shares $1 par
value................... 72,331 --
Additional paid-in
capital................. 8,823 --
Retained earnings........ 396,045 277,170
Accumulated other
comprehensive loss...... (1,642) --
---------- -------- ------- --------
Shareholders' equity..... 475,557 277,170 31,882 230,269(E)
---------- -------- ------- --------
Total liabilities and
shareholders'
equity.............. $1,030,833 $394,304 $ 5,310 $641,839
========== ======== ======= ========
</TABLE>
--------
The following notes are an integral part of this unaudited pro forma condensed
consolidated balance sheet.
(A) Represents eFunds' balance sheet which will not be consolidated in Deluxe's
consolidated balance sheet subsequent to the separation of eFunds from
Deluxe. The separation of eFunds from Deluxe is expected to be treated as a
disposal of a line of business.
(B) Represents the settlement of the intercompany account between eFunds and
Deluxe.
(C) Represents the reversal of certain classifications made for eFunds' balance
sheet.
(D) Represents the elimination of the minority interest in the equity of
eFunds.
(E) Assumes the exchange of Deluxe shares. Total shareholders' equity
would not change at the minimum assumed participation level because the
eFunds shares not exchanged through the exchange offer are assumed to be
distributed through the spin-off. At this minimum participation level,
common shares would be and retained earnings would be .

59
<PAGE>

SELECTED FINANCIAL DATA OF DELUXE

The following selected financial data should be read together with Deluxe's
consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Deluxe" included elsewhere in this offering circular-prospectus. The selected
statement of income data shown below for the five years ended December 31, 1999
and the respective December 31 selected balance sheet data are derived from
Deluxe's audited consolidated financial statements which have been audited by
Deloitte & Touche LLP, independent auditors.

The selected statement of income data shown below for the six months ended
June 30, 1999 and 2000 and the respective June 30 selected balance sheet data
are derived from Deluxe's unaudited consolidated financial statements. In the
opinion of Deluxe's management, all adjustments necessary for a fair
presentation of these financial statements are included. Other than the
adjustments related to restructuring charges discussed in Note 3 to the Deluxe
consolidated financial statements, contract losses discussed in Note 5 to the
Deluxe consolidated financial statements, and the sale of subsidiary shares
discussed in Note 8 to the Deluxe consolidated financial statements, the
adjustments consist only of normal recurring items. Interim results are not
necessarily indicative of results for a full year.

<TABLE>
<CAPTION>
Unaudited
Six Months
Year Ended December 31, Ended June 30,
---------------------------------------------------------- --------------------
1995 1996 1997 1998 1999 1999 2000
---------- ---------- ---------- ---------- ---------- -------- ----------
(in thousands, except per share and operating data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Net sales............... $1,937,605 $1,980,577 $1,920,629 $1,933,659 $1,650,500 $821,918 $ 811,182
---------- ---------- ---------- ---------- ---------- -------- ----------
Cost of sales,
excluding loss
contract and asset
impairment charges.... 951,405 999,202 897,313 895,050 732,541 370,221 342,194
Loss contract and asset
impairment charges.... -- -- 2,470 40,949 8,700 117 9,700
---------- ---------- ---------- ---------- ---------- -------- ----------
Total cost of sales.. 951,405 999,202 899,783 935,999 741,241 370,338 351,894
---------- ---------- ---------- ---------- ---------- -------- ----------
Gross margin............ 986,200 981,375 1,020,846 997,660 909,259 451,580 459,288
---------- ---------- ---------- ---------- ---------- -------- ----------
Selling, general and
administrative........ 802,416 782,366 766,403 753,290 602,157 294,044 323,964
Research and
development(1)........ -- -- 2,175 1,361 5,008 2,377 1,955
Asset impairment
charges............... -- 111,900 96,549 -- -- -- --
---------- ---------- ---------- ---------- ---------- -------- ----------
Total operating
expenses............ 802,416 894,266 865,127 754,651 607,165 296,421 325,919
---------- ---------- ---------- ---------- ---------- -------- ----------
Income from operations.. 183,784 87,109 155,719 243,009 302,094 155,159 133,369
Other income (expense):
Gain on sale of
subsidiary shares..... -- -- -- -- -- -- 30,113
Legal proceedings...... -- -- (40,050) 4,157 2,094 2,094 --
Other income
(expense)............. (1,404) 42,305 8,303 4,022 28,973 2,027 540
Interest income
(expense)............. (13,061) (10,649) (8,822) (8,273) (8,506) (3,458) (7,248)
---------- ---------- ---------- ---------- ---------- -------- ----------
Income from continuing
operations before
income taxes........... 169,319 118,765 115,150 242,915 324,655 155,822 156,774
Provision for income
taxes.................. 74,885 53,302 70,478 99,852 121,633 60,010 52,751
---------- ---------- ---------- ---------- ---------- -------- ----------
Net income from
continuing operations.. $ 94,434 $ 65,463 $ 44,672 $ 143,063 $ 203,022 $ 95,812 $ 104,023
========== ========== ========== ========== ========== ======== ==========
Net income from
continuing operations
per share:
Basic.................. $ 1.15 $ 0.80 $ 0.55 $ 1.77 $ 2.65 $ 1.22 $ 1.44
Diluted................ $ 1.15 $ 0.79 $ 0.55 $ 1.77 $ 2.64 $ 1.21 $ 1.44
Cash dividends per
share.................. $ 1.48 $ 1.48 $ 1.48 $ 1.48 $ 1.48 $ 0.74 $ 0.74
Number of shares used in
computing net income
from continuing
operations per share:
Basic.................. 82,420 82,311 81,854 80,648 76,710 78,790 72,203
Diluted................ 82,462 82,433 81,957 80,855 77,009 79,079 72,279
Operating Data:
Number of employees at
period end............. 19,286 19,643 18,937 15,296 11,691 14,801 10,998
Number of production and
service facilities at
period end............. 81 81 68 58 46 60 46
<CAPTION>
December 31, Unaudited June 30,
---------------------------------------------------------- --------------------
1995 1996 1997 1998 1999 1999 2000
---------- ---------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents
and marketable
securities (2)......... $ 19,938 $ 142,571 $ 179,459 $ 309,522 $ 166,178 $115,770 $ 109,339
Working capital......... 12,290 108,147 131,058 177,385 14,083 (29,928) (111,454)
Total assets............ 1,295,095 1,176,440 1,148,364 1,171,519 992,643 990,604 1,030,833
Long-term debt,
excluding current
portion................ 110,997 108,622 109,986 106,321 115,542 105,327 13,499
Total shareholders'
equity................. 780,374 712,916 610,248 606,565 417,308 462,648 475,557
</TABLE>
-------
(1) Research and development expenses are included in, but were not separately
recorded from, cost of sales and selling, general and administrative
expenses for the years ended December 31, 1995 and 1996.
(2) Excludes restricted cash which represents cash that eFunds has supplied to
ATMs managed by a client and cash that it temporarily holds in custodial
accounts on behalf of clients.

60
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF DELUXE

You should read the following discussion together with "Selected Financial
Data of Deluxe" and its consolidated financial statements and the notes to
those financial statements included in this offering circular-prospectus. In
addition to historical and pro forma information, this discussion contains
forward-looking information that involves risks and uncertainties. Deluxe's
actual results could differ materially from those anticipated by Deluxe's
management due to competitive factors, risks associated with its expansion
plans and strategic initiatives and other factors discussed under "Risk
Factors" and elsewhere in this offering circular-prospectus.

Overview

Deluxe is organized into two operating segments based on the nature of the
products and services offered by each: paper payment systems and eFunds. Paper
payment systems provides checks and related products to financial institutions,
consumers and small businesses. eFunds provides transaction processing and risk
management services to financial institutions, retailers, electronic funds
transfer networks, e-commerce providers and government agencies and offers
information technology consulting and business process management services,
both on a stand-alone basis and as a complement to its electronic payments
business. In April 1999, Deluxe announced that it was changing its business
model to a holding company structure with independently operated business
units. In December 1999, Deluxe sold its collections business, NRC Holding
Corporation and its subsidiaries, which did not fit into its new business
model. Deluxe's segments operate primarily in the United States. The eFunds
segment also has some international operations. Prior to 1999, Deluxe also
operated two other business segments: direct response and Deluxe direct. The
sales of both of these businesses to Taylor Corporation were completed in
December 1998. Direct response provided direct marketing, customer database
management and related services to the financial industry and other businesses.
Deluxe direct primarily sold greeting cards, stationery and specialty paper
products through direct mail.

In January 2000, Deluxe announced that its board of directors approved a
plan to combine the businesses within the eFunds segment into a separate,
independent, publicly traded company called eFunds. eFunds issued 5.5 million
eFunds shares to the public in June 2000. Prior to this IPO, Deluxe owned 40
million, or 100%, of eFunds' total outstanding shares. Subsequent to the IPO,
Deluxe continues to own 40 million eFunds shares, representing approximately
88% of eFunds' total outstanding shares. eFunds' proceeds from the IPO totaled
$71.5 million ($62.0 million, net of offering expenses).

On January 31, 2000, Deluxe announced that it planned to offer all of its
eFunds' shares to Deluxe's shareholders through an exchange offer under which
Deluxe's shareholders would be given the opportunity to tender some or all of
their Deluxe shares in exchange for eFunds shares owned by Deluxe. If the
exchange offer is completed and fewer than 40 million eFunds shares are
exchanged for Deluxe shares, Deluxe plans to distribute all of the remaining
eFunds shares that it owns to its remaining shareholders on a pro rata basis
through the spin-off. The exchange offer is subject to the conditions set forth
in "The Exchange Offer--Conditions to Consummation of the Exchange Offer"
included elsewhere in this offering circular-prospectus. Deluxe cannot be
certain that the exchange offer will be completed. If Deluxe does not complete
the exchange offer, Deluxe will continue to control eFunds and may not realize
the anticipated benefits from the separation of the two companies. If the
exchange offer is completed, it could result in a substantial decrease in the
total number of Deluxe shares outstanding. Additionally, Deluxe would recognize
an additional gain on the exchange of eFunds shares for Deluxe shares. Deluxe
will incur additional costs and expenses associated with the exchange offer. A
portion of these costs will be expensed in future periods and a portion is
expected to be netted against the gain recognized at the time the exchange
offer is completed.

Deluxe has entered into various agreements related to transition and ongoing
relationships with eFunds. These agreements relate to, among other things,
intercompany loans, information technology consulting, business process
management services, indemnification, data sharing, real estate matters, tax
sharing and

61
<PAGE>

transition services. The intercompany loan matures at the earlier of December
31, 2000 or completion of the exchange offer. eFunds will compensate Deluxe for
providing services and will negotiate third-party rates after the transition
arrangements terminate. The transition period varies depending on the
agreement, but many transition services will terminate upon completion of the
exchange offer. Some of the transition agreements may be extended beyond the
"initial transition periods." For a discussion of these agreements, see
"Agreements between Deluxe and eFunds."

Electronic Benefits Transfer and Medical Eligibility Verification Businesses

Deluxe has decided to exit the electronic benefits transfer (EBT) and
medical eligibility verification businesses as soon as its current contractual
commitments expire in 2006. During the wind down period, Deluxe intends to
continue to take steps to improve the profitability of the current businesses.
Deluxe has agreed to indemnify eFunds for future losses arising from any
litigation based on the conduct of these businesses prior to eFunds' IPO in
June 2000, and from future losses on identified loss contracts in excess of
Deluxe's $29.2 million loss contract reserve as of April 30, 2000. The
indemnification obligation does not apply to losses covered by the existing
reserves. The maximum amount of litigation and contract losses for which Deluxe
will indemnify eFunds is $14.6 million. After the completion of the exchange
offer and any spin-off, any indemnification payments to eFunds will be recorded
as an expense in Deluxe's consolidated statements of income. Prior to the
completion of these transactions, any indemnification payments to eFunds will
be treated as capital contributions.

Loss Contract, Asset Impairment and Other Charges

Over the past three years, Deluxe has had significant charges for legal
proceedings, asset impairments, contract losses, restructurings and other
developments. Additionally, Deluxe has had a gain from the sale of subsidiary
shares and gains and losses from the dispositions of businesses. These items
have had a significant impact on Deluxe's results of operations and financial
position over this period of time. The significant items recorded in 1997, 1998
and 1999 and the six months ended June 30, 1999 and 2000 are as follows, on a
pretax basis (dollars in millions):

<TABLE>
<CAPTION>
Unaudited
Year Ended Six Months Ended
December 31, June 30,
--------------------- -----------------
1997 1998 1999 1999 2000
------ ----- ------ -------- --------
<S> <C> <C> <C> <C> <C>
Legal proceedings charges
(reversals)..................... $ 40.0 $(4.2) $ (2.1) $(2.1) $ --
Asset impairment charges......... 99.0 26.3 0.5 .1 --
(Gains) losses on sales of
businesses...................... (0.9) 4.9 (19.8) -- --
Loss contract charges............ -- 14.7 8.2 -- 9.7
Restructuring charges
(reversals)..................... 24.5 38.5 (10.6) (4.6) (1.6)
Gain on sale of subsidiary
shares.......................... -- -- -- -- (30.1)
Executive change of control and
employment agreements........... -- -- -- -- 7.2
------ ----- ------ ------- --------
Total charges (gains).......... $162.6 $80.2 $(23.8) $ (6.6) $ (14.8)
====== ===== ====== ======= ========
</TABLE>

These items are reflected in the statements of income for 1997, 1998 and
1999 and the six months ended June 30, 1999 and 2000 as follows (dollars in
millions):

<TABLE>
<CAPTION>
Unaudited
Year Ended Six Months Ended
December 31, June 30,
------------------- -----------------
1997 1998 1999 1999 2000
------ ----- ------ -------- --------
<S> <C> <C> <C> <C> <C>
Cost of sales....................... $ 10.1 $51.9 $ 6.7 $ 1.1 $ 9.7
Operating expenses (income)......... 110.5 20.1 (6.3) (3.2) 5.6
Other expense (income).............. 42.0 8.2 (24.2) (4.5) (30.1)
------ ----- ------ ------- --------
Total............................. $162.6 $80.2 $(23.8) $ (6.6) $ (14.8)
====== ===== ====== ======= ========
</TABLE>

62
<PAGE>

For more information about these items, see Notes 3, 4, 5, 6, 8 and 17 to
Deluxe's consolidated financial statements.

Results of Operations

The following table presents, for the periods indicated, the relative
composition of selected statement of income data:

<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31, June 30,
---------------------------------- ------------------
1997 1998 1999 1999 2000
---------- ---------- ---------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net sales:
Paper payment systems.. $1,289,416 $1,281,694 $1,232,924 $615,659 $640,399
eFunds................. 229,065 267,520 302,340 140,423 201,225
Other (includes
intercompany
eliminations)......... 402,148 384,445 115,236 65,836 (30,442)
---------- ---------- ---------- -------- --------
Total net sales......... $1,920,629 $1,933,659 $1,650,500 $821,918 $811,182
========== ========== ========== ======== ========
Gross margin:
Paper payment systems.. $ 760,175 $ 779,021 $ 775,925 $381,036 $415,763
eFunds................. 82,629 55,212 108,050 52,183 73,328
Other (includes
intercompany
eliminations)......... 178,042 163,427 25,284 18,361 (29,803)
---------- ---------- ---------- -------- --------
Total gross margin...... $1,020,846 $ 997,660 $ 909,259 $451,580 $459,288
========== ========== ========== ======== ========
Operating expenses:
Paper payment systems.. $ 486,245 $ 477,338 $ 465,685 $228,831 $255,447
eFunds................. 81,301 81,823 109,138 44,785 76,193
Other (includes
intercompany
eliminations)......... 297,581 195,490 32,342 22,805 (5,721)
---------- ---------- ---------- -------- --------
Total operating
expenses............... $ 865,127 $ 754,651 $ 607,165 $296,421 $325,919
========== ========== ========== ======== ========
Income (loss) from
operations:
Paper payment systems.. $ 273,930 $ 301,683 $ 310,240 $152,205 $160,316
eFunds................. 1,328 (26,611) (1,088) 7,398 (2,865)
Other.................. (119,539) (32,063) (7,058) (4,444) (24,082)
---------- ---------- ---------- -------- --------
Total income from
operations............. $ 155,719 $ 243,009 $ 302,094 $155,159 $133,369
========== ========== ========== ======== ========
</TABLE>

Six Months Ended June 30, 2000 Compared to the Six Months Ended June 30, 1999

Net sales. Net sales decreased $10.7 million, or 1.3%, to $811.2 million
during the first six months of 2000 from $821.9 million during the first six
months of 1999. 1999 sales included $66.6 million of sales from Deluxe's
collections business which was sold in December 1999. With these sales
excluded, net sales increased 7.4% during the first six months of 2000.

Paper payment systems net sales increased $24.7 million, or 4.0%, to $640.4
million in the first six months of 2000 from $615.7 million in the first six
months of 1999. This increase was due, in part, to the acquisition in February
2000 of Designer Checks which contributed revenues of $26.8 million during the
first six months of 2000. Additionally, the segment experienced volume
increases in its direct checks business, increased revenue per unit for both
its financial institution checks and business forms businesses, a price
increase for postage within its financial institution checks business and a
price increase for phone reorders in its direct checks business. Partially
offsetting these improvements was a decrease in volume for the financial
institution checks business due to lost customers. The loss of business was due
primarily to competitive pricing requirements that fell below the segment's per
unit revenue and profitability targets.

eFunds net sales increased $60.8 million, or 43.3%, to $201.2 million in the
first six months of 2000 from $140.4 million in the first six months of 1999.
On a full year pro forma basis, taking into account Deluxe's acquisition of the
remaining 50% interest in HCL-Deluxe, N.V. in April 1999 as if it had occured
on January 1, 1999, net sales increased $56.5 million, or 39.0%, to $201.2
million in the first six months of 2000 from $144.7

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<PAGE>

million in the first six months of 1999. This increase was due primarily to
volume increases across virtually all product lines, except the EBT portion of
this segment, which experienced a slight decrease in revenues. Additionally,
the segment initiated business process management and information technology
consulting services for Deluxe's paper payment systems segment in 2000.
Excluding intersegment sales on a pro forma basis, taking into account the HCL-
Deluxe, N.V. acquisition in April 1999 as if it had occurred on January 1,
1999, eFunds net sales increased $27.7 million, or 19.3%, to $170.8 million in
the first six months of 2000 from $143.1 million in the first six months of
1999.

Gross margin. Gross margin increased $7.7 million, or 1.7%, to $459.3
million for the first six months of 2000 from $451.6 million for the first six
months of 1999. As a percentage of net sales, gross margin increased to 56.6%
for the first six months of 2000 from 54.9% for the first six months of 1999.
Cost of sales for the first six months of 2000 included net charges of $9.7
million for additional expected future losses on the contracts of the eFunds
segment's EBT business. In April 2000, Deluxe completed negotiations with the
prime contractor for a state coalition for which eFunds provides EBT services.
Previously, Deluxe was operating without a binding, legally enforceable
contract with this contractor. Deluxe increased its accrual for expected future
losses on long-term service contracts by $12.2 million to reflect the fact that
Deluxe now had a definitive agreement with this contractor. Partially
offsetting this charge was the reversal of $2.5 million of previously recorded
contract loss accruals resulting from productivity improvements and cost
savings from lower than anticipated telecommunications and interchange
expenses. Excluding the net $9.7 million of charges, Deluxe's gross margin
percentage would have been 57.8% for the first six months of 2000. These
increases were partially due to the sale of Deluxe's collections business in
December 1999. This business had a gross margin percentage of 27.8% for the
first six months of 1999.

Paper payment systems gross margin percentage increased to 64.9% for the
first six months of 2000 from 61.9% for the same period in 1999. This increase
was due to cost reductions realized from closing financial institution check
printing plants, continuing process improvements within all businesses and the
loss of lower margin customers within the financial institution checks
business. The last of the scheduled check printing plant closings was completed
during the first quarter of 2000, and the segment consolidated two facilities
into one at the end of the second quarter. The segment plans to continue its
process improvements and focus on increasing sales of higher margin products
during the remainder of 2000.

eFunds gross margin percentage decreased to 36.4% for the first six months
of 2000 from 37.2% for the same period in 1999. Cost of sales for the second
quarter of 2000 included net charges of $9.7 million for additional expected
future losses on the contracts of the segment's EBT business. Excluding these
charges, eFunds' gross margin percentage would have been 41.3% for the first
six months of 2000, showing improvement over 1999. This improvement was due to
a shift toward electronic customer inquiries in the account verification
business which generate higher margins, increased utilization of existing
infrastructure, less reliance on sub-contractors, an increasing portion of work
being performed at the India facilities where margins are higher, and the
implementation of cost containment measures within the segment's EBT business.

Operating expenses. Operating expenses increased $29.5 million, or 10.0%, to
$325.9 million in the first six months of 2000 from $296.4 million in the first
six months of 1999. As a percentage of net sales, operating expenses increased
to 40.2% in the first six months of 2000 as compared to 36.1% in the first six
months of 1999. Operating expenses for the first six months of 2000 included
net restructuring reversals of $1.6 million, charges of $7.2 million for
payments due to certain officers under change of control and executive
employment agreements, as well as additional charges of $3.2 million for
administrative costs relating to the proposed separation of eFunds from Deluxe.
Operating expenses for the first six months of 1999 included net restructuring
reversals of $3.2 million. Additionally, the increase in operating expenses was
due to a number of other factors including the HCL-Deluxe, N.V. and Designer
Checks acquisitions, as well as increased marketing and infrastructure expenses
for new and existing products. These increases were partially offset by the
sale of

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<PAGE>

Deluxe's collections business in December 1999. The collections business had
$17.0 million of operating expenses in the first six months of 1999.

Paper payment systems operating expenses increased 11.6% in the first six
months of 2000 from the first six months of 1999. This reflects increased
spending on Internet commerce infrastructure and additional capabilities for
new ventures, as well as increased marketing expenses for the direct checks
business as it continues to emphasize new customer acquisition. Additionally,
the segment experienced increased operating expenses due to the acquisition of
Designer Checks in February 2000. Partially offsetting these increases was the
net reversal of $2.1 million of restructuring charges in the first six months
of 2000.

eFunds operating expenses increased 70.1% in the first six months of 2000
from the first six months of 1999. As a percentage of net sales, operating
expenses increased to 37.9% during the first six months of 2000 compared to
31.9% during the first six months of 1999. These increases were due to several
factors, including the acquisition of HCL-Deluxe, N.V. in April 1999,
additional promotional advertising geared toward creating brand awareness and
infrastructure investments. Additionally, in the first six months of 1999 the
segment reversed $2.0 million of restructuring accruals from prior periods
related to the decision to retain the international operations of this segment.

Other income (expense). Other income increased $22.7 million to $23.4
million in the first six months of 2000 from $0.7 million in the first six
months of 1999. This increase was due primarily to the gain of $30.1 million
recognized upon the IPO of eFunds in June 2000. Offsetting this increase was
higher interest expense and lower investment income, as well as the fact that
results for the first six months of 1999 included the reversal of $2.1 million
of reserves for legal proceedings and the reversal of $2.3 million of
restructuring reserves.

Provision for income taxes. Deluxe's effective tax rate for the first six
months of 2000 was 33.6% compared to 38.5% for the first six months of 1999.
This decrease was due primarily to the fact that the gain recognized on the
eFunds IPO is not taxable. Thus, this gain was subtracted from pre-tax income
when calculating Deluxe's estimated annual tax rate.

Net income. Net income increased $8.2 million, or 8.6%, to $104.0 million in
the first six months of 2000 from $95.8 million in the first six months of
1999. The $30.1 million gain recorded on the eFunds IPO and Deluxe's improved
gross margin were offset by increased operating expenses related to Internet
commerce spending and other infrastructure investments, increased marketing
expenses within the direct checks and eFunds businesses, and increased goodwill
amortization due to acquisitions.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Net sales. Net sales decreased $283.2 million, or 14.6%, to $1,650.5 million
in 1999 from $1,933.7 million in 1998. This decrease was primarily due to
discontinuing production of direct mail products and the sale of the remaining
businesses in the direct response and Deluxe direct segments in 1998. These
segments contributed net sales of $266.6 million in 1998. NRC contributed
approximately $120.0 million in net sales in both 1998 and 1999, but is not
included in Deluxe's operations in 2000 as it was sold in December 1999.

Paper payment systems net sales decreased $48.8 million, or 3.8%, to
$1,232.9 million in 1999 from $1,281.7 million in 1998. This decrease was
primarily due to lower volume in the financial institution checks business due
to lost customers. The loss of business was due to competitive pricing
requirements which fell

65
<PAGE>

below the segment's per unit revenue and profitability targets. This volume
decrease was partially offset by increased volume for both the direct checks
and business forms businesses and increased revenue per unit for all
businesses.

eFunds net sales increased $34.8 million, or 13.0%, to $302.3 million in
1999 from $267.5 million in 1998. On a full year pro forma basis, taking into
account the HCL-Deluxe acquisition in April 1999 as if it had occurred on
January 1, 1999, net sales increased $27.1 million, or 9.7%, to $306.7 million
in 1999 from $279.6 million in 1998. This improvement was due primarily to
volume increases across virtually all product lines, except for software sales
which decreased due to customer reluctance to make significant software changes
prior to Year 2000. Transaction volumes increased 27.3% and inquiry volumes
increased 6.1% as the result of higher volumes from existing customers. The
medical eligibility verification business saw the effect of price increases on
existing contracts. Additionally, the segment's business process management
business added new customers and began providing services to Deluxe's paper
payment systems segment. Net sales in 1999 included minimal contributions from
several new products which were launched in late 1999.

Gross margin. Gross margin decreased $88.4 million, or 8.9%, to $909.3
million in 1999 from $997.7 million in 1998. As a percentage of net sales,
gross margin increased to 55.1% in 1999 compared to 51.6% in 1998. Gross
margins in 1999 were negatively affected by charges of $8.2 million for
additional expected future losses on EBT-related contracts of the eFunds
segment. A majority of those charges resulted from transitioning switching
services provided to Citibank from Deluxe to a new processor. Also, lower than
projected actual EBT transaction volumes (primarily related to states fully
rolled-out in 1999) resulted in changes in addition to the estimates underlying
the 1998 charges. These charges were partially offset by the net reversal of
$2.0 million of restructuring reserves. Restructuring reserves relating to the
closing of financial institution check printing plants within the paper payment
systems segment, were reduced by $2.9 million. The closing check printing
plants experienced higher attrition rates than anticipated resulting in lower
severance payments than originally estimated. Offsetting this reduction was
additional restructuring charges of $0.9 million relating to reductions within
Deluxe's collection business. By comparison, 1998 cost of sales included
restructuring charges of $10.9 million relating to discontinuing production of
the direct response segment's direct mail products and the planned closure of
four financial institution check printing plans within the paper payment
systems segment. Additionally, charges of $40.9 million were recorded in 1998
for asset impairments and accrued contract losses relating to the eFunds
segment. Excluding the loss contract, asset impairment and restructuring
charges, Deluxe's gross margin would have been 55.5% in 1999 and 54.3% in 1998.

Paper payment systems gross margin percentage increased to 62.9% in 1999
from 60.8% in 1998. This increase was due to cost reductions realized from
closing financial institution check printing plants, process improvements
within all businesses and the loss of lower margin customers within the
financial institution checks business.

eFunds gross margin percentage increased to 35.7% in 1999 from 20.6% in
1998. Excluding the loss contract and asset impairment charges, the gross
margin percentage would have been 38.6% in 1999 and 35.9% in 1998. This
increase was the result of the segment's improved sales, as well as lower
depreciation and amortization expense in 1999 due to the asset impairment
charges recorded in 1998. Partially offsetting these improvements was the
introduction of new services, primarily check conversion services, and
amortization of software related to new products. Additionally, the HCL-Deluxe,
N.V. business, which was acquired in April 1999, contributed a gross margin of
26.4% in 1999. While this compares favorably with the 22.6% gross margin
realized by this business in 1998, prior to the inclusion of its results in
Deluxe's consolidated financial statements, it did lower the eFunds segment's
gross margin in 1999.

Operating expenses. Operating expenses decreased $147.5 million, or 19.5%,
to $607.2 million in 1999 from $754.7 million in 1998. As a percentage of net
sales, operating expenses were 36.8% in 1999 compared to 39.0% in 1998. 1999
operating expenses included the net reversal of $6.3 million of restructuring
reserves. By

66
<PAGE>

comparison, 1998 operating expenses included net restructuring charges of $20.1
million. With these items excluded from each year, operating expenses decreased
$121.1 million, or 16.5%, from 1998. This decrease was largely due to
discontinuing production of the direct response segment's direct mail products
and the sale of the remaining businesses within the direct response and Deluxe
direct segments in 1998. These businesses had $146.7 million of operating
expenses in 1998. NRC had approximately $32.0 million of operating expenses in
both 1998 and 1999 which are not included in Deluxe's operations in 2000
because the business was sold in December 1999.

Paper payment systems operating expenses decreased 2.4% from 1998 to 1999.
This reflected a decrease within the financial institution checks business
resulting from consolidation efforts and reductions in the number of employees.
These decreases were offset by increased marketing expenses for the direct
checks business due to an increased emphasis on new customer acquisition.

eFunds operating expenses increased $27.3 million, or 33.4%, to $109.1
million in 1999 from $81.8 million in 1998. As a percentage of net sales,
operating expenses increased to 36.1% in 1999 from 30.6% in 1998. This increase
was predominantly related to costs incurred in conjunction with the development
of DebitBureau, infrastructure investments and goodwill amortization. These
increases were partially offset by initiatives designed to lower operating
expenses, such as reductions in hiring, travel costs and consulting fees, and
lower restructuring charges. 1999 operating expenses included the reversal of
$2.4 million of restructuring charges, while 1998 operating expenses included
net restructuring charges of $2.2 million.

Other income (expense). Other income increased $22.7 million from 1998 to
1999. 1999 included a $19.8 million gain on the sale of NRC, while 1998
included a combined loss of $4.9 million on sales of businesses. Additionally,
the losses of the HCL-Deluxe, N.V. business were no longer included in other
expense after April 1999 when Deluxe acquired the remaining ownership interest
in this business. After this date, Deluxe began consolidating this business'
results of operations in its consolidated financial statements.

Provision for income taxes. Deluxe's effective tax rate decreased to 37.5%
for 1999 from 41.1% for 1998 due primarily to decreased state tax expense.

Net income. Net income in 1999 increased to $203.0 million, compared to
$143.1 million in 1998. This increase was due in part to the reduced
restructuring charges, asset impairment charges and accrued losses on long-term
service contracts in 1999. The increase was also due in part to improvement in
Deluxe's operating margin resulting from better performance from its ongoing
operations as well as from the sales of the businesses within the direct
response and Deluxe direct segments in 1998.

Year ended December 31, 1998 Compared to Year Ended December 31, 1997

Net sales. Net sales increased $13.0 million, or 0.7% to $1,933.7 million in
1998 from $1,920.6 million in 1997. Revenues lost due to divestitures were more
than offset by growth in the eFunds segment. Excluding businesses divested in
both years, Deluxe's consolidated net sales increased 2.0% from 1997 to 1998.

Paper payment systems sales decreased $7.7 million, or 0.6% to $1,281.7
million in 1998 from $1,289.4 million in 1997. This decrease is primarily due
to lower volume in the financial institution checks business resulting from
lost customers. The loss of business was due to competitive pricing
requirements which fell below the segment's per unit revenue and profitability
targets. This decrease was partially offset by increased volume for the direct
checks business and new pricing strategies within the financial institution
checks business.

eFunds sales increased $38.4 million, or 16.8%, to $267.5 million in 1998
from $229.1 million in 1997. Increased transaction processing volume, higher
inquiry volumes, and higher software licensing and professional services
contributed to this increase. Transaction volumes increased 19.0% and inquiry
volumes

67
<PAGE>

increased 5.9% as a result of higher volumes from existing clients. Software
licensing and related services increased due to clients' demands for new
software systems to address potential Year 2000 impacts. Additionally, the EBT
business entered into additional state contracts and completed the roll-out of
existing contracts.

Net sales of divested businesses decreased $21.0 million, or 5.1%, to $388.7
million in 1998 from $409.7 million in 1997. This decrease was due primarily to
lost customers, price decreases for direct mail products, lower catalog
circulation and business divestitures, partially offset by volume increases in
the collections business.

Gross margin. Gross margin decreased $23.1 million, or 2.3%, to $997.7
million in 1998 from $1,020.8 million in 1997. As a percentage of net sales,
gross margin decreased to 51.6% in 1998 compared to 53.2% in 1997. Gross
margins in 1998 were reduced by restructuring charges of $10.9 million relating
to discontinuing production of the direct response segment's direct mail
products and the planned closure of four financial institution check printing
plants within the paper payment systems segment. Additionally, charges of $40.9
million were recorded in 1998 for asset impairments and accrued contract losses
relating to the eFunds segment. Costs of sales in 1997 included restructuring
charges of $7.7 million associated with Deluxe's 1996 decision to close 21
financial institution check printing plants and severance related to
implementing process improvements in the post-press phase of check production.
Excluding the loss contract, asset impairment and restructuring charges,
Deluxe's gross margin would have been 54.3% in 1998 and 53.7% in 1997.

Paper payment systems gross margin percentage increased to 60.8% in 1998
from 59.0% in 1997. The segment's slight sales decrease was more than offset by
cost savings realized from closing financial institution check printing plants
and other efficiency improvements.

eFunds gross margin percentage decreased to 20.6% in 1998 from 36.1% in
1997, primarily due to charges of $40.9 million for loss contracts and asset
impairments. With these charges excluded from 1998 and $2.4 million of asset
impairment charges excluded from 1997, the segment's gross margin percentages
would have been 35.9% for 1998 and 37.2% for 1997. Revenue growth was more than
offset by increased information services and other infrastructure costs,
reflecting Deluxe's investment in this segment. Partially offsetting these
increased expenses were reduced incentive compensation costs and lower
depreciation and amortization expense in 1998 due to the asset impairment
charges recorded in the third quarter of 1998.

Divested businesses gross margins decreased to 41.9% in 1998 from 45.1% in
1997, due to decreased volume, lower prices for direct mail products and the
divestiture of a higher margin business in late 1997.

Operating expenses. Operating expenses decreased $110.4 million, or 12.8%,
to $754.7 million in 1998 from $865.1 million in 1997. As a percentage of net
sales, operating expenses were 39.0% in 1998 compared to 45.0% in 1997. 1998
operating expenses included net restructuring charges of $20.1 million relating
to Deluxe's initiative to reduce its selling, general and administrative
expense and the planned closure of four additional financial institution check
printing plants. 1997 operating expenses included restructuring charges of
$13.9 million and asset impairment charges of $96.5 million. Excluding these
charges from both years, operating expenses decreased $20.1 million, or 2.7%,
from 1997.

During 1996, Deluxe announced its plans to divest three businesses within
its Deluxe direct segment. During 1997, Deluxe determined that it would divest
certain international operations of its eFunds segment. In 1997, Deluxe
recorded impairment charges of $96.5 million to write these businesses down to
their estimated fair values less costs to sell. The sales of the Deluxe direct
businesses were completed in 1998. Also during 1998, there was a change in the
management of the eFunds segment. As a result, in January 1999 Deluxe
determined that the international operations of this segment maintained a
continuing strategic importance and were no longer considered held for sale.

Paper payment systems operating expenses decreased 1.8% from 1997. Increased
costs associated with implementing a new order processing and customer service
system and increased selling expenses to support

68
<PAGE>

the volume increases in the direct checks business were more than offset by
lower restructuring charges in 1998 than in 1997.

eFunds operating expenses increased $0.5 million, or 0.6%, to $81.8 million
in 1998 from $81.3 million in 1997. This increase was primarily due to
increased selling and marketing costs associated with the growth of and
investment in this business and $2.7 million of costs incurred in connection
with the development of DebitBureau capabilities. Partially offsetting these
increases were lower legal costs for the EBT business. Additionally, 1998
operating expenses included net restructuring charges of $2.2 million, while
1997 operating expenses included $1.5 million of restructuring charges and $9.4
million of asset impairment charges.

Operating expenses for divested units decreased 18.3% from 1997, primarily
because of reduced discretionary spending, reduced catalog circulation and
lower costs resulting from reorganizing a portion of the marketing function at
the direct mail businesses.

Other income (expense). Other income increased $40.5 million from 1997 to
1998. 1997 results included an accrual of $40.0 million for legal proceedings
related to the EBT business. During 1997, a judgment was entered against us in
the U.S. District Court for the Western District of Pennsylvania. The case was
brought against Deluxe by Mellon Bank in connection with a potential bid to
provide EBT services for the Southern Alliance of States. In September 1997,
Deluxe recorded the $40.0 million charge to reserve for this judgment and other
related costs. In 1998, Mellon's motion for prejudgment interest was denied by
the district court and Deluxe reversed $4.2 million of the $40.0 million
liability. This reversal was reflected in other income in the 1998 consolidated
statement of income.

Provision for income taxes. In 1998, Deluxe's effective tax rate decreased
to 41.1% from 61.2% in 1997. This was due to lower non-deductible expenses
resulting primarily from non-deductible goodwill impairment charges recognized
in 1997.

Net income. 1998 net income increased to $143.1 million from $44.7 million
in 1997. The primary reason for this increase was the lower amount of
reorganization and other charges discussed above.

Liquidity, Capital Resources and Financial Condition

As of June 30, 2000, Deluxe had cash and cash equivalents of $91.2 million.
Deluxe also had $6.3 million of restricted cash that it temporarily holds in
custodial accounts on behalf of clients and $28.7 million in restricted cash
that it had supplied to ATMs operated by a client of its eFunds business.
Deluxe has agreed to make up to $35.0 million of cash available for this
purpose which will continue to be eFunds' obligation upon completion of the
separation of eFunds from Deluxe. Deluxe's working capital on June 30, 2000 was
a negative $111.5 million compared to a positive $14.1 million on December 31,
1999. The current ratio on June 30, 2000 and December 31, 1999 was 0.8 to 1 and
1.0 to 1, respectively. On a pro forma basis, giving effect to the exchange
offer as if it had occurred as of June 30, 2000, the current ratio on June 30,
2000 would have been 0.5 to 1, with the reduction in the ratio principally
resulting from the reduction in cash and cash equivalent arising from the
separation of eFunds from Deluxe. The decreases in working capital and the
current ratio are primarily due to the fact that formerly long-term debt of
$100.0 million is payable in February 2001. Thus, the debt is classified in
current liabilities in the consolidated balance sheet at June 30, 2000. Cash
provided by operations represents Deluxe's primary source of working capital
and the source for financing capital expenditures and paying cash dividends.
Deluxe believes that cash generated from operations and from its current credit
facilities is sufficient to sustain Deluxe's existing operations.

69
<PAGE>

The following table sets forth a summary of cash flow activity and should be
read in conjunction with Deluxe's consolidated statements of cash flows:

<TABLE>
<CAPTION>
Summary of Cash Flows
----------------------------------
Unaudited
Year Ended Six Months Ended
December 31, 1999 June 30, 2000
----------------- ----------------
(in thousands)
<S> <C> <C>
Cash provided by operating activities... $ 220,946 $ 100,879
Cash used in investing activities....... (297) (113,110)
Cash used in financing activities....... (348,573) (32,939)
Cash used by certain international
operations during December, 1999....... -- (4,127)
--------- ---------
Net decrease in cash and cash
equivalents............................ $(127,924) $ (49,297)
========= =========
</TABLE>

Cash provided by operating activities was $100.9 million during the first
six months of 2000 compared to $95.7 million during the first six months of
1999. The increase in 2000 was primarily due to the payment of $32.2 million in
February 1999 resulting from a judgment in a lawsuit involving the eFunds
segment and the increase in restricted cash in 1999. Partially offsetting these
uses of cash in 1999 was a decrease in accounts receivable. As the result of a
management plan to drive a reduction in accounts receivable and maximize
working capital, Deluxe saw a significant decrease in accounts receivable in
1999 due to an increase in Automated Clearing House (ACH) processing of cash
receipts within the paper payment systems segment. Cash provided by operating
activities was $220.9 million in 1999 compared to $294.3 million in 1998. A
majority of the decrease was due to the payment of $32.2 million in 1999 to pay
a judgment in a legal proceeding and a $25.0 million increase in restricted
cash supplied to ATMs in the eFunds segment. These decreases were partially
offset by cash inflows due to the increase in ACH processing of cash receipts
by the paper payment systems segment.

Cash used in investing activities was $113.1 million during the first six
months of 2000 compared to $63.3 million during the same period in 1999. Cash
used in investing activities was $0.3 million in 1999 compared to $36.9 million
in 1998. Payments for acquisitions, net of cash acquired, totaled $116.0
million and $35.7 million during the first six months of 2000 and 1999,
respectively. Cash paid for acquisitions also totaled $35.7 million for the
full year of 1999. There were no acquisitions in 1998. Capital expenditures
totaled $42.8 million and $51.6 million during the first six months of 2000 and
1999, respectively, and $115.0 million during 1999 compared to $121.3 million
during 1998. In 1999, Deluxe used $32.5 million to provide short-term financing
on sales of facilities. This cash was collected in early 2000. Other sources of
investing cash flows were the sales of businesses and capital assets. These
activities generated investing cash inflows of $11.9 million and $24.5 million
during the first six months of 2000 and 1999, respectively, and $166.4 million
in 1999 compared to $117.9 million in 1998. As of June 30, 2000, Deluxe had no
significant capital asset purchase commitments. Deluxe estimates that capital
expenditures, including capital expenditures by eFunds through December 31,
2000, will be approximately $100 million in 2000.

Cash used in financing activities was $32.9 million during the first six
months of 2000 compared to $226.2 million during the first six months of 1999.
Cash used in financing activities was $348.6 million in 1999 and $160.4 million
in 1998. The primary uses of cash for financing activities were payments to
repurchase shares and the payment of dividends to shareholders. These
activities used cash totaling $54.5 million and $259.2 million during the first
six months of 2000 and 1999, respectively, and $428.4 million in 1999 compared
to $180.0 million in 1998. Sources of cash from financing activities were the
sale of approximately 12% of eFunds shares to the public in June 2000 and the
issuance of shares to employees under Deluxe's stock purchase plan. The sale of
eFunds shares provided net cash of $62.0 million during the first six months of
2000. Shares issued to employees generated financing cash inflows of $4.7
million and $16.0 million during the first six months of 2000 and 1999,
respectively, $29.2 million in 1999 and $26.2 million in 1998. During the

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<PAGE>

first six months of 2000 Deluxe made debt payments of $45.2 million. During the
first six months of 1999, Deluxe had net proceeds from debt of $17.0 million.
During all of 1999, Deluxe had net proceeds of $50.6 million from borrowings in
comparison to 1998, when it made debt payments of $6.6 million.

As of June 30, 2000, Deluxe had committed lines of credit for $450.0 million
available for borrowing and as support for commercial paper. One of these
committed lines of credit for $300 million expires on August 28, 2000. Subject
to customary closing conditions, Deluxe has reached an agreement to extend this
line until August 2001. The average amount drawn on these lines during the
first six months of 2000 was $37.4 million at a weighted-average interest rate
of 6.38%. As of June 30, 2000 no amounts were outstanding under these lines of
credit. The average amount drawn on these lines during 1999 was $39.8 million
at a weighted-average interest rate of 6.39%. As of December 31, 1999, $60.0
million was outstanding under these lines of credit at an interest rate of
6.39%. No amounts were drawn on these lines during 1998 and there was no
outstanding balance at December 31, 1998. As of June 30, 2000, Deluxe had $15.0
million of commercial paper outstanding at a weighted-average interest rate of
7.10%. The average amount of commercial paper outstanding during the first six
months of 2000 was $2.5 million at a weighted-average interest rate of 6.54%.
No commercial paper was issued during 1999 or 1998.

Deluxe's eFunds segment also had a $10.0 million line of credit guaranteed
by Deluxe, denominated in Indian rupees, available to its international
operations at an interest rate of 15.81%. This line of credit remains
guaranteed by Deluxe until October 1, 2000. The average amount drawn on this
line during the first six months of 2000 was $4.3 million. As of June 30, 2000,
$4.8 million was outstanding. The average amount drawn on this line during 1999
was $2.7 million. As of December 31, 1999, $3.1 million was outstanding. This
line of credit was not available in 1998.

Deluxe had uncommitted bank lines of credit for $40.0 million available at
variable interest rates. The average amount drawn on these lines during the
first six months of 2000 was $65 thousand at a weighted-average interest rate
of 6.47%. The average amount drawn on these lines during 1999 was $1.5 million
at a weighted-average interest rate of 5.12%. No amounts were drawn on these
lines during 1998 and there was no outstanding balance at June 30, 2000 or
December 31, 1999 and 1998 on these lines of credit.

Deluxe has a shelf registration in place for the issuance of up to $300.0
million in medium-term notes. Such notes could be used for general corporate
purposes, including working capital, capital expenditures, possible
acquisitions and repayment or repurchase of outstanding indebtedness and other
securities of Deluxe. As of June 30, 2000 and December 31, 1999 and 1998, no
such notes were issued or outstanding.

Outlook/Recent Developments

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements,
which provides guidance in applying generally accepted accounting principles to
revenue recognition in financial statements. Application of this SAB did not
have a material impact on Deluxe's reported operating results or financial
position.

Deluxe's paper payments systems segment is developing and evaluating plans
and launching initiatives for future growth. These plans and initiatives
involve increased expense and investment in the development of Internet
commerce capabilities for new ventures and infrastructure. Deluxe expects to
continue these expenditures throughout 2000 to create additional opportunities
to offer new types of customized products to individuals and small businesses.

Subsequent to the issuance of Deluxe's consolidated financial statements as
of and for the six months ended June 30, 2000, Deluxe determined that the
effective income tax rate used in computing the provision for income taxes for
the six months ended June 30, 2000 and in its original filing on Form 10-Q for
that period should not have included the effects of the gain it expects to
recognize following the exchange offer. Previously, the estimated expected gain
was included in the determination of the effective income tax rate used

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<PAGE>

in computing the provision for income taxes for six months ended June 30, 2000.
In addition, Deluxe determined that $100 million of notes due in 2001 should be
classified as a current liability rather than as long-term debt. Accordingly,
the consolidated financial statements as of June 30, 2000 and for the six
months then ended were restated from amounts previously reported to reflect the
impact of these adjustments and Deluxe filed a Form 10Q/A amending its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 with the
Securities and Exchange Commission on August 18, 2000. The financial statements
included in this offering circular-prospectus give effect to these
restatements.

Market Risk Disclosure

As of June 30, 2000, Deluxe had an investment portfolio of fixed income
securities, excluding those classified as cash and cash equivalents, of $18.2
million. These securities, like all fixed income instruments, are subject to
interest rate risk and will decline in value if market interest rates increase.
However, Deluxe has the ability to hold these fixed income investments until
maturity and therefore would not expect to recognize an adverse impact on
income or cash flows.

Deluxe operates internationally, and so is subject to potentially adverse
movements in foreign currency rate changes. Deluxe has not entered into foreign
exchange forward contracts to reduce its exposure to foreign currency rate
changes on intercompany foreign currency denominated balance sheet positions.
As of June 30, 2000, Deluxe has borrowed $4.8 million on a line of credit
denominated in Indian rupees. The rate on the borrowing remains fixed for the
term of the borrowing. The rupee-denominated funds borrowed are used
exclusively by the business within India to pay for expenses denominated in
Indian rupees.

Deluxe is exposed to foreign exchange risk to the extent of adverse
fluctuations in the Indian rupee and British pound. Deluxe does not believe
that a change in the Indian rupee and British pound exchange rates of 10% would
result in a material impact on its future earnings, financial position or cash
flows. Historically, the effect of movements in these exchange rates has been
immaterial to Deluxe's consolidated results.

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<PAGE>

SELECTED FINANCIAL DATA OF eFUNDS

The following selected financial data should be read together with eFunds'
consolidated financial statements and related notes and the "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
eFunds" included elsewhere in this offering circular-prospectus. The selected
statement of operations data shown below for the three years ended December 31,
1999 and the selected balance sheet data as of December 31, 1998 and 1999 are
derived from eFunds' audited consolidated financial statements included in this
offering circular-prospectus which have been audited by Deloitte & Touche LLP,
independent auditors.

The selected statement of operations data shown below for the years ended
December 31, 1995 and 1996 and for the six months ended June 30, 1999 and 2000
and the selected balance sheet data as of December 31, 1995, 1996 and 1997 and
June 30, 1999 and 2000 are derived from eFunds' unaudited consolidated
financial statements. In the opinion of eFunds' management, all adjustments
necessary for a fair presentation of these financial statements are included.
Other than the adjustments related to restructuring charges discussed in Note 7
to the eFunds consolidated financial statements and contract losses discussed
in Note 5 to the eFunds consolidated financial statements, the adjustments
consist only of normal recurring items. Interim results are not necessarily
indicative of results for a full year.

On February 19, 1999, eFunds acquired all of the outstanding shares of an
electronic check conversion company. On April 13, 1999, it acquired the
remaining 50% ownership interest in a joint venture which comprises its
professional services business and which prior to the acquisition was recorded
in eFunds' financial statements under the equity method of accounting. The
acquisitions have been accounted for under the purchase method of accounting
and, as a result, eFunds' consolidated financial statements include the total
results of these businesses subsequent to their acquisition dates. On June 30,
2000, eFunds completed its IPO.

<TABLE>
<CAPTION>
Year Ended December 31, Unaudited
------------------------------------------------ Six Months Ended
Unaudited June 30,
------------------ ------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net sales............... $193,111 $201,681 $229,065 $267,520 $302,340 $140,423 $201,225
-------- -------- -------- -------- -------- -------- --------
Cost of sales,
excluding loss
contract and asset
impairment charges.... 104,239 131,379 143,966 171,359 185,590 88,123 118,197
Loss contract and asset
impairment charges.... -- -- 2,470 40,949 8,700 117 9,700
-------- -------- -------- -------- -------- -------- --------
Total cost of sales.... 104,239 131,379 146,436 212,308 194,290 88,240 127,897
-------- -------- -------- -------- -------- -------- --------
Gross margin............ 88,872 70,302 82,629 55,212 108,050 52,183 73,328
-------- -------- -------- -------- -------- -------- --------
Selling, general and
administrative........ 64,330 69,544 70,542 81,198 105,382 42,731 75,271
Research and
development (1)....... -- -- 1,398 625 3,756 2,054 922
Asset impairment
charges............... -- -- 9,361 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total operating
expenses.............. 64,330 69,544 81,301 81,823 109,138 44,785 76,193
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations............. 24,542 758 1,328 (26,611) (1,088) 7,398 (2,865)
Other income (expense)
Legal proceedings...... -- -- (40,050) 4,157 2,094 2,094 --
Other income
(expense)............. (313) 7 (918) (3,495) (4,609) (1,286) (474)
Interest income
(expense)............. (972) (1,463) (825) 2,789 963 1,078 (1,296)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes........... 23,257 (698) (40,465) (23,160) (2,640) 9,284 (4,635)
Provision (benefit) for
income taxes........... 9,733 5,203 (6,397) (8,569) 5,586 7,949 (1,285)
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....... $ 13,524 $ (5,901) $(34,068) $(14,591) $ (8,226) $ 1,335 $ (3,350)
======== ======== ======== ======== ======== ======== ========
Net income (loss) per
share--basic and
diluted................ $ 0.34 $ (0.15) $ (0.85) $ (0.36) $ (0.21) $ 0.03 $ (0.08)
Shares used in computing
basic and diluted net
income (loss) per
share.................. 40,000 40,000 40,000 40,000 40,000 40,000 40,030
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Year Ended December 31, Unaudited
-------------------------------------------- Six Months Ended
Unaudited June 30,
----------------- -----------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- -------- --------
(in thousands, except operating data)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Account verification
inquiries (millions)... 23.7 26.3 28.6 30.3 32.1 16.1 18.9
Transactions processed
(millions)............. 1,356 2,526 3,313 3,944 5,019 2,343 2,803
ATMs driven at period
end.................... N/A N/A 5,766 5,623 8,626 9,302 9,153
<CAPTION>
December 31,
-------------------------------------------- Unaudited
Unaudited June 30,
----------------- -----------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents (2)........ $ 3,967 $ 27,226 $ 23,843 $ 16,055 $ 35,849 $ 28,213 $ 93,289
Working capital......... 8,735 38,666 39,686 1,869 25,607 37,972 68,469
Total assets............ 150,614 177,230 187,810 186,335 289,929 264,925 394,304
Long-term debt,
excluding current
portion................ 3,504 2,426 4,571 4,029 3,597 3,419 2,923
Total stockholders'
equity................. 101,201 131,897 87,690 89,803 199,105 187,191 277,170
</TABLE>
--------
(1) Research and development expenses are included in, but were not separately
recorded from, cost of sales and selling general and administrative
expenses for the years ended December 31, 1995 and 1996.
(2) Excludes restricted cash which represents cash that eFunds has supplied to
ATMs managed by a client and cash that it temporarily holds in custodial
accounts on behalf of clients.

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<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF eFUNDS

You should read the following discussion together with "Selected Financial
Data of eFunds" and its consolidated financial statements and the notes to
those financial statements included in this offering circular-prospectus. In
addition to historical and pro forma information, this discussion contains
forward-looking information that involves risks and uncertainties. eFunds'
actual results could differ materially from those anticipated by eFunds'
management due to competitive factors, risks associated with its expansion
plans and strategic initiatives and other factors discussed under "Risk
Factors" and elsewhere in this offering circular-prospectus.

Overview

eFunds provides transaction processing and risk management services to
financial institutions, retailers, electronic funds transfer networks, e-
commerce providers and government agencies and offers information technology
consulting and business process management services, both on a stand-alone
basis and as a complement to its electronic payments business. eFunds'
electronic payments segment provides transaction processing services and
decision support and risk management products to financial institutions,
retailers, electronic funds transfer networks and e-commerce providers. eFunds'
professional services segment provides information technology consulting and
business process management services to financial services companies and all of
its and Deluxe's businesses. eFunds' government services segment provides
online EBT services under entitlement programs on behalf of state and local
governments and Medicaid eligibility verification services. eFunds' segments
operate primarily in the United States. The electronic payments and
professional services segments also have international operations.

eFunds' businesses have historically been operated as units of Deluxe. In
April 1999, Deluxe announced that it was changing its business model to a
holding company structure with four independently operated business units:
paper payment systems, electronic payments, professional services and
government services. In January 2000, Deluxe announced that its board of
directors approved a plan to combine the latter three businesses into a
separate, independent, publicly traded company called eFunds.

eFunds issued 5.5 million eFunds shares to the public in June 2000. Prior to
this IPO, Deluxe owned 40 million, or 100%, of the total outstanding eFunds
shares. Subsequent to the IPO, Deluxe continues to own 40 million eFunds
shares, representing approximately 88% of the total outstanding eFunds shares.
Proceeds from the IPO, based on the offering price of $13.00 per share, totaled
$71.5 million ($62.0 million, net of offering expenses).

On January 31, 2000, Deluxe announced that it planned to offer all of its
eFunds shares to Deluxe's shareholders through an exchange offer under which
Deluxe's shareholders will be given the opportunity to tender some or all of
their Deluxe shares in exchange for eFunds shares owned by Deluxe. If the
exchange offer is completed and fewer than 40 million eFunds shares are
exchanged for Deluxe shares, Deluxe plans to distribute all of the remaining
eFunds shares that it owns to its remaining shareholders on a pro rata basis
through a spin-off. Deluxe has received a private letter ruling from the IRS to
the effect that the exchange offer and any subsequent spin-off will be
generally tax-free to Deluxe and its shareholders for U.S. federal income tax
purposes. However, eFunds cannot be certain that the distribution by Deluxe
will be completed. If Deluxe does not complete the exchange offer and any
subsequent spin-off, Deluxe will continue to control eFunds and Deluxe and
eFunds may not realize the anticipated benefits of their separation.

eFunds has entered into various agreements related to transition and ongoing
relationships with Deluxe. These agreements relate to, among other things, an
intercompany loan facility, information technology consulting, business process
management services, indemnification, data sharing, real estate matters, tax
sharing and transition services. eFunds will compensate Deluxe for providing
services and will negotiate third-party rates after the transition arrangements
terminate. The transition period varies depending on the agreement, but

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<PAGE>

many transition services will terminate upon completion of the exchange offer.
The intercompany loan facility will expire upon completion of the exchange
offer or December 31, 2000, whichever occurs earlier. See "Agreements Between
Deluxe and eFunds." Some of the transition agreements may be extended beyond
the "initial transition periods."

eFunds' consolidated financial statements have been prepared using the
historical results of operations and historical bases of the assets and
liabilities of the Deluxe businesses that comprise the eFunds' company. The
consolidated financial statements also include allocations to eFunds of certain
liabilities and expenses, including profit sharing, post-retirement, non-
qualified deferred compensation and other employee benefits, information
technology services, facility costs, and other Deluxe administrative services
costs. The expense allocations have been determined on bases that both Deluxe
and eFunds considered to be a reasonable reflection of the utilization of the
services provided to eFunds or the benefit received by eFunds. The expense
allocation methods are based on headcount, transaction processing costs, square
footage and relative sales.

The financial information presented in this offering circular-prospectus may
not necessarily reflect what eFunds' financial position, results of operations
or cash flows would have been had eFunds been a separate, stand-alone entity
for the periods presented nor is it indicative of eFunds' future financial
position, results of operations or cash flows. eFunds anticipates that many
changes will occur in its funding and operations as a result of its operation
as an independent entity. In future periods, eFunds may incur incremental
expenses related to its separation from Deluxe. In addition, eFunds' business
was conducted as three business segments by Deluxe. Accordingly, eFunds'
financial statements reflect those business segments: electronic payments,
professional services and government services. It is eFunds' intention to
integrate its operations more fully, which may change eFunds' presentation of
segment information in future periods.

Net Sales. eFunds' net sales are generally comprised of transaction
processing and service fees, decision support fees, software licensing,
maintenance and support fees, government service fees and information
technology consulting and business process management services fees. eFunds'
revenue recognition policies for these various fees are as follows:

. Transaction processing and service fees are recognized in the period
that the service is performed. These services consist of processing
customers' electronic debit transactions through electronic funds
transfer networks and settling the funds with the financial institutions
involved in the transactions. Additionally, these services include
monitoring ATMs and point-of-sale devices to alert eFunds' customers
when potential problems occur. These fees are charged on a per
transaction basis, depending on the contractual arrangement with the
customer. Government services fees are recognized in the period services
are provided based on monthly fees per benefits recipient.

. Decision support fees are recognized as revenue in the period the
services are provided. Decision support services consist of new account
applicant and check verification screenings to manage the risk
associated with account openings and check acceptance. Decision support
fees are based on the number of inquiries against the databases used for
screening purposes or monthly fees based on the aggregate dollar value
of checks authorized by the retailer, depending on the product and
service.

. Software license fees for standard software products are recognized when
delivery has occurred, the license fee is fixed and determinable,
collectibility is probable and evidence of this arrangement exists.
License fees are charged based on modules purchased by the customer. In
some situations eFunds' customers do not take possession of the
software. Instead, it remains installed on eFunds' hardware and
customers access it as needed. Revenue in these situations is recognized
on a fee-for-service basis.

. Software maintenance and support revenues are recognized ratably over
the term of the contract, and/or as the services are provided. Support
services such as customization of standard software modules, are charged
on a time and materials basis and recognized as hours are completed.

. Revenues from professional services for information technology
consulting and business process management are generally recognized
under two methods, depending on contractual terms. Under the

76
<PAGE>

time and materials method, revenue is based on a fee per hour basis, and
is recognized as hours are completed. Under the fixed contract method, a
pre-set fee is agreed upon for a project, and revenue is recognized
proportionately to the percentage completion of the project.

Cost of Sales. Cost of sales consists primarily of salaries and benefits,
depreciation and maintenance of equipment and facilities and amortization of
software used to operate eFunds' data centers. Expenses are recognized when
incurred, with the exception of installation costs. Installation costs are
capitalized and recognized ratably over the life of the contract, which
approximates the revenue recognition.

Expenses. Selling, general and administration expenses consist of salaries
and benefits, consulting fees, facilities and equipment costs, recruiting and
training, travel expenses, corporate administrative charges, depreciation and
amortization and all other corporate costs.

Research and development expenses, which are expensed as incurred, relate
to investigating new or improved processes and techniques and developing such
research findings into a potential new product or service. Research and
development expenses reflect the cost of salaries and benefits, travel costs
and testing-related costs incurred in the early stages of product development.

Interest expense represents the cost of funds for working capital and other
purposes and reflects Deluxe's internal cost of funds. Interest income
consists of interest credited to us for funds held in investment accounts.

Government Services

eFunds' government services business was started in response to federal
mandates that require state and local governmental agencies to convert to
electronic payment methods for the distribution of benefits under entitlement
programs, including food stamps and other welfare programs. In 1993, eFunds
rolled out its first state-wide system to electronically deliver these
benefits using its electronic funds transfer capabilities. From 1994 through
1996 eFunds bid on contracts that secured business as a prime or subcontractor
with over 30 states, including three subcontracts with coalitions of states.
eFunds was providing services in over 30 states at the end of 1999. All of
eFunds' government services contracts relate to government entitlement
programs.

All of eFunds' contracts are for service periods of five to seven years and
are based on a fixed price, variable volume model. For several of the
contracts, eFunds serves as a subcontractor for Citibank. An integral part of
these arrangements was an exclusive switching services agreement with Citibank
pursuant to which eFunds provided services that allowed benefit recipients to
use their benefit cards to purchase goods from merchants located in a state
other than their state of residence and from merchants who were not members of
eFunds' network.

In 1997, eFunds recorded a $40.0 million charge to legal proceedings
expense for a judgment entered against eFunds in an action brought by Mellon
Bank in connection with a potential bid to provide EBT services to a state
coalition. In 1998, $4.2 million of the reserve was reversed and credited to
legal proceedings expense due to the denial of Mellon's motion for prejudgment
interest. In 1999, after eFunds paid the judgment of $32.2 million in the
Mellon litigation, it reversed the remaining reserve of $2.1 million through a
credit to legal proceedings expense.

In 1998, after a reorganization and management change in eFunds' government
services business and as many of the state systems were being fully
implemented, eFunds concluded that net sales from its government services
contracts would be lower than anticipated because case volumes were lower due
to welfare reform and a strong economy. In addition, eFunds underestimated the
costs required to support its services. The primary sources of additional
costs were a need to install a greater number of point-of-sale terminals,
higher than expected transaction volume per recipient and higher support
costs. These higher costs could not be recovered under eFunds' fixed-price
variable volume contracts and, when combined with lower sales due to a
decreased number of welfare recipients, resulted in 1998 charges of $26.3
million and $14.7 million to write off assets

77
<PAGE>

used in the government services business and to accrue for future losses on
these contracts. Subsequent to the 1998 charges, additional state systems began
operations while a continuing strong economy lead to further reductions in the
number of welfare cases. In addition, Citibank notified eFunds that it would
not renew eFunds' exclusive switching contract. As a result, eFunds recorded
additional charges in 1999 totaling $8.2 million for additional expected future
contract losses.

eFunds increased its provision for expected future losses on long-term
contracts by approximately $12.2 million in the second quarter of 2000 to
reflect the fact that it now has a definitive contract with Citibank for a
coalition of states for which Citibank serves as the prime contractor and
eFunds serves as a subcontractor. In its role as subcontractor for this
coalition, eFunds acts as a third party acquirer of electronic benefit
transactions, hosts the authorization databases, and provides consumer help
desk support. As the prime contractor, Citibank serves as the lead negotiator
with the states in the coalition and retailers located in those states and is
responsible for providing overall project management. Citibank is also
responsible for coordinating the efforts of other subcontractors and for
negotiating all third party processor and regional network agreements. The
$12.2 million charge was partially offset by productivity improvements and cost
savings from lower than anticipated telecommunications and interchange expenses
that reduced prior accruals by $2.5 million.

Prior to executing the agreement with Citibank, eFunds was providing
services for this coalition without a binding contract with Citibank. Although
eFunds believes that it did not have a legal obligation to provide services to
this coalition before signing its agreement with Citibank, the states included
in this coalition did not have alternative means of delivering benefits under
their entitlement programs. As a result, eFunds believes it could not terminate
the provision of services during its contract negotiations with Citibank
because any unilateral decision to do so would have subjected eFunds to a
substantial risk of litigation by the coalition states as well as potential
claims by Citibank. At the same time, eFunds' negotiations with Citibank had to
be conducted within the basic framework of its bid to Citibank and Citibank's
bid to the coalition states. The execution of the agreement allowed eFunds to
avoid the possibility that its future losses could be larger if Citibank were
ultimately to prevail on its assertions regarding the appropriate pricing terms
applicable to eFunds' services and that the help desk services eFunds were
providing should have been transferred to Citibank in exchange for per-call
payments from eFunds. To reach the final pricing schedule in the agreement for
its future services, eFunds paid Citibank $4 million in April 2000 and agreed
to pay Citibank an additional $1 million in April 2001 and April 2002. For its
part, Citibank agreed to pay eFunds $1.55 million in May 2000 for amounts owed
to eFunds that Citibank had refused to pay during the negotiations. Citibank
also agreed that eFunds would not be required to transfer the help desk support
function to it. The $12.2 million charge reflects eFunds' estimate of the
future losses that eFunds will incur providing services based on these final
contract terms. These losses are due to the combination of lower case volumes
and higher than anticipated transaction volumes and support costs which
underlie eFunds' earlier loss contract charges.

eFunds has decided to exit the government services business as soon as its
current contractual commitments expire in 2006. During the wind-down period,
eFunds intends to continue to take steps to improve the profitability of the
current business. Deluxe has agreed to indemnify eFunds for future losses
arising from any litigation based on the conduct of the business prior to the
IPO in June 2000 and from future losses on identified loss contracts in excess
of eFunds' $29.2 million loss contract reserve as of April 30, 2000, which
amount includes the $12.2 million charge. The indemnification obligation does
not apply to losses covered by the existing reserves. The maximum amount of
litigation and contract losses for which Deluxe will indemnify eFunds is $14.6
million. After the completion of the exchange offer and any subsequent spin-
off, eFunds intends to record any indemnification payments earned from Deluxe
as reductions of expense when the additional contract losses, if any, are
recognized. Prior to the completion of the exchange offer and any subsequent
spin-off, any indemnification payments eFunds earns from Deluxe will be
recorded as capital contributions.

Loss Contract, Asset Impairment and Other Charges

Over the past three years, eFunds has had significant charges for legal
proceedings, asset impairments, contract losses and restructurings. These
charges have had a significant impact on eFunds' results of operations

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<PAGE>

and financial position over this period of time. The significant items recorded
in 1997, 1998 and 1999 and the six months ended June 30, 2000 are as follows,
on a pretax basis (dollars in thousands):

<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31, June 30,
------------------------ ------------------
1997 1998 1999 1999 2000
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Legal proceedings charges
(reversals)................. $40,050 $(4,157) $(2,094) $ (2,094) $ --
Asset impairment charges..... 11,831 26,252 492 117 --
Loss contract charges........ -- 14,697 8,208 -- 9,700
Restructuring charges
(reversals)................. 1,516 2,151 (2,399) (2,018) 465
------- ------- ------- -------- --------
Total...................... $53,397 $38,943 $ 4,207 $ (3,995) $ 10,165
======= ======= ======= ======== ========
</TABLE>

These items are reflected in the statements of operations for 1997, 1998 and
1999 and the six months ended June 30, 2000 as follows (dollars in thousands):

<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31, June 30,
------------------------ ------------------
1997 1998 1999 1999 2000
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Cost of sales.................. $ 2,470 $40,949 $ 8,700 $ 117 $ 9,700
Operating expenses (income).... 10,877 2,151 (2,399) (2,018) 465
Other expense (income)......... 40,050 (4,157) (2,094) (2,094) --
------- ------- ------- -------- --------
Total........................ $53,397 $38,943 $ 4,207 $ (3,995) $ 10,165
======= ======= ======= ======== ========
</TABLE>

For more information about these items, see Notes 5, 6, 7 and 14 to eFunds'
consolidated financial statements.

Transactions with Deluxe. Deluxe has been, and is expected to continue to
be, a significant client for eFunds' professional services business. In 1999,
eFunds provided information technology consulting and business process
management services on a project-by-project basis to Deluxe. Revenue for these
professional services was $6.3 million on a pro forma full year basis. In 1999,
sales to Deluxe represented approximately 3% of eFunds' total net sales and
approximately 43% of the net sales of eFunds' professional services business.
Sales to Deluxe for eFunds' electronic payments business were less than 1.5% of
net sales in 1999.

eFunds' sales to Deluxe were $30.4 million, or 15.1% of total net sales, for
the first six months of 2000. Sales to Deluxe were 80.9% of professional
services net sales for the first six months of 2000. For eFunds' electronic
payments business, sales to Deluxe during the first six months of 2000 were
0.3%.

Beginning in 2000, the services provided to Deluxe have been formalized into
a five-year information technology consulting outsourcing agreement. During the
term of the agreement, eFunds anticipates that Deluxe will spend approximately
$43 million per year for information technology consulting based on the actual
number of hours of services that eFunds provides to Deluxe. If Deluxe fails to
reach the $43 million spending target, Deluxe will be obligated to make
payments for a portion of eFunds' fees based on eFunds' estimates of lost
profits. eFunds also will provide business process management services,
including accounts receivable, accounts payable and other general accounting
services, as well as data entry services. Deluxe's annual minimum spending
target for business process management services will range from $8.1 million in
2000 to $4.2 million in 2004. The provision of services by eFunds under the
agreement is non-exclusive, and Deluxe may contract with any third party for
the provision of professional services.

79
<PAGE>

Results of Operations

The following table presents, for the periods indicated, the relative
composition of net sales and selected statement of operations data as a
percentage of net sales:
<TABLE>
<CAPTION>
Unaudited
------------------
Six Months Ended
Year Ended December 31, June 30,
--------------------------- ------------------
1997 1998 1999 1999 2000
------- ------- ------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net sales:
Electronic payments... 88.2% 83.6% 79.8% 82.1% 70.3%
Professional
services............. -- -- 4.2 1.4 18.4
Government services... 11.8 16.4 16.0 16.5 11.3
------- ------- ------- -------- --------
Total net sales..... 100.0 100.0 100.0 100.0 100.0
------- ------- ------- -------- --------
Cost of sales:
Electronic payments... 51.2 47.5 45.6 47.1 39.3
Professional
services............. -- -- 3.0 1.0 11.5
Government services:
Cost of sales,
excluding loss
contract and asset
impairment
charges............ 12.7 16.6 12.8 14.6 8.0
Loss contract and
asset impairment
charges............ -- 15.3 2.9 0.1 4.8
------- ------- ------- -------- --------
Total cost of
sales.............. 63.9 79.4 64.3 62.8 63.6
------- ------- ------- -------- --------
Gross margin............ 36.1 20.6 35.7 37.2 36.4
Operating expenses:
Selling, general and
administrative....... 30.8 30.4 34.9 30.4 37.4
Research and
development.......... 0.6 0.2 1.2 1.5 0.5
Asset impairment
charges.............. 4.1 -- -- -- --
------- ------- ------- -------- --------
Total operating
expenses........... 35.5 30.6 36.1 31.9 37.9
------- ------- ------- -------- --------
Income (loss) from
operations............. 0.6 (10.0) (0.4) 5.3 (1.5)
Other (expense) income:
Legal proceedings..... (17.5) 1.6 0.7 1.5 --
Other (expense)
income............... (0.4) (1.3) (1.5) (0.9) (0.2)
Interest (expense)
income............... (0.4) 1.0 0.3 0.8 (0.6)
------- ------- ------- -------- --------
(Loss) income before
income taxes........... (17.7) (8.7) (0.9) 6.7 (2.3)
Benefit (provision) for
income taxes........... 2.8 3.2 (1.8) (5.7) 0.6
------- ------- ------- -------- --------
Net (loss) income....... (14.9)% (5.5)% (2.7)% 1.0% (1.7)%
======= ======= ======= ======== ========
</TABLE>

Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999

Net sales. Net sales increased $60.8 million, or 43.3%, to $201.2 million in
the first six months of 2000 from $140.4 million in the first six months of
1999. On a full year pro forma basis taking into account eFunds' acquisition of
the remaining 50% interest in its professional services business in April 1999,
net sales increased $56.5 million, or 39.0%, to $201.2 million in the first six
months of 2000 from $144.7 million in the first six months of 1999.

Electronic payments net sales increased $26.1 million, or 22.6%, to $141.4
million in the first six months of 2000 from $115.3 million in the first six
months of 1999. Increased collections services, higher inquiry volume for the
segment's account verification business, coupled with a price increase for
these services, an agreement with an information solutions provider to allow it
to use eFunds' DebitBureau database with certain

80
<PAGE>

of its products and services and higher software sales, contributed to
electronic payment's six months growth. Transaction processing volumes
increased 19.6% over the first six months of 1999. Account verification inquiry
volumes increased 17.6% over the first six months of 1999.

Professional services net sales increased $35.2 million to $37.1 million in
the first six months of 2000 from $1.9 million in the first six months of 1999.
On a pro forma basis, taking into account the acquisition of the remaining 50%
interest in the professional services during April 1999 as if it had occurred
on January 1, 1999, professional services net sales increased $30.9 million in
the first six months of 2000 to $37.1 million from $6.2 million in the first
six months of 1999. The growth on a year to date basis was due to the new
contract with Deluxe and growth in services to financial institutions. However,
it is not expected that the year to date growth rates over pro forma 1999
results are indicative of future results due to the one-time impact of the
Deluxe contract.

Government services net sales decreased $0.4 million, or 1.8%, to $22.8
million in the first six months of 2000 from $23.2 million in the first six
months of 1999. This decrease was primarily due to the expiration of the
Maryland EBT contract and lower EBT revenue which was partially offset by
increased volume in Medicaid eligibility verification services. eFunds expects
revenue in this segment to continue to decline each year as existing contracts
expire.

Cost of sales. Cost of sales increased $39.7 million, or 44.9%, to $127.9
million in the first six months of 2000 from $88.2 million in the first six
months of 1999. As a percentage of net sales, cost of sales increased to 63.6%
in the first six months of 2000 as compared to 62.8% in the first six months of
1999. The increase in cost of sales as a percentage of net sales was due to
additional net charges of $9.7 million for loss contracts in the government
services business. Excluding these net charges, cost of sales as a percentage
of net sales would have been 58.7% for the first six months of 2000.

Electronic payments cost of sales increased $12.8 million, or 19.3%, to
$79.0 million in the first six months of 2000 from $66.2 million in the first
six months of 1999. As a percentage of electronic payments net sales, cost of
sales decreased to 55.9% in the first six months of 2000 as compared to 57.4%
in the first six months of 1999. These decreases were due primarily to a shift
toward electronic customer inquiries for the segment's account verification
business, which generate higher margins, and increased utilization of existing
infrastructure.

Professional services cost of sales increased $21.7 million to $23.2 million
in the first six months of 2000 from $1.5 million in the first six months of
1999. As a percentage of professional services net sales, cost of sales
decreased to 55.6% in the first six months of 2000 compared to 64.9% in the
first six months of 1999. On a full year pro forma basis, taking into account
the acquisition of the remaining 50% interest in this business as if it had
occurred on January 1, 1999, cost of sales for professional services increased
$18.9 million to $23.2 million from $4.3 million in the first six months of
1999. The percentage decreases in 2000 from pro forma 1999 results were due to
the execution of more profitable contracts, less reliance on sub-contractors
and an increasing portion of work being performed at eFunds' India facilities
where margins are higher.

Government services cost of sales increased $5.1 million, or 25.0%, to $25.7
million in the first six months of 2000 from $20.6 million in the first six
months of 1999. As a percentage of government services net sales, cost of sales
increased to 112.9% in the first six months of 2000 as compared to 88.7% in the
first six months of 1999. These increases were due to additional net charges of
$9.7 million for additional expected future losses on EBT contracts. In April
2000, eFunds completed negotiations with Citibank for a state coalition for
which it provides EBT services. Previously, eFunds was operating without a
binding, legally enforceable contract with this contractor. eFunds increased
its accrual for expected future losses on long-term service contracts by $12.2
million to reflect the fact that it now has a definitive agreement with this
contractor. Offsetting this charge was the reversal of $2.5 million of
previously recorded contract loss accruals resulting from productivity
improvements and cost savings from lower than anticipated telecommunications
and interchange expenses. Excluding the net $9.7 million of charges, cost of
sales as a percentage of net sales

81
<PAGE>

would have been 70.3% for the first six months of 2000. This reduction is a
reflection of programs implemented in order to reduce the cost of supporting a
declining revenue stream in future years in the government services business.

Gross margin. Gross margin increased $21.1 million, or 40.5%, to $73.3
million in the first six months of 2000 from $52.2 million in the first six
months of 1999. As a percentage of net sales, gross margin decreased to 36.4%
in the first six months of 2000 as compared to 37.2% in the same period in
1999. The decrease in gross margin as a percentage of net sales was due to the
additional net charges of $9.7 million for loss contracts in the government
services business. Excluding these net charges, gross margin as a percentage of
net sales would have been 41.3% in the first six months of 2000.

Selling, general and administrative (SG&A) expenses. SG&A expenses increased
$32.6 million, or 76.2%, to $75.3 million in the first six months of 2000 from
$42.7 million in the first six months of 1999. As a percentage of net sales,
SG&A expenses increased to 37.4% in the first six months of 2000 as compared to
30.4% in the first six months of 1999. Costs of $2.9 million incurred in the
first six months of 2000 for transition costs related to the separation of
eFunds from Deluxe and employee severance costs contributed to the SG&A
increases from 1999. eFunds will incur additional costs and expenses associated
with its separation from Deluxe in future periods. The remaining increase was
largely driven by infrastructure expenditures needed to support higher levels
of business in the professional services area both in the United States and
India. For the first six months of 2000, the increase in SG&A was primarily due
to the acquisition of the remaining 50% interest in eFunds' professional
services business in April 1999. Other factors contributing to the year-to-date
increase were additional promotional advertising geared toward creating brand
awareness of the eFunds name, infrastructure investments and increased goodwill
expense due to the acquisition of an electronic check conversion company in
February 1999. Also, in the first six months of 1999, $2.0 million of
restructuring accruals from prior periods were reversed, reducing SG&A expenses
for that period.

Research and development (R&D) expenses. R&D expenses decreased $1.2 million
to $0.9 million in the first six months of 2000 from $2.1 million in the first
six months of 1999. All R&D expenses were within the electronic payments
business and primarily reflect costs incurred in conjunction with the
development of the DebitBureau family of products. The decrease in R&D expenses
during 2000 is largely due to the fact that the software which comprises the
DebitBureau family of products has passed the stage of technological
feasibility and is being sold to customers. Additional expenditures to improve
or enhance the functionality of the software are being capitalized rather than
expensed, in conformity with eFunds' policy on capitalized software costs.

Other income (expense). Other expense was $474,000 in the first six months
of 2000 compared to $1.3 million in the first six months of 1999. The larger
expense in 1999 was primarily due to losses recorded under the equity method of
accounting for the professional services business. Prior to eFunds' acquisition
of the remaining ownership interest in this business in April 1999, eFunds
recorded its 50% share of the joint venture's losses in other expense.

Interest income (expense). Interest expense in the first six months of 2000
was $1.3 million compared to interest income of $1.1 million in the first six
months of 1999. The change resulted from intercompany interest from Deluxe
offset by the addition of a credit facility in India. In 1999, interest was
earned from Deluxe on intercompany receivables. This intercompany receivable
was declared a dividend at the end of 1999. During the first six months of
2000, net intercompany balances were in a payable position to Deluxe and
resulted in intercompany interest expense.

Provision for income taxes. The effective tax rate in the first six months
of 2000 was 27.7% compared to 85.6% in the first six months of 1999. The higher
rate in the six-month period was due primarily to losses in the professional
services business for which no benefit could be recognized. The 2000 rates were
further reduced by the utilization of foreign net operating loss carryforwards.

82
<PAGE>

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Net sales. Net sales increased $34.8 million, or 13.0%, to $302.3 million in
1999 from $267.5 million in 1998. All segments experienced increases in net
sales in 1999. On a full year pro forma basis taking into account eFunds'
acquisition of the remaining 50% interest in its professional services business
in April 1999, net sales increased $27.1 million, or 9.7%, to $306.7 million in
1999 from $279.6 million in 1998.

Electronic payments net sales increased $17.9 million, or 8.0%, to $241.4
million in 1999 from $223.5 million in 1998. Increased net sales due to greater
transaction processing and account verification inquiry volumes and price
increases were partially offset by decreased software sales due to customer
reluctance to make significant software changes prior to Year 2000. Transaction
volumes increased 27.3%, and inquiry volumes increased 6.1% as the result of
higher volumes from existing customers. Net sales in 1999 included minimal
contributions from several new products, such as QualiFile, FraudFinder and
Integreat!, which were launched in late 1999.

Professional services net sales were $12.7 million in 1999. eFunds recorded
no net sales for professional services in 1998 because of equity accounting
prior to the acquisition of the remaining 50% interest in its professional
services business in April 1999. On a full year pro forma basis taking into
account this acquisition as if it had occurred on January 1, 1999, professional
services net sales increased $4.9 million, or 40.6%, to $17.0 million in 1999
from $12.1 million in 1998. This growth was due to new clients, increased sales
to existing clients and the initiation of business process management services
for Deluxe.

Government services net sales increased by $4.3 million, or 9.8%, to $48.3
million in 1999 from $44.0 million in 1998. This increase was due to the roll-
out of additional states during the latter half of 1998 and early 1999 and
price increases on contract extensions for online Medicaid eligibility
verification services. Government services net sales will likely decrease in
future periods as existing contracts expire because eFunds is exiting the
government services business.

Cost of sales. Cost of sales decreased $18.0 million, or 8.5%, to $194.3
million in 1999 from $212.3 million in 1998. This decrease in 1999 is the net
result of increased cost of sales primarily due to increased volumes and the
acquisition of the remaining 50% interest in eFunds' professional services
business in April 1999, offset by a $32.2 million reduction in loss contract
and asset impairment charges related to government services. As a percentage of
net sales, cost of sales decreased to 64.3% during 1999 compared to 79.4%
during 1998, mainly due to a reduction in loss contract and asset impairment
charges. Excluding these charges, cost of sales as a percentage of net sales
would have been 61.4% in 1999 and 64.1% in 1998.

Electronic payments cost of sales increased $11.0 million, or 8.6%, to
$138.0 million in 1999 from $127.0 million in 1998. As a percentage of
electronic payments net sales, cost of sales increased to 57.2% in 1999
compared to 56.8% in 1998. This increase was due primarily to the introduction
of new services, primarily electronic check conversion services, and
amortization of software related to new products, primarily QualiFile,
DataNavigator and online banking in the United Kingdom.

Professional services cost of sales were $9.0 million or 71.1% of
professional services net sales in 1999. eFunds recorded no cost of sales for
professional services in 1998 because of equity accounting prior to the
acquisition of the remaining 50% interest in its professional services business
in April 1999. On a full year pro forma basis taking into account this
acquisition, professional services cost of sales increased $2.7 million, or
29.1%, to $11.9 million in 1999 from $9.2 million in 1998. As a percentage of
professional services net sales, cost of sales decreased to 70.0% in 1999
compared to 76.2% in 1998. This decrease was primarily due to increased sales,
execution of more profitable contracts, less reliance on subcontractors through
building of eFunds' own capabilities and an increased proportion of work being
done offshore where margins are higher despite lower billing rates.

83
<PAGE>

Government services cost of sales decreased $38.0 million, or 44.6%, to
$47.3 million in 1999 from $85.3 million in 1998. The decrease during 1999 was
due primarily to the $32.2 million reduction in loss contract and asset
impairment charges, as well as lower depreciation and amortization expense in
1999 due to asset impairment charges recorded in 1998. As a percentage of
government services net sales, cost of sales decreased to 97.9% in 1999
compared to 193.9% in 1998. Excluding the loss contract and asset impairment
charges, cost of sales as a percentage of government services net sales would
have decreased to 79.9% in 1999 compared to 100.8% in 1998.

Gross margin. Gross margin increased $52.8 million, or 95.7%, to $108.1
million in 1999 from $55.2 million in 1998. As a percentage of net sales, gross
margin increased to 35.7% in 1999 compared to 20.6% in 1998. Excluding the loss
contract and asset impairment charges, eFunds gross margin would have been
38.6% in 1999 and 35.9% in 1998.

Selling, general and administrative (SG&A) expenses. SG&A expenses increased
$24.2 million, or 29.8%, to $105.4 million in 1999 from $81.2 million in 1998.
As a percentage of net sales, SG&A expenses increased to 34.9% in 1999 compared
to 30.4% in 1998. This increase was predominantly related to costs incurred in
conjunction with the development of DebitBureau, infrastructure investments and
goodwill amortization. These increases were partially offset by initiatives
designed to lower SG&A expenses, such as reductions in hiring, travel costs and
consulting fees, and lower restructuring charges. In 1999, eFunds reversed $2.4
million of restructuring accruals from prior periods. In 1998, eFunds recorded
restructuring charges of $3.2 million for severance relating to its initiative
to reduce SG&A expenses. During 1998, eFunds also reversed $1.0 million of a
1996 restructuring charge.

Research and development (R&D) expenses. R&D expenses increased by $3.1
million to $3.8 million in 1999 from $0.6 million in 1998. As a percentage of
net sales, R&D expenses increased to 1.2% in 1999 compared to 0.2% in 1998. All
R&D expenses were within the electronic payments business and primarily reflect
costs incurred in conjunction with the development of DebitBureau.

Other income (expense). Other expense increased $1.1 million, or 31.9%, to
$4.6 million in 1999 compared to $3.5 million in 1998. The increase in expense
in 1999 was primarily due to losses on the disposal of an in-house developed
system which was written off when the decision to take the assets out of
service was made and the assets were replaced with purchased software that has
greater functionality. This increase was partially offset by the reduced losses
recorded under the equity method of accounting for the 50% ownership of eFunds
professional services business. Prior to eFunds' acquisition of the remaining
ownership interest in April 1999, eFunds recorded its 50% share of the joint
venture's losses in other expense.

Provision for income taxes. eFunds recognized a provision for income taxes
of $5.6 million in 1999 as compared to a benefit of $8.6 million in 1998.
eFunds did not record a tax benefit on the operating loss of the professional
services business because of its lack of profitability through 1999. Increased
non-deductible goodwill amortization resulting from the acquisition of the
electronic check conversion company also contributed to the provision for
income taxes.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Net sales. Net sales increased $38.4 million, or 16.8%, to $267.5 million in
1998 from $229.1 million in 1997. All segments experienced increases in net
sales during 1998. On a full year pro forma basis taking into account eFunds'
acquisition of the remaining 50% interest in its professional services
business, net sales increased $47.3 million, or 20.4%, to $279.6 million in
1998 from $232.3 million in 1997.

Electronic payments net sales increased $21.4 million, or 10.6%, to $223.5
million in 1998 from $202.1 million in 1997. Increased transaction processing
volume, higher inquiry volumes, higher software licensing and professional
services contributed to this increase. Transaction volumes increased 19.0% and

84
<PAGE>

inquiry volumes increased 5.9% as a result of higher volumes from existing
clients. Software licensing and related services increased due to clients'
demands for new software systems to address potential Year 2000 impacts.

eFunds recorded no net sales for professional services in 1998 and 1997
because of equity accounting prior to the acquisition of the remaining 50%
interest in its professional services business in April 1999. On a full year
pro forma basis taking into account this acquisition, professional services net
sales increased $8.9 million, or 277.5%, to $12.1 million in 1998 from $3.2
million in 1997 when operations for this business commenced late in the third
quarter.

Government services net sales increased by $17.0 million, or 63.1%, to $44.0
million in 1998 from $27.0 million in 1997. This increase was due to additional
state contracts and the roll-out of existing contracts.

Cost of sales. Cost of sales increased $65.9 million, or 45.0%, to $212.3
million in 1998 from $146.4 million in 1997. As a percentage of net sales, cost
of sales increased to 79.4% in 1998 compared to 63.9% in 1997. This increase
was primarily due to the $26.3 million asset impairment charges and the $14.7
million loss contract charges recorded in the government services business
compared to only $2.4 million of asset impairment charges recorded by the
electronic payments segment in 1997. With these charges excluded in both years,
cost of sales as a percentage of net sales would have been 64.1% in 1998
compared to 62.8% in 1997.

Electronic payments cost of sales increased $9.8 million, or 8.4%, to $127.0
million in 1998 from $117.2 million in 1997. The increase in 1998 was primarily
due to higher revenue volumes. As a percentage of electronic payments net
sales, cost of sales was 56.8% in 1998 and 58.0% in 1997.

eFunds recorded no cost of sales for professional services in 1998 and 1997
because of equity accounting prior to the acquisition of the remaining 50%
interest in its professional services business in April 1999. On a full year
pro forma basis taking into account this acquisition, professional services
cost of sales increased $6.7 million, or 267.9%, to $9.2 million in 1998 from
$2.5 million in 1997. The increase was due to a full year of operations in
1998. As a percentage of professional services net sales, cost of sales
decreased to 76.2% in 1998 compared to 78.2% in 1997.

Government services cost of sales increased $56.0 million, or 191.7%, to
$85.3 million in 1998 from $29.2 million in 1997. This increase was primarily
due to loss contract and asset impairment charges totaling $40.9 million. As a
percentage of government services net sales, cost of sales increased to 193.9%
in 1998 compared to 108.4% in 1997.

Gross margin. Gross margin decreased $27.4 million, or 33.2%, to $55.2
million in 1998 from $82.6 million in 1997. As a percentage of net sales, gross
margin decreased to 20.6% in 1998 compared to 36.1% in 1997, primarily due to
charges of $40.9 million for loss contracts and asset impairments in the
government services business. With these charges excluded from 1998 and the
$2.4 million of asset impairment charges discussed above excluded from 1997,
eFunds consolidated gross margin percentage would have been 35.9% for 1998 and
37.2% for 1997.

Selling, general and administrative (SG&A) expenses. SG&A expenses increased
$10.7 million, or 15.1%, to $81.2 million in 1998 from $70.5 million in 1997.
This increase was predominantly related to increased selling and marketing
expenses associated with the electronic payments business and $2.7 million of
costs incurred in connection with the development of DebitBureau. These
increases were partially offset by decreases within the government services
business due to lower legal costs. During 1998, eFunds recorded restructuring
charges of $3.2 million for severance relating to its initiative to reduce SG&A
expenses, while it also reversed $1.0 million of a 1996 restructuring charge.
During 1997, eFunds recorded restructuring charges of $1.5 million for
severance within the electronic payments business. This reduction was completed
in 1998, with severance payments of $1.4 million paid through December 31,
1999. As a percentage of net sales, SG&A expenses were 30.4% in 1998 and 30.8%
in 1997.

85
<PAGE>

Research and development (R&D) expenses. R&D expenses decreased $0.8
million, or 55.3%, to $0.6 million in 1998 from $1.4 million in 1997. As a
percentage of net sales, R&D expenses decreased to 0.2% in 1998 compared to
0.6% in 1997. All R&D expenses were within the electronic payments business and
primarily reflect the costs incurred in conjunction with eFunds' development of
neural network and other fraud prevention technologies.

Asset impairment charges. In 1998, there were no asset impairment charges in
operating expenses compared to $9.4 million of charges recorded in 1997. In
1997, eFunds formulated a plan to divest the international unit of its
electronic payments business. Based on fair market value estimates, eFunds
recorded a charge of $9.4 million to write down the carrying value of these
operations to their estimated fair value less costs to sell.

Other income (expense). Other expense increased $2.6 million to $3.5 million
in 1998 from $0.9 million in 1997. This increase is primarily due to the
increased losses recorded under the equity method of accounting for the 50%
ownership of eFunds professional services business. In 1997, other expense does
not include a full year of operations because the joint venture began
operations in September of that year.

86
<PAGE>

Quarterly Results of Operations

The following tables present eFunds unaudited quarterly data for each of its
nine most recently ended quarters. The data has been prepared on a basis
consistent with eFunds audited consolidated financial statements included in
this offering circular-prospectus and include all necessary adjustments that
management considers necessary for a fair presentation of such information.
This data should be read in conjunction with eFunds annual audited consolidated
financial statements and the notes to those statements included in this
offering circular-prospectus. The operating results for any quarter are not
necessarily indicative of results for any future quarter or year.

<TABLE>
<CAPTION>
Unaudited
Three Months Ended
-----------------------------------------------------------------------------------------
June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30,
1998 1998 1998 1999 1999 1999 1999 2000 2000
-------- --------- -------- -------- -------- --------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales:
Electronic payments..... $55,697 $ 56,775 $56,992 $56,546 $58,768 $61,510 $ 64,561 $ 69,324 $ 72,069
Professional services... -- -- -- -- 1,916 5,218 5,544 19,141 17,914
Government services..... 10,758 10,951 13,031 11,310 11,883 13,167 11,917 11,790 10,987
------- -------- ------- ------- ------- ------- -------- -------- --------
Total net sales........ 66,455 67,726 70,023 67,856 72,567 79,895 82,022 100,255 100,970
------- -------- ------- ------- ------- ------- -------- -------- --------
Cost of sales:
Electronic payments..... 32,642 31,365 32,823 33,180 33,019 34,629 37,169 38,974 40,006
Professional services... -- -- -- -- 1,465 3,666 3,888 11,577 11,623
Government services:
Cost of sales,
excluding contract and
asset impairment
charges............... 10,478 11,915 10,867 9,880 10,579 10,361 7,754 8,206 7,810
Loss contract and asset
impairment charges.... -- 40,949 -- 60 57 150 8,433 -- 9,700
------- -------- ------- ------- ------- ------- -------- -------- --------
Total cost of sales..... 43,120 84,229 43,690 43,120 45,120 48,806 57,244 58,757 69,139
------- -------- ------- ------- ------- ------- -------- -------- --------
Gross margin............ 23,335 (16,503) 26,333 24,736 27,447 31,089 24,778 41,498 31,831
Operating expenses:
Selling, general and
administrative......... 21,345 21,375 16,617 17,887 24,844 28,378 34,273 38,178 37,093
Research and
development............ 172 133 133 536 1,518 1,380 322 579 344
------- -------- ------- ------- ------- ------- -------- -------- --------
Total operating
expenses.............. 21,517 21,508 16,750 18,423 26,362 29,758 34,595 38,757 37,437
------- -------- ------- ------- ------- ------- -------- -------- --------
Income (loss) from
operations............. 1,818 (38,011) 9,583 6,313 1,085 1,331 (9,817) 2,741 (5,606)
Other income (expense):
Legal proceedings....... -- 4,157 -- 2,094 -- -- -- -- --
Other income (expense).. (225) (1,542) (1,457) (866) (420) (2,870) (453) 13 (488)
Interest income
(expense).............. 793 369 750 803 275 (3) (112) (801) (494)
------- -------- ------- ------- ------- ------- -------- -------- --------
Income (loss) before
income taxes........... 2,386 (35,027) 8,876 8,344 940 (1,542) (10,382) 1,953 (6,588)
(Provision) benefit for
income taxes........... (883) 12,960 (3,284) (4,530) (3,419) (7,692) 10,055 (737) 2,022
------- -------- ------- ------- ------- ------- -------- -------- --------
Net income (loss)....... $ 1,503 $(22,067) $ 5,592 $ 3,814 $(2,479) $(9,234) $ (327) $ 1,216 $ (4,566)
======= ======== ======= ======= ======= ======= ======== ======== ========
</TABLE>

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Liquidity, Capital Resources and Financial Condition

As of June 30, 2000, cash and cash equivalents were $93.3 million. eFunds
also had $6.3 million of restricted cash that it temporarily holds in custodial
accounts on behalf of clients and $28.7 million in restricted cash that it had
supplied to ATMs operated by a client of its electronic payments business.
eFunds has agreed to make up to $35.0 million of cash available for this
purpose.

The following table sets forth a summary of cash flow activity and should be
read in conjunction with eFunds' consolidated statements of cash flows:

<TABLE>
<CAPTION>
Summary of Cash Flows
----------------------------------
Unaudited
Year Ended Six Months Ended
December 31, 1999 June 30, 2000
----------------- ----------------
(in thousands)
<S> <C> <C>
Cash (used in) provided by operating
activities............................. $(12,150) $ 20,888
Cash used in investing activities....... (73,209) (35,477)
Cash provided by financing activities... 105,153 76,156
Net cash used by the professional
services segment during December 1999.. -- (4,127)
-------- --------
Net increase in cash and cash
equivalents............................ $ 19,794 $ 57,440
======== ========
</TABLE>

Cash provided by operating activities in the six months ended June 30, 2000
was $20.9 million, primarily due to non-cash charges for depreciation and
amortization and the timing of income tax payments. Cash used in operating
activities in 1999 was $12.2 million, primarily due to the use of $32.2 million
to pay a judgment to Mellon Bank in a legal proceeding related to the
government services business for which eFunds had accrued $40 million in 1997
and the use of $25 million to supply cash to ATMs operated by a client of the
electronic payments business.

Cash used in investing activities was $35.5 million in the six months ended
June 30, 2000, due in part to capital expenditures of $16.0 million, including
$9.8 million for product development related expenditures. eFunds also invested
$20.0 million to purchase a 24% interest in a provider of ATM management and
outsourcing services to retailers and financial institutions. Cash used in
investing activities was $73.2 million in 1999, primarily due to capital
expenditures of $38.2 million, including $17.3 million for product development
related expenditures. eFunds also invested $35.7 million to purchase the
remaining 50% interest in its professional services business and an electronic
check conversion company.

Cash provided from financing activities was $76.2 million in the six months
ended June 30, 2000. Cash provided by the IPO in June 2000 was $62.0 million.
Cash provided by Deluxe was $23.9 million and dividends paid to Deluxe were
$13.8 million. eFunds obtained $5.0 million from borrowings on its lines of
credit and used cash to repay debt of $1.0 million. Cash provided from
financing activities was a net $105.2 million in 1999, of which $108.8 million
was provided by Deluxe and $3.1 million from borrowings on the line of credit
extended by Deluxe. eFunds used cash to repay debt of $6.7 million.

Net cash used by the professional services segment during December 1999
represents the change in the results of operations and financial position of
the professional services business. Previously, this business reported its
results of operations and financial position on a one-month lag. In January
2000, this business changed its reporting periods to coincide with the rest of
the eFunds' businesses.

At June 30, 2000, eFunds had a $10.0 million line of credit, denominated in
Indian rupees and guaranteed by Deluxe, available for use by the professional
services segment's international operations at an interest rate of 15.81%. This
line of credit remains guaranteed by Deluxe until October 1, 2000. The average
amount drawn on this line during the first six months of 2000 was $4.3 million.
As of June 30, 2000, $4.8 million was outstanding. The average amount drawn on
this line during 1999 was $2.7 million. As of December 31, 1999, $3.1 million
was outstanding. This line of credit was not available in 1998.

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Deluxe provides eFunds with an unsecured revolving credit facility of up to
$75 million until the earlier of the completion of the exchange offer or
December 31, 2000. Borrowings under the facility will be due at the completion
of the exchange offer or maturity and accrue interest at the London Interbank
Offered Rate, or LIBOR, plus a variable additional margin based on Deluxe's
credit rating. As of June 30, 2000, the outstanding balance on the credit
facility was $3.8 million at an interest rate of 6.87%. The credit facility
includes financial and restrictive covenants. eFunds is currently in compliance
with all covenants. eFunds intends to replace this facility with a new credit
facility with one or more financial institutions. A replacement credit facility
may not be available to eFunds, or if available, eFunds may not be able to
obtain it on a timely basis or on terms acceptable to it.

eFunds had capital expenditures of $16.0 million in the six months ended
June 30, 2000, and $38.2 million in 1999. eFunds anticipates a substantial
increase in its capital expenditures in 2000 to complete the integration of its
existing infrastructure and for continued spending on product development. In
particular, eFunds intends to consolidate its data centers and customer contact
centers. Portions of these projects will extend into 2001. Deferring portions
of these projects has reduced eFunds' prior expectations regarding capital
expenditures in 2000, and eFunds currently estimates its 2000 capital
expenditures to be approximately $50 million.

eFunds believes that cash generated from operations, borrowings under its
credit facilities and the net proceeds from its IPO will provide sufficient
funds for its operations for the foreseeable future. eFunds will likely expend
approximately $25 million of the net proceeds from its IPO to support its
capital expenditures, $10 million for the creation of the infrastructure needed
to enable it to operate as a stand-alone entity and $10 million for product
development activities. Some of the net proceeds from its IPO may be used to
fund future acquisitions and investments. If future acquisitions and
investments should require cash in excess of the amount of net proceeds from
its IPO and cash generated from operations, eFunds would consider its financing
alternatives at that time.

Market Risk Disclosure

eFunds operates internationally, and so is subject to potentially adverse
movements in foreign currency rate changes. eFunds has not entered into foreign
exchange forward contracts to reduce its exposure to foreign currency rate
changes on intercompany foreign currency denominated balance sheet positions.
As of June 30, 2000, eFunds has borrowed $4.8 million on a line of credit
denominated in Indian rupees. The rate on the borrowing remains fixed for the
term of the borrowing. The rupee-denominated funds borrowed are used
exclusively by the business within India to pay for expenses denominated in
Indian rupees.

eFunds is exposed to foreign exchange risk to the extent of adverse
fluctuations in the Indian rupee and British pound. eFunds does not believe
that a change in the Indian rupee and British pound exchange rates of 10% would
result in a material impact on its future earnings, financial position or cash
flows.

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BUSINESS OF DELUXE

Overview

Deluxe is the largest provider of checks in the United States, both in terms
of revenues and number of checks produced. Deluxe sells checks to financial
institutions who then resell these checks to their customers. Deluxe also sells
checks directly to consumers. In addition, Deluxe sells checks and related
products to small businesses. Excluding net sales related to the eFunds'
businesses and businesses sold in 1999, sales of checks and check-related
products and services accounted for approximately 97% of Deluxe's 1999 net
sales and virtually all of its 1999 profits. Deluxe has announced a strategy to
develop and market new products and services based on personalization, e-
commerce and direct marketing expertise gained in the check printing business.
Deluxe's first initiative under this strategy is a direct-to-consumer
personalization website, PlaidMoon.com.

Industry Background

Payment systems and methods have been changing in the United States in
recent years as banking and other industries have introduced alternatives to
the traditional paper check, including, among others, automatic teller machine
networks, credit cards, debit cards and electronic payment systems such as
electronic bill presentment and payment. Use of these payment alternatives is
affecting the numbers of checks written.

According to Deluxe's estimates, growth in total checks written by
individuals and small businesses, the primary purchasers of Deluxe's checks,
was flat in 1999 and the total number of personal, business and government
checks written in the United States has been in decline since 1997. Deluxe
believes that the individual and small business segments of the check industry
will eventually decline due to the increasing use of alternative payment
methods. Deluxe believes the decline in personal, business and government
checks is due to the increasing use of these alternative payment methods,
increasing use of direct deposits for payroll and government transfer payments,
and changing payment practices at large businesses and government agencies.

The check printing industry in the United States is highly competitive.
Competition among check printers is based principally on price, service,
quality, product range and convenience.

The largest channel for check orders is the financial institution channel
which Deluxe believes comprised approximately 79% of all personal check sales
in 1999. Orders originating in this channel are sourced through financial
institutions such as banks, savings and loan institutions, credit unions,
brokerages and other financial institutions. In recent years, margins in the
financial institutions channel have been pressured by competitive factors and
by the consolidation in the financial institutions industry. Margin pressure
arising from consolidation in the financial institutions industry is a result
of merged entities seeking not only the most favorable prices formerly offered
to the predecessor institutions but also additional discounts due to the
greater volume represented by the combined company.

The direct-to-consumer channel of the check industry emerged in the mid
1980s based upon consumers' desires for a lower-priced alternative to checks
obtained through financial institutions and the ability to obtain enhanced
design selections. Deluxe believes that direct check sales to individuals have
grown from approximately 18% in 1997 to approximately 21% in 1999. While
initial orders through the direct channel tend to have a lower margin than
orders through the financial institution channel due to high customer
acquisition costs, reorders through this channel tend to have a higher margin
than orders through the financial institution channel. Direct checks are
marketed to consumers primarily through newspaper and magazine inserts, direct
mail advertisements and the Internet.

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Deluxe's Strategy

Deluxe's strategy is to manage its leading position in the check industry
and to develop new sources of revenue within its existing customer base and in
new markets based on its personalization, e-commerce and direct marketing
expertise gained in the check printing business. Key elements of Deluxe's
strategy are to:

. Maximize revenues per order. Deluxe intends to maximize revenues per
order by pursuing cross-selling and up-selling opportunities within its
existing customer base. For example, Deluxe has instituted a program in
which it takes reorders directly from a financial institution's
customer, providing Deluxe an opportunity to up-sell products and
services to customers. Deluxe also pursues cross-selling opportunities
with its direct check customers by telephone contact, placing
advertising inserts in the boxes of checks it ships and by placing
hyperlinks on its websites.

. Increase direct check business. Because Deluxe believes that direct
checks are still growing as a percentage of total personal and small
business checks produced, Deluxe intends to increase the number of its
direct check customers by offering a wider range of check designs and
personalization options. Deluxe has been executing this strategy through
licensing agreements, acquisitions and internal development.

. Utilize core competencies to develop new sources of revenue. Deluxe
intends to utilize its ability to produce personalized "units of one" on
a large scale to sell new product offerings to its existing customers,
and to pursue new business opportunities with additional revenue
streams. Deluxe's PlaidMoon.com website, which was announced to the
public in August 2000, is an example of the type of new business
opportunity that Deluxe intends to pursue by leveraging its core
competencies and assets. PlaidMoon.com is an Internet business offering
a range of personalized products to consumers.

. Utilize existing customer base to increase sales of new product
offerings. Deluxe has a file of more than 40,000,000 direct check users,
as determined by the number of account holders, and more than 500,000
small businesses. Deluxe intends to utilize this customer base for
cross-selling of complementary products and new product offerings.

. Manage costs in mature check industry. Deluxe intends to continue to
manage its costs carefully and to look for ways to increase operating
efficiency in its core check printing business. In recent years Deluxe
has implemented a number of programs to control expenses and increase
efficiency.

Deluxe's Products and Services

Check and Check-Related Products. Each check order that Deluxe produces is
unique. Each check order involves a small volume of product that is sold at a
relatively low per unit amount. Many variables are available for specification
by a customer when placing a check order. Many customers use these options as
opportunities to express their personal style, which is a key element in
Deluxe's customer merchandising approach. In addition to including basic name
and address information on their checks, a customer may add other details such
as drivers license, e-mail address and telephone number. Deluxe also offers
customers many variations in the types of checks selected including:

. selection of type fonts;

. placement of information on the check;

. choice of plain safety paper designs or background designs, including
specially licensed designs from companies such as Coca-Cola Company,
Warner Bros. and the NASCAR Inc.;

. choice of color;

. choice of top or side tear options; and

. choice of stubs or duplicate copies.

Financial Institution Checks. For the past 85 years, Deluxe has provided
check printing services to financial institutions. Deluxe has developed
relationships with financial institutions whereby the financial institution
agrees to offer checks produced by Deluxe to its depositors. Deluxe provides
these checks to the

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<PAGE>

financial institution at negotiated prices and the financial institution
resells the checks to its depositors at a price determined by the financial
institution. Depositors commonly submit initial check orders and reorders to
their financial institutions, who then forward them to Deluxe. Printed checks
are usually shipped directly by Deluxe to the depositors. Deluxe's charges are
usually paid directly from the depositors' accounts by electronic transfer.
Deluxe typically produces and ships check orders within two days after its
receipt of the order.

Deluxe sold checks to more than 10,000 financial institutions and produced
approximately 76.2 million check units for financial institutions in 1999 and
87.5 million check units for financial institutions in 1998.

Over the last several years, Deluxe has begun offering enhanced services,
such as customized reporting services, file management and expedited account
conversion support, to its financial institution clients in order to increase
efficiency and revenue for Deluxe and its financial institution clients. Deluxe
also began offering its SecureMail service in September 1999 to help protect
financial institutions and consumers from check order fraud.

Deluxe has been receiving orders through electronic means from financial
institution clients since the late 1980s. Over 70% of the check orders
currently received by Deluxe in its financial institution channel are received
electronically. Deluxe offers its financial institution clients access to
electronic check ordering through its proprietary Online Network Exchange, or
ONE. Deluxe offers financial institutions access to ONE either through a
leased-line connection or through the Internet. Financial institutions are also
able to use ONE on a stand-alone basis or are able to integrate ONE with other
software applications. By using ONE, a financial institution can process its
customers' check orders faster than traditional methods of ordering checks. In
addition, the frequency of costly mistakes is decreased, as information is
entered directly into Deluxe's systems.

Deluxe has instituted a program in which it takes check reorders directly
from customers of financial institutions instead of receiving the reorders from
financial institutions. This program permits a reduction in the financial
institution's workload, while affording Deluxe the opportunity to up-sell
stylized checks with a higher per unit price to these customers and also cross-
sell additional products to these customers, thereby increasing revenue
opportunities for both financial institutions and Deluxe. Under this program,
Internet and voice response unit capabilities are currently available, and
Deluxe intends to introduce an in-person telephone version of this program to
its financial institution customers in 2001.

Deluxe has a sales force of approximately 175 salespersons that call on
financial institutions. Relationships with specific financial institutions are
usually formalized through supply contracts averaging three to five years in
duration. Deluxe is committed to its financial institution relationships and
seeks to maintain and grow them by emphasizing the breadth and value of its
checks and check-related product and service capabilities.

Direct Checks. While the majority of Deluxe's check orders are generated
through its relationships with financial institutions, Deluxe also offers
checks directly to the consumers who choose to order checks directly from a
check printer. Deluxe has a customer file of over 40 million check-users in its
direct check business. Deluxe typically receives a higher margin on check
reorders made in its direct check business because the checks are sold directly
to customers without resellers and there are greater opportunities for sales
agents to sell higher margin designer checks to the customers.

Deluxe offers over 60 distinct background designs to customers in its direct
check channel. Deluxe recently expanded its offerings to direct check customers
by acquiring Designer Checks in February 2000. This acquisition provided Deluxe
with access to additional customers, capacity, new product configurations such
as a side tear option, and additional background designs for its checks.

Deluxe has three websites that market checks directly to customers:
www.checksunlimited.com, www.designerchecks.com and www.checks.com. Deluxe
currently receives over 5% of its check orders in the direct channel via the
Internet. Internet orders for Deluxe's direct checks totalled nearly 300,000 in
1999.

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<PAGE>

Deluxe uses a variety of direct marketing techniques to acquire new
customers in its direct check channel, including free standing inserts in
newspapers, direct mail, and telephone contact. Deluxe also uses Internet
banner advertising and hyperlinks, which are intended to direct traffic to
Deluxe's websites. Deluxe has been emphasizing telephone and Internet contacts
because they are more effective than mail for cross-selling and up-selling
efforts. Deluxe has a marketing department of approximately 40 and a call
center staff of approximately 700 that are dedicated to marketing for direct
checks.

Business Forms. Deluxe also markets and produces computer and business
checks and forms on a small quantity order basis, including continuous form
checks, deposit tickets, invoices, statements, tax forms, labels and rubber
stamps. Checks represented approximately 77% of Deluxe's business forms'
product sales in 1999. Deluxe's checks and business forms are compatible with
nearly all of today's off-the-shelf accounting software packages.

Business checks and forms are marketed primarily to operators of small
businesses, small offices and home offices, typically those with 10 or fewer
employees. Deluxe obtains the majority of its business checks and forms
customers through a referral program with its financial institution clients.
Deluxe also markets its business checks and forms through direct mail, Deluxe's
websites and referrals from other third parties. Deluxe intends to expand its
business checks and forms business through enhancements to its referral
programs, new products, alliances and internet development. Deluxe has
approximately 35 employees who provide marketing support to its business checks
and forms business. Deluxe does not have a direct sales force that calls on
customers for business checks and forms. Customer contact is made via mail,
telephone, fax or through the Internet.

As part of Deluxe's growth and e-commerce retailing strategies, it has
entered into several alliances to provide small business owners with access to
complementary products and services offered by other suppliers via Deluxe's
small business website and catalogs, including computer supplies, website
services, and electronic postage. Although none of these alliances are
significant contributors to Deluxe's revenue at this time, Deluxe believes that
these alliances are beneficial to it because they allow Deluxe's customers to
receive access to a wider range of products and services. Deluxe believes this
should increase customer satisfaction and encourage repeat sales. Deluxe
believes that participants in these alliances also benefit as a result of the
opportunity to grow their customer bases more quickly and to build brand
recognition.

Emerging Products and Services

Deluxe intends to develop new sources of revenue within its existing
customer base and in new markets by using the expertise it has developed in the
check printing business. In the check printing business, Deluxe has developed
expertise in the following areas:

. Personalization Engineering. Using the infrastructure and core
competencies of its check printing and direct-to-consumer businesses,
Deluxe has been able to manage profitably and fulfill large numbers of
custom check orders involving small quantities of products at low dollar
amounts. This customization of a check can be for functional reasons,
such as including bank codes and account numbers of a consumer, or in
ways that allow consumers to express their personalities such as
including scenic paper or background designs. As a result, Deluxe is
able to offer products customized according to an individual's
preference or "unit of one" on a large-scale basis. On an annual basis,
Deluxe produces more than 100,000,000 unique "units of one."

. Direct Marketing. Deluxe has been selling items directly to consumers
since its first catalog was produced in 1918. Deluxe uses free-standing
inserts in newspapers, direct mail advertisements, Internet banner
advertisements, literature placed in its check orders, contact with its
call centers and its websites to cross-sell and up-sell products to its
customers.

. e-Commerce. Deluxe has developed significant capabilities supporting e-
commerce initiatives. Approximately 5% of the check orders currently
received by Deluxe in its direct channel are received through the
Internet. During the first six months of 2000, Deluxe has received over
600,000 unique

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visitors to its non-financial institution channel websites and has
received over 500,000 orders through those sites. Orders received
through the Internet typically have a higher average revenue per order
than orders Deluxe receives through the mail.

. Information Management. In order to deliver large volumes of unique
small transactions, Deluxe must securely and accurately process
individual data for approximately 80 million business and personal
accounts annually on a timely basis. To optimize order delivery
responsiveness, Deluxe captures images and other order information and
distributes orders electronically directly to its manufacturing plants.
Deluxe ships orders within an average of two days from its receipt of
the order.

. Relationship Management. With approximately 10,000 financial institution
clients, a customer file of over 40 million direct check using account
holders and approximately 500,000 small businesses, Deluxe focuses on
efficient and effective customer service. The success of Deluxe's
efforts in this area is demonstrated by the fact that over 75% of the
orders Deluxe receives are reorders from existing accounts.

As a recent example of executing this strategy, in August 2000, Deluxe
publicly announced a direct-to-consumer, personalization website:
PlaidMoon.com. Through PlaidMoon.com, Deluxe is seeking to capitalize on its
personalization, e-commerce and direct marketing expertise by offering
consumers the ability to customize and purchase a wide variety of personalized
products online.

The PlaidMoon.com strategy is to target consumers who wish to express their
thoughts and feelings more creatively in the items they purchase. Consumers
are able to select items for purchase through this website and then
personalize them in many ways, including:

. Personal photographs or other images;

. Personal messages;

. Personal designs;

. Monogramming; and

. Specifying size, placement and layout of images on products.

Deluxe is currently offering the following categories of products through
PlaidMoon.com:

. Paper products, such as invitations, stationery, labels, and napkins;

. Household goods, such as cups, bowls and plates;

. Clothing, such as t-shirts;

. Pet products, such as bowls and collars;

. Recreational and sport products, such as golf balls and sports bags;

. Decorating and gift items, such as pill boxes and keepsake boxes; and

. Home accent items, such as pillows, candles and picture frames.

Most of the products currently offered on the PlaidMoon.com website are
supplied by Taylor Corporation. Nearly all of these products are subject to a
noncompetition agreement between Deluxe and Taylor Corporation. Deluxe and
Taylor entered into this noncompetition agreement as part of the sale of two
businesses by Deluxe to Taylor in 1998. Under the terms of this noncompetition
agreement, Deluxe has agreed that, through December 2003, it will not sell
printed design papers and social expression products, such as greeting and
note cards, gift wrap, small gifts and other seasonal items in the United
States. If Deluxe wishes to sell these products on the PlaidMoon.com site, it
must obtain them from Taylor at a price set by Taylor. To date, Taylor has not
agreed to supply Deluxe with all of the products Deluxe might wish to offer on
its PlaidMoon.com website that could be subject to Deluxe's agreement not to
compete with Taylor. In some cases, Deluxe has agreed that Taylor would act as
the sole supplier of items that are not subject to the non-competition
agreement. Deluxe may enter into additional sole supplier agreements with
Taylor or other parties

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for products that may be sold over the PlaidMoon.com website. In addition,
Taylor is not prohibited from selling the products for which it acts as
Deluxe's sole supplier in a manner that is directly competitive with Deluxe's
PlaidMoon.com website.

Deluxe's marketing strategy is to build the PlaidMoon.com brand name, to
increase customer traffic to PlaidMoon.com website and to encourage customer
loyalty and repeat purchases. In addition, Deluxe intends to use traditional
advertising, hyperlinks from some of its other direct marketing websites,
direct mailings to its direct check and business form customers, and other
online advertising to build awareness of its PlaidMoon.com business offering
and increase customer traffic at the site.

Deluxe plans to build a network of independent artisans and make this
network available to consumers visiting PlaidMoon.com who want to create a more
highly customized product. Deluxe is also considering extending the
PlaidMoon.com concept to other applications.

Competition

The check printing industry is intensely competitive. Deluxe expects that
competition will intensify as the overall check industry continues to mature
and contract. Deluxe faces competition from alternative electronic payment
systems such as ATM machines, credit cards and debit cards and electronic
payment systems, such as electronic bill presentment and payment. Deluxe also
faces considerable competition from other check printers in its traditional
sales channel to financial institutions, such as John H. Harland Company,
Clarke American Checks, Inc. and Liberty Share Draft & Check Printers, Inc.;
from direct sellers of checks, such as Clarke American Checks, Inc. and MDC
Corporation Inc. in its direct-to-consumer check business; and from the sellers
of business checks and forms, such as NEBS, Inc. and Ennis Business Forms, Inc.
in its business checks and forms business. Additionally, Deluxe faces
competition from check printing software vendors and, increasingly, from
Internet-based sellers of checks to consumers and small businesses. In the
check printing industry, the principal factors on which Deluxe competes are
service, convenience, quality, product range and price. From time to time, some
of Deluxe's check printing competitors have reduced the prices of their
products in an attempt to gain greater volume. Price reductions by these
competitors have resulted in reduced profit margins for Deluxe in the past.
Deluxe has also experienced some loss of business due to its refusal to meet
competitive prices that fell below Deluxe's per unit revenue and profitability
targets. Similar pressures may result in margin reductions in the future,
particularly since Deluxe does not believe that it can continue to achieve cost
reductions of a magnitude similar to those that it has achieved in recent
years.

Online commerce is new, rapidly evolving and intensely competitive. Deluxe
is faced with competition from websites of traditional competitors as well as
new web-based entrants such as iPrint or ImageX for business checks and forms.
In addition, Deluxe believes that its PlaidMoon.com website will be competing
with other retail e-commerce sites, as well as retail stores. For
PlaidMoon.com, Deluxe's plan is to compete on the basis of its personalization
capabilities, merchandise assortment, direct marketing skills, fulfillment
capabilities, and proprietary customer lists.

Government Regulation

As of July 2001, Deluxe will be subject to the privacy requirements of a new
federal financial modernization law known as the Gramm-Leach-Bliley Act.
Regulations implementing the Act require each regulated entity to develop and
implement policies to protect the security and confidentiality of consumers'
nonpublic personal information and to disclose those policies to consumers
before a customer relationship is established and annually thereafter.

The regulations will require Deluxe to provide an "opt-out" notice to its
consumer customers and an opportunity to opt-out before it may share their
nonpublic personal information with certain third parties. The regulations,
including the opt-out provisions, may limit Deluxe's ability to use its direct
check consumer data in its businesses. However, the regulations allow Deluxe to
transfer consumer information to effect, administer or enforce a transaction
that a consumer requests or authorizes and to protect the confidentiality or
security of a consumer's records; to protect against or prevent actual or
potential fraud, unauthorized transactions, claims or other liability; for
required institutional risk control; and for resolving customer disputes or
inquiries. Deluxe

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may also contribute consumer information to a consumer reporting agency
pursuant to the Fair Credit Reporting Act.

Deluxe is evaluating the methods by which it will comply with the
regulations and any related contractual requirements. Further, Deluxe
anticipates that its financial institution clients will request various
contractual provisions in their agreements with Deluxe that are intended to
comply with their obligations under the Act and regulations.

Deluxe has entered into an agreement with eFunds pursuant to which Deluxe
will contribute consumer information to eFunds. eFunds has agreed that it may
only use this information for purposes that are consistent with applicable
federal, state and local laws. This agreement is discussed more fully in
"Agreements between Deluxe and eFunds."

Congress and many states are considering more stringent laws or regulations
that, among other things, restrict the purchase, sale or sharing of non-public
personal information about consumers. For example, legislation has been
introduced in Congress to further restrict the sharing of consumer information
by financial institutions, as well as require that a consumer opt-in prior to a
financial institution's use of his or her data in its marketing program.

Laws and regulations may be adopted in the future with respect to the
Internet or e-commerce covering issues such as user privacy. New laws or
regulations may impede the growth of the Internet. This could decrease traffic
to Deluxe's websites and the demand for Deluxe's products. Moreover, the
applicability to the Internet of existing laws governing property ownership,
taxation, libel and personal privacy is uncertain and may remain uncertain for
a considerable length of time.

Intellectual Property Rights

Deluxe relies on a combination of trademark and copyright laws, trade secret
protection and confidentiality and license agreements to protect its
intellectual property. Deluxe has also applied for patents covering certain
systems and methods of its PlaidMoon.com business. Intellectual property laws
afford limited protection. It may be possible for a third party to copy
Deluxe's products and services or otherwise obtain and use its proprietary
information without Deluxe's permission. There is no assurance that Deluxe's
competitors will not independently develop products and services that are
substantially equivalent or superior to Deluxe's products and services.

Employees

Excluding eFunds' employees, as of June 30, 2000, Deluxe had approximately
8,302 full and part-time employees employed within the United States. Of
Deluxe's total number of employees, 3,716 were engaged in manufacturing, 213
were engaged in software development, 3,495 were engaged in customer and
technical support services, 396 were engaged in sales and marketing and 482
were engaged in administrative and other functions.

None of Deluxe's employees are represented by a labor union, and Deluxe
considers its employee relations to be good.

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Facilities

The following table sets forth a description of Deluxe's principal
facilities:

<TABLE>
<CAPTION>
Owned or
Lease
Approximate Expiration
Location Square Feet Date Function
-------- ----------- -------------- ----------------------------
<S> <C> <C> <C>
Shoreview, Minnesota (2 313,965 Owned Administration, marketing,
locations)............. sales and customer contact
center
Lancaster, California... 68,539 Owned Manufacturing and mail
center
Des Plaines, Illinois... 191,805 Owned Manufacturing and
distribution
Colorado Springs, 291,311 Owned Manufacturing,
Colorado............... administration, marketing
and customer contact center
Dallas, Texas........... 53,490 Owned Manufacturing
Greensboro, North 44,336 Owned
Carolina............... Manufacturing
Indianapolis, Indiana... 43,969 Owned Manufacturing
Lenexa, Kansas (2 321,080 Owned Manufacturing, distribution
locations)............. and customer contact center
Mountain Lakes, New 62,961 Owned
Jersey................. Manufacturing
Pittsburgh, 45,884 Owned
Pennsylvania........... Manufacturing
Streetsboro, Ohio....... 115,205 Owned Manufacturing
Salt Lake City, Utah.... 95,307 Owned Manufacturing
Campbell, California.... 68,655 Owned Manufacturing
Shoreview, Minnesota (2 214,655 September 2006
locations)............. Administration
Shoreview, Minnesota.... 180,832 September 2008 Administration
Anniston, Alabama....... 83,400 December 2004 Manufacturing, marketing,
and customer contact center
Greensboro, North 65,340 November 2007
Carolina............... Customer contact center
Syracuse, New York...... 47,469 December 2004 Customer contact center
Phoenix, Arizona........ 50,337 June 2003 Administration and customer
contact center
</TABLE>

Deluxe believes that its current facilities are adequate to meet its
anticipated space requirements. Deluxe believes that additional space will be
available at a reasonable cost to meet its future needs.

Legal Proceedings

Other than routine litigation incidental to its business, there are no
material pending legal proceedings to which Deluxe is a party or to which any
of Deluxe's property is subject.

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BUSINESS OF eFUNDS

Overview

eFunds provides transaction processing and risk management services to
financial institutions, retailers, electronic funds transfer networks, e-
commerce providers and government agencies. eFunds' electronic payments
segment, which accounted for approximately 70% of its total net sales during
the first six months of 2000, provides a comprehensive suite of transaction
processing services and decision support and risk management products for debit
transactions. eFunds' decision support and risk management tools enable its
clients to combat identity fraud and account abuse in debit transactions.
eFunds also provides financial institutions with customer relationship tools
for opening accounts, minimizing fraud and identifying cross-selling
opportunities. In eFunds' professional services segment, which accounted for
approximately 18% of its total net sales during the first half of 2000, eFunds
provides information technology consulting and business process management
services. eFunds offers online electronic transfer of benefits under
entitlement programs on behalf of state and local governments and Medicaid
eligibility verification services under eFunds' government services segment.
This segment accounted for approximately 11% of eFunds' total net sales during
the first six months of 2000.

eFunds' business has been developed through the combination of several
businesses. eFunds' core transaction processing business, SCAN check
verification service and ChexSystems new account application service were
acquired by Deluxe in several acquisitions from 1984 through 1990. In 1989,
eFunds initiated its government services business, which rolled out its first
state-wide system to provide the electronic transfer of government entitlement
benefits in 1993. Deluxe formed a joint venture to provide professional
services in 1997 and acquired the remaining 50% interest in this venture in
April 1999. In 1998, Deluxe began to coordinate and enhance the operation of
eFunds' decision support and risk management businesses by creating eFunds'
DebitBureau database. Deluxe acquired an electronic check conversion business
in February 1999.

In January 2000, as part of a strategy to create strategically focused
enterprises that independently define their business objectives, raise capital
and pursue growth opportunities, Deluxe announced that it planned to combine
eFunds' businesses under eFunds and to issue eFunds' shares to the public. On
June 30, 2000 eFunds completed its initial public offering of 5,500,000 eFunds
shares.

Industry Background

Growth in Debit Cards. Payment methods are undergoing rapid change as new
technologies and new business requirements, including in e-commerce, cause
newer electronic payment methods to supplant traditional paper methods.
Although paper-based payment methods, such as personal checks, cash, bank and
travelers checks and food stamps, represented more than 70% by dollar volume,
or $3,255 billion, of U.S. consumer payments in 1998, the Nilson Report
estimated in December 1999 that payments using these paper-based technologies
will decline to 52.1%, or $3,556 billion, of U.S. consumer payments by 2005.
This report also estimates that the dollar volume of debit card payments will
increase from 3.7%, or $168 billion, of U.S. consumer payments in 1998 to 10.9%
of domestic consumer payments, or $743 billion, in 2005.

The Nilson Report estimates that the number of U.S. debit cards payments
will increase from 4.9 billion transactions, or 4.9% of total consumer
transactions, in 1998 to 19.1 billion transactions, or 14.0% of total consumer
transactions, in 2005. This increase represents a compound annual growth rate
in debit transactions of 21.6%. From eFunds' perspective, this growth rate
compares favorably to the projected compound annual growth rate of only 3.1% in
the number of U.S. credit card payments, which Nilson expects to increase from
17.1 billion transactions, or 17.4% of total consumer transactions, in 1998 to
21.9 billion transactions, or 16.1% of total consumer transactions, in 2005.
The Nilson Report further estimates that the number of U.S. debit card
transactions will overtake credit cards payments by 2007. In many international
markets, including the United Kingdom and Canada, debit cards have replaced
credit cards as the leading form of consumer electronic payment. As a result,
financial institutions and retailers will require electronic payment processes
that allow for newer debit-based electronic payment methods as well as increase
the efficiency of continued paper payment transactions.

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Debit card use is increasing because it is widely accepted by retailers and
provides substantially the same level of convenience in making a purchase as
credit cards. Consumers use debit cards to direct a bank to pay money directly
from a demand deposit account, such as a checking account. Debit cards allow a
consumer to avoid accumulating credit card debt, provide a single summary of
the consumer's debit card and check transactions on the consumer's bank
statements and, in many cases, provide a cash-back feature at the point-of-
sale. For retailers, debit cards generally entail lower transaction costs than
credit cards due to higher processing costs and fees for credit card payments
and fewer fraud losses in the cases where the debit card transaction involves
the use of a unique personal identification number, or PIN, assigned to the
cardholder.

Growth in e-Commerce. Growth in e-commerce transactions is also expected to
increase the need for electronic payment solutions. According to a September
1999 report by Forrester Research, online retail purchases by U.S. consumers
will grow from $20 billion in 1999 to $184 billion in 2004, reaching 7% of
total retail spending in that year. An estimated 90% of Internet transactions
are currently paid for using credit cards. This dependence on credit cards
presents issues for e-commerce companies because they face the potential for a
substantial amount of credit card fraud due to identity manipulation. PIN-based
debit transactions could help alleviate this problem for merchants and give
consumers a higher degree of confidence in the security of Internet
transactions. By failing to provide debit payment alternatives, e-commerce
providers also exclude the estimated 32.4% of U.S. consumers who, according to
a survey published in January 2000 by the Federal Reserve Bank, do not have a
credit card. Consequently, eFunds believes e-commerce companies are
increasingly likely to look to debit cards to expand payment options for
consumers, lower their transaction costs, provide greater transaction security
and successfully complete more transactions.

Decrease Transaction Costs. In general, merchants and financial institutions
are seeking to increase the use of electronic payment systems in order to lower
transaction costs. A December 1997 study in the Journal of Banking and Finance
estimates that the cost of using electronic payments is one-third of the cost
of paper-based transactions. To facilitate electronic transactions, merchants
and financial institutions are installing greater numbers of ATMs and point-of-
sale debit terminals. The number of these devices increased by 36.6% from 1998
to 1999 according to a report published in July 1999 by Bank Network News.
Retailers and banks are also adopting new technologies to reduce costs
associated with paper checks. Electronic check conversion technologies, in
which paper checks are scanned at the point-of-sale and converted from a paper
into an electronic debit transaction, are gaining acceptance. Using electronic
check conversion, retailers and banks can realize cost savings and cash
management benefits while enabling customers to continue their check writing
practices.

A significant factor in transaction costs is fraud, such as use of a false
or stolen identity. Account abuses, such as writing checks with insufficient
funds or opening and closing accounts to avoid payments are also factors.
Losses from bad checks and check fraud totaled $1.3 billion for banks and $13
billion for merchants in the United States in 1998 according to a report
published in September 1999 by the Tower Group and bad check losses have
increased for merchants at a rate of 5% per year since 1996. In order to combat
fraud effectively, financial services companies and retailers require products
that enable them to identify and reduce potential risks. Debit card
transactions can also help to reduce fraud because transactions using PINs are
less likely to be fraudulent than signature based transactions.

Need for New Technologies. Financial service companies also face pressures
to adopt new payment technologies to better serve their customers and reduce
costs. Banks, credit unions and savings banks are making substantial
investments in online banking and brokers require efficient mechanisms for
online opening and funding of trading accounts. In each case, the financial
service companies must find online methods that reduce or eliminate the need to
deliver paper checks and manage the risk of online account funding. Financial
service companies require these services to retain highly valued customers and
to position themselves for expanded e-commerce activities. At the same time, as
financial services companies and retailers are responding

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to these increasing demands for new technologies, they also must control costs
and address shortages of information technology resources. One consequence is
that financial institutions and retailers are increasing their use of external
information technology service providers. In a February 1999 report, The Tower
Group estimated that spending by U.S. commercial banks on external information
technology services will increase from $26 billion in 1998 to $33 billion in
2002.

Market Opportunity

To accommodate the variety of payment methods in use today, merchants and
financial institutions need new technologies to help them acquire, authorize
and process payment transactions. For example, a consumer may wish to use a
debit card, ATM card, credit card or paper check to effect a transaction. The
financial institution or retailer must collect the consumer's account and
transaction information through a point-of-sale device, ATM, telephone order,
check or Internet interface. This account and transaction information must then
be processed for acceptance authorization and then for payment and settlement.
In addition, banks and other financial service providers need technologies that
allow them to open accounts online, manage their accounts more effectively and
allow them to "cross-sell" additional services. The following diagram
illustrates the elements of the payment cycle.

Account Opening Payment Type Transaction Acquisition
--------------------- ------------------ -----------------------
Identity Verification Debit Card Point-of-Sale
--------------------- ------------------ -----------------------
Risk Analysis ATM Card Telephony
--------------------- ------------------ -----------------------
Cross-Sell Paper Check Internet

Transaction Authorization Transaction Processing Bank Settlement
------------------------- ---------------------- ---------------
Identity Verification Funds Transfer Merchant's Bank
------------------------- ----------------------
Risk Analysis Settlement

In the past, financial service companies and retailers have needed to work
with separate service providers to obtain the necessary technologies because
the electronic payments industry has historically been divided between delivery
and transaction processing companies and information and analysis providers. At
the same time, financial service companies and retailers need access to
professional information technology resources so that they can exploit the
promise of new technologies. eFunds provides all of these services.

eFunds' Competitive Advantages

eFunds offers comprehensive electronic payment services that combine its
transaction processing capabilities with its decision support and risk
management tools. eFunds' products enable its clients to manage and combat
fraud, transfer funds and enhance their customer relationships. In addition,
eFunds' professional services provide clients with the information technology
resources they need to respond to the demands for new technology, implement and
integrate eFunds' solutions and develop new software applications. eFunds'
decision support and risk management tools and processing capabilities can be
delivered as an integrated electronic payment process or deployed as separate
modules. eFunds believes this mix of capabilities and flexible product
offerings addresses developing market opportunities and provides it with the
following competitive advantages.

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Comprehensive Products and Services. eFunds' products and services enable
its clients to manage the complete electronic debit payment cycle, from account
opening, to payment approval, to electronic funds transfer and settlement.
eFunds' services reduce transaction costs, manage risks and enhance customer
relationships for eFunds' clients by providing:

. risk management and decision support tools based on DebitBureau, eFunds'
unique debit information database;

. customer relationship tools for opening financial accounts,
electronically funding these accounts, minimizing fraud and identifying
cross-selling opportunities;

. transaction processing, monitoring and settlement on an efficient, cost-
effective and worldwide basis;

. information technology professional services to create e-commerce and
Internet solutions, integrate eFunds' products into eFunds' clients'
systems and new technologies and develop custom software applications;
and

. business process management services.

In the past, merchants, banks and other financial services companies needed
to integrate debit payment services from numerous providers using disparate
technologies and platforms. eFunds believes it is the only single-source
provider of comprehensive electronic debit payment services on an integrated
basis. Clients may choose, however, to use only those of eFunds' individual
services that fit their needs and eFunds can implement these services in any
environment.

Premier Database. eFunds believes its DebitBureau database is the most
comprehensive source of data regarding debit transactions available. This
database contains more than 2.7 billion debit records, including account
openings and closings, checking and savings account activity, insufficient
funds check-writing histories and check order histories. Approximately 1.7
million records are added daily to DebitBureau. DebitBureau provides a unique
source of information because it aggregates data from sources such as SCAN,
which is used at more than 83,000 retail locations, and ChexSystems, which is
used by more than 88,000 financial locations. eFunds also receives data from
clients of Deluxe and other data sources.

The breadth and depth of DebitBureau allows eFunds to develop more powerful
risk management and analytical tools. eFunds' clients can draw on DebitBureau
to make better risk management decisions, such as authorizing a new checking or
savings account or accepting a check, and to improve their customer
relationship decisions, such as identifying opportunities to cross-sell
additional services to their customers. eFunds offers products that provide its
clients online access to the DebitBureau database and eFunds' proprietary risk
assessment models. Information on a proposed debit transaction or an account
opening is entered by a client into eFunds' system and is analyzed to determine
the likelihood of identity fraud or account abuse and to otherwise assess the
overall risk of opening the new account. The system also identifies customers
of eFunds' clients who are most likely to accept client product offers. For
example, eFunds' products enable financial institutions to identify
opportunities to sell new customers credit cards and home equity loans more
effectively and to set more appropriate limits on the customer's privileges,
such as maximum withdrawals in debit card transactions.

Global Processing Capabilities. Using its electronic processing services,
eFunds' clients have the ability to process debit payment transactions on a
worldwide basis. eFunds' network connects with over 15,000 links to other
networks and institutions throughout the world. For example, eFunds is the
single gateway for all of a major U.S. financial institution's ATM transactions
outside its internal network on a worldwide basis. eFunds' processed
approximately 125 million transactions in 45 countries for this client in 1999.
eFunds' processing services can provide a single gateway for electronic funds
transfers that can sort and execute all of a client's electronic debit payment
transactions using the appropriate networks. eFunds drives and manages the
services for all major ATM models through multiple telecommunication
configurations.

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Expertise in Electronic Commerce. eFunds has focused on electronic
transaction processing since 1976. This long history and industry focus
provides eFunds with the experience and capabilities needed to migrate
electronic debit payments to many channels, including the Internet and point-
of-sale devices. Because of its background and skills, eFunds believes it is
uniquely positioned to enable debit transactions on the Internet, and eFunds
recently introduced Integreat!, an online service for opening, funding and
managing accounts, to extend its fraud management and client account management
tools to this channel. eFunds also offers Web EFT, a browser-based Internet
application that allows clients to automatically collect and deposit pre-
authorized customer payments.

Global Resources for Information Technology Solutions. eFunds' high quality
professional services business provides information technology solutions by
teaming onsite consultants in the United States who analyze and manage projects
with software developers in India who develop client-specific software. eFunds'
professional services business employs approximately 815 software developers
worldwide. eFunds' global delivery capabilities gives it the ability to provide
high quality, around-the-clock development services at competitive prices.
eFunds is presently engaged by 20 companies for eFunds' information technology
professional services.

eFunds' Strategy

eFunds' objective is to be the leading provider of electronic debit payment
solutions and related professional services to financial and retail industries.
Key elements of eFunds' business strategy are to:

. Adapting Products for Internet Applications. Based on its processing and
risk management capabilities and industry expertise, eFunds' believes it
is uniquely positioned to help its clients take advantage of the
efficiencies and revenue opportunities of e-commerce. eFunds intends to
continue to adapt its core capabilities in transaction processing, fraud
prevention and client account management for Internet applications and
to develop products and services that will assist in the development of
new e-commerce channels, such as business-to-business Internet
transactions. eFunds' services can help make debit payments, which are
under-represented on the Internet as a payment option, safer, easier to
use, and more widespread. Products under development which are scheduled
for introduction over the next 12 months are:

. PIN-secured debit payment applications for purchases on the
Internet; and

. Internet check acceptance software that can accept, authenticate,
authorize and settle a checking account-based debit transaction
initiated over the Internet.

. Extending its Product Set. eFunds is introducing new products, such as
Qualifile and DataNavigator. QualiFile is a new account opening service
for banks and brokerage firms that features improved risk scoring,
enhanced financial and demographic targeting of cross-selling
opportunities and an expanded set of customized instructions.
DataNavigator is a software product that enhances the ability of
financial services companies, ATM networks and independent ATM service
providers to analyze their electronic funds transfer data, helping them
to more efficiently maintain appropriate cash balances in their ATM
machines and speeding up transaction settlement, reporting and research.
As a part of eFunds' efforts to continue to extend its product set, it
intends to leverage the development skills of its information technology
professionals and expand its research and development role on behalf of
financial institutions. eFunds believes its ability to combine
information and transaction delivery services will be a critical element
in its success. To that end, eFunds plans to invest in the technology
and personnel required to expand its payment information capabilities
and merge them into new, broader, faster and more versatile delivery
systems.

. Expanding its Client Relationships and Attracting New Clients. Most of
eFunds' clients currently use only a portion of its services. As eFunds
continues to integrate its information and processing capabilities,
eFunds believes it can expand its relationships with existing clients to
provide additional products and services. In addition, eFunds plans to
provide products for its clients' e-commerce needs

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as they emerge. eFunds intends to expand its sales force to develop new
clients, build brand awareness and cross-sell all the components of
eFunds' comprehensive suite of electronic payment management services.
eFunds also is seeking new clients in rapidly growing Internet markets
such as online banking, electronic bill presentment and payment and
business-to-business e-commerce.

. Seeking Acquisition and Strategic Alliance Opportunities. eFunds intends
to pursue acquisitions of complementary businesses, technologies or
product lines. eFunds believes there are opportunities to make accretive
acquisitions that will add services to enhance its product suite. In
addition, eFunds plans to seek strategic relationships with key industry
participants in order to broaden its market presence and increase its
sales penetration by leveraging each participant's technology and
expertise. For example, eFunds recently acquired a 24% interest in a
client of its transaction processing services that is a provider of ATM
management and outsourcing services to retailers and financial
institutions.

. Seeking to Broaden International Sales. eFunds currently derives
approximately 6.7% of its revenue from international sales in 22
countries. eFunds intends to seek to expand in international markets by
further penetrating its existing client base and by focusing on emerging
international markets lacking established electronic payment systems.

eFunds' Products and Services

Electronic Payments

eFunds delivers electronic payment services to financial institutions,
retailers, electronic funds transfer networks and gateways and e-commerce
providers. To address its clients' electronic payment needs, eFunds offers a
comprehensive suite of products and services. eFunds' products generally fit
within the following two broad categories:

. transaction processing services; and

. decision support and risk management tools.

These products and services can be deployed on a stand-alone basis, or
combined to provide a complete payment system. This flexibility enables eFunds'
customers to select individual services they need to meet their current
business objectives and then to add additional services as their requirements
evolve.

Transaction Processing

eFunds' processes transactions for regional automated teller machine, or
ATM, networks in the United States. eFunds' also provides transaction
processing for retail point-of-sale terminals that accept payments from debit
cards and electronic checks. Transaction processing involves electronically
transferring money from a person's checking or savings account according to his
or her instructions. For example, when a cardholder inserts his or her debit
card into an ATM or point-of-sale device and enters his or her PIN and the type
and amount of the transaction, the device contacts eFunds' systems and
transmits the request. eFunds identifies the institution that issued the card
and works through the necessary validation and authorization routines, such as
ensuring that the cardholder has entered the correct PIN, that the transaction
is within the cardholder's limits on withdrawals and that there are sufficient
funds in the cardholder's account. If all the routines are executed
successfully, eFunds signals the ATM or point of sale device to complete the
transaction.

To carry out the tasks required, each ATM or point-of-sale device is
typically connected to several computer networks. These networks include
private networks that connect the devices of a single owner, shared networks
that serve several device owners in a region and national shared networks that
provide access to devices across regions. Each shared network has numerous
financial institution members. For example, the NYCE network has over 2,300
financial institution members, including Chase Manhattan and FleetBoston
Financial, and the StarSystem Network has over 3,400 financial institution
members, including Bank of America and First Union. As part of its transaction
processing services, eFunds, and other gateway service providers like eFunds,
provide cardholders with access across these multiple networks.

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eFunds drives or operates more than 9,000 ATMs and more than 95,000 point-
of-sale terminals. These terminals include approximately 62,300 electronic
benefits terminals, 19,500 Medicaid benefits terminals and 13,400 retail
terminals. In 1999, eFunds processed approximately five billion transactions,
with 99.99% system availability and at speeds up to 300 transactions per
second. eFunds processes virtually all types of debit-based transactions,
including cash withdrawals, cash deposits, balance inquiries, purchases,
purchases with cash back and purchase returns. In addition, eFunds authorizes
cash advances and purchases initiated with credit cards at ATM or point-of-sale
locations. eFunds has the ability to process transactions to any electronic
funds transfer network in the world. eFunds also provides 24 hour a day, 7 days
a week monitoring of 5,200 ATMs for system irregularities.

eFunds' transaction processing services include: authorization of the
transaction, capture and transmission of the transaction data, settlement of
the payment transaction and information reporting. eFunds' transaction
processing capabilities include:

. transaction processing from substantially all types of ATMs and point-
of-sale terminals;

. authorization and verification for online and offline debit and credit
cards, including Mastercard or Visa bank cards, and paper and electronic
checks;

. access to substantially all national and regional networks, such as
MasterCard/Maestro/Cirrus, Visa/PLUS, American Express, Discover, STAR,
NYCE, Pulse and MAC;

. transaction switching, allowing transactions to be routed through
different networks and internationally;

. cash management services through eFunds' DataNavigator product; and

. comprehensive settlement and reconciliation services.

For its transaction processing services, eFunds receives fees for
installation of the software and hardware; monthly transaction processing
charges, which include a base fee plus a variable fee based on the number of
transactions processed; and additional service fees related to surcharged
transactions, such as network access and sponsorship, ATM operation, card and
authorization services, settlement services, ATM monitoring, testing resources
and professional services.

eFunds licenses its electronic funds transfer software, the same software
that drives its electronic funds transfer processing business, to in-house
processors and regional networks in 22 foreign countries and in the United
States. In 1999, eFunds' licensees processed 10 billion transactions around the
world using its electronic funds transfer software. eFunds' electronic funds
transfer software runs on IBM and Tandem computing platforms. eFunds also
provides maintenance and support services.

DataNavigator. eFunds' DataNavigator product is a software tool that gives
financial services companies, ATM networks and independent ATM service
providers the ability to perform real-time analysis of their electronic funds
transfer data. This monitoring capability helps eFunds' clients to maintain
appropriate cash balances in their ATM machines, thereby reducing the number of
unneeded visits to restock machines whose cash supplies are not overly depleted
and avoiding the need to maintain excessive inventories of cash in their
machines so that they do not run out of funds. DataNavigator allows eFunds'
clients to analyze their ATM transactions using a variety of parameters, such
as ATM location or withdrawal levels at a given location. Using DataNavigator,
a bank that owns multiple ATMs can, for example, determine its cash position at
each of its ATMs at any point during the day. DataNavigator also helps cut
costs and improves customer satisfaction by speeding up settlement and
reporting and streamlining transaction research and reconciliation services.
DataNavigator is fully operational in eFunds' transaction processing centers
and may be accessed by eFunds' transaction processing clients for an additional
fee or may be licensed by eFunds' software clients as an additional module.

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ACH Processing. eFunds provides processing services to the American Clearing
House Association, a private sector automated clearinghouse service, or ACH,
provider. The ACH network is an electronic payment delivery system used
primarily to process repetitive payments, such as mortgage payments, payroll,
social security payments and utility payments. The ACH network routes
electronic funds transfers between financial institutions on behalf of their
customers. The Federal Reserve is the largest ACH service provider. eFunds also
offers an ACH processing outsourcing service that allows a financial
institution to avoid the costs associated with operating an internal ACH
processing and settlement infrastructure. The fee structure for eFunds' ACH
services consists of installation fees, monthly fees and transaction fees.

eFunds plans to extend its ACH processing services to help providers of
electronic bill payment services to authorize transactions and transfer funds.
eFunds is positioning its decision support and risk management tools to address
fraud and security concerns in connection with electronic bill payment
services. In addition, eFunds intends to use its information technology
professional service capabilities to help develop interoperability between
developing electronic bill presentment and payment systems and existing payment
systems.

Decision Support and Risk Management

eFunds offers products to help financial institutions, retailers and other
businesses that accept debit payments to:

. determine the likelihood of account fraud and identity manipulation;

. assess the overall risks involved in opening new accounts or accepting
payment transactions; and

. make better predictions about other products their customers are likely
to purchase.

eFunds' decision support and risk management products are based on or
enhanced by eFunds' DebitBureau database. DebitBureau contains over 2.7 billion
records and includes data from eFunds' ChexSystems and SCAN businesses and
other sources. eFunds uses the data in DebitBureau to screen for potentially
incorrect, inconsistent or fraudulent social security numbers, home addresses,
telephone numbers, driver license information and other indicators of possible
identity manipulation. Using its data, eFunds can perform various tests to
validate a consumer's identity, assess and rank the risk of fraud and match
customers with targeted product offerings.

SCAN. SCAN, or Shared Check Authorization Network, helps retailers reduce
the risk of write-offs for dishonored checks due to insufficient funds and
other forms of account fraud and identity manipulation. When a check is
presented as payment at the point-of-sale, SCAN members electronically access
eFunds' SCAN database by running the check through a scanner. The information
on the check is then compared to the database and analyzed for the likelihood
of fraud or insufficient funds. SCAN then indicates whether the retailer should
accept or reject the check. SCAN serves 16 of the top 20 retailers in the
United States based on 1999 revenues. More than 83,000 retail locations report
returned check activity to the SCAN network and eFunds verified checks with an
aggregate value of approximately $181 billion in 1998. Merchants pay a service
fee for SCAN based on the aggregate dollar value of checks authorized by them
using SCAN and additional fees per inquiry for customer or retailer calls to
the call centers.

To help retailers manage their check acceptance programs, eFunds offers
collection services to some SCAN members. eFunds tailors its collection
strategies to specific retailer needs. The services generally involve sending
letters and follow-up telephone calls to consumers whose checks have been
returned. In addition, eFunds currently extends to three SCAN members the
option of a portfolio purchase solution. Under this solution, eFunds purchases
the returned checks from the retailer at a mutually agreed upon total
discounted purchase price and assumes the collection liability. Although eFunds
may expand this service to additional customers, eFunds does not expect that
revenues from its debt collection services will exceed 5% of its total net
sales in 2000. eFunds has also recently commenced efforts directed towards a
pilot check guarantee program. Under this program, eFunds will purchase checks
presented as payment at selected merchant sites at a discount

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to their face amount and assume the collection risk on the tendered checks.
eFunds does not expect revenues from this initiative to be material in 2000,
but if the pilot is successful, eFunds could seek to expand this business in
future periods.

ChexSystems. eFunds' ChexSystems business is a provider of new account
applicant verifications services for financial institutions. ChexSystems
provides access to more than 22 million closed-for-cause account histories and
53 million records of new account inquiries. An account is considered closed-
for-cause when, for example, a consumer refuses to pay the account fee and the
bank closes the account. ChexSystems helps financial institutions assess the
risks involved in opening an account for a new customer by allowing them to
make inquiries against eFunds' database when a consumer applies for a new
account. This service is used by more than 88,000 financial institution
locations. ChexSystems receives an average of about 2.7 million new account
inquiries per month. Financial institutions may access the service online or by
telephone. eFunds' also is developing an Internet-based new account
verification service. Financial institutions pay a service fee for eFunds' new
account verification services based on the number of inquiries.

As a separate service, eFunds also provides collection services to financial
institution clients of ChexSystems. eFunds does not assume any collection
liability for these services. eFunds contracts with a third party for extended
collection activity.

QualiFile. eFunds' QualiFile product is an online, real-time account-opening
service. It combines data from DebitBureau with comprehensive credit,
demographic and financial product-use data provided by third parties to help
financial service companies make informed decisions about opening new accounts
and offering additional financial products to new customers. QualiFile has the
following features:

. QualiFile validates an applicant's identity and predicts the likelihood
of account abuse by scoring the applicant's risk level;

. QualiFile creates a financial profile of the new customer and generates
a list of targeted products that matches the customer's likely needs
with the products offered by the financial institution; and

. QualiFile simplifies and automates the account-opening process.
QualiFile guides the new account representative through the new account
process by presenting on-screen messages indicating whether to accept or
deny the account or review the decision with a manager along with
product-offer dollar limits, rates and terms.

The fee structure for QualiFile consists of a one-time set-up fee, a charge
for each customer inquiry and a monthly minimum participation fee. eFunds
introduced QualiFile in September 1999.

FraudFinder. eFunds also offers FraudFinder, an identity fraud-detection
service for new accounts which are opened in person or over the Internet.
FraudFinder accesses eFunds' DebitBureau database to help financial service
companies identify potential identity manipulation and fraud. FraudFinder
scores and ranks new accounts according to their level of risk using a complex
mathematical model to predict the likelihood of future behavior by analyzing
and learning from data supplied about past behavioral patterns. The fee
structure for FraudFinder consists of a one-time set-up fee and a charge for
each customer inquiry. FraudFinder was introduced in 1999 and is currently used
by over 400 clients.

New Product Initiatives

In December 1999, eFunds introduced Integreat!, a product that helps
financial services companies open new accounts for consumers over the Internet.
Integreat! incorporates eFunds' QualiFile service to provide real-time identity
verification, risk assessment and customized financial product offerings. Once
the new account is approved, the customer authorizes the electronic transfer of
funds from an existing outside account to the new account, eliminating the need
to deliver a paper check and speeding up the time to funding. The fee structure
for Integreat! consists of a one-time setup fee, a charge for each customer
inquiry and a monthly minimum participation fee. Although to date eFunds has
not received revenues in material amounts from this product,

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eFunds believes that its Internet account opening and funding service has
potential applications in other customer markets. eFunds is currently targeting
online brokerage firms.

In February 2000, eFunds began to offer reports on consumer debit
transactions that can be used as part of credit reports and scoring models that
assess a consumer's payment risk. eFunds is targeting the service to major
credit issuers and credit bureaus. In June of 2000, eFunds entered into an
agreement with Experian, an information solutions provider, to allow Experian
to use portions of the DebitBureau database with certain of its products and
services.

eFunds recently introduced an electronic check service that converts paper
checks into electronic transactions at the point-of-sale. As part of this
system, a consumer's check is run through a point-of-sale check reader to
capture the consumer's account data. The check is then authorized through SCAN
OnLine, eFunds' real-time check verification service. Once the transaction is
accepted, the authorized amount of funds is deposited in the retailer's account
and debited from the consumer's account using the ACH network. eFunds believes
that its electronic check service benefits retailers by reducing paper check
processing costs, minimizing bad-check write-offs and accelerating funds
collection. eFunds provides its electronic check service on a fee per
transaction basis.

eFunds also offers an online banking software product for Internet delivery
of financial services to home users and businesses. eFunds' Internet Financial
Management product offers banking customers the flexibility to access their
bank accounts 24 hours a day, 365 days a year, using a web browser or new
devices such as web-enabled mobile phones and personal digital assistants.
eFunds introduced its Internet Financial Management product line in June 1999
and is initially targeting this product to financial institutions in western
Europe and the United Kingdom. Currently, two clients are using the product on
a test basis. eFunds is also developing systems and services to facilitate the
web-based delivery of various aspects of business-to-business e-commerce
including accounts receivable and accounts payable processing and reporting,
payment acquisition and settlement and the electronification of retail and
wholesale lockbox functions.

eFunds has also developed a transaction processing software module for use
with NYCE's SafeDebit product, which will allow consumers to pay for purchases
on the Internet with funds withdrawn directly from their checking accounts.

Professional Services

eFunds has combined the information technology professionals from the
various business units being separated from Deluxe to form a single integrated
information technology professional services group. eFunds offers a full range
of information technology professional services to complement its electronic
debit payment business and on a stand-alone basis. eFunds specializes in the
implementation and integration of its own and third-party software products,
the development, redevelopment and maintenance of a broad range of computer
software applications and the development of custom e-commerce and Internet
solutions. In addition, eFunds offers its clients the ability to outsource
their business processing services, such as accounting operations, transaction
processing and call center operations, to eFunds' shared services center in
Gurgaon, India. eFunds offers its professional services either on a fixed-
price, fixed-time basis or on a time and materials basis. In 1999, eFunds
derived approximately 80% of its information technology service net sales from
time and materials contracts. Deluxe was the principal customer of eFunds'
professional services business, accounting for approximately 81% of this
segment's net sales during the first six months of 2000. eFunds is targeting
its services to financial institutions and other businesses that accept debit
payments, such as retailers and e-commerce providers.

eFunds provides services through a global software development model which
combines industry, product and technical specialists based in its facilities in
the United States, United Kingdom, India and Australia. eFunds' global delivery
capabilities give it the ability to provide high quality, around-the-clock
development services at competitive prices. As of August 1, 2000 eFunds'
information technology professional services group included approximately 800
consultants and software developers, including approximately 450

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people in the United States and approximately 350 people in its two software
development centers in India. eFunds' first software development center in
Chennai, India has been assessed at Level 3 of the Software Engineering
Institute's Capability Maturity Model. The Software Engineering Institute's
Capability Maturity Model ratings are internationally recognized standard for
assessing the level of maturity and consistency of software development
centers. The Level 3 rating provides evidence of the quality and consistency of
eFunds' offshore software development capabilities, placing the center in the
top 10% of all software development facilities that have been rated. eFunds
opened its second software development center in Chennai, India in March 2000.

eFunds provides a variety of software development services that cover all
stages of the software development cycle. eFunds develops new custom
applications for its clients on a variety of technology platforms, including
mainframe and client-server, and in a variety of programming languages. eFunds
specializes in developing financial applications, particularly those used by
large complex financial institutions in the banking, insurance and securities
industries. eFunds' experienced professional group can install, implement and
integrate third party software applications within eFunds client's information
technology infrastructure. eFunds performs testing and performance tuning of
customer and third-party applications, and helps in the migration of customers'
legacy applications to client-server and Internet platforms. eFunds also
provides on-going support and maintenance of customer applications. In
addition, eFunds provides a number of specialized software application
services, including workflow management and document imaging, SAP
implementation and support and project management. Examples of eFunds' software
development projects include the development of a custody application for a
major stock transfer company and documenting management systems implementation
and workflow analyses for the corporate trust division of a major bank.

To complement and support its electronic payments business, eFunds provides
its clients with consulting services, customization and implementation services
and educational and training programs. eFunds' services include the
installation of its electronic debit payment products and implementation and
integration of these products within the customer's existing information
technology infrastructure. eFunds also customizes its standard products and
develops new applications for clients who want additional features and
functionality. eFunds helps clients test and refine eFunds' products in their
information technology environments. In addition, eFunds provides on-site user
training on its products and solutions for the information technology,
operations and management staff of its clients. eFunds builds long-term
continuing relationships with its clients by providing on-going maintenance and
support of eFunds' software products and solutions.

eFunds also helps clients to develop e-commerce and Internet-related
products. eFunds' services enable its clients to process business-to-customer,
business-to-business and customer-initiated transactions over the Internet. The
scope of eFunds' capabilities include: multi-channel integration for financial
institutions, such as integration of call centers, ATMs, personal computer and
Internet banking, development of client extranets and intranets and enablement
of electronic bill presentment and payments.

In addition to its information technology professional services, eFunds
offers business process management and outsourcing services. eFunds focuses on
both back-office and customer support business processes, such as accounting
operations, transaction processing and call center operations. eFunds' business
process outsourcing services are provided primarily at its shared services
facility in Gurgaon, India. This facility is staffed with over 400 experienced
business process personnel. eFunds' offshore business processing capabilities
allow its clients to focus on their core processes, reduce their direct
personnel costs, avoid non-core capital investments and improve the quality of
their outsourced operations.

Currently, eFunds provides business process management services only to
Deluxe under a five year agreement. These services consist of accounts
receivable, accounts payable and general ledger processing services. For
additional information concerning this agreement, see the section entitled
"Agreements Between eFunds and Deluxe--Professional Services Agreement" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of eFunds--Transactions with Deluxe." eFunds has recently

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started to market its business process management services to financial
institutions and other clients as well. eFunds believes this line of business
will tie in to its transaction processing services to provide a complete back-
office management solutions to its clients.

Government Services

eFunds provides online electronic benefits transfer services on behalf of
governmental agencies responsible for the administration and management of
selected entitlement programs, primarily the Food Stamps and Transitional Aid
to Needy Families (formerly Aid to Families with Dependent Children) program.
eFunds' electronic benefits transfer processing system manages, supports and
controls the electronic payment and distribution of cash benefits to program
participants through ATMs and point-of-sale networks. eFunds' services reduce
operating costs and fraud for the government agency administering the benefits
program, eliminate the food stamp stigma for recipients through the use of a
plastic ATM-like card and make benefits more readily available to recipients at
retail point-of-sale terminals and ATMs.

eFunds provides electronic benefits transfer services to individual state
and local governments or coalitions of state governments formed to purchase
these services jointly. eFunds provides these services as a prime contractor or
subcontractor to nine individual state and local governments. eFunds also is a
subcontractor for three coalitions of state governments, representing 21
states. eFunds' services are typically provided for a fixed fee per welfare
case plus fixed fees per transaction through the system. State and local
governments require that eFunds enters into long-term contracts, typically five
to seven years in duration.

The principal components of this service include:

. transaction processing;

. point-of-sale terminal deployment and terminal operation for merchants;

. telecommunications network management;

. benefits card production and database management;

. financial settlement of funds with automated clearing house transfers;

. help desk support for consumers, merchants and government personnel; and

. electronic funds transfer gateway services.

eFunds also offers a Medicaid eligibility verification processing service
that performs online verification of a person's eligibility for Medicaid
services. eFunds' system provides authorization services, drug utilization
review and electronic claims capture and transmissions for pharmacies and
managed care firms. Currently, eFunds provides the service for the State of New
York's Medicaid program. This program serves over 177,800 health care providers
and 4.2 million cardholders through 19,500 point-of-sale terminals. In 1999,
eFunds' Medicaid eligibility verification processing service generated revenues
of approximately $10.1 million, or about 21% of the net sales of eFunds'
government services business.

eFunds has had a history of operating losses and loss contract and asset
impairment charges related to eFunds' government services business as described
earlier in "Management's Discussion and Analysis of Financial Condition and
Results of Operations of eFunds--Loss Contract, Asset Impairment and Other
Charges." As a consequence, eFunds has determined to exit this business as soon
as eFunds' current contractual commitments expire in 2006. During the wind down
period, eFunds intends to continue to take steps to improve the profitability
of the current business. Deluxe has agreed to indemnify eFunds against future
losses on eFunds' existing loss contracts in excess of eFunds' $29.2 million
loss contract reserve as of April 30, 2000. Deluxe also has agreed to indemnify
eFunds against future losses related to any litigation arising prior to the
completion of this offering. The indemnification obligation does not apply to
losses contemplated by the existing reserves and is subject to a $14.6 million
limit.

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Clients

The following is a list of eFunds' largest corporate clients based on
eFunds' 1999 net sales.

<TABLE>
<CAPTION>
Financial
Institutions Retailers Network/Gateway International
------------ --------- --------------- -------------
<S> <C> <C> <C>
Bank One Food Lion Access Cash International Bank of Montreal
Bank of America Home Depot Citishare Bank Pekao
Bank of the West J.C. Penney CU Cooperative Systems Cashcard Australia
Citibank Kmart NYCE International Nederlande Group
Credit Union Service Kroger Primary Payment Systems Finax Finansservice
Corp. Lowe's Companies Pulse EFT Societa per I Servizi Bancari
FleetBoston Financial National Data Funding STAR System The Royal Bank of Scotland
Wachovia Corporation Safeway
Washington Mutual Target
Savings Bank Wal-Mart
Wells Fargo Bank
</TABLE>

In 1999, none of eFunds' clients individually accounted for 10% or more of
its total net sales. In 2000, eFunds expects that Deluxe will account for more
than 10% of eFunds' total net sales. eFunds intends to expand its client base
in new markets, including e-commerce providers, online brokerages,
telecommunication firms, insurance companies and utilities.

Sales and Marketing

eFunds markets its electronic products and services through a direct sales
force and indirect sales channels, such as distributors, resellers and
alliances. eFunds organizes its direct sales force by customer market segment,
including financial institutions, networks and gateways, retailers and e-
commerce providers. eFunds' direct sales force is capable of selling all or a
portion of its products and services to offer the most effective solution for
each customer's particular needs. eFunds works collaboratively with its
customers and prospective customers to help them identify issues and create new
solutions using its products and services. Because many of eFunds' customers
use a single product or service, or a combination of products or services, its
direct sales force has begun to target existing customers to capture cross-
selling opportunities. eFunds plans to focus its information technology
services marketing efforts on large U.S. financial institutions and other
businesses that accept debit payments. eFunds' international sales force is
focused on the sale of its transaction processing and online banking software.

eFunds has full service direct sales offices in Milwaukee, Wisconsin;
Minneapolis, Minnesota; Phoenix, Arizona; Dallas, Texas; San Francisco,
California; New York, New York; and Charlotte, North Carolina. These offices
coordinate direct sales and arrange indirect sales channels in the various
regions. eFunds' international sales offices, which have a total of
approximately 15 sales and sales support personnel, are located in Sydney,
Australia, Bombay, India and Runcorn, England. As of August 1, 2000, eFunds'
domestic direct sales force had approximately 100 full-time professionals.
eFunds intends to increase eFunds' sales force by adding new field sales
offices and by adding sales and marketing personnel to eFunds' existing
territories.

To further facilitate broad market penetration and complement eFunds' direct
sales efforts, eFunds plans to expand its indirect sales channels, especially
in international markets. These indirect channels include resellers,
distributors and alliances. Among others, VISA USA, Access Cash International,
eProfile, IBM Australia/NZ and Card Soft International a.s. support eFunds'
indirect sales efforts.

eFunds builds awareness of its products and services and the its corporate
name through targeted advertising, public relations, participating in trade
shows and conferences and providing product information through its website.

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Customer Support, Technology and Infrastructure

Customer Support. eFunds believes that providing superior quality and
accessible and reliable customer and technical support is essential to
developing and maintaining customer relationships in each of its business
segments. eFunds provides customer support services through its customer
contact centers located in Bloomington, Minnesota; Bothell, Washington; Dallas,
Texas; Gurgaon, India; Milwaukee, Wisconsin; and Phoenix, Arizona. eFunds'
contact centers are open 24 hours a day, 7 days a week and provide access to
website, e-mail and telephone support. eFunds also provides technical and
operational support for its customers in its data centers. As of August 1,
2000, eFunds had over 1,500 employees in customer and technical support
functions. In addition to user questions and technical issues, in accordance
with the Fair Credit Reporting Act eFunds responds to inquiries from consumers
who have been denied check authorization or rejected for a new account. eFunds
also provides on-site customer support services in connection with eFunds'
other products and services, and charges a separate fee for these services
based on an hourly rate.

Technology. eFunds' products are configured to run on operating systems
widely adopted by the electronic debit payment industry. These include the
Tandem, IBM, UNIX and Windows operating environments. eFunds' software is
developed using C, C++, Cobol, HTML and other programming languages. eFunds'
software products are modular in design and flexible in implementation so that
they can accommodate specific customer requirements. eFunds' software products
are interoperable with a wide range of terminal types and computer networks and
support a variety of communications protocols, such as TCP/IP.

As of August 1, 2000, eFunds employed approximtely 1,300 software developers
and other information technology professionals at its offices in Milwaukee,
Wisconsin; Minneapolis, Minnesota; Phoenix, Arizona; Seattle, Washington;
Toronto, Canada; Runcorn and Watford, United Kingdom; Sydney, Australia; and
Chennai and Mumbai, India.

Data Centers. eFunds operates two highly secure, fault-tolerant data centers
in New Berlin, Wisconsin and Phoenix, Arizona. eFunds' data centers have been
engineered to ensure minimal exposure to system failures and unauthorized
access. Each of eFunds' data centers contains multiple separate computer rooms
to provide containment and isolation. Physical security is maintained through
restricted card key access and closed circuit T.V. cameras. eFunds uses
redundant uninterruptible power supplies with battery backup and redundant
generators to ensure continuous flow of power to each data center in the event
of any component failure or power outage. The facilities have dual-entrance,
fiber optic SONET service for telecom redundancy.

Research and Product Development

eFunds believes that its future success will depend in large part on its
ability to develop new and enhanced electronic payment products and services.
eFunds is focusing its product development efforts on electronic payment
options for Internet and e-commerce providers, as well as insurance companies,
utilities and telecommunication companies. For example, eFunds is currently
working with a third party to develop the application of voice authentication
software and technology to the debit payments industry.

eFunds has developed all of its electronic payment software independently
through its software development group. eFunds' principal research and
development sites are located in Runcorn and Watford, United Kingdom; Sydney,
Australia; and Glendale, Wisconsin. eFunds' research and development expenses
were $3.8 million in 1999, $625,000 in 1998 and $1.4 million in 1997. eFunds'
capitalized software development costs were $17.3 million in 1999, $3.2 million
in 1998 and $5.0 million in 1997.

Competition

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In the electronic payment management market, eFunds' principal competitors
include:

. third-party network and credit card processors, including First Data,
Equifax, Total System Services, EDS, Concord EFS and Alliance Data
Systems;

. financial institutions that have developed in-house processing
capabilities or services similar to eFunds', including Bank of America,
Marshall and Illsley and Fifth Third National Bank;

. electronic data interchange and cash management providers, including
Fiserv, CheckFree, M&I Data, EDS and Fundtech;

. electronic bill payment providers, including CheckFree, EDS, MasterCard,
Spectrum and Visa;

. electronic funds transfer software providers, including Transaction
System Architects, SLMsoft, Oasis, Mosaic and PaySys; and

. national information database companies, including Equifax, Experian and
TransUnion, and other content providers.

In the market for electronic transaction processing, the principal factors
on which eFunds competes are price and service levels. The future growth of
eFunds' revenues in this market is dependent upon securing an increasing volume
of transactions. If eFunds cannot control its transaction processing expenses,
it may not remain price competitive and its revenues will be adversely
affected. Competition for eFunds' decision support and risk management products
is based primarily on the quantity and quality of the data available to it for
this purpose and, to a somewhat lesser degree, price. eFunds' competitive
position in these markets could be harmed if its competitors were able to
compile different data sources and analytical capabilities that proved to be
more effective than its products.

In addition to its current competitors, eFunds expects substantial
competition from established and new companies as the e-commerce and Internet
markets continue to develop and expand. eFunds cannot assure you that it will
be able to compete effectively against current and future competitors.
Increased competition could result in price reductions, reduced gross margins
or loss of market share.

Data Stewardship

eFunds collects consumer data from multiple sources, including through:

. participating members of SCAN who provide checking account numbers and
drivers license numbers related to unpaid checks;

. participating members of ChexSystems who contribute checking and savings
account closures and names and addresses associated with those records;

. check printing data which includes names, addresses, checking account
numbers and check order histories;

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. state governmental agencies (e.g., drivers license information from the
Department of Motor Vehicles); and

. federal governmental agencies (e.g., social security numbers of deceased
persons from the Social Security Administration).

eFunds obtains the data under agreements or licenses with suppliers. Some of
these agreements impose restrictions on the use and resale of the data and
others are governed by the Fair Credit Reporting Act.

eFunds has a strong commitment to the responsible use of data, including the
protection of consumer privacy rights. eFunds has taken several measures to
fulfill this commitment, including actively participating in the development of
industry-wide privacy standards, maintaining strict information practices and
policies and creating an internal information-practices council and systems to
oversee appropriate data usage.

eFunds' information practices and policies include the following:

. Accuracy. eFunds uses stringent procedures to ensure that information
collected, used and exchanged will be accurate and complete.

. Security. eFunds employs advanced security measures for protecting
information from unauthorized access, use and disclosure.

. Compliance. eFunds collects, uses and discloses information in
accordance with the federal Fair Credit Reporting Act, applicable state
laws and contractual obligations.

. Confidentiality. eFunds collects, uses and exchanges information in
accordance with strict confidentiality standards.

. Privacy. eFunds promotes self-regulation in recognition of consumers'
expectation of privacy and adheres to industry standards, such as those
established by the Direct Marketing Association and the American Bankers
Association.

. Responsiveness. eFunds employs extensive internal monitoring systems and
conducts ongoing customer surveys to maintain high quality and timely
response standards with respect to consumer inquiries.

. Employee education. eFunds educates its employees regarding sound
information practices and the proper handling and use of information.

Government Regulation

Various aspects of eFunds' businesses are subject to federal and state
regulation. eFunds' failure to comply with any applicable laws and regulations
could result in restrictions on its ability to provide its products and
services, as well as the imposition of civil fines and criminal penalties.

As a provider of electronic data processing services to financial
institutions, eFunds is subject to regulatory oversight and examination by the
Federal Financial Institutions Examination Council, an interagency body
comprised of the various federal bank and thrift regulators and the National
Credit Union Association. In addition, eFunds may be subject to possible review
by state agencies that regulate banks in each state where it conducts its
electronic processing activities.

Because eFunds collects and discloses debit data and other personal
information about consumers, it is subject to the federal Fair Credit Reporting
Act and any state laws providing greater consumer protections. The Fair Credit
Reporting Act provides that consumers have the right to know the contents of
the records pertaining to them which are maintained at eFunds' consumer
reporting agencies, to challenge the accuracy of the information and to have
the information verified, updated or removed. To comply with these
requirements, eFunds maintains consumer relations call centers for each of its
consumer reporting businesses. eFunds is also required to maintain a high level
of security for the computer systems in which consumer data files reside.

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eFunds' consumer reporting agencies and collection agencies are also subject
to regulation by the Federal Trade Commission. In addition, eFunds' debt
collection services are subject to the Fair Debt Collection Practices Act and
state collections statutes and licensing requirements.

Financial institutions are now subject to the requirements of a new federal
financial modernization law known as the Gramm-Leach-Bliley Act. Regulations
implementing the privacy provisions of this law are scheduled to go into effect
in July 2001. The Act imposes significant requirements on any entity engaged in
the business of providing financial services, including entities that provide
services to financial institutions. The privacy provisions of the Act impose on
each entity subject to the new requirements an affirmative obligation to
develop and implement policies to protect the security and confidentiality of
consumers' nonpublic personal information and to disclose those policies to
consumers before a customer relationship is established and annually
thereafter. The Act directs the federal banking and thrift regulators, credit
union regulators, the Federal Trade Commission and the SEC to issue appropriate
standards for carrying out this duty.

The regulations require financial institutions to provide an "opt-out"
notice to consumers and an opportunity to opt-out before sharing nonpublic
personal information with an unaffiliated third party. There are numerous
exceptions that do not require that any notice or opportunity to opt-out be
given to consumers. These include:

. transfers of consumer information made to protect the confidentiality or
security of a consumer's records; to protect against or prevent actual
or potential fraud, unauthorized transactions, claims or other
liability; for required institutional risk control; and for resolving
customer disputes or inquires;

. transfers of consumer information to a consumer reporting agency
pursuant to the Fair Credit Reporting Act; and

. transfers between affiliates of consumer reports produced by a consumer
reporting agency in compliance with the Fair Credit Reporting Act.

eFunds believes these exceptions apply to its consumer reporting business
and will permit banks to provide debit data and other nonpublic personal
information to it without triggering the opt-out requirement. However,
government agencies could interpret their regulations in a manner that could
expand the scope of the Act in ways which could adversely affect eFunds'
business. In addition, even if the regulations do not affect eFunds directly,
uncertainty over the scope of the regulations could make financial institutions
unwilling to share consumer-related information with eFunds.

Congress and many states are considering more stringent laws or regulations
that, among other things, restrict the purchase, sale or sharing of nonpublic
personal information about consumers. For example, legislation has been
introduced in Congress to further restrict the sharing of consumer information
by financial institutions, restrict the use of social security numbers, as well
as require that a consumer opt-in prior to a financial institution's use of his
or her data in its marketing program. Given the current public concern over
consumer privacy rights, it is possible the Congress, individual states or
governmental agencies could enact new laws or regulations governing consumer
protection in the future. If enacted, these laws or regulations could directly
affect eFunds' ability to collect and use consumer data and could have a
material adverse effect on its business, results of operations and financial
condition.

Laws and regulations may be adopted in the future with respect to the
Internet or e-commerce covering issues such as user privacy, pricing, content,
copyrights, consumer protections, taxation and characteristics and quality of
products and services. New laws or regulations may impede the growth of the
Internet. This could decrease the demand for eFunds' products and services and
increase its cost of doing business. Moreover, the applicability to the
Internet of existing laws governing property ownership, taxation, libel and
personal privacy is uncertain and may remain uncertain for a considerable
length of time.

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Intellectual Property Rights

eFunds relies on a combination of trademark, copyright, trade secret law and
confidentiality or license agreements to protect its trademarks, software and
know-how. eFunds also has applied for patent protection on some of the features
of its newer products. Intellectual property laws afford limited protection. It
may be possible for a third party to copy eFunds' products and services or
otherwise obtain and use its proprietary information without its permission.
There is no assurance that eFunds' competitors will not independently develop
services and products that are substantially equivalent or superior to eFunds'.

With regard to eFunds' information technology services, its business
consists of software applications development. Ownership of this software is
generally assigned to the client. eFunds also develops software components that
can be reused in software application development and software toolsets, most
of which remains its property.

Employees

As of August 1, 2000, eFunds had approximately 3,500 full and part-time
employees, including approximately 2,620 persons employed within the United
States and approximately 880 persons employed outside of the United States,
including India. Of eFunds' total number of employees, approximately 1,300
persons were engaged in software development and related functions,
approximately 1,500 persons were engaged in customer and technical support
services, approximately 115 persons were engaged in sales and marketing and
approximately 585 persons were engaged in administrative and other functions.

None of eFunds' employees are represented by a labor union, and eFunds
considers its employee relations to be good.

Facilities

The following table sets forth a description of eFunds' principal
facilities:

<TABLE>
<CAPTION>
Owned or Lease
Approximate Expiration
Location Square Feet Date Function
-------- ----------- -------------- ------------------------
<S> <C> <C> <C>
Milwaukee, Wisconsin........ 171,250 Owned Marketing, development
and administration
New Berlin, Wisconsin....... 82,600 Owned Data center
Phoenix, Arizona............ 92,813 Owned Data center
Phoenix, Arizona............ 19,867 October 2001 Corporate resources and
administration
Chennai, India.............. 18,614 January 2008 Software development
center
Gurgaon, India.............. 40,950 January 2002 Shared services center
Chennai, India.............. 38,750 September 2002 Software development
center
Bloomington, Minnesota...... 50,623 June 2002 Customer contact center
Shoreview, Minnesota........ 49,500 September 2001 DebitBureau and
professional services
Bothell, Washington......... 34,309 August 2004 Customer contact center
Bothell, Washington......... 24,702 September 2006 Office center
Dallas, Texas............... 42,052 January 2001 Customer contact center
Mesa, Arizona............... 3,208 August 2001 Business recovery site
New Berlin, Wisconsin....... 5,500 December 2000 Warehouse
</TABLE>

The leases set forth above generally have a term of 3 to 10 years, most of
which have options to extend for at least 3 years. eFunds has opened a
headquarters facility in Phoenix, Arizona and expects to relocate its principal
executive offices to this facility in the Fall of 2000. eFunds believes that
its current facilities are

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adequate to meet its anticipated space requirements. eFunds believes that
additional space will be available at a reasonable cost to meet its future
needs.

Legal Proceedings

On May 14, 1999, eFunds filed a trademark infringement action against
Citizen Advisers, Inc. in the United States District Court for the Central
District of California. The complaint alleges false designation of origin and
trademark infringement, trade name infringement and unfair competition under
California law regarding the use of the "E FUND" mark and efund.com internet
domain by Citizen Advisers. eFunds is seeking injunctive relief to prevent
Citizen Advisers from using the "E FUND" mark and efund.com internet domain,
cancellation of Citizen Advisers trademark registration of the "E FUND" mark
and damages and expenses, including attorneys' fees. Citizen's has recently
amended its answer to eFunds' complaint in this action to assert claims against
eFunds based on eFunds' use of the mark "eFunds." The case is in the discovery
stage and no trial date has been set.

On June 2, 2000, eFunds and Deluxe were sued by James Stern in the Los
Angeles Superior Court. The case has been removed to the federal district
court. Mr. Stern alleges that eFunds' ChexSystems product racially profiles and
discriminates against minorities and prevents customers from living above the
poverty level. eFunds considers this complaint to be frivolous and wholly
without merit. eFunds does not believe that eFunds' products and services are
discriminatory. eFunds does not maintain data describing the racial or ethnic
origin of consumers. Further, as a consumer reporting agency, eFunds is only a
provider of information to institutions who access eFunds' databases. These
institutions have the final decision regarding whether to open or decline an
account. eFunds' client banks have their own policies on when they close a
particular account and when they supply the closure record to us. The financial
institutions also decide when to access eFunds' database when evaluating an
application for account and what weight to give any information that eFunds
supplies them.

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MANAGEMENT OF eFUNDS

Directors and Executive Officers

The following table lists eFunds directors and executive officers.

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Chairman of the Board and Chief Executive
John A. Blanchard III........... 57 Officer
Executive Vice President and Chief
Paul H. Bristow................. 57 Financial Officer
Dr. Nikhil Sinha................ 39 Executive Vice President, Global Corporate
Development
Steven F. Coleman............... 41 Senior Vice President, General Counsel and
Secretary
John J. (Jack) Boyle III........ 53 Director
Jack Robinson................... 45 Director
Hatim A. Tyabji................. 55 Director
John H. LeFevre................. 56 Director
Lois M. Martin.................. 37 Director
Lawrence J. Mosner.............. 57 Director
</TABLE>

John A. Blanchard III has served as Chairman of eFunds' Board of Directors
and Chief Executive Officer since March 1, 2000. Mr. Blanchard has served as
President and Chief Executive Officer of Deluxe since May 1995 and as Chairman
of the Deluxe Board of Directors since May 1996 and will continue to serve in
those capacities until the completion of the exchange offer. From January 1994
to April 1995, Mr. Blanchard was executive vice president of General Instrument
Corporation, a supplier of systems and equipment to the cable and satellite
television industry. From 1991 to 1993, Mr. Blanchard was chairman and chief
executive officer of Harbridge Merchant Services, a national credit card
processing company. Previously, Mr. Blanchard was employed by American
Telephone & Telegraph Company for 25 years, most recently as senior vice
president responsible for national business sales. Mr. Blanchard also serves as
a director of Wells Fargo and Company and ADC Telecommunications, Inc.

Paul H. Bristow has served as Executive Vice President and Chief Financial
Officer of eFunds since March 2000. From 1993 until joining eFunds, Mr. Bristow
served as Executive Vice President--Finance Administration and Chief Financial
Officer of Galileo International, a computer reservation system company for the
travel industry. Previously, Mr. Bristow held various finance, accounting and
auditing positions with London International Group, plc, ITT Europe, ITT
Canada, Philip Morris and Arthur Andersen.

Dr. Nikhil Sinha has served as eFunds' Executive Vice President, Global
Corporate Development since March 1, 2000. Previously, Dr. Sinha served as
President and Chief Executive Officer of iDLX Technology Partners, Deluxe's
Professional Services Division, from June 1999 to February 2000. He was a
director of the Telecommunications and Information Policy Institute at the
University of Texas at Austin from September 1997 to May 1999 and associate
professor of International Communication from 1991 to 1997. Dr. Sinha has
worked as a consultant to the Informatics and Telecommunications Division for
the World Bank and as an advisor to the Indian Telecom Commission and the
Indian Planning Commission. Dr. Sinha also serves on the advisory committee of
the Indo-US Sub-Commission on Education and Culture. He is co-founder and
director of Sinha & Lariviere, Ltd., a consulting firm providing strategic and
investment advisory services to U.S. companies doing business in South Asia.

Steven F. Coleman has served as Senior Vice President, General Counsel and
Secretary since March 2000. From 1996 until joining eFunds, Coleman worked as a
Senior Attorney for Deluxe. Prior to joining Deluxe, Mr. Coleman was associated
with Dorsey & Whitney LLP, a law firm located in Minneapolis, Minnesota, and
Fried, Frank, Harris, Shriver & Jacobson, a law firm located in New York, New
York.

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<PAGE>

John J. (Jack) Boyle III became a director in June 2000. Mr. Boyle currently
serves as Chief Executive Officer of Tuck Partners, a newly formed web
engineering company. From August 1994 to October 1999, Mr. Boyle served as
President and Chief Executive Officer of Saville Systems, PLC, a maker and
marketer of customer care and billing systems for the global telecommunications
industry. Mr. Boyle served as Chairman of the Board of Directors of Saville
Systems from April 1998 to October 1999. Saville Systems was acquired by ADC
Telecommunications, Inc. in October 1999. Mr. Boyle also serves as a director
of ADC Telecommunications, Inc.

Jack Robinson became a director in June 2000. Mr. Robinson joined IBM in
June 2000 as Vice President of Planning and Control for IBM's Software Group.
From January 2000 to June 2000, Mr. Robinson served as Chief Executive Officer
of Personal Cuisine, Inc., a recently formed food service company. From
November 1998 to January 2000, Mr. Robinson served as Vice President, Finance
for the home and small business group of Dell Computer Corporation. From
February 1998 through November 1998, Mr. Robinson served as President of the
Foodservice unit of Sara Lee Bakery, a division of Sara Lee Corporation.
Between July 1996 and February 1998, Mr. Robinson served as President of the
Specialty Markets division of Sara Lee. Mr. Robinson joined Sara Lee in June
1993 as a Senior Vice President and Chief Financial Officer of its Sara Lee
Bakery division. Sara Lee is a global packaged food and consumer products
company. Mr. Robinson served as a director of Deluxe from June 1997 until
August 2000.

Hatim A. Tyabji became a director in June 2000. Mr. Tyabji has served as
chief executive officer and chairman of Saraide Inc., a provider of Internet
and wireless data services, since September 1998. From November 1986 until
March 1998, Mr. Tyabji served as president and chief executive officer of
VeriFone, Inc., which was acquired by Hewlett Packard Company in June 1997. Mr.
Tyabji also served as chairman of VeriFone from 1992 until 1998. VeriFone is a
global provider of transaction automation systems and Internet commerce
solutions. Mr. Tyabji served as a director of Deluxe from November 1997 until
August 2000. Mr. Tyabji also serves as a director of PubliCARD, Inc., Ariba,
Inc., Smart Disk Corp., and Best Buy Company, Inc.

John H. LeFevre became a director in June 2000. Mr. LeFevre has served as
Senior Vice President, General Counsel and Secretary of Deluxe since February
1994. Mr. LeFevre has indicated that he intends to leave the employ of Deluxe
by the end of 2000. From 1978 to February 1994, Mr. LeFevre was employed by
Wang Laboratories, Inc. From 1988 until February 1994, he held various
positions in Wang Laboratories' law department, including corporate counsel,
vice president, general counsel and secretary. Wang Laboratories was in the
business of manufacturing and selling computer hardware and software and
related services.

Lois M. Martin became a director in June 2000. Ms. Martin has served as
Senior Vice President and Chief Financial Officer of Deluxe since April 2000.
Ms. Martin has indicated that she intends to leave the employ of Deluxe by the
end of 2000. From November 1997 to April 2000, Ms. Martin served as a Vice
President and the Corporate Controller of Deluxe. From December 1995 to
November 1997, Ms. Martin served as Vice President and Controller of Deluxe
Financial Services Group. From December 1993 to December 1995, Ms. Martin held
various accounting-related positions with Deluxe. Ms. Martin is a certified
public accountant.

Lawrence J. Mosner became a director in June 2000. Mr. Mosner has served as
Vice Chairman of Deluxe with overall responsibility for all of its day-to-day
operations since July 1997 and he became Vice-Chairman of Deluxe's Board of
Directors in August 1999. Following the split-off, Mr. Mosner is expected to
succeed Mr. Blanchard as Chairman of the Board and Chief Executive Officer of
Deluxe. From February 1997 to July 1997, Mr. Mosner served as President of the
Paper Payment Systems unit of Deluxe. From October 1996 to February 1997, Mr.
Mosner served as President of Deluxe Direct, Inc., a subsidiary of Deluxe.
Between November 1995 and October 1996, Mr. Mosner served as Senior Vice
President of Deluxe.

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<PAGE>

Board Composition

eFunds' board of directors is currently comprised of seven directors.

eFunds' board of directors is divided into three classes for purposes of
election. One class will be elected at each annual meeting of shareholders to
serve for a three year term. Ms. Martin and Mr. LeFevre serve as class I
directors, whose term expires at the 2001 annual meeting of shareholders.
Messrs. Blanchard and Mosner serve as class II directors, whose term expires at
the 2002 annual meeting of shareholders. Messrs. Boyle, Robinson and Tyabji
serve as class III directors, whose term expires at the 2003 annual meeting of
shareholders. Messrs. LeFevre and Mosner and Ms. Martin, each of whom is
currently an executive officer of Deluxe, have advised eFunds that they will
resign from eFunds' board following the completion of the exchange offer.
eFunds intends to seek additional independent directors.

Board Committees

Audit Committee. The audit committee consists of Jack Robinson (chair), Jack
Boyle and Hatim Tyabji. The audit committee is responsible for:

. reviewing the adequacy of eFunds' system of internal accounting
controls;

. reviewing the results of the independent auditors' annual audit,
including any significant adjustments, management judgments and
estimates, new accounting policies and disagreements with management;

. determining the duties and responsibilities of the internal audit staff;

. reviewing the scope and results of eFunds' internal auditing procedures;

. reviewing eFunds' audited financial statements and discussing them with
management;

. reviewing the audit reports submitted by both the independent auditors
and eFunds' internal audit staff;

. reviewing disclosures by independent auditors concerning relationships
with eFunds' and the performance of eFunds' independent auditors and
annually recommending independent auditors;

. adopting and annually assessing its charter; and

. preparing reports or statements required by Nasdaq or the securities
laws.

Compensation Committee. The compensation committee consists of Jack Boyle
(chair), Hatim Tyabji and Jack Robinson. The functions of the compensation
committee currently include:

. reviewing eFunds' general compensation strategy;

. reviewing the terms of employment agreements for executives earning over
a specified amount and approving compensation for executives if their
compensation is, or may become, subject to Section 162(m) of the
Internal Revenue Code; and

. administering eFunds' compensation and benefit plans.

Director Compensation

eFunds compensates its non-employee directors with an annual retainer of
$15,000, meeting fees of $1,000, committee chair fees of $2,500 and annual
options under the 2000 Stock Incentive Plan valued at $50,000. Messrs. LeFevre
and Mosner and Ms. Martin will not be compensated for their services as
directors.

Stock Ownership of Directors and Executive Officers

The following table sets forth the number of eFunds shares beneficially
owned on August 1, 2000 by each director, each executive officer named in the
Summary Compensation Table in the "--Executive Compensation" section below, and
all of eFunds' directors and executive officers as a group. Except as

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otherwise noted, the individual director or officer had sole voting and
investment power with respect to such securities. The total number of eFunds
shares outstanding as of June 30, 2000 was 45,500,000.

<TABLE>
<CAPTION>
Shares of eFunds
Beneficially Owned
---------------------
Name of Beneficial Owner Number Percentage
------------------------ ---------- ----------
<S> <C> <C>
Deluxe Corporation...................................... 40,000,000 88%
3680 Victoria Street North
Shoreview, Minnesota 55126
John A. Blanchard III (1)............................... 80,000 *
Paul H. Bristow (2)..................................... 2,000 *
Dr. Nikhil Sinha (3).................................... 43,462 *
Steven F. Coleman (4)................................... 1,000 *
John J. (Jack) Boyle III (5)............................ 5,000 *
Jack Robinson (5)....................................... 1,000 *
Hatim A. Tyabji (5)..................................... 0 *
John H. LeFevre......................................... 2,500 *
Lois M. Martin.......................................... 750 *
Lawrence J. Mosner...................................... 0 *
All directors and executive officers as a group (10
persons)............................................... 135,712 *
</TABLE>
--------
* Represents holdings of less than one percent.
(1) Excludes options to purchase 418,462 eFunds shares which will not be
exercisable within 60 days.
(2) Excludes options to purchase 138,462 eFunds shares which will not be
exercisable within 60 days.
(3) Includes options to purchase 38,462 eFunds shares that are currently
exercisable or will be exercisable within 60 days if the exchange offer and
the spin-off are consummated within such period. Excludes options to
purchase 106,153 eFunds shares which will not be exercisable within 60
days.
(4) Excludes options to purchase 61,538 eFunds shares which will not be
exercisable within 60 days.
(5) Excludes options to purchase 7, 962 eFunds shares which will not be
exercisable within 60 days.

Treatment of Deluxe Options

As of August 11, 2000, options to purchase 5,411,866 Deluxe shares were
outstanding. Immediately prior to the completion of the exchange offer of
Deluxe's remaining interest in eFunds following the exchange offer, these
outstanding options will be converted into both options to purchase Deluxe
shares and options to purchase eFunds' shares. All persons who hold Deluxe
options will have Deluxe options, as adjusted, and new eFunds options. The
eFunds board of directors has adopted the eFunds Corporation Stock Incentive
Plan for Deluxe Conversion Awards to provide for the eFunds options resulting
from the conversion. Deluxe, as eFunds' sole shareholder at the time of
approval, approved this plan. The purpose of this plan is to allow the
employees of Deluxe and eFunds to maintain the same relative equity interest in
the two companies as they held in the combined enterprise.

The stock options granted under this plan generally will have the same terms
and conditions as the Deluxe options to which they relate. The eFunds options
will be granted immediately prior to the completion of the exchange offer. The
number of shares and the exercise price of eFunds options to be granted under
this plan will depend on a conversion equation that is summarized below.
Generally, the eFunds options will maintain the original vesting and
exercisability provisions and option period as the converted Deluxe options.
Any exercisability provision or option term that is based on past employment or
contingent on continued employment will mean and include past-employment with
Deluxe and continued employment with eFunds for those participants who are
employees of eFunds as of the date of completion of the exchange offer.
However, some options held by eFunds employees will become fully vested upon
completion of this exchange offer in accordance with the terms of the options.

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<PAGE>

The basic principle for the conversion of Deluxe options is to maintain the
relative value of the options based on the difference between exercise price
and market price, or intrinsic value. The conversion equation for calculating
the number of shares and the exercise price of eFunds options to be granted
under the conversion plan is summarized below.

. The pre-conversion intrinsic value of all Deluxe options outstanding is
calculated by multiplying the number of Deluxe options outstanding by
the difference between the market price of Deluxe shares at the close of
market on the last day before the completion of the exchange offer and
the exercise price of the Deluxe options outstanding.

. The pre-conversion intrinsic value will be allocated between the
adjusted Deluxe options and the new eFunds options according to the
relative value of Deluxe, exclusive of the value of the proportion of
eFunds owned by Deluxe, to the value of the proportion of eFunds owned
by Deluxe.

. The exercise price of the eFunds options to be granted will be equal to
the market price of eFunds shares at the close of market on the last day
before the completion of the exchange offer multiplied by the ratio of
the weighted average exercise price of the Deluxe options outstanding to
the closing price of the Deluxe shares the last day before the
completion of the exchange offer.

. The number of options to be granted will be calculated by dividing the
pre-conversion intrinsic value allocated to eFunds options by the
difference between the market price of eFunds shares at the close of
market on the last day before the completion of the exchange offer and
the exercise price calculated above.

For example, assume that there are options to purchase 5.5 million Deluxe
shares outstanding prior to completion of the exchange offer and the exercise
price is $32. The assumed market price of Deluxe shares is $22 and the assumed
market price of eFunds shares is $9.3125. The pre-conversion total intrinsic
deficit value would be $55 million, (or ($22-$32)x5.5 million). Assume that the
pre-conversion market value of shares of eFunds held by Deluxe is $372 million
and the pre-exchange offer market value of Deluxe, excluding the market value
of eFunds shares held, is $1,219 million. The relative proportionate value is
therefore 23%/77%. This ratio results in an intrinsic deficit value of $13
million (or approximately 23% of $55 million) to be distributed in eFunds
options and $42 million (or approximately 77% of $55 million) to be allocated
to the Deluxe options. The exercise price of the eFunds options in this example
would be $13.54 (or $9.3125x(32/22)). The number of eFunds options which would
be granted is 3.0 million, (or approximately ($13 million)/($9.3125-$13.54)).
Using these assumptions, the exercise price of the Deluxe options would be $32
(or $22x(32/22)). The number of Deluxe options which would remain is 4.2
million (or ($42) million/($22-$32)).

This example uses hypothetical numbers that are unlikely to be accurate on
the day of the completion of the exchange offer. The number of eFunds options
granted pursuant to the conversion plan and the exercise price of those options
is subject to a large number of variables, particularly the relative market
prices for eFunds shares and Deluxe shares on the day before the completion of
the exchange offer. At this time, eFunds and Deluxe cannot provide any
certainty regarding the number of options eFunds will grant under to the
conversion plan or the exercise price for those options.

Employment Agreements

John A. Blanchard III. eFunds has entered into an Executive Employment
Agreement with Mr. Blanchard related to his service as eFunds' Chairman and
Chief Executive Officer. The term of the agreement begins as of the date of the
completion of the exchange offer and expires on December 31, 2002. Under the
agreement, Mr. Blanchard will receive a salary of $680,000, subject to increase
at the discretion of eFunds' board. Mr. Blanchard is also eligible to receive
annual cash bonuses on the same basis that eFunds pay bonuses to eFunds' other
executives, with a target bonus equal to his base salary. Mr. Blanchard is
eligible to participate in eFunds' stock incentive plan. eFunds anticipates
that he will receive annual stock option grants having a value equal to 200% of
his base salary, as determined by the Black-Scholes method. Mr. Blanchard
received double-options in 2000, which are listed in the table below under "--
2000 Stock Incentive Plan Grants." In

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recognition of the termination of Mr. Blanchard's existing supplemental
retirement benefits, Mr. Blanchard is also entitled to receive $490,768 on or
about January 2, 2003. This amount is reflective of the present value on that
date of the retirement benefits Mr. Blanchard would have been entitled to under
his supplemental retirement benefit plan with Deluxe if that plan was continued
throughout the term of his Executive Employment Agreement. Mr. Blanchard has
the option to receive the economic equivalent of this benefit on an annuity
basis for 15 years following his retirement.

If eFunds terminates Mr. Blanchard's employment other than for cause, or if
Mr. Blanchard terminates his employment for good reason, Mr. Blanchard is
entitled to a lump sum payment equal to:

. the sum of (1) his unpaid base salary due through the date of
termination, (2) the product of his most recent annual bonus and the
fraction of the year he was employed and (3) any deferred compensation
and any accrued vacation pay;

. an amount equal to the annual base salary that Mr. Blanchard would have
earned during the remaining term of the Executive Employment Agreement
had his employment not been terminated; and

. an amount equal to the annual bonus that Mr. Blanchard would have earned
had he remained continuously employed throughout the employment period
and been awarded his annual target bonus amount to the extent this bonus
amount has not theretofore been paid.

In addition, upon any such termination of Mr. Blanchard's employment, Mr.
Blanchard will be entitled to participate in all benefit plans, including
medical, disability, life and other health insurance benefits and to certain
out-placement services. All unvested options granted to Mr. Blanchard will
immediately vest and remain exercisable for a five year period, or their
remaining term, and all other restricted shares and restricted stock units held
by Mr. Blanchard under the stock incentive plan vest and are converted into
shares of common stock on the date of any termination other than for cause or
for good reason. Mr. Blanchard would also be entitled to retain and earn any
performance-based awards previously received under eFunds' stock incentive plan
as if he had continued in eFunds' employ until the expiration of the relevant
performance period. Any options granted to Mr. Blanchard will also vest and
remain exercisable for five years following any termination of Mr. Blanchard's
employment upon the expiration of his Executive Employment Agreement.

The agreement also provides that if any payment or benefit received or to be
received by Mr. Blanchard would be subject to the federal excise tax on "excess
parachute payments," eFunds will pay Mr. Blanchard such additional amount as
may be necessary so that he realizes, after the payment of the excise tax and
any income tax or excise tax on that additional amount, the amount of such
compensation.

Paul H. Bristow. eFunds entered into a letter agreement with Mr. Bristow
effective as of March 1, 2000. The agreement provides for an annual base salary
of $300,000 with a bonus ranging from 0% to 100% of base salary, depending on
eFunds' performance. The target bonus is 50%, or $150,000 annually. Mr. Bristow
is eligible to receive annual stock option grants having a value equal to 150%
of his base salary, as determined by the Black-Scholes method. Mr. Bristow
received double-options in 2000, which are listed in the table below under "--
2000 Stock Incentive Plan Grants." Mr. Bristow's letter agreement also contains
a severance provision allowing him to receive one year's base salary plus a
second year of income continuation if he is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward eFunds or
toward others involved with eFunds' business.

Dr. Nikhil Sinha. eFunds entered into a letter agreement with Dr. Sinha
effective as of March 1, 2000. The agreement provides for an annual base salary
of $300,000 with a bonus ranging from 0% to 100% of base salary, depending on
eFunds' performance. The target bonus is 50%, or $150,000 annually. Dr. Sinha
is eligible to receive annual stock option grants having a value equal to 115%
of his base salary, as determined by the Black-Scholes method. Dr. Sinha
received double-options in 2000, which are listed in the table below under "--
2000 Stock Incentive Plan Grants." Dr. Sinha also received an option grant
having a value of $250,000 upon completion of eFunds' initial public offering
in consideration of the termination of iDLX Technology Partners options
provided to him under a previous employment agreement. Dr. Sinha's letter
agreement also contains a

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severance provision allowing him to receive one year's base salary plus a
second year of income continuation if he is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward eFunds or
toward others involved with eFunds' business.

Steven F. Coleman. eFunds entered into a letter agreement with Mr. Coleman
effective as of March 1, 2000. The agreement provides for an annual base salary
of $200,000 with a bonus ranging from 0% to 80% of base salary, depending on
eFunds' performance. The target bonus is 40%, or $80,000 annually. Mr. Coleman
is eligible to receive annual stock option grants having a value equal to 100%
of his base salary, as determined by the Black-Scholes method. Mr. Coleman
received double-options in 2000, which are listed in the table below under "--
2000 Stock Incentive Plan Grants." Mr. Coleman's letter agreement also contains
a severance provision allowing him to receive one year's base salary plus a
second year of income continuation if he is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward eFunds or
toward others involved with eFunds' business.

Change in Control Arrangements

eFunds has entered into Change in Control Agreements with each of Messrs.
Sinha, Bristow and Coleman. These agreements are designed to diminish the
distractions that could be caused by personal uncertainties and risks
associated with changes of control and other significant business combinations
involving eFunds by providing these officers with assurances regarding their
compensation and benefits expectations under such circumstances.

Under the Change in Control Agreements, each of these officers agrees to
remain in eFunds' employ, and eFunds agreed to continue to employ each officer,
until the third anniversary following any "business combination" involving
eFunds. During that three-year period, each officer is entitled to maintain a
position, authority, duties and responsibilities at least commensurate with the
most significant of those held by the officer during the 180 day period prior
to the effective date of the business combination or change in control. The
base salary of the officer may not be reduced below that earned by the officer
during the twelve month period preceding the effective date of the business
combination. In determining any increase in an officer's base salary during the
three year period, the officer is to be treated in a manner consistent with
other peer executives. The officers are also entitled to receive annual bonus
payments, stock option grants and other benefits during the three year period
on the same objective basis as other peer executives.

If, during the three year period, eFunds terminates an officer's employment
other than for "cause" or "disability" or the officer terminates his or her
employment for "good reason," the officer is entitled to a lump sum payment
equal to the sum of any unpaid base salary, accrued vacation pay and any unpaid
portions of incentive awards earned by the executive prior to the date of
termination. In addition, the officer is entitled to receive a lump sum payment
equal to three times the sum of the officer's annual base salary and the
officer's historical or target incentive award, plus the amount that eFunds
would have contributed to the retirement plans in which the officer
participated prior to his or her termination in respect of such sum. The
officers are also entitled to the continuation of their medical, disability,
life and other health insurance benefits for up to a three year period after a
qualifying termination and to certain out-placement services.

All unvested options granted to an officer vest and remain outstanding for a
five year period or their remaining term following a qualifying termination and
all other restricted shares and restricted stock units held by the officer
under eFunds' stock incentive plan vest and are converted into shares of common
stock on the date of any such termination.

The agreements also provide that if any payment or benefit received or to be
received by an officer, whether or not pursuant to his or her change in control
agreement, would be subject to the federal excise tax on "excess parachute
payments," eFunds will pay to the officer such additional amount as may be
necessary so that the officer realizes, after the payment of such excise tax
and any income tax or excise tax on such additional amount, the amount of such
compensation.

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2000 Stock Incentive Plan

eFunds' 2000 Stock Incentive Plan provides for grants of options to purchase
shares of common stock, stock appreciation rights, restricted stock and
restricted stock rights, performance awards, dividend equivalents and other
stock-based awards. All of eFunds' employees are eligible for grants under this
plan. eFunds' directors, consultants and advisors are also eligible for grants
under this plan.

The maximum aggregate number of shares of common stock that may be
distributed under this plan is 20% of the total number of eFunds' shares
outstanding at the time of the award, subject to adjustment. No participant may
be granted stock options or any other award, the value of which is based solely
on an increase in the price of the common stock, for more than 1,000,000 eFunds
shares in the aggregate in any calendar year.

Administration. The compensation committee of the eFunds board administers
the plan.

Stock Options. eFunds' compensation committee may award stock options under
this plan and set their terms, including the number and kind of stock options
granted, the exercise price of the stock options, the vesting schedule
applicable to such stock options, the period during which they can be exercised
and the form of consideration, which may include, without limitation, cash,
common stock, other securities, any combination thereof or any other form of
valid consideration that is acceptable to the compensation committee. No stock
option can be exercised more than ten years after the date of grant. The
compensation committee may provide that any option granted under the plan
contain a reload feature. If an option containing this feature is exercised
using shares of common stock or if shares are withheld or tendered as payment
of the amount to be withheld under applicable income tax laws, the optionee
will receive an additional option on a number of shares equal to the number of
shares tendered or withheld. The exercise price of this reload option will be
equal to the fair market value of eFunds' shares on the date the reload option
is granted.

Stock Appreciation Rights. eFunds' compensation committee may grant stock
appreciation rights under this plan and set their terms, including grant price,
term, methods of exercise, dates of exercise, methods of settlement and any
other terms or conditions of any stock appreciation right. Each stock
appreciation right entitles the holder to receive an amount equal to the excess
of the fair market value of a share of common stock on the date the holder
exercises the stock appreciation right over the grant price, as determined by
the compensation committee. The grant price may not be less than 100% of the
fair market value of an eFunds share on the date of the grant, unless required
by law or government regulation.

Restricted Stock and Restricted Stock Units. eFunds' compensation committee
may grant shares of restricted stock and restricted stock units and set their
terms, including voting rights for restricted shares and dividend rights with
respect to such shares and units. The compensation committee may determine when
restrictions shall lapse. If the participant's employment or service
terminates, the participant will forfeit unvested restricted stock and
restricted stock units as of the date of such event, unless eFunds'
compensation committee determines otherwise with respect to some or all of the
unvested restricted stock and restricted stock units.

Performance Awards. The compensation committee may grant performance awards,
which entitle the holder to receive payments upon the achievement of specified
performance goals and set their terms, including the performance goals to be
achieved during the performance period, the length of the performance period
and the amount and form of payment of the performance award. A performance
award may be denominated or payable in cash, shares of stock or other
securities, or other awards or property.

Dividend Equivalents. The compensation committee may grant dividend
equivalents which entitle the holder to receive payments equivalent to the
amount of cash dividends paid on eFunds' shares.

Other Stock-Based Awards. The compensation committee may grant other awards
denominated or payable in, valued by reference to, or otherwise based on or
related to shares of common stock as are deemed by the compensation committee
to be consistent with the purpose of plan. The compensation committee will

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<PAGE>

determine the terms and conditions of such other stock-based awards, including
the consideration to be paid for shares of common stock or other securities
delivered pursuant to a purchase right granted under such award. The value of
such consideration shall not be less than 100% of the fair market value of such
shares or other securities as of the date such award is granted, unless
required by law or government regulation.

Transfer Restrictions. The rights of a participant with respect to the stock
options, stock appreciation rights, restricted stock and restricted stock
rights, performance awards, dividend equivalents and other stock based awards
granted under this plan generally are not transferable by the participant other
than by will or the laws of descent and distribution.

Amendment and Termination of the 2000 Stock Incentive Plan. The 2000 Stock
Incentive Plan may be terminated and may be altered, amended, suspended or
terminated at any time, in whole or in part, by eFunds' board of directors,
except that:

. no alteration or amendment will be effective without shareholder
approval if approval is required by law or under the rules of the Nasdaq
Stock Market or any stock exchange on which eFunds shares are listed;
and

. no such termination, suspension, alteration or amendment may adversely
alter or affect the terms of any then outstanding awards without the
consent of the affected participant.

Options to purchase up to 2,768,741 eFunds' shares were granted under
eFunds' 2000 stock incentive plan on June 26, 2000. The exercise price of these
options is $13.00. These options will generally vest in three equal annual
installments, beginning on the first anniversary of the date of grant, except
that options granted to eFunds' outside directors will vest in two equal annual
installments.

Related Party Transactions

Prior to joining eFunds' professional services business as its President and
Chief Executive Officer, Dr. Sinha was a 50% partner in a consulting firm
employed by Deluxe. The consulting firm provided international development
consulting services to Deluxe at per diem rates subject to minimum amounts. In
1999, Deluxe paid $28,713 to the consulting firm for services rendered. In
addition, in connection with the hiring of Dr. Sinha and the consequent
termination of the consulting agreement, Deluxe paid approximately $1.1 million
to the members of the consulting firm in lieu of an equity interest in HCL-
Deluxe N.V. Dr. Sinha received 50% of this amount.

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EXECUTIVE COMPENSATION FOR eFUNDS

The following table sets forth the compensation earned by eFunds' Chief
Executive Officer and each of eFunds' other most highly compensated executive
officers who, based on the salary and bonus compensation information from
Deluxe, were the most highly compensated for the year ended December 31, 1999.
During the periods shown, these executive officers participated in Deluxe's
compensation plans and the following table sets forth compensation earned by
these individuals for services with Deluxe and its subsidiaries for each of the
last three fiscal years. Mr. Bristow was not an employee of Deluxe prior to
joining eFunds in March 2000 and accordingly he is not shown in the table. This
offering circular-prospectus refers to these individuals as the eFunds Named
Executive Officers.

<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------ ----------------------------------
Restricted Securities All Other
Name and Principal Other Annual Stock Underlying Compensation
Position Year Salary Bonus(1) Compensation Awards Options(2) (3)
------------------ ---- -------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Blanchard III
(4).................... 1999 $680,000 $ 680,000 $22,866 -- 185,000 $136,400
Chairman and Chief 1998 600,000 1,200,000 13,848 -- 176,000 79,051
Executive Officer 1997 600,000 638,550 11,328 -- 100,000 67,745

Debra A. Janssen........ 1999 261,282 168,233 8,719 -- 25,000 17,476
Former President and 1998 198,892 168,300 2,467 -- 10,000 --
Chief Operating Officer

Dr. Nikhil Sinha (5).... 1999 175,000 87,500 -- -- 25,000 28,846
Executive Vice
President,
Global Corporate
Development

Steven F. Coleman....... 1999 132,000 26,400 -- -- 2,000 14,820
Senior Vice President, 1998 120,000 36,000 -- -- 1,500 15,237
General Counsel and 1997 112,500 15,964 -- -- 1,000 11,110
Secretary
</TABLE>
--------
(1) Recipients of awards under Deluxe's Annual Incentive Plan are entitled to
elect to receive all or a portion of their incentive compensation in the
form of shares of restricted stock or restricted stock units. If an
election is made to receive shares of restricted stock or restricted stock
units, the amount of cash foregone is increased by 25 percent in
determining the number of shares of restricted stock units to be awarded.
(2) Reflects options to purchase Deluxe shares. As described in "--Treatment of
Deluxe Options" immediately prior to the split-off of Deluxe's ownership of
eFunds following the exchange offer, these options will be converted into
both options to purchase Deluxe shares and options to purchase eFunds
shares.
(3) All other compensation consists of (a) annual company contributions to
qualified retirement plans, (b) amounts credited to a non-qualified
supplemental retirement plan and (c) amounts credited to a non-qualified
deferred compensation plan as benefit plan equivalents. For 1999, the
amounts were: Mr. Blanchard--$16,000, $120,400 and $0; Ms. Janssen--
$11,200, $4,010 and $2,266; and Mr. Coleman--$14,260, $560 and $0. For Dr.
Sinha, all other compensation includes $28,846 paid in respect of his
vacation pay following the transfer of Deluxe employees to Deluxe
Professional Services.
(4) Mr. Blanchard is entitled to supplemental retirement benefits in addition
to those ordinarily payable under Deluxe's profit-sharing, pension and
supplemental retirement plans, and with respect to any company-paid portion
of contributory retirement plans, such as Deluxe's 401(k) plan. Deluxe is
expected to make a lump-sum cash payment of approximately $3.8 million to
Mr. Blanchard on January 1, 2001 in satisfaction of its obligations in
respect of the supplemental retirement benefits.
(5) Dr. Sinha began employment with Deluxe in April 1999.

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<PAGE>

The following table contains information concerning the grant of options to
purchase Deluxe shares to the eFunds Named Executive Officers during the fiscal
year ended December 31, 1999:

<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (2)
--------------------------------------------- ----------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Per Expiration
Name Granted(1) Fiscal Year Share Date 5% ($) 10% ($)
---- ---------- ------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
John A. Blanchard III... 185,000 15.04% $35.9375 1/4/09 $4,181,167 $10,595,897
Debra A. Janssen........ 15,000 1.22 35.6250 1/29/09 336,066 851,656
10,000 .81 35.8125 5/04/09 225,223 570,759
Dr. Nikhil Sinha........ 25,000 2.03 37.5625 6/17/09 590,571 496,624
Steven F. Coleman....... 2,000 .16 35.6250 1/29/09 44,809 113,554
</TABLE>
--------
(1) All options were granted at an exercise price that equaled or exceeded the
fair market value of the Deluxe shares on the date of grant, as determined
by the last sale price as reported on the New York Stock Exchange. The
options are exercisable in cumulative installments of 33 1/3 percent on
each anniversary of the date of grant.
(2) The amounts represent hypothetical gains that might be achieved by the
optionees if the respective options are exercised at the end of their
terms. These gains are based on assumed rates of stock price appreciation
of 5% and 10% mandated by rules of the Securities and Exchange Commission.
These rates are shown for illustrative purposes only and do not represent a
prediction of stock price performance.

The following table sets forth information regarding exercises of options
to purchase Deluxe shares during the year ended December 31, 1999 and
unexercised options to purchase Deluxe shares as of December 31, 1999, by each
of the eFunds Named Executive Officers:

<TABLE>
<CAPTION>
Number of Deluxe Shares
Deluxe Underlying Unexercised Value of Unexercised In-
Shares Options at Fiscal Year the-Money Options at
Acquired End Fiscal Year End (1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John A. Blanchard III... -- -- 260,334 335,666 -- --
Debra A. Janssen........ -- -- 3,334 31,666 -- --
Dr. Nikhil Sinha........ -- -- -- 25,000 -- --
Steven F. Coleman....... -- -- 3,300 2,000 -- --
</TABLE>
--------
(1) The value of unexercised in-the-money option is determined by multiplying
the difference between the exercise price and $27.4375, the closing price
of Deluxe shares on the NYSE on December 31, 1999, by the number of Deluxe
shares underlying the options. If the exercise price is greater than the
December 31, 1999 closing price, the options are not in-the-money and no
value is listed.

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<PAGE>

SHARES ELIGIBLE FOR FUTURE SALES

eFunds shares distributed to Deluxe shareholders in the exchange offer will
be freely transferable, except for eFunds shares received by persons who may be
deemed to be "affiliates" of eFunds under the Securities Act. Affiliates
generally include individuals or entities that control, are controlled by, or
are under common control with, eFunds. The directors and principal executive
officers of eFunds will be affiliates, as may be significant shareholders of
eFunds. Affiliates of eFunds may sell their eFunds shares only under an
effective registration statement under the Securities Act or pursuant to an
available exemption from the registration requirements of the Securities Act,
if any, such as the exemption afforded by Rule 144 under the Securities Act.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK OF eFUNDS

eFunds' authorized capital stock consists of 250 million shares of common
stock, $.01 par value per share, and 100 million shares of preferred stock,
$.01 par value per share. The following discussion is a summary of the material
terms of eFunds' capital stock.

Common Stock

Each holder of an eFunds share is entitled to one vote for each share held
of record on all matters to be voted upon by the shareholders. There are no
cumulative voting rights. Subject to the preferences of preferred stock that
may be issued, holders of eFunds shares are entitled to receive ratably any
dividends that may be declared from time to time by the board of directors out
of funds legally available for that purpose. In the event of liquidation,
dissolution or winding up of eFunds, holders of eFunds shares would be entitled
to share in eFunds' assets remaining after the payment of liabilities and the
satisfaction of any liquidation preference granted to the holders of any
outstanding shares of preferred stock. Holders of eFunds shares have no
preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to the eFunds shares.

All outstanding eFunds shares are fully paid and nonassessable, except for
certain statutory liabilities which may be imposed by Section 180.0622 of the
Wisconsin Business Corporation Law for unpaid employee wages. Section 180.0622
of the Wisconsin Business Corporation Law provides that shareholders of every
corporation that does business in Wisconsin are personally liable to an amount
equal to the par value of the shares owned by them and for all debts owing to
employees for services performed for such corporation, but not exceeding six
months' service in the case of any individual employee. The rights, preferences
and privileges of the holders of eFunds shares are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
preferred stock that eFunds may designate in the future.

Preferred Stock

The board of directors of eFunds is authorized, subject to any limitations
prescribed by law, without shareholder approval, from time to time to issue up
to an aggregate of 100 million shares of preferred stock, in one or more
series, with each of such series to have such rights and preferences,
including, without limitation, voting rights, dividend rights, conversion
rights, redemption privileges and liquidation preferences, as shall be
determined in the unlimited discretion of the board of directors. The eFunds
board has authorized the issuance of up to 2,500,000 shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share.

Issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, a majority of eFunds'
outstanding voting stock. eFunds currently has no plans to issue any shares of
preferred stock.

Shareholder Rights Plan

eFunds has declared a dividend of one preferred share purchase right for
each eFunds share outstanding on May 1, 2000 to the shareholders of record on
that date. Each right will entitle the registered holder to purchase one one-
hundredth of a share of Series A Junior Participating Preferred Stock, par
value $0.01 per share, at a price of $65.00 per one one-hundredth of a
preferred share, subject to adjustment. The description and terms of the share
purchase rights are set forth in a Rights Agreement between eFunds and
EquiServe Trust Company N.A., as Rights Agent.

Initially, the certificates for eFunds shares then outstanding will evidence
the rights and eFunds will not distribute separate right certificates. The
rights will separate from the eFunds shares on the share purchase rights
distribution date, which is the earlier of:

. the 10th day following the public announcement that a person or group of
affiliated or associated persons has become the beneficial owner of 15%
or more of the outstanding eFunds shares, subject to certain exceptions;
and

129
<PAGE>

. the 10th day, or such later date as may be determined by the board of
directors prior to such time as any person becomes the beneficial owner
of 15% or more of the outstanding eFunds shares, following the
commencement or public announcement of a tender offer or exchange offer,
the consummation of which would result in a person or group of
affiliated or associated persons becoming the beneficial owner of 15% or
more of the outstanding eFunds shares.

Under the plan, Deluxe's ownership of eFunds shares will not cause the
rights to separate from the common stock or result in a share purchase rights
distribution date. eFunds anticipates, subject to the approval of its board of
directors, amending this plan in connection with the exchange offer to exempt
acquisitions by any person who becomes a holder of more than 15%, but not more
than 20%, of the outstanding eFunds shares through the exchange offer and any
spin-off if such person reports its holdings on Schedule 13G under the Exchange
Act.

The board of directors, after receiving such advice as it deems necessary
and giving due consideration to all relevant factors, may elect to approve a
tender offer or an exchange offer for all of eFunds shares if the board
determines the offer to be in eFunds' best interest and the best interests of
its shareholders. If the board does approve a tender offer or exchange offer,
the rights will expire.

Until the share purchase rights distribution date,

. the rights will be evidenced by the certificates for eFunds shares and
will be transferred with and only with the eFunds shares;

. any eFunds shares certificates issued after May 1, 2000 upon transfer or
new issuance of eFunds shares will contain a notation incorporating the
Rights Agreement by reference; and

. the transfer of any eFunds shares will also constitute the transfer of
the rights associated with eFunds shares.

As promptly as practicable following the share purchase rights distribution
date, eFunds will mail separate certificates evidencing the share purchase
rights to holders of record of the common stock as of the close of business on
that date, and such separate certificates alone will evidence the share
purchase rights.

The holders of eFunds shares and the share purchase rights cannot exercise
the rights until the distribution date. The rights will expire on June 25,
2010, unless eFunds extends or earlier redeems or exchanges as described below.
eFunds will not issue fractions of a preferred share, other than fractions in
integral multiples of one one-hundredth of a share, and, in lieu thereof,
eFunds will make a cash adjustment on the closing price on the last trading
date prior to the date of exercise.

eFunds will adjust the purchase price payable and the number of preferred
shares issuable upon exercise of the rights from time to time to prevent
dilution:

. in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the preferred shares;

. upon the grant to holders of the preferred shares of certain rights,
options or warrants to subscribe for or purchase preferred shares or
convertible securities at less than the then current market price of the
preferred shares; or

. upon the distribution to holders of the preferred shares of any evidence
of indebtedness or assets, excluding regular periodic cash dividends or
dividends payable in preferred shares, or of subscription rights or
warrants.

With certain exceptions, eFunds is not required to adjust the purchase price
until cumulative adjustments require an adjustment of at least 1% in the
purchase price. eFunds also will adjust the number of outstanding share
purchase rights and the number of preferred shares issuable upon exercise of
the rights in the event of a stock split of the eFunds shares or a stock
dividend on the eFunds shares payable in eFunds shares or subdivisions,
consolidations or combinations of the eFunds shares occurring, in any such
case, prior to the distribution date.

eFunds cannot redeem the preferred shares purchasable upon exercise of the
rights. Each preferred share will be entitled to a minimum preferential
quarterly dividend payment of $0.001 per share but will be entitled

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<PAGE>

to an aggregate dividend of 100 times the dividend declared per eFunds share.
In the event of any liquidation of eFunds, the holders of the preferred shares
will be entitled to a minimum preferential liquidation payment of $0.01 per
share but will be entitled to an aggregate payment of 100 times the payment
made per eFunds share. Each preferred share will have 100 votes, voting
together with the common stock. Finally, in the event of any merger,
consolidation or other transaction in which eFunds shares are exchanged, each
preferred share will be entitled to receive 100 times the amount received per
eFunds share. These rights are subject to adjustment in the event of a stock
dividend on the eFunds shares or a subdivision, combination or consolidation of
the eFunds shares.

In the event any person becomes the beneficial owner of 15% or more of the
outstanding eFunds shares (other than a person who acquires more than 15%, but
not more than 20%, of the outstanding eFunds shares through the exchange offer
and any spin-off who is entitled to report their holdings on Schedule 13G under
the Exchange Act), each holder of a share purchase right shall thereafter have
a right to receive, in lieu of preferred shares, a number of eFunds shares
having an aggregate market price equal to twice the exercise price of the share
purchase right. In other words, each holder of a right will have the right to
receive eFunds shares at a 50% discount to the then current market price. In
the event that at any time after there is a beneficial owner of 15% or more of
the outstanding eFunds shares, eFunds is acquired in a merger or other business
combination or 50% or more of eFunds' assets or earning power are sold, holders
of the rights will thereafter have the right to receive a number of shares of
common stock of the acquiring company at a 50% discount to its then current
market price.

At any time after a person becomes the beneficial owner of 15% (20% for
Schedule 13G filers who acquire their shares in excess of 15% of the
outstanding eFunds shares through the exchange offer and any spin-off) or more
of the outstanding eFunds shares, subject to certain exceptions, and prior to
the acquisition by a person of 50% or more of the outstanding eFunds shares,
the board of directors may exchange all or part of the rights for eFunds shares
at an exchange ratio of one eFunds share per right, subject to adjustment.

At any time before a person has become the beneficial owner of 15% (20% for
Schedule 13G filers who acquire their shares in excess of 15% of the
outstanding eFunds shares through the exchange offer and any spin-off) or more
of the outstanding eFunds shares, the board of directors may redeem the rights
in whole, but not in part, at a price of $0.01 per right, subject to
adjustment. The redemption of the rights may be made effective at such time, on
such basis and with such conditions as the board of directors in its sole
discretion may establish.

Until a right is exercised, the holder of the right will have no rights as a
shareholder, including without limitation, the right to vote or to receive
dividends.

The rights have anti-takeover effects. The rights will cause substantial
dilution to a person or group that attempts to acquire eFunds pursuant to an
offer that is not approved by eFunds the board of directors, unless the rights
have been redeemed. However, the rights should not interfere with any tender
offer or merger approved by the eFunds board of directors because the board of
directors may redeem the rights or approve an offer at any time prior to such
time as any person has becomes the beneficial owner of 15% (20% for Schedule
13G filers who acquire their shares in excess of 15% of the outstanding eFunds
shares through the exchange offer and any spin-off) or more of the outstanding
eFunds shares.

Limitation of Liability and Indemnification Matters

eFunds' amended and restated certificate of incorporation limits the
liability of directors to the maximum extent permitted by Delaware law.
Delaware law provides that directors of a corporation will not be personally
liable for monetary damages for breach of their fiduciary duties as directors,
except liability for:

. breach of their duty of loyalty to the corporation or its shareholders;

. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

. unlawful payments of dividends or unlawful stock repurchases or
redemptions; and

. any transaction from which the director derived an improper personal
benefit.

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<PAGE>

This limitation of liability does not apply to liabilities arising under the
federal or state securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission.

eFunds' amended and restated certificate of incorporation provides that
eFunds will indemnify its directors, officers, employees and other agents to
the fullest extent permitted by Delaware law. eFunds believes that
indemnification under its amended and restated certificate of incorporation
covers at least negligence and gross negligence on the part of indemnified
parties. eFunds' amended and restated certificate of incorporation also permits
it to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in such capacity,
regardless of whether the amended and restated certificate of incorporation
would permit such indemnifications.

At present, there is no litigation or proceeding involving any of eFunds'
directors or officers in which indemnification is required or permitted, and
eFunds is not aware of any threatened litigation or proceeding that may result
in a claim for indemnification.

Anti-Takeover Provisions

Some provisions of eFunds' amended and restated certificate of incorporation
and bylaws could make more difficult the acquisition of control of eFunds, and
the removal of existing management:

. The amended and restated certificate of incorporation does not provide
for cumulative voting for directors;

. eFunds has a classified board of directors with each class serving a
staggered three-year term;

. The board of directors fixes the size of the board of directors, may
create new directorships and may elect new directors to serve for the
full term of the class of directors in which the new directorship was
created. The board of directors (or its remaining members, even though
less than a quorum) also may fill vacancies on the board of directors
occurring for any reason for the remainder of the term of the class of
director in which the vacancy occurred;

. The board of directors may issue preferred stock without any vote or
further action by the shareholders;

. The board of directors may adopt, amend, alter or repeal the bylaws
without a vote of the shareholders;

. All shareholder actions must be taken at a regular or special meeting of
the shareholders and cannot be taken by written consent without a
meeting;

. eFunds requires advance notice with respect to shareholder proposals and
the nominations of candidates for election as directors; and

. Without the affirmative vote of the holders of at least 66 2/3% of the
outstanding eFunds shares, together with the affirmative vote of at
least 66 2/3% of the members of the board of directors, eFunds may not
(1) consolidate or merge with any other entity, (2) convey, transfer,
lease or otherwise dispose of all or substantially all of its property
and assets, (3) amend its amended and restated certificate of
incorporation to permit the removal of directors without cause or (4)
amend, modify or repeal the anti-takeover and indemnification provisions
of the amended and restated certificate of incorporation.

These provisions are expected to discourage coercive takeover practices and
inadequate takeover bids. They are also designed to encourage persons seeking
to acquire control of eFunds to first negotiate with eFunds' board. eFunds
believes that the benefits of increased protection give it the potential
ability to negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure eFunds and outweigh the disadvantages of
discouraging such proposals. Negotiating with the proponent could result in an
improvement of the terms of the proposal.

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<PAGE>

Section 203 of the Delaware General Corporation Law

eFunds is subject to Section 203 of the Delaware General Corporation Law,
which regulates corporate acquisitions. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a business combination with
an interested shareholder for a period of three years following the date the
person became an interested shareholder, unless:

. the board of directors approved the transaction in which such
shareholders became an interested shareholder prior to the date the
interested shareholder attained such status;

. upon consummation of the transaction that resulted in the shareholder
becoming an interested shareholder, he or she owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding shares owned by persons who are directors and also
officers and by employee stock plans in which participants do not have
the right to determine confidentially whether shares held subject to the
plan will be tendered;

. the business combination is approved by a majority of the board of
directors and by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the interested
shareholder; and

. the shareholder acquires a 15% interest inadvertently and divests itself
of such ownership and would not have been a 15% shareholder in the
preceding 3 years but for the inadvertent acquisition of ownership;

A business combination generally includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
shareholder. In general, an interested shareholder is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested shareholder status, did own, 15% or more of a
corporation's voting stock. The eFunds board of directors has not approved the
exchange offer or the spin-off as transactions exempt from the operation of
Section 203.

Transfer Agent and Registrar

The transfer agent and registrar for eFunds shares is EquiServe.

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COMPARISON OF RIGHTS OF SHAREHOLDERS OF EFUNDS
AND SHAREHOLDERS OF DELUXE

This section of the offering circular-prospectus describes some differences
between the rights of holders of Deluxe shares and the rights of holders of
eFunds shares. While we believe that the description covers the material
differences between the two sets of rights, this summary may not contain all of
the information that is important to you. You should carefully read this entire
document and refer to the other documents discussed below for a more complete
understanding of the differences between your rights as a shareholder of Deluxe
and your rights as a shareholder of eFunds.

As a shareholder of Deluxe, Deluxe's amended articles of incorporation, as
currently in effect, and Deluxe's bylaws govern your rights. If Deluxe shares
which you tender in the exchange offer are accepted for exchange or eFunds
shares are distributed to you in a spin-off, you will become a shareholder of
eFunds. As an eFunds shareholder, eFunds' amended and restated certificate of
incorporation and eFunds' bylaws will govern your rights. In addition, eFunds
is incorporated in Delaware while Deluxe is incorporated in Minnesota. Although
the rights and privileges of shareholders of a Delaware corporation are in many
instances comparable to those of shareholders of a Minnesota corporation, there
are also differences.

The following discussion of similarities and material differences between
the rights of Deluxe shareholders and the rights of eFunds shareholders under
the certificate of incorporation and bylaws of eFunds and the articles of
incorporation and bylaws of Deluxe is only a summary of some provisions and is
not a complete description of these similarities and differences. This
discussion is qualified in its entirety by reference to the Minnesota law and
Delaware law, the common law thereunder and the full text of the certificate of
incorporation and bylaws of eFunds and the articles of incorporation and bylaws
of Deluxe.

Shareholder Meetings

Bylaws governed by Delaware law require that shareholders be provided prior
written notice no more than 60 days nor less than 10 days prior to the date of
any meeting of shareholders. Delaware law provides that notice must be given at
least 20 days prior to a meeting at which the shareholders will be asked to
approve and adopt an agreement relating to the merger of the corporation.

Under Minnesota law, shareholders are entitled to at least 10 days' prior
written notice for each regular meeting and special meeting to consider any
matter, unless a shorter time is provided for in the articles or bylaws. The
bylaws of Deluxe require that the shareholders be given at least 7 days' and
not more than 60 days' written notice prior to each regular meeting and special
meeting. However, Minnesota law also requires that notice of a meeting at which
an agreement of merger or exchange is to be considered shall be mailed to
shareholders of record, whether entitled to vote or not, at least 14 days prior
to such meeting.

Right to Call Special Meetings

Under Delaware law, a special meeting of shareholders may be called by the
board of directors or by such person or persons as may be authorized by the
certificate of incorporation or by the bylaws. eFunds' bylaws authorize the
calling of a special meeting of shareholders by the board of directors.
Shareholders of eFunds do not have the right to call a special meeting of
shareholders.

Under Minnesota law, a special meeting of shareholders may be called by the
chief executive officer, the chief financial officer, any two or more
directors, a person authorized in the articles or bylaws to call special
meetings, or a shareholder or shareholders holding 10% or more of all shares
entitled to vote, except that a special meeting called by a shareholder for the
purpose of considering any action to facilitate, directly or indirectly, or
effect a business combination, including any action to change or otherwise
affect the composition of the board of directors for that purpose, must be
called by 25% or more of the voting power of all shares entitled to vote.
Deluxe's bylaws provide that special meetings of shareholders will be called in
accordance with Minnesota law. No person is specifically designated by Deluxe's
articles or bylaws to call a special meeting of shareholders.

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Actions by Written Consent of Shareholders

Under Delaware law, unless otherwise provided in the certificate of
incorporation, shareholders may act by a written consent in lieu of a meeting
provided the written consent is signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted. eFunds' certificate of incorporation provides
that all actions required or permitted to be taken by the shareholders of the
corporation must be effected at a duly called annual or special meeting of
shareholders of the corporation and may not be effected by any consent in
writing of such shareholders.

Under Minnesota law, any action required or permitted to be taken in a
meeting of the shareholders may be taken without a meeting by a written action
signed by all of the shareholders entitled to vote on that action.

Rights of Dissenting Shareholders

Under both Minnesota and Delaware law, shareholders may exercise a right of
dissent from some corporate actions and obtain payment of the fair value of
their shares. Generally, under Minnesota law, the categories of transactions
subject to dissenter's rights are broader than those under Delaware law.

Appraisal rights are available under Delaware law with respect to the shares
of any class of stock of a constituent corporation to a merger or consolidation
unless such shares were listed on a national securities exchange, designated on
a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc., or held of record by more
than 2,000 shareholders. Notwithstanding the foregoing, appraisal rights are
available under Delaware law with respect to the shares of any class of stock
of a constituent corporation if the terms of a merger or consolidation requires
the holders of the stock to exchange their stock for anything other than (a)
shares of the surviving corporation; (b) shares of another corporation that
will be listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than 2,000
holders; (c) cash in lieu of fractional shares of any such corporation; or (d)
any combination of such shares and cash in lieu of fractional shares. Subject
to the preceding sentences, appraisal rights are also available under Delaware
law, to the extent so provided in the certificate of incorporation, in
connection with amendments to the certificate of incorporation, any merger or
consolidation in which the corporation is a constituent corporation, or sales
of all or substantially all of the assets of a corporation. The eFunds'
certificate does not grant any dissenters' rights in addition to the
statutorily prescribed rights. Shareholders who desire to exercise their
dissenters' rights must satisfy all of the conditions and requirements as set
forth in the Delaware General Corporation Law in order to maintain such rights
and obtain any payment due in respect of the exercise of such rights.

Shareholders of a Minnesota corporation may exercise dissenter's rights in
connection with:

. an amendment of the articles of incorporation that materially and
adversely affects the rights and preferences of the shares of the
dissenting shareholder in some respects;

. a sale, lease, transfer or other disposition of all or substantially all
of the assets of the corporation;

. a plan of merger to which the corporation is a constituent party;

. a plan of exchange of shares to which the corporation is a party as the
corporation whose shares will be acquired, if the shares are entitled to
be voted on the plan of exchange; and

. any other corporate action with respect to which the corporation's
articles of incorporation or bylaws give dissenting shareholders the
right to obtain payment for their shares.

Unless the articles, the bylaws, or a resolution approved by the board of
directors otherwise provide, such dissenters' rights do not apply to a
shareholder of (a) the surviving corporation in a merger with respect to

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shares of the shareholder that are not entitled to be voted on the merger and
are not canceled or exchanged in the merger, or (b) the corporation whose
shares will be acquired by the acquiring corporation in a plan of exchange with
respect to shares of the shareholder that are not entitled to be voted on the
plan of exchange and are not exchanged in the plan of exchange. Deluxe's
articles do not grant any other dissenters' rights. Shareholders who desire to
exercise their dissenters' rights must satisfy all of the conditions and
requirements as set forth in the Minnesota Business Corporation Act in order to
maintain such rights and obtain any payment due in respect of the exercise of
such rights.

Board of Directors

Delaware law states that the board of directors shall consist of one or more
members with the number of directors to be fixed as provided in the bylaws of
the corporation, unless the certificate of incorporation fixes the number of
directors, in which case a change in the number of directors shall be made only
by amendment of the certificate. eFunds' certificate of incorporation provides
that the number of directors to constitute the whole board of directors shall
be such number, not less than one nor more than twelve, as shall be fixed from
time to time by resolution of the board of directors adopted by such vote as
may be required in the bylaws. eFunds' board currently consists of seven
directors, however, three directors, each of whom are currently executive
officers of Deluxe, will resign from the board following the completion of the
exchange offer. Additional independent directors will be sought as
replacements.

Delaware law states that any director or the entire board of directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors, with an exception for
corporations with cumulative voting. eFunds does not have cumulative voting for
the election of directors. In the case of a corporation, such as eFunds, whose
board is classified, holders may only remove a director for cause unless the
certificate of incorporation provides otherwise. eFunds' bylaws provide that
any director or the entire board of directors may be removed at any time but
only for cause. eFunds' certificate of incorporation provides that the board of
directors shall be divided into three classes as nearly equal in number as may
be, with the term of office of one class expiring each year and does not
contain a provision permitting directors to be removed other than for cause.
Furthermore, eFunds' certificate of incorporation provides that eFunds cannot
amend its certificate of incorporation or bylaws in any way that would permit a
director to be removed other than for cause without the affirmative vote of the
holders of record of two thirds of all the shares outstanding and entitled to
vote and the approval of two thirds of all of the directors.

Minnesota law provides that the board of directors of a Minnesota
corporation shall consist of one or more directors as fixed by the articles of
incorporation or bylaws. Deluxe's articles of incorporation provide that the
number of directors of Deluxe shall not be less than three nor more than eleven
and shall be fixed from time to time by the board of directors. Deluxe
currently has eight directors.

Minnesota law provides that, unless modified by the articles or bylaws of
the corporation or by shareholder agreement, the directors may be removed with
or without cause by the affirmative vote of the holders of a majority of the
voting power of all shares entitled to vote at an election of directors with an
exception for corporations with cumulative voting. Deluxe's articles and bylaws
do not alter the statutory provisions regarding removal of directors. Deluxe's
articles and bylaws state that voting by shareholders shall not be cumulative.

Filling Vacancies on the Board of Directors

Delaware law provides that, unless otherwise provided in the certificate of
incorporation or bylaws, vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled with
directors elected by all the shareholders having the right to vote as a class
or by a majority of the directors then in office, although less than a quorum,
or by a sole remaining director. Further, if, at the time of filling any
vacancy or newly created directorship, the directors then in office shall
constitute less than a majority of the whole board, the Court of Chancery may,
upon application of any shareholder or shareholders holding at least 10% of the
total number of the shares at the time outstanding having the right to vote for
such

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directors, summarily order an election to be held to fill any such vacancies or
newly created directorships, or to replace the directors chosen by the
directors then in office. eFunds' certificate of incorporation provides that in
case of any vacancies, by reason of an increase in the number of directors or
otherwise, each additional director may be elected by a majority of the
directors then in office, even though less than a quorum of the board of
directors, to serve until the end of the remainder of the term of the class to
which such director is assigned and until his or her successor shall have been
elected and qualified. eFunds' certificate of incorporation also provides that
directors shall continue in office until others are chosen and qualified in
their stead. Furthermore, when the number of directors is changed, any newly
created directorships or any decrease in directorships must be so assigned
among the classes by a majority of the directors then in office, though less
than a quorum, so as to make all classes as nearly equal in number as may be
feasible.

Under Minnesota law, unless different rules for filling vacancies are
provided for in the articles of incorporation or bylaws, vacancies resulting
from the death, resignation, removal or disqualification of a director may be
filled by the affirmative vote of a majority of the remaining directors, even
though less than a quorum, and vacancies resulting from a newly created
directorship may be filled by the affirmative vote of a majority of the
directors serving at the time of the increase. Each such director elected to
fill a vacancy holds office until the shareholders elect a successor at the
next annual or special meeting. New directors may be elected at a meeting at
which directors are removed. Deluxe's articles of incorporation provide that
vacancies on the board of directors resulting from newly created directorships
due to increases in the size of the board of directors shall be filled by the
majority vote of the existing directors. Furthermore, such directors shall hold
office until the next annual meeting of the shareholders.

Preemptive Rights

A preemptive right allows a shareholder to maintain its proportionate share
of ownership of a corporation by permitting such shareholder the right to
purchase a proportionate share of any new stock issuance, thereby protecting
the shareholder from dilution of value and control upon new stock issuances.

Unless the certificate of incorporation provides otherwise, under Delaware
law, shareholders of a corporation have no preemptive rights. eFunds'
certificate of incorporation does not provide for preemptive rights.

Minnesota law provides that all shareholders are entitled to preemptive
rights unless the articles of incorporation specifically deny or limit
preemptive rights. Deluxe's articles provide that the board of directors shall
have authority to accept or reject subscriptions for shares made after
incorporation and may grant options to purchase or subscribe for shares of any
class(es) free of any preemptive right of shareholders.

Advance Notice Requirement of Shareholder Proposals and Directors Nominations

eFunds' bylaws provide that for a proposal to be properly brought before an
annual meeting by a shareholder, the shareholder must give written notice of
such shareholder's intent to bring a matter before the annual meeting, either
by personal delivery or by United States mail, postage prepaid, to the chief
executive officer or secretary of the corporation, no later than the date (the
Notice Date) specified by Rule 14a-8 promulgated under the Exchange Act, as the
same may be amended from time to time and any successor rule or regulation, as
the last date for receipt of shareholder proposals to be submitted under such
rule.

eFunds' bylaws provide that any shareholder entitled to vote in the election
of directors generally may nominate one or more persons for election as
directors only if written notice of such shareholder's intent to make such
nomination(s) has been given either by personal delivery or by United States
mail, postage prepaid, to the chief executive officer or secretary of the
corporation not later than (a) the Notice Date, for an election to be held at
an annual meeting of shareholders, and (b) with respect to the election to be
held at a special meeting of shareholders, the close of business on the tenth
day following the date on which notice of such meeting is first given to
shareholders. Furthermore, in order to be properly before the meeting at which
such nominations are to be considered, the shareholder proposing the
nomination(s) and the person(s) so nominated must be present at the meeting.

Deluxe's bylaws provide that for a shareholder proposal to be properly made
by a shareholder at a regular meeting, the shareholder must give written notice
of the proposal containing the information required by Rule

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14a-8 to the chief executive officer or secretary of the corporation not later
than the Notice Date, and the proposal must be presented at the meeting by the
proposing shareholder. Deluxe's bylaws also provide that for a nomination of a
director to be properly made by a shareholder at a regular meeting, the
shareholder must give written notice of the nomination to the chief executive
officer or secretary of the corporation not later than the Notice Date, must
attend the meeting with the candidate whom the shareholder wishes to nominate,
and must propose the candidate's nomination for election to the board of
directors at the meeting.

Amendments to Bylaws and Articles

Delaware law requires a resolution of the corporation's board of directors
followed by the affirmative vote of a majority of the outstanding stock of each
class entitled to vote for any amendment to the certificate of incorporation,
unless the certificate of incorporation requires a greater level of approval.
Further, Delaware law states that if an amendment would increase or decrease
the aggregate number of authorized shares of a particular class, increase or
decrease the par value of shares of such class or alter or change the powers,
preferences or special rights of a particular class or series of stock so as to
affect them adversely, the class shall be given the power to vote as a class
notwithstanding the absence of any specifically enumerated power in the
certificate of incorporation. If any proposed amendment would alter or change
the powers, preferences or special rights of one or more series of any class so
as to effect them adversely, but shall not so affect the entire class, then
only the shares of the series so affected by the amendment shall be considered
a separate class for the purposes of this paragraph. Delaware law also states
that the shareholders have the power to adopt, amend or repeal the bylaws of a
corporation, provided that the corporation in its certificate of incorporation
may confer such power on the board of directors in addition to the
shareholders.

eFunds' certificate states that eFunds cannot amend or otherwise modify or
repeal Articles V through XI in its certificate, which cover supermajority
voting, board representation and classification, actions by shareholders,
amendments to its bylaws, reservation of power of the corporation to amend its
certificate of incorporation, breach of fiduciary duty and indemnification,
without the affirmative vote of the holders of record of two-thirds of all the
shares outstanding and entitled to vote and the approval of two thirds of all
of the directors. eFunds' certificate expressly authorizes the board of
directors to adopt, amend, alter and repeal the bylaws of the corporation by
majority vote, except that any provision of the bylaws requiring a vote greater
than a majority for the board to take action, such as the provisions of the
bylaws regarding the making of any recommendation to the shareholders with
respect to a pending tender offer, shall not be amended, altered or repealed
except by two-thirds vote of the board. eFunds' bylaws also provide that,
subject to the provisions of its certificate of incorporation, the bylaws may
be altered, amended or repealed at any regular meeting of shareholders, or
special meeting called for that purpose, by a majority vote of the shares
represented and entitled to vote at the meeting, except for the provisions of
eFunds' bylaws regarding the making of any board recommendation to the
shareholders with respect to a pending tender offer. The amendment, alteration
or repeal of these provisions requires the affirmative vote of two-thirds of
all the outstanding shares entitled to vote.

Minnesota law provides that unless reserved by the articles of incorporation
to the shareholders, the power to adopt, amend or repeal the bylaws is vested
in the board, subject to the power of the shareholders to adopt, amend or
repeal bylaws adopted, amended or repealed by the board. Under Minnesota law, a
shareholder or shareholders holding 3% or more of the voting shares entitled to
vote may propose a resolution to adopt, amend or repeal bylaws adopted, amended
or repealed by the board, in which event such resolutions must be brought
before the shareholders for their consideration pursuant to the procedures for
amending the articles of incorporation. Under Minnesota law the board of
directors shall not adopt, amend or repeal any bylaws once adopted fixing a
quorum for meetings of shareholders, prescribing procedures for removing
directors or filling vacancies in the board of directors, or fixing the number
of directors or their classifications, qualifications or terms of office and
such actions are reserved to the shareholders. However, Minnesota law does
provide that the board of directors may adopt or amend a bylaw to increase the
number of directors. Deluxe's bylaws provide that, except as otherwise provided
by Minnesota law, the bylaws may be amended in whole or in part by a vote of a
two-thirds majority of all the directors, such authority is subject to the
power of the shareholders to adopt, amend or repeal bylaws adopted, amended or
repealed by the board.

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Minnesota law provides that a proposal to amend the articles of
incorporation may be presented to the shareholders of a Minnesota corporation
by a resolution either approved by the affirmative vote of a majority of the
directors present or proposed by a shareholder or shareholders holding 3% or
more of the voting shares entitled to vote thereon. Under Minnesota law, any
such amendment must be approved by the affirmative vote of a majority of the
shareholders entitled to vote thereon, except that the articles may provide for
a specified proportion or number larger than a majority. Deluxe's articles
require the affirmative vote of the holders of not less than 70% of the
outstanding shares of capital stock of the corporation entitled to vote
generally in the election of directors to repeal or amend Article XI of the
articles, which requires shareholders to approve business combinations in which
any Deluxe shareholder receives less than the highest price per share paid for
Deluxe's shares and for the purchase of any shares by Deluxe from certain of
its shareholders.

In addition, under Minnesota law, the holders of the outstanding shares of a
class or series are entitled to vote as a class or series on a proposed
amendments to the articles of incorporation, whether or not such class or
series would otherwise be entitled to vote, if the amendment would:
. alter the aggregate number of authorized shares of the applicable class
or series;
. effect an exchange, reclassification or cancellation of all or part of
the class or series;
. effect an exchange or create a right of exchange of all or a part of
another class or series for the shares of the applicable class or
series;
. change the rights or preferences of the shares of the applicable class
or series;
. changes the shares of the class or series into the same or a different
number of shares of another class or series;
. create a new class or series with rights or preferences prior and
superior to the shares of the applicable class or series or increase the
rights and preferences or the number of authorized shares of a class or
series having rights and preferences prior or superior to the shares of
the applicable class or series;
. divide the shares of the applicable class into series and determine the
designation of each series and the variations in the relative rights and
preferences between the shares of each series, or authorize the board to
do so;
. limit or deny any existing preemptive rights of the shares of the
applicable class or series; or
. cancel or otherwise affect distributions on the shares of the applicable
class or series that have accrued but have not been declared.

Deluxe currently has only one class of shares of common stock authorized or
outstanding.

Indemnification of Directors, Officers and Employees

Minnesota law and Delaware law both contain provisions setting forth
conditions under which a corporation may or is required to indemnify its
directors, officers and employees. While indemnification is permitted only if
statutory standards of conduct are met, Minnesota law and Delaware law are
substantially similar in providing for indemnification if the person acted in
good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the conduct
was unlawful. The statutes differ, however, with respect to whether
indemnification is permissive or mandatory, where there is a distinction
between third-party actions and actions by or in the right of the corporation,
and whether, and to what extent, reimbursement of judgments, fines,
settlements, and expenses is allowed. The major difference between Minnesota
law and Delaware law is that while indemnification of officers, directors and
employees is mandatory under Minnesota, indemnification is permissive under
Delaware law, except that a Delaware corporation must indemnify a person who is
successful on the merits or otherwise in the defense of some specified actions,
suits or proceedings for expenses and attorney's fees actually and reasonably
incurred in connection therewith.

Although indemnification is permissive in Delaware, a corporation may,
through its certificate of incorporation, bylaws or other intracorporate
agreements, make indemnification mandatory. Pursuant to this authority, eFunds'
certificate of incorporation provides that eFunds shall, to the full extent
permitted by

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Delaware law, indemnify each officer and director of the corporation and may,
but shall not be obligated to, indemnify any employee or agent of the
corporation who is not an officer or director of the corporation. eFunds'
certificate of incorporation provides that eFunds indemnification shall include
expenses, including attorney fees and the advancement of reimbursement
expenses, judgments, fines and amounts paid in settlement to the fullest extent
permitted under the Delaware law.

Minnesota law requires a corporation to indemnify any director, officer or
employee who is made or threatened to be made party to a proceeding by reason
of the former or present official capacity of the director, officer or
employee, against judgments, penalties, fines, settlements and reasonable
expenses. Minnesota law permits a corporation to prohibit indemnification by so
providing in its articles of incorporation or its bylaws. Deluxe has not
limited the statutory indemnification in its articles of incorporation or
bylaws. Deluxe's bylaws state that Deluxe shall indemnify all officers and
directors of the corporation for such expenses and liabilities, in such manner,
under such circumstances and to the fullest extent permitted by Minnesota law.
Under Minnesota law and its articles and bylaws, Deluxe must indemnify officers
of Deluxe who are serving as directors of eFunds at the request or direction of
Deluxe until the earlier to occur of the separation of eFunds from Deluxe or
the resignation of such officer as a director of eFunds.

Liabilities of Directors

Under Delaware law, a certificate of incorporation may contain a provision
limiting or eliminating a director's personal liability to the corporation or
its shareholders for monetary damages for the director's breach of fiduciary
duty, subject to certain limitations. eFunds' certificate of incorporation
provides that the corporation's directors shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability:

. for any breach of the director's duty of loyalty to the corporation or
its shareholders;

. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law;

. under section 174 of the Delaware General Corporation Law, which
provides for unlawful payment of dividend or unlawful stock purchase or
redemption; or

. for any transaction from which the director derived an improper personal
benefit.

eFunds' certificate of incorporation also provides that if Delaware law is
amended to eliminate or limit the liability of directors further, then the
liability of eFunds' directors shall be limited to the fullest extent permitted
by Delaware law, as so amended.

Under Minnesota law, a director's personal liability to the corporation or
its shareholders for monetary damages for breach of fiduciary duty as a
director may be eliminated or limited in the articles except that the articles
cannot limit the liability of a director:

. for any breach of the director's duty of loyalty to the corporation or
its shareholders;

. for acts or omissions not in good faith or that involve intentional
misconduct or a known violation of the law;

. under Section 302A.559 of the Minnesota Business Corporation Act or
Section 80A.23 of the Minnesota Regulation of Securities Act which
provide for liability for illegal distributions and civil liability,
respectively;

. for any transaction from which the directors derived an improper
benefit; or

. for any act or omission occurring prior to the date when the provision
in the articles eliminating liability becomes effective.

Deluxe's articles provide that no director of the corporation shall be
personally liable to Deluxe or its shareholders for monetary damages for breach
of fiduciary duty by such director as a director, except for liability:

. for any breach of the director's duty of loyalty to the corporation or
its shareholders;

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. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

. under Section 80A.23 or Section 302A.559 of the laws of Minnesota; or

. for any transaction from which the director derived an improper personal
benefit.

Shareholder Approval of Merger

In order to effect a merger or consolidation under Delaware law, a
corporation's board of directors must adopt an agreement of merger or
consolidation and recommend it to the shareholders. Such a recommendation by
the eFunds board requires the concurrence of 66-2/3% of the eFunds directors.
The agreement must be approved and adopted by holders of a majority of the
outstanding shares of the corporation entitled to vote thereon, unless a higher
percentage is specified in the corporation's certificate of incorporation.
eFunds' certificate of incorporation requires that the holders of 66-2/3% of
its outstanding shares approve such a transaction.

Minnesota law provides that a resolution containing a plan of merger or
exchange must be approved by the affirmative vote of a majority of the
directors present at a meeting and submitted to the shareholders and approved
by the affirmative vote of the holders of a majority of the voting power of all
shares entitled to vote. Unlike Delaware law, Minnesota law requires that any
class of shares of a Minnesota corporation must be given the right to approve
the plan if it contains a provision which, if contained in a proposed amendment
to the corporation's articles of incorporation, would entitle such a class to
vote as a class.

Business Combinations, Control Share Acquisitions and Anti-Takeover Provisions

Delaware law prohibits, in some circumstances, a "business combination"
between the corporation and an "interested shareholder" within three years of
the shareholder becoming an "interested shareholder." An "interested
shareholder" is a person who owns 15% or more of the outstanding voting stock
or is an affiliate of the corporation or was the owner of 15% or more of the
outstanding voting stock at any time within the prior three-year period. A
"business combination" includes a merger or consolidation, a sale or other
disposition of assets having an aggregate market value equal to 10% or more of
the consolidated assets of the corporation or the aggregate market value of the
outstanding stock of the corporation, certain transactions resulting in the
issuance or transfer by the corporation, or certain of its subsidiaries, of
stock, and certain transactions that would increase the interested
shareholder's proportionate share ownership in the corporation. This provision
does not apply where:

. either the business combination or the transaction which resulted in the
shareholder becoming an interested shareholder is approved by the
corporation's board of directors prior to the date the interested
shareholder acquired such 15% interest. The eFunds board of directors
has not approved the exchange offer or the spin-off as transactions
exempt from the operation of Section 203;

. upon the consummation of the transaction which resulted in the
shareholder becoming an interested shareholder, the interested
shareholder owned at least 85% of the outstanding voting stock of the
corporation excluding, for the purposes of determining the number of
shares outstanding, shares held by persons who are directors and also
officers and by employee stock plans in which participants do not have
the right to determine confidentially whether shares held subject to the
plan will be tendered;

. the business combination is approved by a majority of the board of
directors and the affirmative vote of two-thirds of the outstanding
votes entitled to be cast by disinterested shareholders at an annual or
special meeting;

. the corporation does not have a class of voting stock that is listed on
a national securities exchange, authorized for quotation on the Nasdaq
Stock Market, or held of record by more than 2,000 shareholders unless
any of the foregoing results from action taken, directly or indirectly,
by an interested shareholder or from a transaction in which a person
becomes an interested shareholder;

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. the shareholder acquired the 15% interest when these restrictions did
not apply; or

. the corporation has opted out of this provision. eFunds has not opted
out of this provision.

eFunds is party to a Rights Agreement with EquiServe, as Rights Agent.The
provisions of this Rights Agreement are more fully described in "--Description
of Capital Stock of eFunds--Shareholder Rights Plan."

Minnesota law prohibits certain "business combinations," as defined in the
Minnesota Business Corporation Act, between a Minnesota corporation with at
least 100 shareholders, or a publicly held corporation that has at least 50
shareholders, and an "interested shareholder" for a four-year period following
the share acquisition date by the interested shareholder, unless certain
conditions are satisfied or an exemption is found. An "interested shareholder"
is generally defined to include a person who beneficially owns at least 10% of
the voting power of the outstanding shares entitled to vote of the issuing
public corporation. Minnesota law also limits the ability of a shareholder who
acquires beneficial ownership of more than certain thresholds of the percentage
voting power of a Minnesota corporation, starting at 20%, from voting those
shares in excess of the threshold unless such acquisition has been approved in
advance by a majority of the voting power held by shareholders unaffiliated
with such shareholder.

Minnesota law provides that during any tender offer, a publicly held
corporation may not enter into or amend an agreement, whether or not subject to
contingencies, that increases the current or future compensation of any officer
or director. In addition, under Minnesota law, a publicly held corporation is
prohibited from purchasing any voting shares owned for less than two years from
a 5% shareholder for more than their market value unless the transaction has
been approved by the affirmative vote of the holders of a majority of the
voting power of all shares entitled to vote or unless the corporation makes a
comparable offer to all holders of shares of the class or series of stock held
by the 5% shareholder and to all holders of any class or series into which such
securities may be converted.

Deluxe's articles provide that, whether or not a vote of shareholders is
otherwise required, the affirmative vote of the holders of not less than 70% of
the outstanding voting Deluxe shares is required for the approval or
authorization of certain business combinations unless the business combination
is a merger, consolidation, share exchange or sale of substantially all of the
assets of Deluxe and the value of the consideration to be received per Deluxe
share by shareholders other than a person who beneficially owns 5% or more of
the voting stock of Deluxe is not less than the highest per share price paid by
the 5% owner in acquiring any of its Deluxe shares. This may make it more
difficult to effect a change in control of Deluxe and may discourage or deter a
third party from attempting a takeover.

Deluxe is a party to an Amended and Restated Rights Agreement with Wells
Fargo Bank Minnesota, N.A., through which each shareholder of record of Deluxe
shares on February 22, 1988, was issued one right to purchase one Deluxe share
for each Deluxe share held by such shareholder, and which provides for the
issuance of one right for each Deluxe share issued thereafter and prior to the
distribution date (as described below). Initially, the certificates for Deluxe
shares will evidence the rights. Unless the transaction is approved in advance
by a majority of Deluxe's continuing directors (defined generally as directors
not associated with the acquiring person), the rights will separate from the
Deluxe shares on the distribution date, which is the earlier of:

. The close of business on the10th day following the stock acquisition
date, which is the date of public announcement that a person or group of
affiliated or associated persons has become the beneficial owner of 15%
or more of Deluxe's outstanding common stock, subject to certain
exceptions;

. the close of business on the 10th day after the date that a tender or
exchange offer is commenced, which, if consummated, would result in a
person or group of affiliated or associated persons becoming the
beneficial owner of 15% or more of Deluxe's outstanding common stock;
and

. the date that Deluxe consolidates or merges into any person which is not
a Deluxe subsidiary and if the consolidation or merger results in the
other person being the continuing or surviving entity, or the date that
any person, other than a subsidiary of Deluxe, consolidates with or
merges into Deluxe, if that consolidation or merger results in Deluxe
being the continuing or surviving entity and the

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shareholders of Deluxe prior to the merger or consolidation receive, as
consideration for the merger or consolidation, cash or shares of the
person, or the date that Deluxe transfers more than 50% of its, or its
subsidiaries', assets or earning power.

The rights cannot be exercised until the distribution date and will expire
on the expiration date, which is the earlier of :

. the close of business on January 31, 2007;

. the time at which the rights are redeemed by the board of directors of
Deluxe. The board of directors of Deluxe can redeem all of the
outstanding rights any time prior to the earlier of January 31, 2007 or
the stock acquisition date; and

. a time established by Deluxe's board of directors through an amendment
to the plan.

The registered holder of any rights certificates can exercise the rights
any time after the distribution date and before the expiration date, by
surrendering the rights certificates and paying the relevant purchase price,
as calculated in accordance with the Rights Agreement. Subject to certain
exceptions, rights held by persons who beneficially own 15% or more of
Deluxe's common stock, or are certain transferees of such beneficial owners
are null and void. Deluxe is not required to issue fractional shares upon any
exercise of the rights and may issue cash instead of any such fractions.

Generally, unless the consolidation or merger is approved in advance by a
majority of Deluxe's continuing directors, if Deluxe consolidates with or
merges into another person which is not a subsidiary and the other person to
the consolidation or merger is the continuing or surviving entity and, as a
result of the transaction, any person becomes a beneficial owner of more than
15% of the outstanding shares of common stock of Deluxe, then each holder of a
right will be entitled to receive, upon the exercise of its right, shares of
common stock of the continuing or surviving person having an aggregate market
price equal to twice the exercise price of all rights held by such holder
(i.e., at a 50% discount). Also, in general, unless the consolidation or
merger is approved in advance by a majority of Deluxe's continuing directors,
if any person, other than a subsidiary of Deluxe, consolidates with or merges
into Deluxe, with Deluxe being the continuing or surviving entity and the
shareholders of Deluxe shares prior to the merger or consolidation receive, as
consideration for the merger or consolidation, cash or shares of the other
person, and as a result of the transaction the other person becomes a
beneficial owner of more than 15% of the outstanding common stock of Deluxe,
each holder of a right will be entitled to receive, upon the exercise of its
rights, shares of Deluxe at a 50% discount. Unless the consolidation or merger
is approved in advance by a majority of Deluxe's continuing directors, if
Deluxe transfers to a person more than 50% of its, or its subsidiaries',
assets or earning power, and as a result of the transaction the other person
becomes the beneficial owner of more than 15% of the outstanding common stock
of Deluxe, each holder of a right generally will be entitled to receive, upon
the exercise of its rights, shares of common stock of this other person at a
50% discount.

At any time after a person has become the beneficial owner of 15% or more
of the outstanding Deluxe shares, subject to certain exceptions, and prior to
the acquisition by a person of 50% or more of the outstanding Deluxe shares,
the board of directors of Deluxe may exchange all or part of the then
outstanding and exercisable rights for Deluxe shares at an exchange ratio of
one Deluxe share per right, subject to adjustment.

The rights have anti-takeover effects. The rights will cause substantial
dilution to a person or group that attempts to acquire Deluxe pursuant to an
offer that is not approved by the Deluxe board of directors, unless the rights
have been redeemed. However, the rights should not interfere with any tender
offer or merger approved by the Deluxe board because the Deluxe board may
redeem the rights, amend the plan or approve an offer at any time prior to
such time as any person has become the beneficial owner of 15% or more of the
outstanding Deluxe shares. Deluxe anticipates, subject to approval by its
board of directors, amending its rights plan to exempt any person who becomes
a holder of more than 15%, but less than 20%, of the outstanding Deluxe shares
by reason of the exchange offer and spin-off and who is either entitled to
report, and reports, its ownership on Schedule 13G under the Exchange Act or
reports its holdings on Schedule 13D, but only if that person's Schedule 13D
does not state any intention to or reserve the right to control or influence
the management or policies of Deluxe or engage in any of the actions specified
in Item 4 of Schedule 13D.

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AGREEMENTS BETWEEN DELUXE AND eFUNDS

The following is a summary description of the key agreements between Deluxe
and eFunds. This description, which summarizes the material terms of the
agreements, is not complete. You should read the full text of the agreements,
which have been filed with the SEC as exhibits to the registration statement of
which this offering circular-prospectus is a part.

The following is a table summarizing the approximate value that has been or
will be exchanged between Deluxe and eFunds in connection with the key related
agreements described below. eFunds has also entered into several arrangements
with Deluxe for indemnification. Because it is unknown whether any value will
be exchanged pursuant to these agreements, these arrangements are not included
in the table.

Agreement Value to Deluxe Value to eFunds

--------------------------------------------------------------------------------

Initial Public eFunds to pay all costs and Deluxe to pay
Offering and expenses of the initial public all costs and
Distribution offering of its shares. Deluxe expenses of the
Agreement also receives an option to exchange offer.
purchase, at the then market
price, additional eFunds' shares
stock to the extent necessary to
own at least 80.1% of the total
combined voting power of eFunds'
stock and at least 80.1% of any
class of nonvoting stock.

--------------------------------------------------------------------------------

Registration Rights If Deluxe does not proceed with This Agreement
Agreement the split-off, it can request is primarily for
eFunds to register shares of the benefit of
eFunds' shares owned by Deluxe Deluxe.
for sale under applicable
securities laws. Deluxe will
also have the right to include
its shares in other
registrations of securities that
eFunds initiates. eFunds has
agreed to indemnify Deluxe in
respect of certain liabilities
arising under securities laws in
connection with registrations
pursuant to this agreement.

--------------------------------------------------------------------------------

Assignment and This "as-is, where-is" transfer Receipt of the
Assumption Agreement was intended to align eFunds' stock of Chex
assets and businesses in order Systems, Inc.,
to enable eFunds to proceed with Payment
the initial public offering and Protection
the split-off. Systems, Inc.
(SCAN), eFunds
Corporation of
Tustin,
California and
its professional
services and
U.K. businesses,
together with
their net
receivables and
payables with
Deluxe. Based on
their historical
cost at March
31, 2000, the
value of the net
assets
transferred to
eFunds was
approximately
$27.3 million to
Deluxe.

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Agreement Value to Deluxe Value to eFunds

--------------------------------------------------------------------------------

Tax-Sharing eFunds assumes liability for eFunds receives
Agreement taxes resulting from its tax return
operations and eFunds agrees to preparation and
indemnify Deluxe for any taxes filing
due from Deluxe if the exchange assistance and
offer and any subsequent spin- Deluxe
off fail to qualify as tax-free indemnifies
as a result of eFunds' actions eFunds against
or inactions and for a portion any tax
of any taxes that become due as liabilities of
a result of the exchange offer the other
and any subsequent spin-off members of the
because of a retroactive change Deluxe
of law or other reason unrelated consolidated
to an action or inaction by group.
either eFunds or Deluxe. Deluxe
also receives $450,000 per year
for providing eFunds with tax
return preparation and filing
assistance.

--------------------------------------------------------------------------------
Employee This Agreement is primarily eFunds'
Benefits intended to provide continued employees
Agreement benefits to eFunds' employees. continue to
participate in
Deluxe's benefit
plans until the
split-off or the
time eFunds
establishes its
own benefit
plans for its
employees.

--------------------------------------------------------------------------------
Real Estate $10,000,000 eFunds received
Agreements title to eFunds
Phoenix, Arizona
data center
facility.

$44,325 per year eFunds receives
the right to
maintain
communication
nodes at nine
Deluxe
facilities.

$688,800 per year eFunds receives
office space in
Shoreview,
Minnesota.

Deluxe receives space in eFunds' $1,396,800 per
Phoenix, Arizona data center for year
use by its call center
operations.

--------------------------------------------------------------------------------
Transitional $304,000 per month, decreasing eFunds receives
Services to $0 not later than December financial,
Agreement 31, 2001. administrative,
treasury, cash
management,
insurance, sales
support and
employee
benefits
administration
services from
Deluxe.

Deluxe receives ACH processing $28,800 per
services from eFunds. month,
decreasing to $0
not later than
December 31,
2001

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Agreement Value to Deluxe Value to eFunds

--------------------------------------------------------------------------------

Professional Deluxe receives software $43,000,000 per
Services development and maintenance year*
Agreement services from eFunds.

Deluxe receives data entry $5,900,000 per
services from eFunds. year*

--------------------------------------------------------------------------------

Network Access $3,500,000 per year* through end eFunds receives
Agreement of 2001 the right to use
the system
through which
Deluxe's check
printing
customers order
products to
deliver eFunds'
ChexSystems
product set.

--------------------------------------------------------------------------------

Data and Related Deluxe receives approximately Deluxe provides
Agreements $97,500 per year for providing eFunds, at no
eFunds with processing services. cost, with check
printing data
from Deluxe's
direct to
consumer check
printing
business until
July 1, 2001.

--------------------------------------------------------------------------------

Loan Agreement Deluxe receives interest eFunds receives
payments from eFunds at the the right to
London Interbank Offered Rate, borrow up to $75
plus a variable additional million from
margin based on Deluxe's credit Deluxe until the
rating. earlier of the
split-off or
December 31,
2000.

* These amounts are estimated. The actual amounts paid by Deluxe and received
by eFunds may vary based upon the actual services provided.

Initial Public Offering and Distribution Agreement

General. On March 31, 2000, eFunds entered into an initial public offering
and distribution agreement with Deluxe, which governs offerings of eFunds'
securities, including eFunds' initial public offering and the exchange offer.
Deluxe has the sole discretion to determine all terms of the exchange offer,
including the form, structure and terms of any transactions or offerings to
effect the exchange offer and the timing of and conditions to the completion of
the exchange offer.

Offerings of eFunds Securities and the Exchange Offer. eFunds has agreed
that it will cooperate with Deluxe in all respects to accomplish the exchange
offer or any similar transaction.

eFunds also agreed that, at Deluxe's direction, it will promptly take all
actions necessary or desirable to effect these transactions, including the
registration under the Securities Act of eFunds' shares.

Expenses. eFunds has agreed to pay all costs and expenses relating to any
primary offerings of eFunds shares and its other securities prior to the
exchange offer, including eFunds' initial public offering. Deluxe has agreed to
pay all costs and expenses relating to the exchange offer.

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Covenants. eFunds and Deluxe have agreed to provide each other with access
to information relating to the assets, business and operations of the
requesting party. eFunds has agreed that, for so long as Deluxe is required to
consolidate eFunds' results of operations and financial position with Deluxe's,
eFunds will:

. provide Deluxe with financial information regarding eFunds and its
subsidiaries and access to eFunds' books and records;

. not select a different accounting firm than Deloitte & Touche LLP to
serve as its auditors;

. complete the audit of its financial statements on the same schedule as
the audit of Deluxe's financial statements; and

. consult with Deluxe and provide Deluxe and its auditors with notice of
any proposed determination of, or significant changes in, eFunds'
accounting estimates and accounting principles.

As long as Deluxe beneficially owns 50% or more of the outstanding eFunds'
shares, eFunds may not take any action that may result in a contravention or an
event of default by Deluxe of:

. any provision of law, including the Internal Revenue Code or the
Employee Retirement Income Security Act of 1974, as amended;

. any provision of Deluxe's articles of incorporation or bylaws;

. any credit agreement, indenture or other material agreement binding upon
Deluxe; or

. any judgment, order or decree of any governmental body, agency or court.

Options. eFunds has granted to Deluxe options to purchase additional eFunds
shares to the extent necessary to own at least 80.1% of the total combined
voting power of all classes of eFunds' outstanding voting stock and to own at
least 80.1% of each outstanding class of nonvoting stock. These options may be
exercised immediately prior to the issuance of any of eFunds' equity
securities, other than its initial public offering.

The purchase price of the shares of voting stock purchased upon any exercise
will be the market price of eFunds' voting stock on the date of delivery of the
exercise notice. The purchase price of nonvoting capital stock will be the
price at which that stock may be purchased by third parties. These options will
terminate when Deluxe or its affiliates own less than 45% of the total combined
voting power of all classes of eFunds' outstanding equity.

Registration Rights Agreement

eFunds and Deluxe have entered into a registration rights agreement which
only becomes effective in the event Deluxe notifies eFunds that it does not
plan to proceed with or complete the exchange offer and any subsequent spin-
off. Upon the request of Deluxe, eFunds must use its reasonable best efforts to
register under applicable securities laws any of the eFunds shares owned by
Deluxe for sale in accordance with Deluxe's intended method of disposition.
Deluxe will also have the right to include eFunds shares owned by Deluxe in
other registrations of equity securities eFunds initiates. Deluxe will pay all
costs and expenses relating to each such registration that Deluxe requests or
in which Deluxe participates except for eFunds out-of-pocket expenses and the
fees of eFunds attorneys, accountants and other advisors. eFunds has agreed to
indemnify Deluxe against liabilities in connection with registrations in which
Deluxe participates, including liabilities under the Securities Act or to
contribute to payments Deluxe may be required to make for these liabilities.

Assignment and Assumption Agreement

eFunds has entered into an assignment and assumption agreement with Deluxe
which governs the terms of the transfer to eFunds of assets and liabilities of
Deluxe. All transfers by Deluxe to eFunds are on an "as is, where is" basis,
and without any representations or warranties. As a result, eFunds has agreed
to bear the economic and legal risks that any conveyances of assets are
insufficient to vest in eFunds good and marketable

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<PAGE>

title to such assets and as to defects in the condition of the assets. eFunds
and its subsidiaries assumed sole financial responsibility for all liabilities
associated with its businesses and operations other than government services
and all of the assets transferred to eFunds as of March 31, 2000. Based on
their historical cost at March 31, 2000, the value of the net assets
transferred to eFunds was approximately $27.3 million.

Tax-Sharing Agreement

In general, eFunds will be included in Deluxe's consolidated group for
federal income tax purposes for so long as Deluxe beneficially owns at least
80% of eFunds' total voting power and value of its outstanding stock. Each
member of a consolidated group is jointly and severally liable for the federal
income tax liability of each other member of the consolidated group. eFunds has
entered into a tax-sharing agreement with Deluxe which allocates tax
liabilities between eFunds and Deluxe during the period in which eFunds is
included in Deluxe's consolidated group. eFunds could, however, be liable in
the event that any federal tax liability is incurred, but not discharged, by
other members of Deluxe's consolidated group and Deluxe would be liable if any
such liability is incurred, but not discharged, by eFunds.

eFunds and Deluxe will make payments to each other such that the amount of
taxes to be paid by eFunds will generally be determined as though eFunds had
filed separate federal, state and local income tax returns. eFunds will be
responsible for any taxes with respect to tax returns that include eFunds and
its subsidiaries. In determining the amount of its tax-sharing payments, Deluxe
will prepare for eFunds' pro forma returns with respect to federal and
applicable state and local income taxes.

Prior to completion of the exchange offer, Deluxe will continue to have all
the rights as eFunds' parent for purposes of federal, state and local tax law.
Deluxe will be the sole and exclusive agent for eFunds in any and all matters
relating to eFunds' income, franchise and similar tax liabilities. Deluxe will
have sole and exclusive responsibility for the preparation and filing of
consolidated federal and consolidated or combined or unitary state income tax
returns or amended returns. Deluxe will have the power, in its sole discretion,
to contest, compromise or settle any asserted tax adjustment or deficiency and
to file, litigate or compromise any claim for a refund on eFunds' behalf. In
addition, Deluxe has agreed to undertake to provide these services with respect
to eFunds separate state and local tax returns and eFunds' foreign tax returns.
eFunds generally will pay Deluxe $37,500 per month for the tax services to be
provided to eFunds by Deluxe.

The tax-sharing agreement also provides that eFunds will indemnify Deluxe
for any taxes due from Deluxe if the exchange offer and any spin-off fails to
qualify as tax-free as a result of eFunds' actions or inactions. eFunds is
required under the tax sharing agreement to comply with the representations
made to the Internal Revenue Service in connection with its private letter
ruling request regarding the tax-free nature of the exchange offer and any
spin-off. In addition, eFunds agreed to indemnify Deluxe for a portion of any
taxes due from Deluxe if the exchange offer and any spin-off fail to qualify as
tax-free as a result of a retroactive change of law or other reason unrelated
to the action or inaction of either eFunds or Deluxe.

Employee Benefits Agreement

eFunds has entered into an employee benefits agreement with Deluxe to
allocate assets, liabilities, and responsibilities relating to eFunds' current
and former U.S. employees and their participation in the benefit plans that
Deluxe currently sponsors and maintains.

All of eFunds' eligible employees will continue to participate in the Deluxe
benefit plans on comparable terms and conditions to those currently applicable
to them until the earlier of the completion of the exchange offer and spin-off,
if any or the time at which eFunds established comparable benefit plans for its
current and former employees.

Prior to or upon the completion of the exchange offer and any spin-off
eFunds will adopt benefit plans generally corresponding to the Deluxe plans,
including qualified retirement plans, executive deferred compensation and
supplemental benefit plans, health and welfare plans, fringe benefit plans, and
leave of absence programs. eFunds' benefit plans will take into account all
service, compensation and other benefit determinations that, as of the
completion of the exchange offer and any spin-off were recognized under the
corresponding Deluxe benefit plan.

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<PAGE>

eFunds' benefit plans will generally assume any liabilities for eFunds'
employees under the corresponding Deluxe benefit plan. Assets relating to the
employee liabilities are expected to be transferred to eFunds or its related
plans and trusts from trusts and other funding vehicles associated with
Deluxe's benefit plans.

Real Estate Agreements

eFunds has purchased real property and a data center located in Phoenix,
Arizona and personal property from a subsidiary of Deluxe at their historical
cost for approximately $10 million. Following the completion of eFunds initial
public offering, eFunds and Deluxe entered into several agreements under which
Deluxe or its subsidiaries have agreed to:

. lease nine sites to eFunds for use as communication nodes for a period
of approximately 12 to 18 months at approximately $942 per month;

. sublease a portion of a building in Shoreview, Minnesota to eFunds for a
period of approximately 12 months at approximately $57,445 per month;

. lease for a period of 3 years a portion of a data center in Phoenix,
Arizona from eFunds at approximately $116,404 per month; and

. assign their rights as tenant under various leases to eFunds.

Transitional Services Agreement

eFunds and Deluxe have entered into a transitional services agreement under
which Deluxe and eFunds will provide services to each other, including:

. financial and administrative services;

. treasury;

. cash management and insurance services;

. sales support;

. legal services; and

. employee benefits administration.

Each service provided under the transitional services agreements will be
provided until either completion of the exchange offer or December 31, 2001.
Either party may terminate any or all services that they receive under the
transitional services agreements at any time upon 60 days' prior written
notice. Any or all services may be extended for one additional 60-day period.
eFunds has agreed to pay $303,797 per month to Deluxe for transitional
services provided to eFunds. Deluxe has agreed to pay $28,800 per month to
eFunds for transitional services provided to Deluxe. These amounts will
gradually decrease as services are terminated.

Professional Services Agreement

eFunds has entered into a master agreement with Deluxe under which eFunds
will provide Deluxe with:

. software development and maintenance services for information technology
applications;

. financial shared services including accounts receivable, accounts
payable and general accounting transaction processing; and

. data entry services.

This agreement will expire on March 31, 2005, and will automatically renew
each year for an additional one year term unless terminated by either party.
In addition, this agreement may be terminated by Deluxe at its option if
eFunds is acquired by a third party, whether by merger or the sale of all or
substantially all of eFunds' assets. During the term of the agreement, eFunds
anticipates that Deluxe will spend approximately $43 million

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<PAGE>

per year for software development and maintenance services for information
technology applications, which amounts will be based on the actual number of
hours of information technology services that eFunds provides to Deluxe. If
Deluxe fails to reach the $43 million spending target per year, it will be
obligated to make compensatory payments for a portion of eFunds' fees based on
eFunds' estimates of lost margins. If Deluxe exceeds the $43 million spending
target per year, Deluxe will be entitled to receive reduced rates. eFunds also
will provide business process management services, including accounts
receivable, accounts payable and other general accounting services, and data
entry services. Deluxe's annual minimum spending target for these business
process management services will range from $8.1 million in 2000 to $4.2
million in 2004. The agreement will also provide for credits to Deluxe for
unsatisfactory performance by eFunds and bonuses for superior performances as
are typical for information technology professional services. The provision of
services by eFunds under the agreement is non-exclusive, and Deluxe may
contract with any third party for the provision of information technology and
business process management services.

Third Party Indemnification Agreement

Under the third party indemnification agreement, eFunds has agreed to
indemnify Deluxe in connection with any liabilities incurred by Deluxe after
completion of the exchange offer as a result of:

. Deluxe's purchase or lease of property or services for eFunds' benefit
under any master agreement; or

. any guaranties under which Deluxe guaranteed eFunds' performance of
agreements with third parties.

eFunds is obligated to indemnify Deluxe for any liability to the extent such
liability primarily relates to the past, present or future operation of its
business or operations.

Network Access Agreement

Historically, some customers of eFunds' ChexSystems have elected to use the
online ordering connectivity provided by Deluxe's check printing operations to
receive services provided by ChexSystems. Deluxe provided eFunds a license to
use these connections to its check printing customers in order to allow eFunds
to continue to provide eFunds' ChexSystems, FraudFinder, QualiFile and other
ChexSystems products to financial institutions who wish to receive these
products through the Deluxe network. In exchange for access to this product
delivery channel, eFunds will pay Deluxe its cost of providing these services
during 2000 and cost plus 10% in 2001. eFunds estimates the cost of these
services to be approximately $3.5 million in 2000. Deluxe will maintain
ownership of all rights in its network, except that eFunds will own the
interface between the network security layer and eFunds' back-end systems. The
agreement will expire on December 31, 2001.

Data and Related Agreements

eFunds and Deluxe have entered into several agreements which will govern the
transfer of data between them. Under a data contribution agreement, Deluxe will
provide eFunds, at no cost, with consumer account records pertaining to its
direct to consumer check printing business. eFunds will agree to only use this
information for purposes that are consistent with applicable federal, state and
local laws, including the Fair Credit Reporting Act. Customers of Deluxe will
have the ability to request that their information not be provided to eFunds.
The agreement has a term that will end on July 1, 2001.

Under a processing agreement, eFunds will provide Deluxe with bank routing
numbers to enable eFunds to obtain check order history files from Deluxe as
long as eFunds have obtained a consent from the applicable financial
institution to receive this data. Deluxe may only use the bank routing numbers
for the purpose of performing the processing requested by eFunds. eFunds
estimates the cost of these processing services to be approximately $97,472 per
year. Either party may terminate this agreement upon 30 days' prior written
notice.

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Loan Agreement

Deluxe provided eFunds with a revolving credit facility of up to $75 million
until the earlier of the completion of the exchange offer or December 31, 2000.
Borrowings under the facility will be due at completion of the exchange offer
or maturity and will accrue interest at the London Interbank Offered Rate, plus
a variable additional margin based on Deluxe's credit rating. The credit
facility includes financial and restrictive covenants. eFunds intends to
replace this facility with a new credit facility with one or more financial
institutions.

Indemnification Agreement

Deluxe has agreed to indemnify eFunds for any losses on identified
government services loss contracts in excess of eFunds' $29.2 million loss
contract reserves as of April 30, 2000. eFunds is required to calculate any
charges for loss contracts in a manner consistent with Deluxe's prior loss
accrual practices. Deluxe will also indemnify eFunds against any liabilities,
losses or expenses arising from litigation and claims asserted against eFunds
in connection with the operation of its government services business prior to
the completion of eFunds' initial public offering. Deluxe's indemnification
obligations do not apply to losses contemplated by existing reserves and are
limited to a maximum amount equal to $14.6 million. In addition, Deluxe's
indemnification does not apply to any contract that was not in a loss position
as of April 30, 2000 and so if any of these profitable contracts were to become
unprofitable, no indemnification would be available. eFunds has agreed to
indemnify Deluxe for all other claims related to the operation of its
government services business that occurs after the completion of the initial
public offering.

151
<PAGE>

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following discussion is a summary of material United States federal
income tax consequences relating to the exchange offer and any subsequent spin-
off, if necessary. This discussion is for general information only and does not
address all aspects of United States federal income taxation. For example, this
discussion does not address any state, local or foreign tax consequences. This
discussion does not discuss all tax considerations that may be relevant to
Deluxe shareholders in light of their particular circumstances, nor does it
address the consequences to certain Deluxe shareholders subject to special
treatment under the United States federal income tax laws (such as tax-exempt
entities, non-resident alien individuals, foreign corporations, persons who
acquired such Deluxe shares pursuant to the exercise of employee stock options
or otherwise as compensation, insurance companies, and dealers in securities).
In addition, this discussion does not address the United States federal income
tax consequences to Deluxe shareholders who do not hold their Deluxe shares as
a capital asset. The discussion is based on the Internal Revenue Code of 1986,
as amended, referred to as the Code, the Treasury Department regulations
promulgated thereunder, published positions of the Internal Revenue Service,
referred to as the IRS, and court decisions now in effect, all of which are
subject to change, possibly with retroactive effect. Deluxe shareholders are
urged to consult their tax advisors as to the particular tax consequences to
them of the exchange offer and any subsequent spin-off, as well as the
applicability and effect of any state, local or foreign tax laws and the effect
of any changes in federal tax laws that occur after the date of this offering
circular-prospectus.

Deluxe has received a private letter ruling from the IRS to the effect that,
for United States federal income tax purposes, the exchange offer and any
subsequent spin-off will qualify under Section 355 of the Code as a
distribution that is generally tax-free to Deluxe shareholders and to Deluxe.
Although private letter rulings generally are binding on the IRS, Deluxe will
not be able to rely on the private letter ruling if any factual representations
made to the IRS are incorrect or untrue in any respect or any undertakings made
to the IRS are not complied with. Neither Deluxe nor eFunds is aware of any
facts or circumstances that would cause any such representations to be
incorrect or untrue in any respect. Nevertheless, if Deluxe completes the
exchange offer and any subsequent spin-off, and, notwithstanding the private
letter ruling, the exchange offer and any subsequent spin-off is held to be
taxable, both Deluxe and its shareholders who receive eFunds shares could be
subject to a material amount of taxes as a result of the exchange offer and any
subsequent spin-off.

The private letter ruling generally provides that:

. no gain or loss will be recognized by the Deluxe shareholders upon their
receipt of eFunds shares in the exchange offer and any subsequent spin-
off;

. for those Deluxe shareholders who surrender all of their Deluxe shares
in the exchange offer, the aggregate tax basis of the eFunds shares held
by the Deluxe shareholders after the exchange offer, including any
fractional share interests, will be the same as the aggregate tax basis
of the Deluxe shares exchanged in the exchange offer;

. for those Deluxe shareholders who do not surrender all of their Deluxe
shares in the exchange offer, each shareholder's aggregate tax basis in
the Deluxe shares held before the completion of the exchange offer will
be allocated between the Deluxe shares and eFunds shares (including any
fractional share interests) held by such shareholder after the exchange
offer and any subsequent spin-off in proportion to their relative fair
market values;

. the holding period of the eFunds shares received by the Deluxe
shareholders in the exchange offer and any subsequent spin-off,
including any fractional share interests, will include the holding
period of the Deluxe shares with respect to which the eFunds shares were
received; and

. those Deluxe shareholders who receive cash in lieu of a fractional share
interest in eFunds will recognize gain or loss equal to the difference
between the amount of cash received and the tax basis allocable to such
fractional share interest, and that gain or loss will generally
constitute capital gain or loss if the fractional share interest is held
as a capital asset at the time of the exchange offer and any subsequent
spin-off.

152
<PAGE>

The private letter ruling does not specifically address tax basis issues
with respect to holders of Deluxe shares who have blocks of Deluxe shares with
different per share tax bases. Such holders are urged to consult their tax
advisors regarding the possible tax basis consequences of the exchange offer
and any subsequent spin-off.

United States Treasury Department regulations require each Deluxe
shareholder who receives eFunds shares in the exchange offer and any subsequent
spin-off to attach to the holder's United States federal income tax return for
the year in which such shares are received a detailed statement setting forth
such data as may be appropriate in order to show the applicability of Section
355 of the Code to the exchange offer and any subsequent spin-off. Deluxe will
provide its shareholders who participate in this exchange offer and its
shareholders who receive eFunds' shares in any subsequent spin-off with the
information necessary to comply with such requirement.

LEGAL MATTERS

Certain legal matters with respect to the exchange offer and spin-off, will
be passed upon by Dorsey & Whitney LLP, Minneapolis, Minnesota. Legal matters
relating to certain United States federal income tax consequences with respect
to the exchange offer and any subsequent spin-off have been passed upon by
Skadden, Arps, Slate, Meagher & Flom LLP. Simpson Thacher & Bartlett, New York,
New York will represent the dealer manager.

EXPERTS

The consolidated financial statements of Deluxe as of December 31, 1999 and
December 31, 1998 and for the three years in the period ended December 31, 1999
included in this offering circular-prospectus and the consolidated financial
statements of eFunds as of December 31, 1999 and December 31, 1998 and for the
three years in the period ended December 31, 1999 included in this offering
circular-prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing in this offering circular-
prospectus and elsewhere in the registration statement, and are included in
reliance upon the report of such firm, given upon their authority, as experts
in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

Deluxe and eFunds file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information filed by either company at the SEC's
public reference rooms at 450 5th Street NW, Washington DC 20549 or in, New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. In addition, the SEC
maintains an Internet site that contains reports, proxy statements and other
information regarding registrants that file electronically, such as Deluxe and
eFunds. The address of the SEC's Internet site is http://www.sec.gov.

eFunds has filed a registration statement on Form S-4 under the Securities
Act of 1933, of which this document forms a part, to register the eFunds shares
to be issued to shareholders whose Deluxe shares are accepted for exchange
pursuant to the exchange offer. Deluxe will file a Schedule TO Issuer Tender
Offer Statement with the SEC with respect to the exchange offer. This offering
circular-prospectus, and the related letter of transmittal, constitute Deluxe's
offer to exchange, in addition to being a prospectus of eFunds. This document
does not contain all the information set forth in the registration statement or
in the Schedule TO, selected portions of which are omitted in accordance with
the rules and regulations of the SEC. For further information pertaining to
Deluxe, eFunds and eFunds shares, reference is made to the registration
statement and its exhibits. Statements contained in this document or in any
document incorporated in this document by reference as to the contents of any
contract or other document referred to within this document or other documents
that are incorporated by reference are not necessarily complete and, in each
instance, reference is made to the copy of the applicable contract or other
document filed as an exhibit to the registration statement or otherwise filed
with the SEC. Each statement contained in this document is qualified in its
entirety by reference to the underlying documents.

153
<PAGE>

Deluxe shares are listed on the NYSE. Reports, proxy statements and other
information concerning Deluxe can be inspected at the offices of the NYSE, 20
Broad Street, New York, New York 10005. eFunds shares are quoted on the Nasdaq
National Market. Reports, proxy statements and other information concerning
eFunds can also be inspected at the offices of the Nasdaq National Market. For
further information on obtaining copies of eFunds public filings at the Nasdaq
National Market, you should call (212) 656-5060.

This document incorporates documents by reference that are not included as
part of this document. Deluxe and eFunds undertake to provide, without charge
to each person, including any beneficial owner of Deluxe shares, to whom a copy
of this document has been delivered, upon written or oral request, a copy of
any and all of the documents that have been incorporated into this document by
reference, other than exhibits to those documents unless the exhibits are
specifically incorporated into this document by reference. Requests for these
documents should be directed to Deluxe or eFunds, as the case may be, at the
following addresses and telephone numbers:

Deluxe Corporation eFunds Corporation
3680 Victoria Street North 3680 Victoria Street North
Shoreview, Minnesota 55126 Shoreview, Minnesota 55126
Attn: Shareowner Services Attn: c/o Deluxe Shareowner
Telephone: (651) 450-4053 Services
Telephone: (651) 450-4053

In order to ensure timely delivery of the requested documents, requests
should be made by , 2000.

The following documents of Deluxe, which have been filed with the SEC by
Deluxe (File No. 01-07945), are incorporated into this document by reference:

(a) the Annual Report on Form 10-K for the year ended December 31, 1999,
as amended by Form 10-K/A;

(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
2000, as amended by a Form 10-Q/A filed on August 18, 2000 and June 30,
2000, as amended by a Form 10-Q/A filed on August 18, 2000;

All documents filed by Deluxe pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act, after the date of this document and prior to the
expiration of the exchange offer are incorporated by reference into this
document and are considered a part of this document form the date of filing of
those documents.

Any statement contained within this document or in any document incorporated
by reference will be deemed to be modified or superseded for purposes of this
document to the extent that the statement contained in this document or any
subsequently filed document that also is or is deemed to be incorporated by
reference in this document modifies or supersedes that statement. Statements so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute part of this document.

No person has been authorized to give any information or to make any
representation other than as contained in this document in connection with the
eFunds shares to be issued in connection with the exchange offer and, if given
or made, the information or representation must not be relied upon as having
been authorized. This document does not constitute an offer to exchange
securities in any jurisdiction in which, or to any person to whom, it would be
unlawful to make such an offer. Neither the delivery of this document nor any
distribution of the securities offered hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of Deluxe or eFunds since the date of this document or that the
information contained in this document is correct as of any time subsequent to
that date. All information in this document regarding Deluxe has been provided
by Deluxe and all information regarding eFunds has been provided by eFunds.

154
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C>
CONSOLIDATED DELUXE FINANCIAL STATEMENTS:
Independent Auditors' Report............................................ F-2
Consolidated Balance Sheets at December 31, 1998 and 1999 and June 30,
2000 (Unaudited)....................................................... F-3
Consolidated Statements of Income for the Years Ended December 31, 1997,
1998 and 1999 and the Six Months Ended June 30, 1999 and 2000
(Unaudited)............................................................ F-4
Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 1997, 1998 and 1999 and the Six Months Ended June 30, 1999
and 2000 (Unaudited)................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1997, 1998 and 1999 and the Six Months Ended June 30, 1999 and 2000
(Unaudited)............................................................ F-6
Notes to Consolidated Financial Statements.............................. F-7
Summarized Quarterly Financial Data (Unaudited)--1998, 1999 and 2000.... F-35
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
CONSOLIDATED eFUNDS FINANCIAL STATEMENTS:
Independent Auditors' Report............................................ F-36
Consolidated Balance Sheets at December 31, 1998 and 1999 and June 30,
2000 (Unaudited)....................................................... F-37
Consolidated Statements of Operations for the Years Ended December 31,
1997, 1998 and 1999 and the Six Months Ended June 30, 1999 and 2000
(Unaudited)............................................................ F-38
Consolidated Statements of Comprehensive Income (Loss) for the Years
Ended December 31, 1997, 1998 and 1999 and the Six Months Ended June
30, 1999 and 2000 (Unaudited).......................................... F-39
Consolidated Statements of Cash Flows for the Years Ended December 31,
1997, 1998 and 1999 and the Six Months Ended June 30, 1999 and 2000
(Unaudited)............................................................ F-40
Notes to Consolidated Financial Statements.............................. F-41
Summarized Quarterly Financial Data (Unaudited)--1998, 1999 and 2000.... F-64
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Deluxe Corporation

We have audited the accompanying consolidated balance sheets of Deluxe
Corporation and its subsidiaries (the Company) as of December 31, 1998 and
1999, and the related consolidated statements of income, comprehensive income,
and cash flows for each of the three years in the period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Deluxe Corporation and its
subsidiaries at December 31, 1998 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States of America.

DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
January 26, 2000

F-2
<PAGE>

DELUXE CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
December 31, Unaudited
-------------------- June 30,
1998 1999 2000
---------- -------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents................... $ 268,389 $140,465 $ 91,168
Restricted custodial cash................... 545 3,429 6,311
Marketable securities....................... 41,133 25,713 18,171
Trade accounts receivable--net.............. 145,079 115,775 126,141
Inventories:
Raw material ............................. 2,619 3,110 2,478
Semi-finished goods....................... 7,401 7,245 7,788
Finished goods............................ 1,981 1,261 1,239
Supplies.................................... 17,400 15,007 13,872
Deferred advertising........................ 7,939 17,189 11,776
Deferred income taxes ...................... 56,554 14,206 19,215
Prepaid expenses and other current assets... 59,040 75,349 45,567
---------- -------- ----------
Total current assets...................... 608,080 418,749 343,726
Long-term Investments........................ 45,208 40,846 65,335
Restricted Cash.............................. 3,921 28,939 28,748
Property, Plant, and Equipment
Land and land improvements.................. 46,826 41,157 40,679
Buildings and building improvements......... 209,416 165,028 163,069
Machinery and equipment..................... 507,680 448,445 437,089
---------- -------- ----------
Total..................................... 763,922 654,630 640,837
Less accumulated depreciation .............. 423,845 359,845 368,486
---------- -------- ----------
Property, plant and equipment--net........ 340,077 294,785 272,351
Intangibles
Cost in excess of net assets acquired--
net........................................ 42,836 51,705 141,287
Internal use software--net.................. 116,734 142,465 163,592
Other intangible assets--net................ 14,663 15,154 15,794
---------- -------- ----------
Total intangibles......................... 174,233 209,324 320,673
---------- -------- ----------
Total assets............................ $1,171,519 $992,643 $1,030,833
========== ======== ==========
Current Liabilities
Accounts payable............................ $ 53,555 $ 60,876 $ 55,285
Accrued liabilities:
Wages, including vacation pay............. 60,540 54,228 54,641
Employee profit sharing and pension....... 41,762 33,490 16,449
Accrued income taxes...................... 33,075 28,405 44,244
Accrued rebates........................... 34,712 28,281 26,308
Accrued contract losses................... 14,697 20,599 27,734
Other .................................... 185,022 111,330 107,951
Short-term debt............................. -- 63,100 19,813
Long-term debt due within one year.......... 7,332 4,357 102,755
---------- -------- ----------
Total current liabilities ................ 430,695 404,666 455,180
Long-term Debt............................... 106,321 115,542 13,499
Deferred Income Taxes........................ 27,519 46,322 46,571
Other Long-term Liabilities ................. 419 8,805 8,144
Minority Interest in Net Assets of
Subsidiary.................................. -- -- 31,882
Commitments and Contingencies (Notes 13 and
17)
Shareholders' Equity
Common shares $1 par value (authorized:
500,000,000 shares; issued: 1998--
80,480,526; 1999--72,019,898; 2000--
72,331,225)................................ 80,481 72,020 72,331
Additional paid-in capital ................. 6,822 -- 8,823
Retained earnings........................... 519,742 346,617 396,045
Unearned compensation....................... (238) (47) --
Accumulated other comprehensive income
(loss)..................................... (242) (1,282) (1,642)
---------- -------- ----------
Shareholders' equity...................... 606,565 417,308 475,557
---------- -------- ----------
Total liabilities and shareholders'
equity................................. $1,171,519 $992,643 $1,030,833
========== ======== ==========
</TABLE>

See Notes to Consolidated Financial Statements

F-3
<PAGE>

DELUXE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
Unaudited
Six Month Ended
Year Ended December 31, June 30,
---------------------------------- ------------------
1997 1998 1999 1999 2000
---------- ---------- ---------- -------- --------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Net Sales............... $1,920,629 $1,933,659 $1,650,500 $821,918 $811,182
Cost of sales,
excluding loss
contract and asset
impairment charges... 897,313 895,050 732,541 370,221 342,194
Loss contract and
asset impairment
charges.............. 2,470 40,949 8,700 117 9,700
---------- ---------- ---------- -------- --------
Total cost of sales.. 899,783 935,999 741,241 370,338 351,894
---------- ---------- ---------- -------- --------
Gross Margin............ 1,020,846 997,660 909,259 451,580 459,288
---------- ---------- ---------- -------- --------
Selling, general and
administrative....... 766,403 753,290 602,157 294,044 323,964
Research and
development.......... 2,175 1,361 5,008 2,377 1,955
Asset impairment
charges.............. 96,549 -- -- -- --
---------- ---------- ---------- -------- --------
Total operating
expenses............ 865,127 754,651 607,165 296,421 325,919
---------- ---------- ---------- -------- --------
Income from
operations........... 155,719 243,009 302,094 155,159 133,369
Other Income (Expense)
Gain on sale of
subsidiary shares.... -- -- -- -- 30,113
Legal proceedings..... (40,050) 4,157 2,094 2,094 --
Other income
(expense)............ 8,303 4,022 28,973 2,027 540
Interest expense ..... (8,822) (8,273) (8,506) (3,458) (7,248)
---------- ---------- ---------- -------- --------
Income Before Income
Taxes.................. 115,150 242,915 324,655 155,822 156,774
Provision for Income
Taxes.................. 70,478 99,852 121,633 60,010 52,751
---------- ---------- ---------- -------- --------
Net Income.............. $ 44,672 $ 143,063 $ 203,022 $ 95,812 $104,023
========== ========== ========== ======== ========
Net Income per Share
Basic................. $ 0.55 $ 1.77 $ 2.65 $ 1.22 $ 1.44
Diluted............... $ 0.55 $ 1.77 $ 2.64 $ 1.21 $ 1.44
Cash Dividends per
Share.................. $ 1.48 $ 1.48 $ 1.48 $ 0.74 $ 0.74
</TABLE>

See Notes to Consolidated Financial Statements

F-4
<PAGE>

DELUXE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
Unaudited Six
Months Ended
Year Ended December 31, June 30,
--------------------------- -----------------
1997 1998 1999 1999 2000
------- -------- -------- ------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net Income................... $44,672 $143,063 $203,022 $95,812 $104,023
Other Comprehensive (Loss)
Income, Net of Tax..........
Foreign currency
translation adjustments... (1,135) 177 (555) (949) (416)
Unrealized gains on
securities:
Unrealized holding gains
(losses) arising during
the period............... -- 116 4 41 96
Less reclassification
adjustments for gains
included in net income... -- (46) (489) (413) (40)
------- -------- -------- ------- --------
Other comprehensive (loss)
income.................... (1,135) 247 (1,040) (1,321) (360)
------- -------- -------- ------- --------
Comprehensive Income......... $43,537 $143,310 $201,982 $94,491 $103,663
======= ======== ======== ======= ========
Related Tax Benefit (Expense)
of Other Comprehensive
(Loss) Income
Foreign currency
translation adjustments... $ 1,790 $ (124) $ 333 $ 594 $ 214
Unrealized gains on
securities:
Unrealized holding gains
(losses) arising during
the period............... -- (61) (2) (22) (52)
Less reclassification
adjustments for gains
included in net income... -- 24 263 222 22
</TABLE>

See Notes to Consolidated Financial Statements

F-5
<PAGE>

DELUXE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31, June 30,
---------------------------- ------------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net income................ $ 44,672 $143,063 $203,022 $ 95,812 $104,023
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation............. 54,690 58,931 54,305 27,855 21,748
Amortization of
intangibles............. 26,453 24,885 29,605 12,768 23,274
Asset impairment
charges................. 99,019 26,252 492 117 --
Share purchase discount.. 6,654 5,905 4,764 2,481 1,582
Gain on sale of
subsidiary shares....... -- -- -- -- (30,113)
Net (gain) loss on sales
of businesses........... (866) 4,850 (19,770) -- --
Deferred income taxes.... (25,733) 12,146 63,875 -- (4,797)
Changes in assets and
liabilities, net of
effects from
acquisitions and sales
of businesses:
Restricted cash........ -- (4,466) (27,902) (13,336) (2,691)
Trade accounts
receivable............ (5,806) (5,241) 20,578 21,127 (9,776)
Inventories............ 5,019 3,568 385 2,754 1,134
Accounts payable....... 9,678 (6,008) 7,306 (4,850) (5,916)
Other assets and
liabilities........... 81,998 30,378 (115,714) (49,046) 2,411
-------- -------- -------- -------- --------
Net cash provided by
operating activities.. 295,778 294,263 220,946 95,682 100,879
-------- -------- -------- -------- --------
Cash Flows from Investing
Activities
Proceeds from sales of
marketable securities
with maturities of more
than 3 months............ -- 19,199 32,775 17,438 7,627
Purchases of marketable
securities with
maturities of more than 3
months................... (8,000) (52,411) (17,915) (17,915) --
Capital expenditures...... (109,500) (121,275) (115,020) (51,592) (42,792)
Payments for acquisitions,
net of cash acquired..... (10,600) -- (35,667) (35,666) (115,991)
Net proceeds from sales of
businesses, net of cash
sold..................... 21,627 89,416 99,475 24,447 --
Proceeds from sales of
capital assets........... 20,036 28,518 66,892 52 11,909
Loans to others........... -- -- (32,500) -- 32,500
Other..................... (2,925) (395) 1,663 (104) (6,363)
-------- -------- -------- -------- --------
Net cash used in
investing activities.. (89,362) (36,948) (297) (63,340) (113,110)
-------- -------- -------- -------- --------
Cash Flows from Financing
Activities
Net (payments) borrowings
on short-term debt....... (16,783) -- 61,720 25,065 (43,863)
Payments on long-term
debt..................... (6,818) (6,589) (11,113) (8,038) (1,299)
Net proceeds from sale of
subsidiary shares........ -- -- -- -- 61,995
Payments to retire
shares................... (56,281) (60,323) (314,853) (199,853) (1,047)
Proceeds from issuing
shares under employee
plans.................... 23,654 26,230 29,208 16,020 4,746
Cash dividends paid to
shareholders............. (121,321) (119,682) (113,535) (59,372) (53,471)
-------- -------- -------- -------- --------
Net cash used in
financing activities.. (177,549) (160,364) (348,573) (226,178) (32,939)
-------- -------- -------- -------- --------
Net Cash Used by Certain
International Operations
During December, 1999 (see
Note 1) -- -- -- -- (4,127)
-------- -------- -------- -------- --------
Net Increase (Decrease) in
Cash and Cash Equivalents.. 28,867 96,951 (127,924) (193,836) (49,297)
Cash and Cash Equivalents at
Beginning of Period........ 142,571 171,438 268,389 268,389 140,465
-------- -------- -------- -------- --------
Cash and Cash Equivalents at
End of Period.............. $171,438 $268,389 $140,465 $ 74,553 $ 91,168
======== ======== ======== ======== ========
Supplementary Cash Flow
Disclosure:
Interest paid............ $ 9,620 $ 8,018 $ 9,420 $ 4,191 $ 8,364
Income taxes paid........ $ 63,612 $ 82,276 $ 62,793 $ 10,803 $ 46,517
</TABLE>

See Notes to Consolidated Financial Statements

F-6
<PAGE>

DELUXE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 1998 AND 1999 AND FOR THE YEARS ENDED
DECEMBER 31, 1997, 1998 AND 1999
(INFORMATION AS OF JUNE 30, 2000 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1999 AND 2000 IS UNAUDITED)

Note 1: Significant accounting policies

Consolidation--The consolidated financial statements include the accounts of
the Company and all majority owned subsidiaries. All significant intercompany
accounts, transactions and profits have been eliminated.

For purposes of consolidating the portion of the eFunds segment, which is
based in India, the Company has used financial statements with a November 30
fiscal period end for the year ended December 31, 1999. Effective January 1,
2000, certain of the international operations of the eFunds segment, which had
previously reported its results of operations and financial position on a one-
month lag, changed its reporting dates to coincide with the rest of the
Company's subsidiaries. This change, which was made in conjunction with the
implementation of the Company's central accounting and financial reporting
system, will reflect the financial results of these operations on a more timely
basis and improves operating and planning efficiencies. The results of
operations for this portion of the eFunds segment for the month of December
1999 were excluded from the Company's consolidated statements of income and
were reflected as an adjustment to retained earnings during the first quarter
of 2000. These operations generated a net loss of $1.1 million in the month of
December 1999.

Cash and cash equivalents--The Company considers all cash on hand, money
market funds, outstanding transfers of cash for authorized settlement of
automated teller machines (ATMs) with financial institutions and other highly
liquid investments with original maturities of three months or less to be cash
and cash equivalents. The carrying amounts reported in the consolidated balance
sheets for cash and cash equivalents approximate fair value.

Restricted cash--The Company has entered into agreements with a third party
to supply cash for ATMs maintained by the third party in various locations
throughout the United States. The agreements provide that the Company retains
control over and ownership of this cash. Subject to the approval of the
Company, the other party to the agreements determines the level of cash
required to be maintained within the ATMs up to an authorized level. The
Company currently has an aggregated outstanding authorized cash level of $35
million. The agreements are effective through August 31, 2004. The cash in the
ATMs is not available for general operating use and is reflected in the
Company's consolidated balance sheets as a non-current asset.

In connection with the Company's eFunds segment, the Company also has cash
belonging to customers that temporarily resides in custodial accounts
maintained by the Company. The Company records these amounts as current
restricted custodial cash with a corresponding liability within other accrued
liabilities in the consolidated balance sheets.

Marketable securities--Marketable securities consist of debt and equity
securities. They are classified as available for sale and are carried at fair
value, with the unrealized gains and losses, net of tax, reported in other
comprehensive income (loss) in the shareholders' equity section of the
consolidated balance sheets. Realized gains and losses and permanent declines
in value are included in other income (expense) in the consolidated statements
of income. The cost of securities sold is determined using the specific
identification method.

Accounts receivable--Accounts receivable are stated net of allowances for
uncollectible accounts of $3.5 million, $5.8 million and $3.3 million at
December 31, 1998 and 1999 and June 30, 2000, respectively. The Company records
allowances for uncollectible accounts when it is probable that the full amount
of its accounts receivable balance will not be collected and when this
uncollectible amount can be reasonably estimated. When estimating the
allowances for uncollectible accounts, the Company takes into consideration

F-7
<PAGE>

such factors as its day-to-day knowledge of specific customers, the industry
and size of its customers, the overall composition of its accounts receivable
aging, prior history of accounts receivable write-offs and prior history of
allowances in proportion to the overall receivable balance. Increases in the
allowances for uncollectible accounts are recorded as bad debt expense and are
reflected in selling, general and administrative expense in the Company's
consolidated statements of income. Bad debt expense was $4.9 million in 1997,
$2.5 million in 1998, $5.3 million in 1999 and $4.5 million and $3.3 million
for the six months ended June 30, 1999 and 2000, respectively. When a specific
account receivable is determined to be uncollectible, the Company reduces both
its accounts receivable and allowances for uncollectible accounts accordingly.
As of December 31, 1998 and 1999, no one customer accounted for 10% or more of
total receivables.

Inventory--Inventory is stated at the lower of cost or market. Cost is
determined using the last-in, first-out (LIFO) method for substantially all
inventory. LIFO inventories were approximately $5.0 million, $6.3 million and
$5.0 million less than replacement cost at December 31, 1998 and 1999, and June
30, 2000, respectively.

Deferred advertising--These costs consist of materials, production, postage
and design expenditures required to produce catalogs for the Company's direct
checks and business forms businesses. Such costs are amortized over periods (up
to 18 months) that correspond to the estimated revenue streams of the
individual catalogs. The actual timing of these revenue streams may differ from
these estimates. Sales materials are charged to expense when no longer owned or
expected to be used. The total amount of advertising expense recognized was
$101.3 million in 1997, $100.0 million in 1998, $50.1 million in 1999, and
$23.0 million and $35.3 million for the six months ended June 30, 1999 and
2000, respectively.

Long-term investments--At December 31, 1998 and 1999, long-term investments
consist principally of cash surrender values of insurance contracts, notes
receivable and other investments. Such investments are carried at cost or
amortized cost which approximates their fair values. Additionally, in March
2000, the Company paid cash of $20.0 million for an approximately 24% interest
in a limited liability company (see Note 6). This investment is being accounted
for under the equity method of accounting. The difference of $20.0 million
between the carrying value of the investment and the underlying equity in the
net assets of the limited liability company is being accounted for in the same
manner as goodwill and is being amortized over 15 years.

Property, plant and equipment--Property, plant and equipment, including
leasehold and other improvements that extend an asset's useful life or
productive capabilities, are stated at historical cost. Buildings with 40-year
lives and machinery and equipment with lives of three to 11 years are generally
depreciated using accelerated methods. Leasehold and building improvements are
depreciated on a straight-line basis over the estimated useful life of the
property or the life of the lease, whichever is shorter.

Intangibles--Intangibles are presented in the consolidated balance sheets
net of accumulated amortization. Amortization expense is determined on the
straight-line basis over periods of five to 30 years for cost in excess of net
assets acquired (goodwill) and one to 10 years for internal use software and
other intangibles. Other intangibles consist primarily of licensed software and
software held for sale. The Company continually re-evaluates the original
assumptions and rationale utilized in the establishment of the estimated lives
of its identifiable intangible assets and goodwill. The carrying values of its
intangible assets are evaluated for impairment in accordance with the Company's
policy on impairment of long-lived assets and intangibles. Total intangibles
were as follows (dollars in thousands):

<TABLE>
<CAPTION>
December 31, Unaudited
-------------------- June 30,
1998 1999 2000
--------- --------- ---------
<S> <C> <C> <C>
Cost in excess of net assets acquired
(see Note 6)............................ $ 63,131 $ 69,577 $ 163,342
Internal use software.................... 146,100 194,685 230,196
Other intangible assets ................. 69,622 69,845 74,078
--------- --------- ---------
Total ................................. 278,853 334,107 467,616
Less accumulated amortization............ (104,620) (124,783) (146,943)
--------- --------- ---------
Intangibles--net......................... $ 174,233 $ 209,324 $ 320,673
========= ========= =========
</TABLE>

F-8
<PAGE>

Capitalization of internal-use software--The Company capitalizes costs of
software developed or obtained for internal use once the preliminary project
stage has been completed, management commits to funding the project and it is
probable that the project will be completed and the software will be used to
perform the function intended. Capitalized costs include only (1) external
direct costs of materials and services consumed in developing or obtaining
internal-use software, (2) payroll and payroll-related costs for employees who
are directly associated with and who devote time to the internal-use software
project, and (3) interest costs incurred, when material, while developing
internal-use software. Capitalization of costs ceases when the project is
substantially complete and ready for its intended use. The carrying value of
internal-use software is reviewed in accordance with the Company's policy on
impairment of long-lived assets and intangibles.

Capitalization of software developed for resale--The Company capitalizes
costs of software developed for licensing and resale once technological
feasibility has been established. Costs incurred prior to establishing
technological feasibility are expensed as incurred and are included in research
and development expense in the Company's consolidated statements of income.
Technological feasibility is established when the Company has completed all
planning, designing, coding and testing activities that are necessary to
determine that a product can be produced to meet its design specifications,
including functions, features and technical performance requirements.
Capitalization of costs ceases when the product is available for general
release to customers. Such costs are amortized on a product-by-product basis,
but no longer than 5 years. The carrying value of software developed for resale
is reviewed in accordance with the Company's policy on impairment of long-lived
assets and intangibles.

In some situations, the Company's customers do not take possession of the
software. Instead, it remains installed on the Company's hardware and customers
access it as needed. The software utilized under these arrangements is also
sold to customers. Thus, the development costs of these software products are
accounted for under the Company's policy on capitalization of software
developed for resale.

Web site development costs--The Company capitalizes costs associated with
the development of web sites in accordance with its policy on capitalization of
internal-use software. Costs incurred in populating the site with information
about the Company or products available to customers are expensed as incurred.

Impairment of long-lived assets and intangibles--The Company periodically
evaluates the recoverability of property, plant, equipment and identifiable
intangibles not held for sale by measuring the carrying amount of the asset
against the estimated undiscounted future cash flows associated with it. When
the asset being evaluated was acquired in a purchase business combination in
which goodwill was recorded, a pro rata portion of the goodwill value is
included in the carrying amount of the asset. This pro rata portion of goodwill
is based on the relative fair values at the date of acquisition of the long-
lived assets and identifiable intangibles acquired. Should the sum of the
expected future net cash flows be less than the carrying value of the asset
being evaluated, an impairment loss would be recognized. The impairment loss
would be calculated as the amount by which the carrying value of the asset
exceeds the fair value of the asset. The pro rata portion of any goodwill
allocated to the asset would be eliminated before recording any reduction of
the original carrying amount of the asset. In evaluating whether there is any
impairment of a long-lived asset associated with a long-term service contract,
the amount of any contract loss accrual is excluded from the undiscounted
future cash flows associated with the long-lived asset when determining whether
the asset is impaired.

The Company periodically evaluates the recoverability of property, plant,
equipment and identifiable intangibles held for disposal by comparing the
asset's carrying amount with its fair value less costs to sell. If a large
segment or separable group of assets which were acquired in a purchase business
combination are held for disposal, all of the unamortized goodwill associated
with those assets is included in the carrying amount of the assets for purposes
of this evaluation. Should the fair value less costs to sell be less than the
carrying value of the long-lived asset(s), an impairment loss would be
recognized. The impairment loss would be calculated as the amount by which the
carrying value of the asset(s) exceeds the fair value of the asset(s) less
costs to sell. The unamortized goodwill associated with those assets would be
eliminated before recording any reduction in the original carrying value of the
asset(s).

F-9
<PAGE>

The Company evaluates the carrying value of goodwill at an enterprise level
when events or changes in circumstances at the businesses to which the goodwill
relates indicate that the carrying amount may not be recoverable. Such
circumstances could include, but are not limited to, (1) a current period
operating or cash flow loss combined with a history of operating or cash flow
losses, (2) a forecast that demonstrates continuing losses, (3) a significant
adverse change in legal factors or in business climate, or (4) an adverse
action or assessment by a regulator. In evaluating the recoverability of
enterprise goodwill, the Company measures the carrying amount of the goodwill
against the estimated undiscounted future net cash flows of the businesses to
which the goodwill relates. In determining the future net cash flows, the
Company looks to historical results, current forecasts and internal earnings
targets. The estimated net cash flows include the effects of income tax
payments and interest charges. Should the sum of the expected future net cash
flows be less than the carrying value of the goodwill, an impairment loss would
be recognized. The impairment loss would be calculated as the amount by which
the net book value of the related businesses exceeds the fair value of these
businesses.

Income taxes--Deferred income taxes result from temporary differences
between the financial reporting basis of assets and liabilities and their
respective tax reporting bases. Future tax benefits are recognized to the
extent that realization of such benefits is more likely than not.

Customer rebates--On occasion, the Company enters into contractual
agreements with its customers for rebates on certain products it sells. The
Company records these amounts as reductions to sales and records a liability on
the consolidated balance sheets as incurred.

Translation adjustment--The financial position and results of operations of
the Company's international subsidiaries are measured using local currencies as
the functional currencies. Assets and liabilities of these operations are
translated at the exchange rate in effect at the balance sheet date. Income
statement accounts are translated at the average exchange rate during the year.
Translation adjustments arising from the use of differing exchange rates from
period to period are included in other comprehensive income (loss) in the
shareholders' equity section of the consolidated balance sheets. Gains and
losses that result from foreign currency transactions are included in earnings.

Revenue recognition--The Company records revenues for the majority of its
operations as products are shipped or as services are performed. Revenues are
recorded net of any applicable discounts.

Transaction processing and service fees are recognized in the period that
the service is performed. These services consist of processing customers'
electronic debit transactions through electronic funds transfer networks and
settling the funds with the financial institutions involved in the transaction.
Additionally, these services include monitoring ATMs and point-of-sale devices
to alert the customers when potential problems occur. These fees are charged on
a per transaction basis, depending on the contractual arrangement with the
customer. Government services fees are recognized in the period services are
provided based on monthly fees per benefits recipient.

Decision support fees are recognized as revenue in the period the services
are provided. Decision support services consist of new account applicant and
check verification screenings to manage the risk associated with account
openings and check acceptance. Decision support fees are based on the number of
inquiries against the databases used for screening purposes or monthly fees
based on the aggregate dollar value of checks authorized by the retailer,
depending on the product and service.

Software license fees for standard software products are recognized when
delivery has occurred, the license fee is fixed and determinable,
collectibility is probable and evidence of the arrangement exists. License fees
are charged based on modules purchased by the customer. In some situations, the
Company's customers do not take possession of the software. Instead, it remains
installed on the Company's hardware and customers access it as needed. Revenue
in these situations is recognized on a fee-for-service basis.

Software maintenance and support revenues are recognized ratably over the
term of the contract, and/or as the services are provided. Support services,
such as customization of standard software modules, are charged on a time and
materials basis and are recognized as hours are completed.

F-10
<PAGE>

Revenues for information technology consulting and business process
management services are generally recognized under two methods, depending on
contractual terms. Under the time and materials method, revenue is based on a
fee per hour basis and is recognized as hours are completed. Under the fixed
contract method, a pre-set fee is agreed upon for a project, and revenue is
recognized proportionately to the percentage completion of the project.

Long-term service contracts--Long-term service contracts are definitive
agreements to provide services over a period of time in excess of one year and
with respect to which the Company has no contractual right to adjust the prices
or terms at or on which its services are supplied during the term of the
contract. The Company's long-term service contracts are for transaction
processing and business process management services provided by the eFunds
segment. Total revenues for some long-term service contracts may vary based on
the demand for services. Revenues on long-term service contracts are recognized
under the applicable revenue recognition policy outlined above. Expenses are
recognized when incurred, with the exception of installation costs. In existing
long-term service contracts, installation costs are not recovered at the time
of installation. Rather, they are factored into billing rates over the term of
the contract. Accordingly, installation costs for long-term services contracts
are initially capitalized and then amortized over the life of the contract. Any
equipment and software purchased to support a long-term service contract is
capitalized and depreciated or amortized over the life of the related contract
or the life of the asset, whichever is shorter.

In determining the profitability of a long-term service contract, only
direct and allocable indirect costs associated with the contract are included
in the calculation. The appropriateness of allocations of indirect costs
depends on the circumstances and involves the judgment of management, but such
costs may include the costs of indirect labor, contract supervision, tools and
equipment, supplies, quality control and inspection, insurance, repairs and
maintenance, depreciation and amortization and, in some circumstances, support
costs. The method of allocating any indirect costs included in the analysis is
also dependent upon the circumstances and the judgment of management, but the
allocation method must be systematic and rational. Selling, general and
administrative costs are not included in the analysis. Provisions for estimated
losses on long-term service contracts, if any, are made in the period in which
the loss first becomes probable and reasonably estimable. Projected losses are
based on management's best estimates of a contract's revenue and costs. Actual
losses on individual long-term service contracts are compared to the loss
projections periodically, with any changes in the estimated total contract loss
recognized as they become probable and reasonably estimable.

Certain direct costs associated with the electronic benefit transfer (EBT)
contracts discussed in Note 5 are common to a number of contracts and are
attributed to each contract based on its use of the services associated with
these common direct costs. Revenues, case counts or other applicable statistics
are used to attribute these costs to individual contracts.

In the event an asset impairment loss is recognized on long-lived assets
used to support a long-term service contract, the original estimation of the
contract's costs is revised to reduce the depreciation and amortization
associated with the impaired assets accordingly.

Research and development expense--Research and development costs, which are
expensed as incurred, relate to investigating new or improved processes and
techniques and developing such research findings into a potential new product
or service.

Employee stock-based compensation--As permitted by Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation,
the Company continues to account for its employee stock-based compensation in
accordance with Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees. Accordingly, no compensation cost has been
recognized for fixed stock options issued under the Company's stock incentive
plan. The Company discloses pro forma net income and net income per share as if
the fair value method of SFAS No. 123 had been used (see Note 11).

Sale of subsidiary shares--The Company recognizes a gain or loss on the sale
of subsidiary shares when both of the following conditions are met: (1) the
shares are sold directly to the public or via some other means

F-11
<PAGE>

where the value of the proceeds can be objectively determined and (2) there are
no facts or circumstances which raise concerns about the likelihood of the
Company realizing the gain or loss, such as the planned spin-off of the
subsidiary, a plan to repurchase the shares or a subsidiary whose continuing
existence is in question. When both of these conditions are not met, the sale
of subsidiary shares is accounted for as a capital transaction. In the case of
the sale of eFunds Corporation (eFunds) shares in June 2000 (see Note 8), the
Company has recognized a gain in accordance with SEC Staff Accounting Bulletin
Topic 5H, "Accounting for Sales of Stock by a Subsidiary" as it plans to
dispose of its remaining ownership in eFunds via the transaction described in
Note 8.

Comprehensive income--Comprehensive income includes charges and credits to
equity that are not the result of transactions with shareholders. The Company's
total comprehensive income consists of net income, foreign currency translation
adjustments and unrealized gains and losses on securities. The foreign currency
translation adjustments and unrealized gains and losses on securities are
reflected as accumulated other comprehensive income (loss) in the Company's
consolidated balance sheets and in the Company's shareholders' equity statement
presented in Note 15.

Reclassifications--Certain amounts reported in 1997, 1998 and 1999 have been
reclassified to conform with the 2000 presentation. These changes had no impact
on previously reported results of operations or shareholders' equity.

Unaudited interim financial information--The consolidated balance sheet as
of June 30, 2000, the consolidated statements of income and comprehensive
income for the quarters and six months ended June 30, 1999 and 2000 and the
consolidated statements of cash flows for the six months ended June 30, 1999
and 2000 are unaudited. In the opinion of management, all adjustments necessary
for a fair presentation of such consolidated financial statements are included.
Other than the adjustments related to restructuring charges (see Note 3),
contract losses (see Note 5) and the sale of subsidiary shares (see Note 8),
the adjustments consist only of normal recurring items. Interim results are not
necessarily indicative of results for a full year.

Use of estimates--The Company has prepared the accompanying consolidated
financial statements in conformity with accounting principles generally
accepted in the United States of America. In this process, it is necessary for
management to make certain assumptions and related estimates affecting the
amounts reported in the consolidated financial statements and attached notes.
These estimates and assumptions are developed based upon all information
available using management's best efforts. However, actual results can differ
from assumed and estimated amounts.

New accounting pronouncements--In April 1998, the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-5, Reporting the Costs of Start-up
Activities, which provides guidance on the appropriate accounting for start-up
activities beginning in 1999. Application of the SOP did not have a material
impact on the Company's reported operating results or financial position.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which provides
guidance on accounting for derivatives and hedge transactions. This statement
is effective for the Company on January 1, 2001. The Company does not
anticipate that the effect of this pronouncement will have a material impact on
reported operating results or financial position.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements,
which provides guidance in applying generally accepted accounting principles to
revenue recognition in financial statements. Application of this SAB did not
have a material impact on the Company's reported operating results or financial
position.

F-12
<PAGE>

Note 2: Earnings per share

The following tables reflect the calculation of basic and diluted earnings
per share (dollars and shares outstanding in thousands, except per share
amounts).

<TABLE>
<CAPTION>
Unaudited Six Months
Year Ended December 31, Ended June 30,
------------------------- --------------------
1997 1998 1999 1999 2000
------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income per share--basic:
Net income..................... $44,672 $143,063 $203,022 $95,812 $104,023
Weighted average shares
outstanding................... 81,854 80,648 76,710 78,790 72,203
Net income per share--basic.... $ 0.55 $ 1.77 $ 2.65 $ 1.22 $ 1.44
Net income per share--diluted:
Net income..................... $44,672 $143,063 $203,022 $95,812 $104,023
Weighted average shares
outstanding................... 81,854 80,648 76,710 78,790 72,203
Dilutive impact of options..... 92 179 273 275 72
Shares contingently issuable... 11 28 26 14 4
------- -------- -------- ------- --------
Weighted average shares and
potential dilutive shares
outstanding................... 81,957 80,855 77,009 79,079 72,279
Net income per share--diluted.. $ 0.55 $ 1.77 $ 2.64 $ 1.21 $ 1.44
</TABLE>

During 1997, 1998, 1999 and the six months ended June 30, 2000, options to
purchase a weighted average of 0.7 million, 0.7 million, 2.0 million and 5.4
million shares, respectively, were outstanding but were not included in the
computation of diluted earnings per share. The exercise prices of the excluded
options were greater than the average market price of the Company's common
shares during the respective periods.

In January 1998, the Company awarded options to substantially all employees
(excluding foreign employees and employees of businesses held for sale),
allowing them, subject to certain conditions, to purchase 100 shares of common
stock at an exercise price of $33 per share. Options for the purchase of 1.7
million shares of common stock were issued under this program. Had these
options been issued in previous years, the dilutive impact of options presented
above for 1997 may have differed.

Note 3: Restructuring charges

During 1997, the Company recorded restructuring charges of $24.5 million.
The charges included costs associated with a 1996 plan to close 21 financial
institution check printing plants. These costs could not be recorded in 1996
because they did not meet the requirements for accrual in that year.
Additionally, costs associated with the continued consolidation of the
Company's core businesses were included in the charges. Termination of
additional employees was expected to result from process improvements in the
post-press phase of check production, implementation of a new order processing
and customer service system and reductions in support functions at corporate
operations and other businesses. The restructuring charges consisted of
employee severance costs of $21.6 million and $2.9 million for expected losses
on the disposition of assets. The severance portion of this charge assumed the
termination of approximately 2,800 employees. Expenses of $7.7 million were
included in cost of sales, $13.9 million in selling, general and administrative
(SG&A) expense and $2.9 million in other expense in the 1997 consolidated
statement of income. As of the end of 1999, both the production and front-end
functions of all 21 plants were closed. Improvements to the post-press
production process were also completed during 1999. Implementation of the new
order processing and customer service system is expected to be delayed to early
2001 due to the fact that financial institutions did

F-13
<PAGE>

not want to implement the system in late 1999 or early 2000 due to the efforts
they were expending on year 2000 issues.

During 1998, the Company recorded restructuring charges of $39.5 million.
The charges included costs associated with the Company's initiative to reduce
its SG&A expense, discontinuing production of the direct response segment's
direct mail products and closing four additional financial institution check
printing plants. The Company anticipated eliminating 800 SG&A positions within
sales, marketing, finance, human resources and information services.
Discontinuing production of direct mail products was expected to result in the
elimination of 60 positions. The Company also planned to close four additional
financial institution check printing plants, affecting approximately 870
employees. The restructuring charges consisted of employee severance costs of
$31.2 million and $8.3 million for expected losses on the disposition of
assets. Expenses of $10.9 million were included in cost of sales, $21.1 million
in SG&A expense and $7.5 million in other expense in the 1998 consolidated
statement of income. As of the end of 1999, three of the four check printing
plants were closed, with the remaining plant closed in the first quarter of
2000. Reductions in SG&A positions are expected to continue through 2000. Also
during 1998, the Company reversed $1.0 million of a 1996 restructuring charge.
The 1996 charge related to planned reductions in various support functions at
the international operations of the eFunds segment. Due to higher than
anticipated attrition, it was necessary to reduce this reserve. This reversal
was included in SG&A expense in the 1998 consolidated statement of income.

During 1999, restructuring accruals of $12.2 million were reversed. The
majority of this amount related to the Company's initiatives to reduce SG&A
expense and to discontinue production of direct mail products. The excess
accrual amount occurred when the Company determined that it was able to use a
greater portion of the direct mail production assets in its ongoing operations
than was originally anticipated, as well as changes in the SG&A expense
reduction initiative due to the plan announced in April 1999 to reorganize the
Company into four independently operated business units. The remainder of the
accrual reversal related to the Company's planned reductions within its
financial institution checks business and the Company's decision in 1999 to
retain the international operations of its eFunds segment (see Note 4). The
closing check printing plants experienced higher attrition rates than
anticipated, resulting in lower severance payments than originally estimated.
Also during 1999, the Company recorded a restructuring accrual of $0.8 million
for employee severance and $0.8 million for estimated losses on asset
dispositions related to the planned closing of one collections office and
planned employee reductions in another collections office within the Company's
collection business which was sold in 1999 (see Note 6). These accrual
reversals and the new restructuring accrual are reflected in the 1999
consolidated statement of income as a reduction in cost of sales of $2.0
million, a reduction in SG&A expense of $6.3 million and other income of $2.3
million.

During the second quarter of 2000, the Company recorded restructuring
charges of $1.4 million. These charges primarily related to the paper payment
systems segment's transfer of certain data entry functions to the eFunds
segment and administrative reductions within the eFunds segment. These charges
assume the termination of approximately 185 employees, 30 of whom are employed
within the eFunds segment. Additionally, the Company reversed $3.0 million of
restructuring charges relating to the Company's initiative to reduce SG&A
expense. This was due to higher attrition than anticipated and the reversal of
"early termination" payments to a group of employees. Under the Company's
severance program, employees are provided 60 days notice prior to being
terminated. In certain situations, the Company asks the employees to leave
immediately because they may have access to crucial infrastructure or
information. In these cases, severance includes this additional amount. In
certain situations, management decided to keep employees working for the 60 day
period and thus, a reduction in the restructuring reserves was required since
this pay was no longer severance, but an operating expense. These new
restructuring charges and reversals are reflected in SG&A expense in the
Company's consolidated statements of income for the six months ended June 30,
2000.

The Company's consolidated balance sheets reflect restructuring accruals of
$45.7 million, $15.1 million and $7.9 million, respectively, for employee
severance costs, and $6.8 million, $1.1 million and $0.5 million for estimated
losses on asset dispositions, respectively, as of December 31, 1998 and 1999
and June 30, 2000.

F-14
<PAGE>

The status of the severance portion of the Company's restructuring accruals
as of December 31, 1999 and June 30, 2000 is as follows (dollars in millions):

<TABLE>
<CAPTION>
Check Printing SG&A Reductions
Plant & Direct Mail Collection Ctr
Closings(1) Production(2) Closing/Reductions
---------------- ---------------- ----------------------
No. of No. of No. of
employees employees employees
affected Amount affected Amount affected Amount
--------- ------ --------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Original accrual........ 4,970 $ 68.0 860 $21.2 70 $ 0.8
Severance paid.......... (3,985) (55.6) (305) (7.1) (70) (0.7)
Adjustments to accrual.. (545) (5.9) (270) (5.5) (0.1)
------ ------ ---- ----- --------- ---------
Balance, December 31,
1999................... 440 6.5 285 8.6 -- --
Severance paid
(unaudited)............ (305) (3.2) (125) (2.1) -- --
Adjustments to accrual
(unaudited)............ -- -- (60) (2.9) -- --
------ ------ ---- ----- --------- ---------
Balance, June 30, 2000
(unaudited)............ 135 $ 3.3 100 $ 3.6 -- $ --
====== ====== ==== ===== ========= =========
<CAPTION>
Data Entry eFunds
Transfer Reductions Total
---------------- ---------------- ----------------------
No. of No. of No. of
employees employees employees
affected Amount affected Amount affected Amount
--------- ------ --------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Original accrual........ -- $ -- -- $ -- 5,900 $ 90.0
Severance paid.......... -- -- -- -- (4,360) (63.4)
Adjustments to accrual.. -- -- -- -- (815) (11.5)
--------- ---------
Balance, Decembeer 31,
1999................... -- -- -- -- 725 15.1
Severance paid
(unaudited)............ (10) (0.3) -- -- (440) (5.6)
Adjustments to accrual
(unaudited)............ 155 0.9 30 0.4 125 (1.6)
------ ------ ---- ----- --------- ---------
Balance, June 30, 2000
(unaudited)............ 145 $ 0.6 30 $ 0.4 410 $ 7.9
====== ====== ==== ===== ========= =========
</TABLE>
--------
(1) Includes charges recorded in 1996 and 1998 for plans to close
financial institution check printing plants and charges recorded in
1996 and 1997 for reductions in support functions at corporate
operations and other businesses, implementation of a new order
processing and customer service system and implementation of process
improvements in the post-press phase of check production.
(2) Includes charges recorded in 1998 for the Company's initiatives to
reduce SG&A expense and discontinue production of direct mail
products.

The majority of the remaining severance costs are expected to be paid in
2000 with cash generated from the Company's operations.

The status of the estimated loss on asset dispositions portion of the
Company's restructuring accruals as of December 31, 1999 and June 30, 2000 is
as follows (dollars in millions):

<TABLE>
<CAPTION>
SG&A Reductions &
Check Printing Direct Mail Collection Center
Plant Closings(1) Production Closing/Reductions Total
----------------- ----------------- ------------------ ------
<S> <C> <C> <C> <C>
Original accrual........ $ 15.0 $ 5.2 $ 0.8 $ 21.0
Losses realized......... (13.9) (3.4) (0.6) (17.9)
Adjustments to accrual.. -- (1.8) (0.2) (2.0)
------ ----- ----- ------
Balance, December 31,
1999................... 1.1 -- -- 1.1
Losses realized
(unaudited)............ (0.6) -- -- (0.6)
------ ----- ----- ------
Balance, June 30, 2000
(unaudited)............ $ 0.5 $ -- $ -- $ 0.5
====== ===== ===== ======
</TABLE>
--------
(1) Includes charges recorded in 1996 for the plan to close 21 financial
institution check printing plants.

F-15
<PAGE>

Note 4: Impairment losses

During 1997, the Company recorded impairment charges of $99.0 million to
write-down the carrying amounts of businesses held for sale in the Deluxe
direct, direct response and eFunds segments. The Company had announced in 1996
plans to divest three businesses in the Deluxe direct segment. During 1997, the
Company determined that it would dispose of certain international operations of
its eFunds segment. The Company determined that it would dispose of the
businesses in its direct response segment in 1998. Based on fair market value
estimates, the Company determined that the long-lived assets of these
businesses were impaired. The charges are included in the 1997 consolidated
statement of income in cost of sales ($2.5 million) and operating expenses
($96.5 million). The disposals of the businesses in the Deluxe direct and
direct response segments were completed in 1998 (see Note 6). Also during 1998,
there was a change in the management of the eFunds segment. As a result, in
January 1999, the Company determined that the international operations of this
segment maintained a continuing strategic importance and were no longer
considered held for sale. The decision to retain these operations did not have
a material impact on the Company's results of operations or financial position.

During 1998, the Company recorded impairment charges of $26.3 million to
write-down the carrying value of certain long-lived assets of the eFunds
segment. The assets consisted of point-of-sale equipment, internal-use software
and capitalized installation costs utilized in the EBT activities of this
segment. The Company concluded that the operating losses incurred by this
business would continue. This is primarily due to the fact that the variable
costs associated with supporting benefit recipient activity are higher than
originally anticipated and actual transaction volumes are below original
expectations. In calculating the impairment charges, the Company determined
that the assets utilized by this business have no fair market value. The point-
of-sale equipment was purchased via capital leases. The lease buy-out prices
for this equipment plus the deinstallation costs exceeded the amount equipment
resellers were willing to pay for the equipment. The utility of the internal-
use software was limited to its use in supporting the EBT business, and the
installation costs could not be resold. Thus, the long-lived assets and
intangibles of this business were reduced to a carrying value of zero. These
impairment charges are reflected in cost of sales in the 1998 consolidated
statement of income.

During 1999, due to the continued operating losses generated by the EBT
activities of the eFunds segment, additional impairment charges of $0.5 million
were recorded. These charges represent the write-down of long-lived assets and
intangibles purchased by this business during 1999. These assets consisted
primarily of software and installation costs associated with the continued
roll-out of additional states. All assets purchased were reduced to a carrying
value of zero, as they were in 1998. These impairment charges are reflected in
cost of sales in the 1999 consolidated statement of income.

Note 5: Contract losses

During 1998, the Company recorded charges of $14.7 million to provide for
expected future losses on existing long-term service contracts related to the
EBT activities of the eFunds segment. These charges are reflected in cost of
sales in the 1998 consolidated statement of income. Due to a continuing strong
economy, record low unemployment and welfare reform, the actual transaction
volumes and expected future revenues of this business are well below original
expectations. Additionally, actual and expected future telecommunications,
installation, help desk and other costs are significantly higher than
originally anticipated. These factors resulted in expected future losses on the
existing EBT contracts of this business.

During 1999, charges of $8.2 million were recorded to provide for additional
expected future losses on the contracts of the eFunds segment's EBT business.
These charges are reflected in cost of sales in the 1999 consolidated statement
of income. A majority of the charges resulted from the conclusion of
negotiations with a prime contractor regarding the timing and costs of
transitioning switching services from the Company to a new processor. Also,
lower than projected actual transaction volumes (primarily related to states
fully rolled-out in 1999) contributed to the changes in the estimates
underlying the 1998 charge. These increases to the reserve for accrued contract
losses were partially offset by the application of $2.3 million of contract
losses against the reserve during 1999.

F-16
<PAGE>

During the second quarter of 2000, the Company recorded net charges of $9.7
million for additional expected future losses on the contracts of the eFunds
segment's EBT business. This amount is reflected in cost of sales in the
consolidated statements of income for the six months ended June 30, 2000. In
April 2000, the Company completed negotiations with the prime contractor,
Citibank, for a state coalition for which the Company provides EBT services.
Prior to this, the Company and the prime contractor were operating without a
binding, legally enforceable contract. The Company increased its accrual for
expected future losses on long-term service contracts by $12.2 million to
reflect the fact that the Company now had a definitive agreement with this
contractor. Offsetting this charge was the reversal of $2.5 million of
previously recorded contract loss accruals. These reversals resulted from
productivity improvements and cost savings from lower than anticipated
telecommunications and interchange expenses.

Note 6: Business combinations and divestitures

1997 acquisitions--During 1997, the Company acquired substantially all of
the assets of Fusion Marketing Group, Inc. for $10.6 million in cash plus
amounts contingent on the future earnings of the business. Fusion provides
customized database marketing services to financial institutions and is
included in the direct response segment in Note 16. The acquisition was
accounted for under the purchase method of accounting. Accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed
based on their fair values on the date of purchase. Total cost in excess of net
assets acquired in the amount of $9.6 million was being amortized over 15
years. In December 1998, the Company sold the assets of this business. The
effect of this acquisition did not have a material pro forma impact on the
Company's operations or financial position.

1997 divestitures--During 1997, the Company sold substantially all of the
assets of Nelco, Inc., its U.K. checks business, and a product line within the
direct response segment. The aggregate sales price for these businesses was
$17.4 million, consisting of cash proceeds of $11.7 million and notes
receivable of $5.7 million. The consolidated financial statements of the
Company include the results of these businesses through their individual sale
dates. In aggregate, the effect of these divestitures did not have a material
impact on the operations or financial position of the Company.

1998 divestitures--During 1998, the Company sold substantially all of the
assets of PaperDirect (UK) Limited, ESP Employment Screening Partners, Inc.,
Social Expressions, and the remaining businesses within the direct response
segment. The Company also sold all of the outstanding stock of PaperDirect,
Inc. The aggregate net sales price for these businesses was $113.7 million,
consisting of cash proceeds of $87.9 million and notes receivable of $25.8
million. The Company realized a loss of $10.5 million on the combined sale of
PaperDirect and Social Expressions. The individual gains and losses recognized
on the sales of the other businesses did not have a material impact on the
operations or financial position of the Company. The consolidated financial
statements of the Company include the results of these businesses through their
individual sale dates. The notes receivable from the sales of these businesses
were collected in full by the end of 1999.

The following summarized, unaudited pro forma results of operations for 1997
and 1998 assume the 1998 divestitures occurred as of the beginning of the
respective periods. No assumptions were made in the pro forma information
concerning the use of the cash received in consideration for the sales of the
businesses.

<TABLE>
<CAPTION>
1997 1998
---------- ----------
(dollars in
thousands, except per
share amounts)
<S> <C> <C>
Net sales............................................ $1,656,075 $1,683,863
Cost of sales........................................ 768,398 815,316
Operating expenses .................................. 634,798 620,698
Other (expense) income............................... (40,861) 9,382
Provision for income taxes........................... 89,928 104,863
---------- ----------
Net income........................................... $ 122,090 $ 152,368
========== ==========
Net income per share--basic.......................... $ 1.49 $ 1.89
Net income per share--diluted........................ $ 1.49 $ 1.88
</TABLE>

F-17
<PAGE>

1999 acquisitions--During February 1999, the Company acquired all of the
outstanding shares of eFunds Corporation of Tustin, California, an electronic
check conversion company, for $13.0 million in cash. This company provides
electronic check conversion and electronic funds transfer solutions to
financial services companies and retailers. The acquisition was accounted for
under the purchase method of accounting. Accordingly, the consolidated
financial statements of the Company include the results of this business
subsequent to its acquisition date. This business is included in the eFunds
segment in Note 16. The purchase price was allocated to the assets acquired and
liabilities assumed based on their fair values on the date of purchase. Total
cost in excess of net assets acquired in the amount of $15.7 million is being
amortized over 10 years. The effect of this acquisition was not material to the
operations or financial position of the Company.

During April 1999, the Company acquired the remaining 50% ownership interest
in HCL-Deluxe, N.V. for $23.4 million in cash. The joint venture, which the
Company entered into with HCL Corporation of India in 1996, commenced
operations in September 1997. The company provides information technology
consulting and business process management services to financial services
companies and to all of the Company's businesses. The acquisition was accounted
for under the purchase method of accounting. Accordingly, the consolidated
financial statements of the Company include the entire results of this business
from the date the Company acquired 100% ownership. Prior to this, the Company
recorded its 50% ownership of the joint venture's results under the equity
method of accounting. As such, its results of operations prior to the
acquisition are included in other expense in the consolidated statements of
income. This business is included in the eFunds segment in Note 16. The
purchase price was allocated to the assets acquired and liabilities assumed
based on their fair values on the date of purchase. Total cost in excess of net
assets acquired in the amount of $24.9 million is being amortized over 15
years. The effect of this acquisition was not material to the operations or
financial position of the Company.

1999 divestitures--During 1999, the Company sold substantially all of the
assets of NRC Holding Corporation and all of the outstanding stock of United
Creditors Alliance International Limited, the Company's collection businesses.
The cash proceeds, net of cash sold, from the sales of these businesses were
$74.4 million. The 1999 consolidated statement of income reflects a net gain of
$19.8 million on these sales. The consolidated financial statements of the
Company include the results of these businesses through their sale dates. These
businesses contributed revenues of $105.8 million, $121.3 million and $124.1
million, in 1997, 1998 and 1999, respectively.

2000 acquisitions--During February 2000, the Company acquired all of the
outstanding shares of Designer Checks for $97.0 million in cash. Designer
Checks produces specialty design checks and related products for direct sale to
consumers and is included in the Company's paper payment systems segment. This
acquisition was accounted for under the purchase method of accounting.
Accordingly, the consolidated financial statements of the Company include the
results of this business subsequent to its acquisition date. The purchase price
was allocated to the assets acquired and liabilities assumed based on their
fair values on the date of purchase. Total cost in excess of net assets
acquired in the amount of $88.8 million is being amortized over 15 years. The
effect of this acquisition was not material to the operations or financial
position of the Company.

During March 2000, the Company paid cash of $20.0 million for an
approximately 24% interest in a limited liability company that provides ATM
management and outsourcing services to retailers and financial institutions.
This investment is being accounted for under the equity method of accounting
and is included in other long-term investments in the Company's consolidated
balance sheet as of June 30, 2000. The Company's consolidated statements of
income reflect the Company's share of the results of this business subsequent
to its acquisition date in other income (expense) within the Company's eFunds
segment. The difference of $20.0 million between the carrying value of the
investment and the underlying equity in the net assets of the limited liability
company is being accounted for in the same manner as goodwill and is being
amortized over 15 years.

Note 7: Sale-leaseback transaction

During 1999, the Company entered into a $42.5 million sale-leaseback
transaction whereby the Company sold five existing facilities in Shoreview,
Minnesota and leased back three of these facilities for periods ranging

F-18
<PAGE>

from five to 10 years. Of the related leases, two are being accounted for as
operating leases and one is a capital lease. An asset of $11.6 million was
recorded for the capital lease and is reflected as buildings and building
improvements in the consolidated balance sheets. The result of this sale was a
$17.1 million gain, of which $10.6 million was deferred and is being amortized
over the lease terms. $8.7 million and $7.9 million of the deferred gain is
reflected in other long-term liabilities in the December 31, 1999 and June 30,
2000 consolidated balance sheets, respectively. The Company provided short-term
financing for $32.5 million of the proceeds from this sale. This amount is
reflected in prepaid expenses and other current assets in the December 31, 1999
consolidated balance sheet and is reflected as loans to others in the 1999
consolidated statement of cash flows. The loan was paid in full in January
2000.

Note 8: Sale of subsidiary shares

In January 2000, the Company announced that its board of directors approved
a plan to operate the Company's eFunds segment as a separate, independent,
publicly traded company. eFunds sold 5.5 million shares of its common stock to
the public in June 2000. Prior to this initial public offering (IPO), the
Company owned 40 million, or 100%, of eFunds' total outstanding shares.
Subsequent to the IPO, the Company continues to own 40 million shares of eFunds
shares, representing 87.9% of eFunds' total outstanding shares. Proceeds from
the offering, based on the offering price of $13.00 per share, totaled
$71.5 million ($62.0 million, net of offering expenses). A gain of $30.1
million was recognized during the second quarter of 2000 for the difference
between the offering price and the carrying amount of the Company's investment
in eFunds. This gain was reflected in other income in the Company's
consolidated statements of income for the six months ended June 30, 2000. No
tax expense or deferred tax was provided on this gain, as it is not taxable.
Additionally, the Company recorded charges of $7.2 million for payments which
must be made to certain officers of the Company under change of control and
executive employment agreements. These charges are reflected in SG&A expense in
the Company's consolidated statements of income for the six months ended June
30, 2000.

The Company has announced that it plans to distribute all of its shares of
eFunds common stock to its shareholders through an exchange offer under which
the Company's shareholders will be given the opportunity to tender some or all
of their Company shares in exchange for eFunds shares (the Split-off). The
Company has the sole discretion to determine whether to proceed with the Split-
off based on the best interests of the Company's shareholders and to decide
what will be the timing, structure and terms of the Split-off. Subject to these
conditions, the Company plans to complete the Split-off prior to December 31,
2000. The Company has received a private letter ruling request from the
Internal Revenue Service that the Split-off will be tax-free to the Company and
its shareholders for U.S. federal income tax purposes. If consummated, the
Split-off could result in a substantial decrease in the Company's total shares
outstanding. Additionally, the Company would recognize an additional gain on
the exchange of subsidiary shares and would reflect eFunds results of
operations as discontinued operations in the Company's consolidated financial
statements. If the Company does not complete the Split-off, it will continue to
control eFunds, and the Company and eFunds may not realize the anticipated
benefits from the separation of the two companies.

In connection with the IPO of eFunds and the anticipated Split-off, the
Company and eFunds have entered into various agreements that address the
allocation of assets and liabilities between them and that define their
relationship after the separation. The agreements relate to matters such as
consummation of the IPO and the Split-off, registration rights for the Company,
intercompany loans, information technology consulting, business process
management services, indemnification, data sharing, real estate matters, tax
sharing and transition services. For transition services, eFunds will
compensate the Company for providing services and will negotiate for third-
party rates after the transition arrangements terminate. The transition period
varies depending on the agreement, but many transition services will terminate
upon completion of the Split-off. Some of the transition agreements may be
extended beyond the initial transition period. Additionally, the Company has
agreed to indemnify eFunds for future losses arising from any litigation based
on the conduct of the EBT and medical eligibility verification businesses prior
to eFunds' IPO in June 2000, and from future losses on identified loss

F-19
<PAGE>

contracts in excess of the Company's $29.2 million accrual for contract losses
as of April 30, 2000. The indemnification obligation does not apply to losses
covered by the existing reserves. The maximum amount of litigation and contract
losses for which the Company will indemnify eFunds is $14.6 million. After the
Split-off, any indemnification payments will be recorded as other expense in
the Company's consolidated statements of income. Prior to the Split-off, any
indemnification payments will be treated as capital contributions.

Note 9: Marketable securities

On December 31, 1998 and 1999 and June 30, 2000, marketable securities
classified as available for sale consisted of the following (dollars in
thousands):

<TABLE>
<CAPTION>
December 31, 1998
-------------------------------------------
Unrealized Unrealized Fair
Cost holding gain holding loss value
-------- ------------ ------------ --------
<S> <C> <C> <C> <C>
Debt securities issued by the
U.S. Treasury and other
government agencies........... $ 17,084 $ -- $ (97) $ 16,987
Debt securities issued by
states of the U.S. and
political subdivisions of
states........................ 14,677 23 (2) 14,698
Corporate debt securities...... 9,450 -- (2) 9,448
-------- ----- -------- --------
Total marketable securities.. 41,211 23 (101) 41,133
Other debt securities (cash
equivalents).................. 256,186 185 -- 256,371
-------- ----- -------- --------
Total........................ $297,397 $ 208 $ (101) $297,504
======== ===== ======== ========
<CAPTION>
December 31, 1999
----------------------------------
Unrealized
Cost holding loss Fair value
-------- ------------ ------------
<S> <C> <C> <C> <C>
Debt securities issued by the
U.S. Treasury and other
government agencies........... $ 24,352 $(636) $ 23,716
Debt securities issued by
states of the U.S. and
political subdivisions of
states........................ 2,000 (3) 1,997
-------- ----- --------
Total marketable securities.. 26,352 (639) 25,713
Other debt securities (cash
equivalents).................. 126,457 -- 126,457
-------- ----- --------
Total........................ $152,809 $(639) $152,170
======== ===== ========
<CAPTION>
June 30, 2000
----------------------------------
Unrealized
Cost holding loss Fair value
-------- ------------ ------------
<S> <C> <C> <C> <C>
Debt securities issued by the
U.S. Treasury and other
government agencies........... $ 10,733 $(348) $ 10,385
Debt securities issued by
states of the U.S. and
political subdivisions of
states........................ 7,990 (204) 7,786
-------- ----- --------
Total marketable securities.. 18,723 (552) 18,171
Other debt securities (cash
equivalents).................. 78,797 -- 78,797
-------- ----- --------
Total........................ $ 97,520 $(552) $ 96,968
======== ===== ========
</TABLE>

At June 30, 2000, debt securities maturing in 2000 have a cost basis and
fair value of $78.8 million. Debt securities maturing in 2001 have a cost basis
of $8.0 million and a fair value of $7.8 million. Securities maturing in 2002
have a cost basis of $10.7 million and a fair value of $10.4 million.

F-20
<PAGE>

Proceeds from sales of marketable securities available for sale were $19.2
million and $32.8 million in 1998 and 1999, respectively, and $7.6 million
during the first six months of 2000. The Company realized net gains of $70,000,
$0.8 million and $61,000 on the sales of marketable securities in 1998, 1999
and the first six months of 2000, respectively. There were no sales of
marketable securities in 1997.

Note 10: Provision for income taxes

Income (loss) before income taxes consisted of (dollars in thousands):

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Domestic........................................ $137,677 $242,676 $325,619
Foreign......................................... (22,527) 239 (964)
-------- -------- --------
Total......................................... $115,150 $242,915 $324,655
======== ======== ========
</TABLE>

The components of the provision for income taxes were as follows (dollars in
thousands):

<TABLE>
<CAPTION>
1997 1998 1999
-------- ------- --------
<S> <C> <C> <C>
Current tax provision:
Federal ....................................... $ 84,392 $73,776 $ 55,587
State.......................................... 14,062 22,692 13,550
-------- ------- --------
Total........................................ 98,454 96,468 69,137
Deferred tax (benefit) provision:
Federal ....................................... (23,876) 3,252 51,754
State.......................................... (4,100) 132 742
-------- ------- --------
Total ....................................... $ 70,478 $99,852 $121,633
======== ======= ========
</TABLE>

The Company's effective tax rate on pretax income differs from the U.S.
Federal statutory tax rate of 35% as follows (dollars in thousands):

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Income tax at Federal statutory rate......... $ 40,303 $ 85,020 $113,629
State income taxes net of Federal income tax
benefit..................................... 6,442 14,836 9,290
Amortization and write-down of non-deductible
intangibles ................................ 32,116 745 1,602
Recognition of difference in tax and book
investments in subsidiaries sold............ (3,786) (2,220) 401
Change in valuation allowance................ 1,024 (542) 2,212
Other........................................ (5,621) 2,013 (5,501)
-------- -------- --------
Provision for income taxes................... $ 70,478 $ 99,852 $121,633
======== ======== ========
</TABLE>

The Company's effective tax rate of 33.6% for the six months ended June 30,
2000 was lower than the Federal statutory rate of 35% due primarily to the fact
that the gain recognized on the eFunds IPO is not taxable. This large base of
non-taxable income causes a lower effective tax rate.

F-21
<PAGE>

Tax effected temporary differences which give rise to a significant portion
of deferred tax assets and liabilities at December 31, 1998 and 1999 are as
follows (dollars in thousands):

<TABLE>
<CAPTION>
1998 1999
------------------------- -------------------------
Deferred tax Deferred tax Deferred tax Deferred tax
assets liabilities assets liabilities
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Property, plant, and
equipment.............. $ -- $20,937 $ -- $15,774
Capital loss
carryforwards.......... 25,294 -- 7,400 --
Deferred advertising.... -- 2,698 -- 4,747
Employee benefit plans.. 7,490 -- 11,264 --
Inventory............... 708 -- 1,062 --
Intangibles............. -- 34,656 -- 38,033
Net operating loss carry
forwards............... 13,919 -- 17,291 --
Restructuring accruals.. 19,218 -- 6,115 --
Reserve for legal
proceedings............ 12,373 -- -- --
Accrued contract
losses................. 5,144 -- 7,210 --
Miscellaneous reserves
and accruals........... 13,414 -- 10,969 --
Prepaid services........ -- -- -- 16,389
All other............... 14,679 7,706 12,994 10,971
-------- ------- -------- -------
Subtotal ............... 112,239 65,997 74,305 85,914
Valuation allowance..... (17,207) -- (20,507) --
-------- ------- -------- -------
Total deferred taxes.... $ 95,032 $65,997 $ 53,798 $85,914
======== ======= ======== =======
</TABLE>

The valuation allowance at both dates relates primarily to the uncertainty
of realizing foreign and state deferred tax assets.

At December 31, 1999, net operating loss carryforwards relating to both
foreign and state jurisdictions totaled $103.6 million. Of these carryforwards,
$86.6 million expire in various years between 2001 and 2014 and $17.0 million
may be carried forward indefinitely. At December 31, 1999, the Company also had
capital loss carryforwards of $20.0 million which expire in 2003.

Note 11: Employee benefit and stock-based compensation plans

Stock purchase plan--The Company has an employee stock purchase plan that
enables eligible employees to purchase the Company's common stock at 75% of its
fair market value on the first business day following each three-month purchase
period. Compensation expense recognized for the difference between the
employees' purchase price and the fair value of the stock was $6.7 million,
$5.9 million and $4.8 million in 1997, 1998 and 1999. Under the plan, 840,143,
698,830 and 568,107 shares were issued at prices ranging from $22.88 to $24.75,
$24.38 to $26.16 and $20.95 to $27.57 in 1997, 1998 and 1999, respectively.

Stock incentive plan--Under the stock incentive plan, stock-based awards may
be issued to employees via a broad range of methods, including non-qualified or
incentive stock options, restricted stock and restricted stock units, stock
appreciation rights and other awards based on the value of the Company's common
stock. Options become exercisable in varying amounts beginning generally one
year after the date of grant. The plan was amended in 1996 to reserve an
aggregate of 7 million shares of common stock for issuance under the plan. At
December 31, 1999, 2.6 million shares remained available for issuance under the
plan.

In 1998, the Company adopted the DeluxeSHARES program. Under this program,
options were awarded to substantially all employees of the Company (excluding
foreign employees and employees of businesses held for sale), allowing them,
subject to certain conditions, to purchase 100 shares of common stock at an
exercise price of $33 per share. The options become exercisable when the value
of the Company's common stock reaches $49.50 per share or January 30, 2001,
whichever occurs first. Options for the purchase of 1.7 million shares of
common stock were issued under this program.

F-22
<PAGE>

All options allow for the purchase of shares of common stock at prices equal
to their market value at the date of grant. Information regarding the options
issued under the current plan, which was adopted in 1994, the remaining options
outstanding under the former plan adopted in 1984, and the DeluxeSHARES plan,
is as follows:

<TABLE>
<CAPTION>
Number of Weighted-average
shares exercise price
--------- ----------------
<S> <C> <C>
Outstanding at January 1, 1997................... 2,138,559 $33.92
Granted.......................................... 808,400 30.92
Exercised........................................ (126,100) 29.25
Canceled......................................... (317,507) 35.07
---------
Outstanding at December 31, 1997................. 2,503,352 33.04
Granted.......................................... 3,085,800 33.18
Exercised........................................ (277,848) 29.76
Canceled......................................... (689,042) 34.60
---------
Outstanding at December 31, 1998................. 4,622,262 33.10
Granted.......................................... 1,231,053 35.72
Exercised........................................ (481,340) 30.62
Canceled......................................... (835,418) 35.41
---------
Outstanding at December 31, 1999................. 4,536,557 $33.65
=========
</TABLE>

For options outstanding and exercisable at December 31, 1999, the exercise
price ranges and average remaining lives were as follows:

<TABLE>
<CAPTION>
Options outstanding Options exercisable
----------------------------------------- --------------------------
Weighted- Weighted- Weighted-
Number average average Number average
Range of exercise prices outstanding remaining life exercise price exercisable exercise price
------------------------ ----------- -------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$27.13 to $32.99........ 1,050,664 6.30 years $30.45 899,672 $30.37
$33.00 to $35.13........ 1,943,982 4.61 years 33.07 593,792 33.21
$35.14 to $45.88........ 1,541,911 8.07 years 36.55 411,596 38.62
--------- ---------
4,536,557 6.18 years $33.65 1,905,060 $33.04
========= =========
</TABLE>

The Company issued 72,581, 60,912 and 106,815 restricted shares and
restricted stock units at weighted-average fair values of $31.52, $33.22, and
$34.78 during 1997, 1998 and 1999, respectively. These awards generally vest
over periods ranging from one to five years.

In connection with the Split-off of the eFunds segment into an independent
company (see Note 8), the Company and eFunds have decided that options
outstanding as of the Split-off date will be converted to options of the
Company and options of eFunds based on a formula. The formula will be based on
the market value of the Company's and eFunds' common stock at the Split-off
date and is designed to maintain an equivalent intrinsic value for the option
holder utilizing the criteria described in Emerging Issues Task Force No. 90-9,
Changes to Fixed Employee Stock Option Plans as a Result of Equity
Restructuring. The Company does not expect a compensation charge to result from
this conversion process.

Pro forma information regarding net income and net income per share has been
determined as if the Company had accounted for its employee stock-based
compensation under the fair value method. The fair value of options was
estimated at the date of grant using a Black-Scholes option pricing model. The
following weighted-average assumptions were used in valuing options issued in
1997, 1998 and 1999, respectively: risk-free interest rate of 6.0%, 5.9% and
6.7%; dividend yield of 4.0%, 4.5% and 4.6%; and expected volatility of 23.0%,
21.8% and 24.0%. The weighted-average expected option life was 7.2 years, 5.9
years and 9.0 years for 1997, 1998 and 1999, respectively. The weighted-average
fair value of options granted in 1997, 1998 and 1999

F-23
<PAGE>

was $7.49, $5.99 and $8.24 per share, respectively. For purposes of pro forma
disclosures, the estimated fair value of the options was recognized as expense
over the options' vesting periods. The Company's pro forma net income and net
income per share were as follows (dollars in thousands, except per share
amounts):

<TABLE>
<CAPTION>
1997 1998 1999
------- -------- --------
<S> <C> <C> <C>
Net income:
As reported.................................. $44,672 $143,063 $203,022
Pro forma.................................... 44,536 140,510 197,555
Basic net income per share:
As reported.................................. $ 0.55 $ 1.77 $ 2.65
Pro forma.................................... 0.54 1.74 2.58
Diluted net income per share:
As reported.................................. $ 0.55 $ 1.77 $ 2.64
Pro forma.................................... 0.54 1.74 2.57
</TABLE>

Profit sharing, defined contribution and 401(k) plans--The Company maintains
profit sharing plans, a defined contribution pension plan and plans established
under section 401(k) of the Internal Revenue Code to provide retirement
benefits for certain employees. The plans cover substantially all full-time
employees with approximately 15 months of service. Contributions to the profit
sharing and defined contribution plans are made solely by the Company.
Employees may contribute up to the lesser of $10,000 or 10% of their wages to
the 401(k) plan. The Company will match the first 1% of wages contributed and
50% of the next 4% of wages contributed. All contributions are remitted to the
plans' respective trustees, and benefits provided by the plans are paid from
accumulated funds of the trusts.

Contributions to the defined contribution pension plan equaled 6% of
eligible compensation in 1997, and 4% in 1998 and 1999. Related expense for
these years was $18.6 million, $13.7 million and $15.5 million, respectively.
Contributions to the profit sharing plans vary based on the Company's
performance. Expense for these plans was $25.6 million, $27.5 million and $17.6
million in 1997, 1998 and 1999, respectively. Company contributions to the
401(k) plan were $7.0 million, $7.8 million and $7.9 million in 1997, 1998 and
1999, respectively.

Note 12: Post-retirement benefits

The Company provides certain health care benefits for a large number of its
retired employees. Employees included in the plan may become eligible for such
benefits if they attain the appropriate years of service and age while working
for the Company. Certain retirees' medical insurance premiums are based on the
amounts paid by active employees. Effective January 1, 1998, active employees'
premiums were reduced, thus reducing the medical premiums required to be paid
by these retirees. Additionally, for retirees who participate in the active
employees' indemnity plans, their copayment amount was increased 5%. In 1997,
the plan was also amended to provide employees who are involuntarily terminated
and who are qualified retirees at the time of termination with a bridge for
retiree medical benefits if they are terminated prior to age 53.

F-24
<PAGE>

The following table summarizes the change in benefit obligation and plan
assets during 1998 and 1999 (dollars in thousands):

<TABLE>
<S> <C>
Benefit obligation, January 1, 1998 $66,183
Service cost................................................. 1,218
Interest cost................................................ 4,651
Actuarial losses, net........................................ 14,232
Effect of curtailment........................................ (1,056)
Benefits paid from general funds of the Company.............. (4,589)
-------
Benefit obligation, December 31, 1998.......................... 80,639
Service cost................................................. 1,694
Interest cost................................................ 5,286
Actuarial losses, net........................................ 3,383
Effect of curtailment........................................ (3,200)
Benefits paid from plan assets and general funds of the
Company..................................................... (6,947)
-------
Benefit obligation, December 31, 1999.......................... $80,855
=======
Fair value of plan assets, January 1, 1998..................... $60,203
Actual return on plan assets................................. 4,283
-------
Fair value of plan assets, December 31, 1998................... 64,486
Actual return on plan assets................................. 11,678
Benefits paid................................................ (3,900)
-------
Fair value of plan assets, December 31, 1999................... $72,264
=======
</TABLE>

The funded status of the plan was as follows at December 31 (dollars in
thousands):

<TABLE>
<CAPTION>
1998 1999
------- --------
<S> <C> <C>
Accumulated post-retirement benefit obligation........ $80,639 $ 80,855
Less:
Fair value of plan assets (debt and equity
securities)........................................ 64,486 72,264
Unrecognized prior service cost..................... 1,285 743
Unrecognized net loss............................... 13,367 10,908
Unrecognized transition obligation.................. 8,209 5,949
------- --------
Prepaid post-retirement asset recognized in the
consolidated balance sheets.......................... $(6,708) $(9,009)
======= ========
</TABLE>

Net post-retirement benefit cost for the years ended December 31 consisted
of the following components (dollars in thousands):

<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Service cost--benefits earned during the year... $ 877 $ 1,218 $ 1,694
Interest cost on the accumulated post-retirement
benefit obligation............................. 4,163 4,651 5,286
Expected return on plan assets.................. (4,979) (5,719) (6,126)
Amortization of transition obligation........... 680 680 586
Amortization of prior service cost.............. 269 269 257
Recognized net amortization of (gains) and
losses ........................................ (78) (63) 290
------- ------- -------
Net post-retirement benefit cost................ 932 1,036 1,987
Curtailment loss (gain)......................... -- 315 (1,242)
------- ------- -------
Total post-retirement benefit cost.............. $ 932 $ 1,351 $ 745
======= ======= =======
</TABLE>

F-25
<PAGE>

As a result of the sale of businesses (see Note 6) and a reduction in
employees as a result of the Company's cost-saving initiatives (see Note 3),
the Company recognized a net post-retirement benefit curtailment loss of $0.3
million in 1998 and a net curtailment gain of $1.2 million in 1999.

In measuring the accumulated post-retirement benefit obligation as of
December 31, 1999, the Company's health care inflation rate for 2000 and beyond
was assumed to be 5%. A one percentage point increase in the health care
inflation rate for each year would increase the accumulated post-retirement
benefit obligation by approximately $12.0 million and the service and interest
cost components of the net post-retirement benefit cost by approximately $1.0
million. A one percentage point decrease in the health care inflation rate for
each year would decrease the accumulated post-retirement benefit obligation by
approximately $10.4 million and the service and interest cost components of the
net post-retirement benefit cost by approximately $1.0 million. The discount
rate used in determining the accumulated post-retirement benefit obligation as
of December 31, 1998 and 1999, was 6.75% and 7.50%, respectively. The expected
long-term rate of return on plan assets used to determine the net periodic
post-retirement benefit cost was 9.5% in 1997, 1998 and 1999.

In connection with the Split-off of the eFunds segment into an independent
company (see Note 8), eFunds intends to terminate this plan. eFunds employees
and retirees who have qualified for retiree medical benefits as of the Split-
off date will continue to be eligible for these benefits. The Company will
retain the obligation for these employees and retirees. This obligation was
approximately $150,000 as of December 31, 1999. A net post-retirement benefit
curtailment gain of approximately $0.6 million will be recorded at the Split-
off date.

Note 13: Lease and debt commitments

Long-term debt was as follows (dollars in thousands):

<TABLE>
<CAPTION>
December 31, Unaudited
----------------- June 30,
1998 1999 2000
-------- -------- ---------
<S> <C> <C> <C>
8.55% unsecured and unsubordinated notes
due February 15, 2001..................... $100,000 $100,000 $100,000
Other...................................... 13,653 19,899 16,254
-------- -------- --------
Total long-term debt..................... 113,653 119,899 116,254
Less amount due within one year.......... 7,332 4,357 102,755
-------- -------- --------
Total.................................. $106,321 $115,542 $ 13,499
======== ======== ========
</TABLE>

In February 1991, the Company issued $100 million of 8.55% unsecured and
unsubordinated notes due February 15, 2001. The notes are not redeemable prior
to maturity. The fair values of these notes were estimated to be $106.4 million
and $101.8 million at December 31, 1998 and 1999, respectively, based on quoted
market prices.

Other long-term debt consists principally of capital leases on equipment.
The capital lease obligations bear interest rates of 6.7% to 15.7% and are due
through the year 2009. Carrying value materially approximates fair value for
these obligations.

Maturities of long-term debt for the five years ending December 31, 2004,
are $4.4 million, $103.7 million, $2.3 million, $1.1 million and $1.1 million,
and $7.3 million thereafter.

The Company has entered into operating leases on certain facilities and
equipment. Future minimum lease payments for all noncancelable operating leases
for the five years ending December 31, 2004, are $20.2 million, $12.8 million,
$6.4 million, $4.3 million and $3.1 million, and $2.9 million thereafter.
Rental expense was $40.9 million, $45.4 million and $43.9 million for 1997,
1998 and 1999, respectively, and $22.7 million and $17.8 million for the six
months ended June 30, 1999 and 2000, respectively.

F-26
<PAGE>

As of June 30, 2000, the Company had committed lines of credit for $450.0
million available for borrowing and as support for commercial paper. One of
these committed lines of credit for $300 million expires on August 30, 2000.
Subject to customary closing conditions, Deluxe has reached an agreement to
extend this line until August 2001. No amounts were drawn on these lines during
1998 and there was no outstanding balance at December 31, 1998. The average
amount drawn on these lines during 1999 was $39.8 million at a weighted-average
interest rate of 6.39%. As of December 31, 1999, $60.0 million was outstanding
under these lines of credit at an interest rate of 6.39%. The average amount
drawn on these lines during the first six months of 2000 was $37.4 million at a
weighted-average interest rate of 6.38%. As of June 30, 2000, no amounts were
outstanding under these lines of credit. No commercial paper was issued during
1998 or 1999. As of June 30, 2000, $15.0 million of commercial paper was
outstanding at an interest rate of 7.10%. The average amount of commercial
paper outstanding during the first six months of 2000 was $2.5 million at a
weighted-average interest rate of 6.54%.

As of December 31, 1999, the Company had a $5.0 million line of credit,
which was denominated in Indian rupees and guaranteed by Deluxe, available to
its international operations at an interest rate of 15.81%. This line of credit
was not available in 1998. The average amount drawn on this line during 1999
was $2.7 million. As of December 31, 1999, $3.1 million was outstanding. The
line of credit was increased on March 9, 2000 to $10.0 million and remains
guaranteed by Deluxe until October 1, 2000. The average amount drawn on this
line during the first six months of 2000 was $4.3 million. As of June 30, 2000
$4.8 million was outstanding.

The Company had uncommitted bank lines of credit for $40.0 million available
at variable interest rates. No amounts were drawn on these lines during 1998
and there was no outstanding balance at December 31, 1998 and 1999 on these
lines of credit. The average amount drawn on these lines during 1999 was $1.5
million at a weighted-average interest rate of 5.12%. The average amount drawn
on these lines during the first six months of 2000 was $65 thousand at a
weighted average interest rate of 6.47%. As of June 30, 2000, there was no
outstanding balance under these lines of credit.

The Company has a shelf registration in place for the issuance of up to
$300.0 million in medium-term notes. Such notes could be used for general
corporate purposes, including working capital, capital expenditures, possible
acquisitions and repayment or repurchase of outstanding indebtedness and other
securities of the Company. As of December 31, 1998 and 1999 and June 30, 2000,
no such notes were issued or outstanding.

Absent certain defined events of default under a $150.0 million committed
credit facility and the indenture related to its outstanding 8.55% unsecured
and unsubordinated notes due February 15, 2001, there are no significant
contractual restrictions on the ability of the Company to pay cash dividends.

Note 14: Common stock purchase rights

On February 5, 1988, the Company declared a distribution to shareholders of
record on February 22, 1988, of one common stock purchase right for each
outstanding share of common stock. These rights were governed by the terms and
conditions of a rights agreement entered into by the Company as of February 12,
1988. That agreement was amended and restated as of January 31, 1997 (Restated
Agreement).

Pursuant to the Restated Agreement, upon the occurrence of certain events,
each right will entitle the holder to purchase one share of common stock at an
exercise price of $150. In certain circumstances described in the Restated
Agreement, if (i) any person becomes the beneficial owner of 15% or more of the
Company's common stock, (ii) the Company is acquired in a merger or other
business combination or (iii) upon the occurrence of other events, each right
will entitle its holder to purchase a number of shares of common stock of the
Company, or the acquirer or the surviving entity if the Company is not the
surviving corporation in such a transaction. The number of shares purchasable
will be equal to the exercise price of the right divided by 50% of the then-
current market price of one share of common stock of the Company, or other
surviving entity (i.e., at a 50% discount), subject to adjustments provided in
the Restated Agreement. The rights expire January 31, 2007, and may be redeemed
by the Company at a price of $.01 per right at any time prior to the occurrence
of the circumstances described above.

F-27
<PAGE>

Note 15: Shareholders' equity

<TABLE>
<CAPTION>
Accumulated other
comprehensive
income (loss)
--------------------------
Unrealized
Additional gain (loss) on Cumulative
Common paid-in Retained Unearned marketable translation
shares capital earnings compensation securities adjustment
------- ---------- --------- ------------ -------------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996................... $82,056 $ -- $ 631,151 $(937) $ -- $ 646
Net income.............. -- -- 44,672 -- -- --
Cash dividends.......... -- -- (121,321) -- -- --
Common stock issued .... 985 30,124 -- -- -- --
Common stock retired.... (1,715) (25,366) (29,200) -- -- --
Unearned compensation... -- -- -- 288 -- --
Translation adjustment.. -- -- -- -- -- (1,135)
------- -------- --------- ----- ----- -------
Balance, December 31,
1997................... 81,326 4,758 525,302 (649) -- (489)
Net income.............. -- -- 143,063 -- -- --
Cash dividends.......... -- -- (119,682) -- -- --
Common stock issued..... 988 31,613 -- -- -- --
Common stock retired.... (1,833) (29,549) (28,941) -- -- --
Unearned compensation... -- -- -- 411 -- --
Unrealized fair value
adjustments ........... -- -- -- -- 70 --
Translation adjustment.. -- -- -- -- -- 177
------- -------- --------- ----- ----- -------
Balance, December 31,
1998 .................. 80,481 6,822 519,742 (238) 70 (312)
Net income.............. -- -- 203,022 -- -- --
Cash dividends.......... -- -- (113,535) -- -- --
Common stock issued..... 1,112 35,846 -- -- -- --
Common stock retired.... (9,573) (42,668) (262,612) -- -- --
Unearned compensation... -- -- -- 191 -- --
Unrealized fair value
adjustments ........... -- -- -- -- (485) --
Translation adjustment.. -- -- -- -- -- (555)
------- -------- --------- ----- ----- -------
Balance, December 31,
1999................... 72,020 -- 346,617 (47) (415) (867)
Net income (unaudited).. -- -- 104,023 -- -- --
Adjustment for lag in
financial reporting
(see Note 1)
(unaudited)............ -- -- (1,124) -- -- --
Cash dividends
(unaudited)............ -- -- (53,471) -- -- --
Common stock issued
(unaudited)............ 351 9,830 -- -- -- --
Common stock retired
(unaudited)............ (40) (1,007) -- -- -- --
Unearned compensation
(unaudited)............ -- -- -- 47 -- --
Unrealized fair value
adjustments
(unaudited)............ -- -- -- -- 56 --
Translation adjustment
(unaudited)............ -- -- -- -- -- (416)
------- -------- --------- ----- ----- -------
Balance, June 30, 2000
(unaudited)............ $72,331 $ 8,823 $ 396,045 $ -- $(359) $(1,283)
======= ======== ========= ===== ===== =======
</TABLE>

F-28
<PAGE>

Note 16: Business segment information

In January 2000, the Company announced that its board of directors approved
a plan to combine its electronic payment systems, professional services and
government services segments into a separate, independent, publicly traded
company called eFunds. As a result, the Company modified its management
reporting in the first half of 2000 and restated its segment information for
prior years to conform to the current operating structure which presents the
business units as two operating segments based on the nature of the products
and services offered by each: paper payment systems and eFunds. Paper payment
systems provides checks and related products to financial institutions,
consumers and small businesses. eFunds provides transaction processing and risk
management services to financial institutions, retailers, electronic funds
transfer networks, e-commerce providers and government agencies and offers
information technology consulting and business process management services both
on a stand-alone basis and as a complement to its electronic payments business.
In December 1999, the Company sold its collections business. The results of
this business are not included in the Company's segment information, but are
included in the Company's reconciliations to consolidated amounts.

In 1997 and 1998, the Company operated two additional segments: direct
response and Deluxe direct. Direct response, which was sold in 1998, provided
direct marketing, customer database management and related services to the
financial industry and other businesses. Deluxe direct, which was also sold in
1998, primarily sold greeting cards, stationery and specialty paper products
through direct mail.

The Company's segments operate primarily in the United States. The eFunds
segment also has some international operations. No single customer of the
Company accounted for more than 10% of net sales in 1997, 1998 or 1999.

The accounting policies of the segments are the same as those described in
Note 1. In evaluating segment performance, management focuses on income from
operations and earnings before interest, taxes, depreciation and amortization
(EBITDA). The income from operations measurement utilized by management
excludes special charges (e.g., restructuring charges, asset impairment
charges, certain one-time charges that management believes are not reflective
of on-going operations, etc.). In 1997, 1998 and 1999, holding company expenses
were allocated to the segments as a fixed percentage of segment revenues. This
allocation included expenses for various support functions such as human
resources, information services and finance and included depreciation and
amortization expense related to holding company assets. The corresponding
holding company asset balances were allocated to the segments. Beginning in
2000, the majority of the costs for these support functions were incurred
directly by the operating segments. The remaining holding company expenses were
allocated to the segments based on estimates of the costs which would have been
incurred by the operating segments if they were stand-alone, independent
entities. Most inter-segment sales are based on current market pricing.

Prior to the acquisition of the remaining 50% interest in HCL-Deluxe, N.V.
in 1999 (see Note 6), the results of this business were recorded under the
equity method of accounting. As such, the Company recorded its 50% ownership of
the joint venture's results of operations prior to the acquisition in other
expense in the consolidated statements of income. To be consistent with
management reporting, the entire results of the joint venture for the pre-
acquisition periods are reflected in the business segment information as if the
business had been a consolidated entity.

F-29
<PAGE>

<TABLE>
<CAPTION>
Paper
Year Ended December 31, Payment Direct Deluxe Total
1997 Systems eFunds Response Direct Segments
----------------------- ---------- -------- ---------- -------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net sales to external
customers.............. $1,288,630 $228,216 $ 49,781 $249,682 $1,816,309
Intersegment sales...... 786 4,053 3,187 1,137 9,163
Operating income (loss)
excluding special
charges................ 291,626 13,885 (19,742) (5,231) 280,538
Asset impairment
charges................ -- 11,831 5,000 82,188 99,019
Other special charges... 17,696 2,316 -- 1,824 21,836
Operating income (loss)
including special
charges................ 273,930 (262) (24,742) (89,243) 159,683
EBITDA.................. 315,405 (17,804) (14,389) (89,118) 194,094
Depreciation and
amortization expense... 45,228 22,760 6,902 697 75,587
Segment assets.......... 525,795 191,179 47,876 121,824 886,674
Capital expenditures.... 81,183 18,136 3,026 2,191 104,536
<CAPTION>
Paper
Year Ended December 31, Payment Direct Deluxe Total
1998 Systems eFunds Response Direct Segments
----------------------- ---------- -------- ---------- -------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net sales to external
customers.............. $1,279,738 $273,928 $ 42,662 $223,906 $1,820,234
Intersegment sales...... 1,956 5,686 722 -- 8,364
Operating income (loss)
excluding special
charges................ 312,782 13,557 (20,060) 5,047 311,326
Asset impairment
charges................ -- 26,252 -- -- 26,252
Other special charges... 11,099 17,303 2,513 -- 30,915
Operating income (loss)
including special
charges................ 301,683 (29,998) (22,573) 5,047 254,159
EBITDA.................. 360,730 (5,803) (16,781) (3,147) 334,999
Depreciation and
amortization expense... 54,022 21,779 2,213 -- 78,014
Segment assets.......... 540,871 188,268 -- -- 729,139
Capital expenditures.... 80,416 32,402 602 1,623 115,043
<CAPTION>
Paper
Year Ended December 31, Payment Total
1999 Systems eFunds Segments
----------------------- ---------- -------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net sales to external
customers.............. $1,232,924 $296,907 $1,529,831
Intersegment sales...... -- 9,758 9,758
Operating income
excluding special
charges................ 307,458 10,487 317,945
Special (recoveries)
charges................ (2,782) 12,809 10,027
Operating income (loss)
including special
charges................ 310,240 (2,322) 307,918
EBITDA.................. 368,608 19,005 387,613
Depreciation and
amortization expense... 59,257 22,644 81,901
Segment assets.......... 474,044 281,271 755,315
Capital expenditures.... 73,037 38,370 111,407
</TABLE>

F-30
<PAGE>

<TABLE>
<CAPTION>
Paper
Six Months Ended June 30, Payment Total
1999 (unaudited) Systems eFunds Segments
------------------------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net sales to external
customers................... $615,659 $143,106 $758,765
Intersegment sales........... -- 1,642 1,642
Operating income excluding
special charges............. 152,205 7,062 159,267
Special charges.............. -- 898 898
Operating income including
special charges............. 152,205 6,164 158,369
EBITDA....................... 177,516 18,176 195,692
Depreciation and amortization
expense..................... 27,679 10,954 38,633
Segment assets............... 513,503 264,679 778,182
Capital expenditures......... 33,711 16,718 50,429
<CAPTION>
Paper
Six Months Ended June 30, Payment Total
2000 (unaudited) Systems eFunds Segments
------------------------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net sales to external
customers................... $640,399 $170,783 $811,182
Intersegment sales........... -- 30,442 30,442
Operating income excluding
special charges............. 158,188 9,710 167,898
Special charges
(recoveries)................ (2,128) 12,575 10,447
Operating income (loss)
including special charges... 160,316 (2,865) 157,451
EBITDA....................... 190,809 10,454 201,263
Depreciation and amortization
expense..................... 31,540 13,432 44,972
Segment assets............... 554,488 392,750 947,238
Capital expenditures......... 26,751 16,023 42,774
</TABLE>

F-31
<PAGE>

Segment information reconciles to consolidated amounts as follows (dollars
in thousands):

<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31, June 30,
---------------------------------- ------------------
1997 1998 1999 1999 2000
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Total net sales to
external customers
Total segment net sales
to external
customers............. $1,816,309 $1,820,234 $1,529,831 $758,765 $811,182
Divested businesses not
included in segments.. 105,909 121,419 124,074 66,559 --
Joint venture pre-
acquisition
elimination........... (1,589) (7,994) (3,405) (3,406) --
---------- ---------- ---------- -------- --------
Total consolidated net
sales to external
customers............. $1,920,629 $1,933,659 $1,650,500 $821,918 $811,182
========== ========== ========== ======== ========
Operating income
including special
charges
Total segment operating
income................ $ 159,683 $ 254,159 $ 307,918 $158,369 $157,451
Divested businesses not
included in segments.. 6,730 3,612 (2,409) 1,575 --
Joint venture pre-
acquisition
elimination........... 1,590 3,387 1,234 1,234 --
Elimination of inter-
segment profits....... 99 28 -- -- --
Unallocated holding
company expenses...... (12,383) (18,177) (4,649) (6,019) (24,082)
---------- ---------- ---------- -------- --------
Total consolidated
operating income...... $ 155,719 $ 243,009 $ 302,094 $155,159 $133,369
========== ========== ========== ======== ========
Depreciation and
amortization expense
Total segment
depreciation and
amortization expense.. $ 75,587 $ 78,014 $ 81,901 $ 38,633 $ 44,972
Divested businesses not
included in segments.. 5,460 5,957 2,050 2,081 --
Joint venture pre-
acquisition
elimination........... (12) (260) (143) (143) --
Unallocated holding
company expenses...... 108 105 102 52 50
---------- ---------- ---------- -------- --------
Total consolidated
depreciation and
amortization expense.. $ 81,143 $ 83,816 $ 83,910 $ 40,623 $ 45,022
========== ========== ========== ======== ========
Capital expenditures
Total segment capital
expenditures.......... $ 104,536 $ 115,043 $ 111,407 $ 50,429 $ 42,774
Divested businesses not
included in segments.. 5,115 8,156 3,337 1,293 --
Joint venture pre-
acquisition
elimination........... (151) (1,934) (145) (145) --
Holding company capital
purchases............. -- 10 421 15 18
---------- ---------- ---------- -------- --------
Total consolidated
capital expenditures.. $ 109,500 $ 121,275 $ 115,020 $ 51,592 $ 42,792
========== ========== ========== ======== ========
</TABLE>

Unallocated holding company expenses affecting operating income consist
primarily of holding company restructuring charges and charges for certain
liabilities that are not allocated to the segments.

<TABLE>
<CAPTION>
Unaudited
December 31, June 30,
-------------------------------- -------------------
1997 1998 1999 1999 2000
---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Total assets
Total segment assets..... $ 886,674 $ 729,139 $755,315 $778,182 $ 947,238
Assets of divested
businesses not included
in segments............. 63,317 68,734 -- 74,637 --
Joint venture pre-
acquisition
elimination............. (3,369) (4,732) -- -- --
Unallocated holding
company assets.......... 201,742 378,378 237,328 137,785 83,595
---------- ---------- -------- -------- ----------
Total consolidated
assets................. $1,148,364 $1,171,519 $992,643 $990,604 $1,030,833
========== ========== ======== ======== ==========
</TABLE>

Unallocated holding company assets consist primarily of cash, investments
and deferred tax assets relating to holding company activities.

F-32
<PAGE>

Revenues are attributed to geographic areas based on the location of the
assets and employees producing the revenues. The Company's operations by
geographic area are as follows (in thousands):

Net Sales to External Customers

<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31, June 30,
-------------------------------- -----------------
1997 1998 1999 1999 2000
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
United States................ $1,883,363 $1,907,157 $1,630,353 $811,633 $802,748
Foreign countries............ 37,266 26,502 20,147 10,285 8,434
---------- ---------- ---------- -------- --------
Total consolidated........... $1,920,629 $1,933,659 $1,650,500 $821,918 $811,182
========== ========== ========== ======== ========
</TABLE>

Long-Lived Assets

<TABLE>
<CAPTION>
Unaudited
December 31, June 30,
----------------- -----------------
1998 1999 1999 2000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
United States............................... $337,048 $289,827 $332,794 $265,993
Foreign countries........................... 3,029 4,958 5,163 6,358
-------- -------- -------- --------
Total consolidated.......................... $340,077 $294,785 $337,957 $272,351
======== ======== ======== ========
</TABLE>

Note 17: Legal proceedings

During 1997, a judgment was entered against the Company in the U.S. District
Court for the Western District of Pennsylvania. The case was brought against
the Company by Mellon Bank (Mellon) in connection with a potential bid to
provide EBT services for the Southern Alliance of States. In September 1997,
the Company recorded a pretax charge of $40 million to reserve for this
judgment and other related costs. This charge is reflected in other expense in
the 1997 consolidated statement of income.

In 1998, Mellon's motion for prejudgment interest was denied by the district
court. The Company reversed $4.2 million of the $40 million liability. This
reversal is reflected in other income in the 1998 consolidated statement of
income. At December 31, 1998, the remaining liability of $34.4 million was
included in other accrued liabilities in the consolidated balance sheet.

In January 1999, the United States Court of Appeals for the Third Circuit
affirmed the judgment of the district court and the Company paid $32.2 million
to Mellon in February 1999. The portion of the reserve remaining after the
payment of this judgment ($2.1 million) was reversed and is reflected in other
income in the 1999 consolidated statement of income.

Note 18: Subsequent Events (unaudited)

Subsequent to the issuance of the Company's consolidated financial
statements as of and for the six months ended June 30, 2000, the Company
determined that the effective income tax rate used in computing the provision
for income taxes for the six months ended June 30, 2000 in its original filing
on Form 10-Q for that period should not have included the effects of the gain
the Company expects to recognize following the exchange offer. Previously, the
estimated expected gain was included in the determination of the effective
income tax rate used in computing the provision for income taxes for six months
ended June 30, 2000. In addition, the Company determined that $100 million of
notes due in 2001 should be classified as a current liability rather than as
long-term debt. Accordingly, the consolidated financial statements as of June
30, 2000 and for the six months then ended were restated from amounts
previously reported to reflect the impact of these adjustments and the Company
filed a Form 10-Q/A amending its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000 with the Securities and Exchange Commisson on August 18,
2000. The financial statements included in this offering circular-prospectus
give effect to these restatements. A summary of selected amounts before and
after the restatement is as follows. Included in this summary are selected
financial statement amounts that were not impacted by the restatement.

F-33
<PAGE>

<TABLE>
<CAPTION>
As Previously As
Reported Restated
------------- ----------
(Dollars in thousands)
<S> <C> <C>
At June 30, 2000
Cash............................................... $ 91,168 $ 91,168
Total Assets....................................... 1,030,833 1,030,833
Accrued income taxes............................... 22,276 44,244
Total Current Liabilities.......................... 333,212 455,180
Shareholders' Equity............................... 497,525 475,557
Six Months Ended June 30, 2000
Income from Operations............................. 133,369 133,369
Income before Taxes................................ 156,774 156,774
Provision for Income Taxes......................... 30,783 52,751
Net Income......................................... 125,991 104,023
Net Income Per Share--Basic........................ 1.74 1.44
Net Income Per Share--Diluted...................... 1.74 1.44
</TABLE>

F-34
<PAGE>

DELUXE CORPORATION

SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
(dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
1998 Quarter Ended
-----------------------------------------------
March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales..................... $489,451 $475,216 $470,258 $498,734
Cost of sales................. 228,498 224,582 265,220 217,699
Net income (loss)............. 43,571 42,255 (115)(1) 57,352(2)
Per share of common stock
Net income--basic........... 0.54 0.52 0.00 0.71
Net income--diluted ........ 0.54 0.52 0.00 0.71
Cash dividends.............. 0.37 0.37 0.37 0.37
<CAPTION>
1999 Quarter Ended
-----------------------------------------------
March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales..................... $414,077 $407,841 $417,114 $411,468
Cost of sales................. 186,078 184,260 187,453 183,450
Net income.................... 48,033 47,779 49,057 58,153(3)
Per share of common stock
Net income--basic........... 0.60 0.61 0.65 0.79
Net income--diluted......... 0.60 0.61 0.65 0.79
Cash dividends.............. 0.37 0.37 0.37 0.37
<CAPTION>
2000 Quarter
Ended
-----------------
March 31 June 30
-------- --------
<S> <C> <C> <C> <C>
Net sales..................... $404,426 $406,756
Cost of sales................. 171,685 180,209
Net income.................... 44,322 59,701(4)
Per share of common stock
Net income--basic........... 0.61 0.83
Net income--diluted......... 0.61 0.83
Cash dividends.............. 0.37 0.37
</TABLE>
--------
(1) 1998 third quarter results include reorganization and other charges of
$74.7 million, including restructuring charges of $39.5 million,
losses on existing contracts of the eFunds segment of $14.7 million,
and asset impairment charges of $26.3 million on the long-lived assets
of the eFunds segment offset by a gain on the sale of a business
within the direct response segment.

(2) 1998 fourth quarter results include a loss of $10.5 million on the
sale of the Social Expressions and PaperDirect, Inc. businesses.

(3) 1999 fourth quarter results include a gain of $19.8 million on the
sale of its collections businesses, the reversal of $6.0 million of
restructuring reserves, as well as charges of $8.2 million to reserve
for additional expected future losses on existing contracts of the
eFunds segment.

(4) 2000 second quarter results include a gain of $30.1 million on the
sale of eFunds shares, net charges of $9.7 million for additional
expected future losses on existing EBT contracts of the eFunds
segment, charges of $7.2 million for change of control payments and
executive employment agreements and net restructuring reversals of
$1.6 million.

F-35
<PAGE>

INDEPENDENT AUDITORS' REPORT

eFunds Corporation

We have audited the accompanying consolidated balance sheets of eFunds
Corporation and subsidiaries (the Company) as of December 31, 1998 and 1999,
and the related consolidated statements of operations, comprehensive income
(loss) and cash flows for each of the three years in the period ended December
31, 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of eFunds Corporation and
subsidiaries as of December 31, 1998 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted
in the United States of America.

DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
April 3, 2000 (May 12, 2000 as to the effects of the stock split described in
Note 2 and as to Note 15)

F-36
<PAGE>

eFUNDS CORPORATION

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, Unaudited
------------------ June 30,
1998 1999 2000
-------- -------- ---------
(dollars in thousands)
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents..................... $ 16,055 $ 35,849 $ 93,289
Restricted custodial cash..................... 545 3,429 6,311
Accounts receivable--net...................... 49,620 52,834 60,665
Deferred income taxes......................... 20,755 10,552 13,948
Income taxes receivable....................... 2,799 7,109 --
Prepaid expenses and other current assets..... 3,428 3,061 8,417
-------- -------- --------
Total current assets......................... 93,202 112,834 182,630
Long-term Investments........................... 1,370 3,347 23,764
Deferred Income Taxes........................... -- 1,549 1,554
Restricted Cash................................. 3,921 28,939 28,748
Property and Equipment
Land and land improvements.................... 5,001 4,993 6,827
Buildings and building improvements........... 32,351 33,683 44,535
Computer and other equipment.................. 76,522 80,211 85,470
-------- -------- --------
Total........................................ 113,874 118,887 136,832
Less accumulated depreciation................. (55,414) (58,414) (67,637)
-------- -------- --------
Property and equipment--net.................. 58,460 60,473 69,195
Intangibles
Cost in excess of net assets acquired--net.... 9,258 46,905 44,959
Internal use software--net.................... 5,550 20,746 28,365
Other intangible assets--net.................. 14,574 15,136 15,089
-------- -------- --------
Total intangibles............................ 29,382 82,787 88,413
-------- -------- --------
Total non-current assets..................... 93,133 177,095 211,674
-------- -------- --------
Total assets............................... $186,335 $289,929 $394,304
======== ======== ========
Current Liabilities
Accounts payable.............................. $ 10,728 $ 19,791 $ 22,809
Accrued liabilities:
Accrued compensation and employee benefits... 10,480 18,172 19,049
Accrued contract losses...................... 14,697 20,599 27,734
Reserve for legal proceedings................ 35,754 1,554 1,429
Other........................................ 18,184 22,116 32,423
Borrowings on line of credit.................. -- 3,100 8,568
Long-term debt due within one year............ 1,490 1,895 2,149
-------- -------- --------
Total current liabilities.................... 91,333 87,227 114,161
Long-term Debt.................................. 4,029 3,597 2,923
Deferred Income Taxes and Other Long-term
Liabilities.................................... 1,170 -- 50
Commitments and Contingencies (Notes 11 and 14)
Stockholders' Equity
Preferred shares $.01 par value; 100,000,000
shares authorized; no shares issued or
outstanding.................................. -- -- --
Common shares $.01 par value (authorized:
250,000,000 shares; issued and outstanding:
1998 and 1999--40,000,000 shares; 2000--
45,500,000 shares)........................... 400 400 455
Additional paid-in capital.................... 14,564 292,198 389,230
Retained earnings (accumulated deficit)....... 74,967 (92,946) (111,221)
Accumulated other comprehensive loss.......... (128) (547) (1,294)
-------- -------- --------
Stockholders' equity......................... 89,803 199,105 277,170
-------- -------- --------
Total liabilities and stockholders'
equity.................................... $186,335 $289,929 $394,304
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements

F-37
<PAGE>

eFUNDS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Unaudited Six
Months Ended
Year Ended December 31, June 30,
---------------------------- ------------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
(dollars and shares in thousands, except per
share amounts)
<S> <C> <C> <C> <C> <C>
Net Sales.................... $229,065 $267,520 $302,340 $140,423 $201,225
Cost of sales, excluding
loss contract and asset
impairment charges........ 143,966 171,359 185,590 88,123 118,197
Loss contract and asset
impairment charges........ 2,470 40,949 8,700 117 9,700
-------- -------- -------- -------- --------
Total cost of sales....... 146,436 212,308 194,290 88,240 127,897
-------- -------- -------- -------- --------
Gross Margin................. 82,629 55,212 108,050 52,183 73,328
-------- -------- -------- -------- --------
Selling, general and
administrative............ 70,542 81,198 105,382 42,731 75,271
Research and development... 1,398 625 3,756 2,054 922
Asset impairment charges... 9,361 -- -- -- --
-------- -------- -------- -------- --------
Total operating expenses.. 81,301 81,823 109,138 44,785 76,193
-------- -------- -------- -------- --------
Income (loss) from
operations................ 1,328 (26,611) (1,088) 7,398 (2,865)
Other Income (Expense)
Legal proceedings.......... (40,050) 4,157 2,094 2,094 --
Other income (expense)..... (918) (3,495) (4,609) (1,286) (474)
Interest income (expense).. (825) 2,789 963 1,078 (1,296)
-------- -------- -------- -------- --------
Income (Loss) Before Income
Taxes....................... (40,465) (23,160) (2,640) 9,284 (4,635)
Provision (Benefit) for
Income Taxes................ (6,397) (8,569) 5,586 7,949 (1,285)
-------- -------- -------- -------- --------
Net Income (Loss)............ $(34,068) $(14,591) $ (8,226) $ 1,335 $ (3,350)
======== ======== ======== ======== ========
Net Income (Loss) per Share--
Basic and Diluted........... $ (0.85) $ (0.36) $ (0.21) $ 0.03 $ (0.08)
======== ======== ======== ======== ========
Weighted Average Common
Shares
Outstanding--Basic and
Diluted..................... 40,000 40,000 40,000 40,000 40,030
======== ======== ======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements

F-38
<PAGE>

eFUNDS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
Unaudited Six
Months Ended
Year Ended December 31, June 30,
--------------------------- ---------------
1997 1998 1999 1999 2000
-------- -------- ------- ------ -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net Income (Loss) ............... $(34,068) $(14,591) $(8,226) $1,335 $(3,350)
Other Comprehensive (Loss)
Income,
Net of Tax -- Foreign currency
translation adjustments...... (972) 44 (419) (838) (747)
-------- -------- ------- ------ -------
Comprehensive Income (Loss)...... $(35,040) $(14,547) $(8,645) $ 497 $(4,097)
======== ======== ======= ====== =======
Related Tax Benefit (Expense) of
Other Comprehensive Income
(Loss) --
Foreign currency translation
adjustments................... $ 182 $ (26) $ (795) $1,589 $ (256)
======== ======== ======= ====== =======
</TABLE>

See Notes to Consolidated Financial Statements

F-39
<PAGE>

eFUNDS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31, June 30,
---------------------------- -----------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net income (loss)........... $(34,068) $(14,591) $ (8,226) $ 1,335 $(3,350)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation............... 9,914 12,015 12,519 6,414 5,767
Amortization of
intangibles............... 12,834 9,504 9,982 4,397 7,665
Asset impairment charges... 11,831 26,252 492 117 --
Equity in pre-acquisition
earnings of the
professional services
segment................... 665 1,759 1,114 1,114 --
Loss on sales of capital
assets.................... 449 2,635 4,973 537 89
Deferred income taxes...... (13,521) (6,529) 8,927 28 (3,400)
Changes in assets and
liabilities, net of
effects from acquisitions:
Restricted cash.......... -- (4,466) (27,902) (13,336) (2,691)
Accounts receivable...... (5,256) (6,629) 393 (1,983) (7,383)
Accounts payable......... 1,996 (6,571) 7,963 5,328 4,399
Income taxes
receivable/payable...... (119) (10,218) (4,310) 7,059 9,497
Reserve for legal
proceedings............. 41,982 (6,228) (34,200) (34,254) (125)
Accrued contract losses.. -- 14,697 5,902 (1,373) 7,134
Other assets and
liabilities............. (769) (3,809) 10,223 4,661 3,286
-------- -------- -------- -------- -------
Net cash provided by
(used in) operating
activities.............. 25,938 7,821 (12,150) (19,956) 20,888
-------- -------- -------- -------- -------
Cash Flows from Investing
Activities
Capital expenditures........ (17,985) (30,468) (38,225) (16,573) (16,023)
Payments for acquisitions
and investments, net of
cash acquired.............. -- -- (35,667) (35,667) (20,000)
Proceeds from sales of
capital assets............. 131 70 1,229 -- 407
Other....................... (665) (1,139) (546) (79) 139
-------- -------- -------- -------- -------
Net cash used in
investing activities.... (18,519) (31,537) (73,209) (52,319) (35,477)
-------- -------- -------- -------- -------
Cash Flows from Financing
Activities
Net borrowings on lines of
credit..................... -- -- 3,054 16 5,041
Proceeds from issuance of
long-term debt............. 290 61 11 -- 12
Payments on long-term debt.. (2,293) (2,125) (6,665) (3,279) (997)
Proceeds from initial public
offering, net of offering
expenses of $9,505......... -- -- -- -- 61,995
(Distributions to)
contributions by Deluxe,
net........................ (8,799) 17,992 268,440 87,696 23,905
Dividends paid to Deluxe.... -- -- (159,687) -- (13,800)
-------- -------- -------- -------- -------
Net cash (used in)
provided by financing
activities.............. (10,802) 15,928 105,153 84,433 76,156
-------- -------- -------- -------- -------
Net Cash Used by the
Professional Services Segment
During December 1999 (see
Note 2)...................... -- -- -- -- (4,127)
-------- -------- -------- -------- -------
Net (Decrease) Increase in
Cash and Cash Equivalents (3,383) (7,788) 19,794 12,158 57,440
Cash and Cash Equivalents at
Beginning of Period.......... 27,226 23,843 16,055 16,055 35,849
-------- -------- -------- -------- -------
Cash and Cash Equivalents at
End of Period................ $ 23,843 $ 16,055 $ 35,849 $ 28,213 $93,289
======== ======== ======== ======== =======
Supplementary Cash Flow
Disclosure:
Interest paid............... $ 949 $ 673 $ 1,091 $ 429 $ 1,045
======== ======== ======== ======== =======
</TABLE>

See Notes to Consolidated Financial Statements

F-40
<PAGE>

eFUNDS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 1998 AND 1999
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
(INFORMATION AS OF JUNE 30, 2000 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1999 AND 2000 IS UNAUDITED)

Note 1: Split-off and basis of presentation

In January 2000, Deluxe Corporation (Deluxe) announced that its board of
directors approved a plan (the Plan) to combine its electronic payments,
professional services and government services businesses into a separate,
independent publicly traded company to be called eFunds Corporation (the
Company). The Company was incorporated in Delaware in December 1984 and changed
its name from Deluxe Electronic Payment Systems, Inc. to eFunds Corporation in
September 1999. The Company's business is conducted through three segments:
electronic payments, professional services and government services. Electronic
payments provides transaction processing services and decision support and risk
management products to financial institutions, retailers, electronic funds
transfer networks and e-commerce providers. Professional services provides
information technology consulting and business process management services to
financial services companies and to all of the Company's and Deluxe's
businesses. Government services provides online electronic benefits transfer
(EBT) services under entitlement programs on behalf of state and local
governments and Medicaid eligibility verification services.

In June 2000, the Company issued 5.5 million shares of common stock to the
public. Proceeds from the offering, based on the offering price of $13.00 per
share, totaled $71.5 million ($62.0 million net of offering expenses).
Subsequent to this initial public offering (IPO), Deluxe continues to own 40
million of the Company's shares, representing 87.9% of the Company's total
outstanding shares. Deluxe announced that it plans to offer all of its shares
of the Company's common stock to its shareholders through an exchange offer
under which Deluxe's shareholders will be given the opportunity to tender some
or all of their Deluxe shares in exchange for shares of the Company owned by
Deluxe. Deluxe has the sole discretion to determine whether to proceed with the
exchange offer based on the best interests of Deluxe's shareholders and to
decide what will be the timing, structure and terms of the exchange offer.
Subject to these conditions, Deluxe plans to complete the exchange offer prior
to December 31, 2000. Deluxe has received a private letter ruling request from
the Internal Revenue Service to the effect that the exchange offer will be tax-
free to Deluxe and its shareholders for U.S. federal income tax purposes.
However, the Company cannot be certain that the distribution by Deluxe will be
completed. If Deluxe does not complete the exchange offer, Deluxe will continue
to control the Company and the Company may not realize the anticipated benefits
from its separation from Deluxe. In accordance with Emerging Issues Task Force
No. 96-4, Accounting for Reorganizations Involving a Non-Pro Rata Split-Off of
Certain Nonmonetary Assets to Owners, and Accounting Principles Board Opinion
No. 29, Accounting for Nonmonetary Transactions, Deluxe will account for the
exchange offer as a non-pro rata split-off of a segment of the business in a
corporate plan of reorganization and will account for the transaction at fair
value.

As part of the exchange offer, the Company and Deluxe have entered into
various agreements that address matters, such as information technology
consulting and business processing management services, indemnification, data
sharing, real estate, tax-sharing and transitional services. The Company does
not believe that the effect of these agreements, if applied to the Company's
historical financial statements, would result in a material difference to the
financial statements presented herein.

Certain of these agreements between the Company and Deluxe relate to
services that each party also provides to external customers, i.e. revenue-
generating services. These agreements are intended to be on-going once the
Company is split-off from Deluxe. The Company will provide information
technology consulting, data entry and financial services to Deluxe as it would
to any other external customers. Conversely, Deluxe will provide the Company
certain development and support services as it would to any external customer.

F-41
<PAGE>

Deluxe has agreed to indemnify the Company for future losses arising from
litigation as well as future losses on identified loss contracts. The Company
plans to record any amounts received from Deluxe under the indemnification
agreement prior to the completion of the exchange offer and any spin-off as a
capital contribution. The Company plans to record any amounts earned from
Deluxe under the indemnification agreement after the completion of the exchange
offer and any spin-off, when the Company is no longer owned or controlled by
Deluxe, as a reduction of expense when the additional contract losses, if any,
are recognized. Under the indemnification agreement, the Company is required to
calculate increases or decreases to the loss contract reserve in a manner
consistent with Deluxe's loss accrual practices as of the date of the
agreement. Deluxe will also indemnify the Company against any liabilities,
losses or expenses arising from the litigation or claims asserted against the
Company in connection with the operation of the government services business
prior to the completion of the IPO. Deluxe's total indemnification obligations
to the Company are limited to $14.6 million. Due to the uncertainty associated
with the transactions underlying the indemnification agreement, the Company
cannot state the impact to the Company's financial condition or results of
operations.

Deluxe will assist the Company with certain treasury, accounting, legal and
sales services through the exchange offer date. Deluxe will also assist the
Company in the administration of benefit and compensation plans, and rent
certain facilities to the Company through September 30, 2001. The purpose of
these transitional service agreements is to allow the party receiving the
services to locate another source for such service. As such, the party
receiving the transitional service may discontinue the service at any time
prior to the termination date contained within the agreement, or may extend the
service period for an additional 60 days if necessary. In addition, the Company
will lease portions of a facility to Deluxe for various periods through
December 2003.

Deluxe contributed the ownership of various subsidiaries and certain assets
and liabilities of business operations (the Transferred Businesses) to the
Company on March 31, 2000. As the Company and the Transferred Businesses are
under common control, the consolidated financial statements of the Company
include all of the assets, liabilities, revenues and expenses of the businesses
conducted through the electronic payments, professional services and government
services segments.

All transactions between the entities included in the consolidated financial
statements have been eliminated. Because the Transferred Businesses are under
common control, the accompanying consolidated financial statements have been
retroactively restated to reflect the historical consolidated financial
position as of December 31, 1998 and 1999 and the consolidated results of
operations and cash flows for each of the three years in the period ended
December 31, 1999 as if the contribution of the Transferred Business described
above had occurred and been operating as a stand-alone business throughout the
periods presented, on an "as-if-pooled" basis.

Included in the consolidated financial statements are allocated portions of
Deluxe's corporate assets, liabilities and expenses relating to the Transferred
Businesses. Deluxe and the Company believe the allocation method and the
allocations are reasonable; however, the Company has no history as an
independent operating company. The historical financial information the Company
has included in the consolidated financial statements may not be reflective of
what the results of operations, financial condition and cash flows would have
been had the Company had been a separate, stand-alone entity during the periods
presented. The Company now has, or has contracted with Deluxe to provide its
own financial, administrative and other resources to operate as an independent
public company and to replace other services provided by Deluxe. As a result,
the historical financial information may not necessarily be indicative of what
the results of operations, financial condition and cash flows will be in the
future. The Company has not made adjustments to reflect changes that may occur
to its cost structure, funding and operations as a result of the separation
from Deluxe.

Prior to 2000, the allocations of common expenses, which were calculated
based on a percentage of Company revenue to total Deluxe revenue, headcount,
square footage and transaction processing costs, included costs for various
support functions such as human resources, information services and finance.
These common costs to the Company and Deluxe were allocated since specific
identification of the actual costs incurred was not practicable. In addition,
historically, the Deluxe corporate entity has purchased certain assets or paid
certain

F-42
<PAGE>

liabilities that were attributable to the Company. These items were
specifically identified from within the Deluxe consolidated financial
statements and have been recorded in the Company's consolidated financial
statements.

Note 2: Significant accounting policies

Consolidation--The consolidated financial statements include the accounts of
the Company and the Transferred Businesses. All significant intercompany
accounts, transactions and profits have been eliminated.

For purposes of consolidating the professional services segment, which is
primarily based in India, the Company has used financial statements with a
November 30 fiscal period end for the year ended December 31, 1999. Effective
January 1, 2000, the professional services segment, which had previously
reported its results of operations and financial position on a one-month lag,
changed its reporting dates to coincide with the rest of the Company's
subsidiaries. This change, which was made in conjunction with the
implementation of the Company's central accounting and financial reporting
system, will reflect the financial results of that segment on a timely basis
and improves operating and planning efficiencies. The results of operations for
the professional services segment for the month of December 1999 were excluded
from the Company's consolidated statements of operations and were reflected as
an adjustment to accumulated deficit during the first quarter of 2000. This
segment generated a net loss of $1.1 million in the month of December 1999.

In connection with the Company's electronic payment transactions, the
Company also has cash belonging to customers that temporarily resides in
custodial accounts maintained by the Company. The Company records these amounts
as current restricted custodial cash with a corresponding liability within
other accrued liabilities in the consolidated balance sheets.

Accounts receivable--Accounts receivable are stated net of allowances for
uncollectible accounts of $2.1 million, $4.5 million and $2.0 million at
December 31, 1998 and 1999 and June 30, 2000, respectively. The Company records
allowances for uncollectible accounts when it is probable that the full amount
of its accounts receivable balance will not be collected and when this
uncollectible amount can be reasonably estimated. When estimating the
allowances for uncollectible accounts, the Company takes into consideration
such factors as its day-to-day knowledge of specific customers, the industry
and size of its customers, the overall composition of its accounts receivable
aging, prior history of accounts receivable write-offs and prior history of
allowances in proportion to the overall receivable balance. Increases in the
allowances for uncollectible accounts are recorded as bad debt expense and are
reflected in selling, general and administrative expense in the Company's
consolidated statements of operations. Bad debt expense was $1.5 million in
1997, $1.1 million in 1998, and $2.9 million in 1999. Bad debt expense was $1.4
million and $1.1 million for the six months ended June 30, 1999 and 2000,
respectively. When a specific account receivable is determined to be
uncollectible, the Company reduces both its accounts receivable and allowances
for uncollectible accounts accordingly. As of December 31, 1998 and 1999 and
June 30, 2000, no one customer accounted for 10% or more of total receivables.

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<PAGE>

Long-term investments--At December 31, 1997, 1998, and 1999, long-term
investments consisted principally of cash surrender values of insurance
contracts. The carrying values approximate their fair values. Additionally, in
March 2000, the Company paid cash of $20.0 million for an approximately 24%
interest in a limited liability company (see Note 15). This investment is being
accounted for under the equity method of accounting. The difference of $20.0
million between the carrying value of the investment and the underlying equity
in the net assets of the limited liability company is being accounted for in
the same manner as goodwill and is being amortized over 15 years.

Property and equipment--Property and equipment, including leasehold and
other improvements that extend an asset's useful life or productive
capabilities, are stated at historical cost. Buildings with 40-year lives and
computer and other equipment with lives of three to eight years are generally
depreciated using accelerated methods. Leasehold and building improvements are
depreciated on a straight-line basis over the estimated useful life of the
property or the life of the lease, whichever is shorter.

Intangibles--Intangibles are presented in the consolidated balance sheets
net of accumulated amortization. Amortization expense is determined on the
straight-line basis over periods of 10 to 30 years for cost in excess of net
assets acquired (goodwill) and one to five years for internal use software and
other intangibles. Other intangibles consist primarily of licensed software and
software held for sale. The Company continually re-evaluates the original
assumptions and rationale utilized in the establishment of the estimated lives
of its identifiable intangible assets and goodwill. The carrying values of its
intangible assets are evaluated for impairment in accordance with the Company's
policy on impairment of long-lived assets and intangibles.

Total intangibles were as follows (dollars in thousands):

<TABLE>
<CAPTION>
December 31, Unaudited
----------------- June 30,
1998 1999 2000
-------- -------- ---------
<S> <C> <C> <C>
Cost in excess of net assets acquired (see
Note 4)...................................... $ 21,431 $ 61,577 $ 61,466
Internal use software......................... 11,729 34,164 43,844
Other intangible assets....................... 68,711 69,784 72,926
-------- -------- --------
Total....................................... 101,871 165,525 178,236
Less accumulated amortization................. 72,489 82,738 89,823
-------- -------- --------
Intangibles--net.............................. $ 29,382 $ 82,787 $ 88,413
======== ======== ========
</TABLE>

Capitalization of software developed for resale--The Company capitalizes
costs of software developed for licensing and resale once technological
feasibility has been established. Costs incurred prior to establishing
technological feasibility are expensed as incurred and are included in research
and development expense in the Company's consolidated statements of operations.
Technological feasibility is established when the Company has completed all
planning, designing, coding and testing activities that are necessary to
determine that a product can be produced to meet its design specifications,
including functions, features and technical performance requirements.
Capitalization of costs ceases when the product is available for general
release to customers. Such costs are amortized on a product-by-product basis,
but no longer than five years. The carrying

F-44
<PAGE>

value of software developed for resale is reviewed in accordance with the
Company's policy on impairment of long-lived assets and intangibles.

In some situations the Company's customers do not take possession of the
software. Instead, it remains installed on the Company's hardware and customers
access it as needed. The software utilized under these arrangements is also
sold to customers. Thus, the development costs of these software products are
accounted for under the Company's policy on capitalization of software
developed for resale.

Web site development costs--The Company capitalizes costs associated with
the development of web sites in accordance with its policy on capitalization of
internal-use software. Costs incurred in populating the site with information
about the Company or on products available to customers are expensed as
incurred.

Impairment of long-lived assets and intangibles--The Company periodically
evaluates the recoverability of property, equipment and identifiable
intangibles not held for sale by measuring the carrying amount of the asset
against the estimated undiscounted future cash flows associated with it. When
the asset being evaluated was acquired in a purchase business combination in
which goodwill was recorded, a pro rata portion of the goodwill value is
included in the carrying amount of the asset. This pro rata portion of goodwill
is based on the relative fair values at the date of acquisition of the long-
lived assets and identifiable intangibles acquired. Should the sum of the
expected future net cash flows be less than the carrying value of the asset
being evaluated, an impairment loss would be recognized. The impairment loss
would be calculated as the amount by which the carrying value of the asset
exceeds the fair value of the asset. The pro rata portion of any goodwill
allocated to the asset would be eliminated before recording any reduction of
the original carrying amount of the asset. In evaluating whether there is any
impairment of a long-lived asset associated with a long-term service contract,
the amount of any loss contract accrual is excluded from the undiscounted
future cash flows associated with the long-lived asset when determining whether
the asset is impaired.

The Company periodically evaluates the recoverability of property, equipment
and identifiable intangibles held for disposal by comparing the asset's
carrying amount with its fair value less costs to sell. If a large segment or
separable group of assets which were acquired in a purchase business
combination are held for disposal, all of the unamortized goodwill associated
with those assets is included in the carrying amount of the assets for purposes
of this evaluation. Should the fair value less costs to sell be less than the
carrying value of the long-lived asset(s), an impairment loss would be
recognized. The impairment loss would be calculated as the amount by which the
carrying value of the asset(s) exceeds the fair value of the asset(s) less
costs to sell. The unamortized goodwill associated with those assets would be
eliminated before recording any reduction in the original carrying value of the
asset(s).

Income taxes--In most cases, the Company's domestic businesses are included
in the Deluxe consolidated tax return. Tax payments are made to Deluxe and tax
benefits are reimbursed by Deluxe to the extent they are used. The consolidated
financial statements include income tax provisions and liabilities calculated
as if separate tax returns were prepared for the periods covered. Deferred
income taxes result from temporary

F-45
<PAGE>

differences between the financial reporting basis of assets and liabilities and
their respective tax reporting bases. Future tax benefits are recognized to the
extent that realization of such benefits is more likely than not.

Translation adjustment--The financial position and results of operations of
the Company's international subsidiaries are measured using local currencies as
the functional currencies. Assets and liabilities of these operations are
translated at the exchange rate in effect at the balance sheet date. Income
statement accounts are translated at the average exchange rate during the year.
Translation adjustments arising from the use of differing exchange rates from
period to period are included in other comprehensive income in the
stockholders' equity section of the consolidated balance sheets. Gains and
losses that result from foreign currency transactions are included in earnings.

Revenue recognition--Revenues are recorded net of any applicable discounts.
Transaction processing and service fees are recognized in the period that the
service is performed. These services consist of processing customers'
electronic debit transactions through electronic funds transfer networks and
settling the funds with the financial institutions involved in the
transactions. Additionally, these services include monitoring ATMs and point-
of-sale devices to alert customers when potential problems occur. These fees
are charged on a per transaction basis, depending on the contractual
arrangement with the customer. Government services fees are recognized in the
period services are provided based on monthly fees per benefits recipient.

Software license fees for standard software products are recognized when
delivery has occurred, the license fee is fixed and determinable,
collectibility is probable and evidence of this arrangement exists. License
fees are charged based on modules purchased by the customer. In some
situations, the Company's customers do not take possession of the software.
Instead, it remains installed on the Company's hardware and customers access it
as needed. Revenue in these situations is recognized on a fee-for-service
basis.

Software maintenance and support revenues are recognized ratably over the
term of the contract, and/or as the services are provided. Support services
such as customization of standard software modules, are charged on a time and
materials basis and recognized as hours are completed.

Revenues from professional services for information technology consulting
and business process management services are generally recognized under two
methods, depending on contractual terms. Under the time and materials method,
revenue is based on a fee per hour basis and is recognized as hours are
completed. Under the fixed contract method, a pre-set fee is agreed upon for a
project, and revenue is recognized proportionately to the percentage completion
of the project.

Long-term service contracts--Long-term service contracts are definitive
agreements to provide services over a period of time in excess of one year and
with respect to which the Company has no contractual right to adjust the prices
or terms at or on which its services are supplied during the term of the
contract. The Company's long-term service contracts are for transaction
processing in the government services segment and business process management
services in the professional services segment. Total revenues for some long-
term service contracts may vary based on the demand for services. Revenues on
long-term service contracts are recognized under the applicable revenue
recognition policy above. Expenses are recognized when incurred, with the
exception of installation costs. In existing long-term service contracts,
installation costs are not recovered at the time of installation. Rather, they
are factored into billing rates over the term of the contract. Accordingly,
installation costs for long-term service contracts are initially capitalized
and then amortized over the life of the contract. Any equipment and software
purchased to support a long-term service contract is

F-46
<PAGE>

capitalized and depreciated or amortized over the life of the related contract
or the life of the asset, whichever is shorter.

Certain direct costs associated with the EBT contracts discussed in Note 5
are common to a number of contracts and are attributed to each contract based
on its use of the services associated with these common direct costs. Revenues,
case counts or other applicable statistics are used to attribute these costs to
individual contracts.

Advertising expense--Advertising and promotional costs are expensed as
incurred. The Company incurred advertising and promotional expense of $0.3
million, $0.4 million, and $0.7 million in 1997, 1998 and 1999, respectively.
Advertising expense was $0.2 million and $6.9 million for the six months ended
June 30, 1999 and 2000, respectively.

Employee stock-based compensation--The Company participates in Deluxe's
stock incentive program. In connection with the IPO and the exchange offer, the
Company intends to adopt new stock incentive programs. As permitted by
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, the Company continues to account for its employee
stock-based compensation in accordance with Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation
cost has been recognized for fixed stock options issued under the Deluxe stock
incentive or DeluxeSHARES programs. The Company discloses pro forma net loss
and net loss per share as if the fair value method of SFAS No. 123 had been
used (see Note 9).

Income (loss) per share and stockholders' equity--The following table
reflects the calculation of basic and diluted income (loss) per share (dollars
and shares outstanding in thousands, except per share amounts).

<TABLE>
<CAPTION>
Unaudited
Six Months
Year Ended December 31, Ended June 30,
--------------------------- ---------------
1997 1998 1999 1999 2000
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net income (loss)............... $(34,068) $(14,591) $(8,226) $ 1,335 $(3,350)
Weighted average shares
outstanding.................... 40,000 40,000 40,000 40,000 40,030
Net income (loss) per share--
basic and diluted.............. $ (0.85) $ (0.36) $ (0.21) $ 0.03 $ (0.08)
</TABLE>

F-47
<PAGE>

On January 27, 2000, the Company increased the number of authorized shares
from 2,500 to 250 million. On May 12, 2000, the Company declared a 16,000 to
one stock split, increasing the shares issued and outstanding from 2,500 to 40
million. The income (loss) per share is presented as if the 40 million shares
had been outstanding for all periods presented. In June 2000, the Company
issued 5.5 million shares of common stock in an IPO. These shares have been
included in the calculation of weighted average shares outstanding for the six
months ended June 30, 2000.

As of the IPO, the Company issued 2.8 million options to purchase shares of
the Company's common stock at an exercise price equal to the IPO price. These
options were excluded from the computation of diluted earnings per share for
the six months ended June 30, 2000, because their exercise price was greater
than the average market price of the Company's common shares during the
respective periods.

Comprehensive income--Comprehensive income includes charges and credits to
equity that are not the result of transactions with stockholders. The Company's
total comprehensive income (loss) consists of net income or loss and foreign
currency translation adjustments. The foreign currency translation adjustments
are reflected as accumulated other comprehensive loss in the Company's
consolidated balance sheets and in the Company's stockholders' equity statement
presented in Note 12.

Unaudited interim financial information--The consolidated balance sheet as
of June 30, 2000, the consolidated statements of operations and comprehensive
income (loss) for the six months ended June 30, 1999 and 2000 and the
consolidated statements of cash flows for the six months ended June 30, 1999
and 2000 are unaudited. In the opinion of management, all adjustments necessary
for a fair presentation of such consolidated financial statements are included.
Other than the adjustments related to charges for contract losses (see Note 5)
and restructuring charges (see Note 7), the adjustments consist only of normal
recurring items. Interim results are not necessarily indicative of results for
a full year.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements,
which provides guidance in applying generally accepted accounting principles to
revenue recognition in financial statements. Application of this SAB did not
have a material impact on the Company's reported operating results or financial
position.

Note 3: Transactions with Deluxe

Purchase and sale transactions between the Company and Deluxe are executed
at either current market pricing or agreed-upon transfer prices. Purchases from
Deluxe were $1.0 million, $0.2 million, and $2.9 million

F-48
<PAGE>

for the years ended December 31, 1997, 1998 and 1999. Purchases from Deluxe
were zero and $6.2 million for the six months ended June 30, 1999 and 2000,
respectively. Sales to Deluxe were $2.4 million, $1.6 million, and $8.8 million
for the years ended December 31, 1997, 1998 and 1999. Sales to Deluxe were
$722,000, and $30.4 million for the first six months of 1999 and 2000,
respectively. Under Deluxe's centralized cash management system, advances from
Deluxe and excess cash sent to Deluxe are reflected as contributions by and
distributions to Deluxe and are included in stockholders' equity in the
consolidated balance sheets through March 31, 2000.

Deluxe allocated to the Company $15.5 million, $25.3 million, and $25.6
million for the years ended December 31, 1997, 1998 and 1999, respectively, for
the costs of corporate services provided. Deluxe allocated to the Company $10.3
million and $3.3 million for the first six months of 1999 and 2000,
respectively. Prior to 2000, these allocations, which were calculated based on
a percentage of Company revenue to total Deluxe revenue, headcount and
transaction processing costs, included expenses for various support functions
such as human resources, information services and finance. These common costs
to the Company and Deluxe were allocated since specific identification of the
actual costs incurred was not practicable. The Company and Deluxe believe that
this allocation method was reasonable. The amounts allocated to the Company are
included in selling, general and administrative expense in the consolidated
statements of operations. During 2000, the majority of the costs for these
support functions are incurred directly by the Company. The remaining corporate
services provided by Deluxe are allocated to the Company based on estimates of
the costs which would be incurred by the Company if it were a stand-alone,
independent company. The amounts allocated to the Company are included in
selling, general and administrative expense in the consolidated statements of
operations.

Deluxe also charges the Company for interest expense or credits the Company
for interest income based on the cash the Company has borrowed from or provided
to Deluxe. The Company was charged or credited net interest (expense) income
from Deluxe of $(0.7) million, $3.0 million, and $1.8 million for the years
ended December 31, 1997, 1998 and 1999, respectively. The Company was charged
or credited net interest income (expense) from Deluxe of $1.4 million and
$(0.8) million for the first six months of 1999 and 2000, respectively. These
amounts are included in interest (expense) income in the consolidated
statements of operations. The interest rate for net receivables from Deluxe is
based on the average 30-day commercial paper composite rate. The interest rate
for net payables is based on the average 30-day commercial paper composite rate
plus 2%. The average 30-day commercial paper composite rate was 7.5%, 5.4% and
5.1% for the years ended December 31, 1997, 1998, and 1999 and 4.9% and 6.0%
for the six months ended June 30, 1999 and 2000, respectively. At December 31,
1999 and March 31, 2000, Deluxe forgave the net outstanding debt that the
Company owed Deluxe. The Company recorded this as a capital contribution. After
March 31, 2000, the Company and Deluxe intend to repay any net amounts owed to
each other.

Note 4: Business combinations

On February 19, 1999, Deluxe acquired all of the outstanding shares of
eFunds Corporation of Tustin California, an electronic check conversion
company, for $13 million in cash. The company provides electronic check
conversion and electronic funds transfer solutions for financial services
companies and retailers. The ownership of this company was transferred to the
Company under the Plan discussed in Note 1. The acquisition was accounted for
under the purchase method of accounting. Accordingly, the consolidated
financial statements of the Company include the results of this business
subsequent to its acquisition date. This business is included in the electronic
payments segment in Note 13. The purchase price was allocated to the assets
acquired and liabilities assumed based on their fair values on the date of
purchase. Total cost in excess of net assets acquired in the amount of $15.7
million is being amortized over 10 years.

On April 13, 1999, Deluxe acquired the remaining 50% ownership interest in
HCL-Deluxe, N.V. (the joint venture pursuant to which the Company's
professional services business was created) for $23.4 million in cash. The
joint venture, which Deluxe entered into with HCL Corporation of India in 1996,
commenced operations in September 1997. The company provides information
technology consulting and business process management services to financial
services companies and to all of the Company's and Deluxe's businesses. The
ownership of

F-49
<PAGE>

this company was transferred to the Company under the Plan discussed in Note 1.
The acquisition was accounted for under the purchase method of accounting.
Accordingly, the consolidated financial statements of the Company include the
entire results of this business from the date the Company acquired 100%
ownership. Prior to this, the Company recorded its 50% ownership of the joint
venture's results under the equity method of accounting. As such, its results
of operations prior to the acquisition are included in other expense in the
consolidated statements of operations. This business comprises the professional
services segment in Note 13. The purchase price was allocated to the assets
acquired and liabilities assumed based on their fair values on the date of
purchase. Total cost in excess of net assets acquired in the amount of $24.9
million is being amortized over 15 years.

Note 5: Contract losses

During 1998, the Company recorded charges of $14.7 million to provide for
expected future losses on existing long-term service contracts of the
government services segment. These charges are reflected in cost of sales in
the 1998 consolidated statement of operations. Due to a continuing strong
economy, record low unemployment and welfare reform, the actual transaction
volumes and expected future revenues of this business are well below original
expectations. Additionally, actual and expected future telecommunications,
installation, help desk and other costs are significantly higher than
originally anticipated. These factors resulted in expected future losses on the
existing EBT contracts of this business.

During 1999, charges of $8.2 million were recorded to provide for additional
expected future losses on the contracts of the government services segment.
These charges are reflected in cost of sales in the 1999 consolidated statement
of operations. A majority of the charges resulted from the conclusion of
negotiations with a prime contractor regarding the timing and costs of
transitioning switching services from the Company to a new processor. Also,
lower than projected actual transaction volumes (primarily related to states
fully rolled-out in 1999) contributed to the changes in the estimates
underlying the 1998 charges. These increases to the reserve for accrued
contract losses were partially offset by the application of $2.3 million of
contract losses against the reserve during 1999.

During the second quarter of 2000, the Company recorded net charges of $9.7
million for additional expected future losses on the contracts of the
government services segment. This amount is reflected in cost of sales in the
consolidated statements of operations for the quarter and six months ended June
30, 2000. In April 2000, the Company completed negotiations with the prime
contractor for a state coalition for which the Company provides EBT services.
Prior to this, the Company and the prime contractor were operating without a
binding, legally enforceable contract. The Company increased its accrual for
expected future losses on long-term service contracts by $12.2 million to
reflect the fact that the Company now had a definitive agreement with this
contractor. Offsetting this charge was the reversal of $2.5 million of
previously recorded contract loss accruals. These reversals resulted from
productivity improvements and cost savings from lower than anticipated
telecommunications and interchange expenses.

Note 6: Impairment losses

During 1997, the Company determined that it would dispose of certain
international operations of its electronic payments segment. Based on fair
market value estimates, the Company determined that the long-lived assets of
these operations were impaired and recorded a charge of $11.8 million to write
down the carrying value of these operations to their estimated fair value less
costs to sell. Of this total, $2.4 million related to capitalized software is
recorded in cost of sales and $9.4 million for goodwill is recorded in
operating expenses in the 1997 consolidated statement of operations. During
1998, there was a change in the management of the electronic payments segment.
As a result, in January 1999, the Company determined that the international
operations of this segment maintained a continuing strategic importance and
were no longer considered held for sale. The assets that were written off in
1997 remain at zero book value.

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<PAGE>

During 1998, the Company recorded impairment charges of $26.3 million to
write down the carrying value of long-lived assets of the government services
segment. The assets consisted of point-of-sale equipment, internal-use software
and capitalized installation costs utilized in the EBT activities of this
segment. The Company concluded that the operating losses incurred by this
business would continue. This is primarily due to the fact that the variable
costs associated with supporting benefit recipient activity are higher than
originally anticipated and actual transaction volumes are below original
expectations. In calculating the impairment charge, the Company determined that
the assets utilized by this business have no fair market value. The point-of-
sale equipment was purchased via capital leases. The lease buy-out prices for
this equipment plus the deinstallation costs exceeded the amount equipment
resellers were willing to pay for the equipment. The utility of the internal-
use software was limited to its use in supporting the EBT business, and the
installation costs could not be resold. Thus, the long-lived assets and
intangibles of this business were reduced to a carrying value of zero. These
impairment charges are reflected as cost of sales in the 1998 consolidated
statement of operations.

During 1999, due to the continued operating losses of the government
services segment, additional impairment charges of $0.5 million were recorded.
These charges represented the write-down of long-lived assets and intangibles
purchased by this segment during 1999. These assets consisted primarily of
software and installation costs associated with the continued roll-out of
additional states. All assets purchased were reduced to a carrying value of
zero, as they were in 1998. These impairment charges are reflected in cost of
sales in the 1999 consolidated statement of operations.

Note 7: Restructuring charges

During 1997, the Company recorded restructuring charges of $1.5 million for
severance relating to management changes within the electronic payments
segment. This reduction of four employees was completed in 1998. These charges
are reflected in selling, general and administrative (SG&A) expense in the 1997
consolidated statement of operations.

During 1998, the Company recorded restructuring charges of $3.2 million for
severance associated with the Company's initiative to reduce its SG&A expense.
The Company anticipated eliminating 76 positions in various support functions
within sales, marketing, finance, human resources and information services
through 2000. As of December 31, 1999, 33 of the positions have been
eliminated. Also during 1998, the Company reversed $1.0 million of a 1996
restructuring charge. The 1996 charge related to planned reductions in various
support functions at the international operations of the electronic payments
segment. Due to higher than anticipated attrition, it was necessary to reduce
this reserve. This accrual reversal and the new restructuring accruals are
reflected in SG&A expense in the 1998 consolidated statement of operations.

During 1999, the Company reversed $2.4 million of restructuring accruals
relating to its 1998 initiative to reduce SG&A expense and the 1996 plan to
reduce the workforce at the international operations of the electronic payments
segment. The reduction in the SG&A expense initiative accrual was due to higher
than anticipated attrition, resulting in severance payments to 37 fewer
employees than originally anticipated. Also, due to the Company's decision in
1999 to retain the international operations of its electronic payments segment
(see Note 6), planned reductions within that business were canceled. These
accrual reversals are reflected in SG&A expense in the 1999 consolidated
statement of operations.

During the first quarter of 1999, restructuring accruals of $2.0 million
were reversed. These reversals related to the Company's decision in 1999 to
retain the international operations of its electronic payments segment. These
reversals are reflected in SG&A expense in the consolidated statement of
operations for the six months ended June 30, 1999.

During the first quarter of 2000, additional restructuring accruals of $0.2
million were recorded relating to the continuing reorganization of the Company.
Additionally, accruals of $0.1 million were reversed. During the second quarter
of 2000, additional restructuring accruals of $0.4 million were recorded. No
accruals were

F-51
<PAGE>

reversed during the second quarter of 2000. These new restructuring charges and
reversals are reflected in SG&A expense in the consolidated statements of
operations for the six months ended June 30, 2000.

The Company's consolidated balance sheets reflect restructuring accruals for
employee severance costs of $4.7 million, $1.2 million and $1.0 million as of
December 31, 1998 and 1999 and June 30, 2000, respectively. The following table
summarizes the change in the Company's restructuring accruals for 1997, 1998
and 1999 and the six months ended June 30, 2000 (dollars in thousands):

<TABLE>
<CAPTION>
Unaudited
Six Months Ended
Year Ended December 31, June 30,
------------------------------------------------------ ----------------
1997 1998 1999 2000
---------------- ----------------- ----------------- ----------------
Number of Number of Number of Number of
employees employees employees emplyees
affected Amount affected Amount affected Amount affected Amount
--------- ------ --------- ------- --------- ------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance--beginning of
year................... 190 $3,500 174 $ 4,574 186 $ 4,672 6 $1,242
Severance paid.......... (20) (442) (19) (2,053) (18) (1,031) (7) (673)
Adjustments to accrual.. 4 1,516 31 2,151 (162) (2,399) 31 465
--- ------ --- ------- ---- ------- --- ------
Balance--end of year.... 174 $4,574 186 $ 4,672 6 $ 1,242 30 $1,034
=== ====== === ======= ==== ======= === ======
</TABLE>

Note 8: Benefit (provision) for income taxes

(Loss) income before income taxes consists of (dollars in thousands):

<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1997 1998 1999
-------- -------- -------
<S> <C> <C> <C>
Domestic........................................ $(25,620) $(24,591) $(2,163)
Foreign......................................... (14,845) 1,431 (477)
-------- -------- -------
Total......................................... $(40,465) $(23,160) $(2,640)
======== ======== =======
</TABLE>

The components of the benefit (provision) for income taxes are as follows
(dollars in thousands):

<TABLE>
<CAPTION>
1997 1998 1999
------- ------ --------
<S> <C> <C> <C>
Current tax benefit (provision):
Federal........................................ $(6,866) $1,324 $ 5,527
State.......................................... (1,345) 1,169 (271)
------- ------ --------
Total........................................ (8,211) 2,493 5,256
Deferred tax benefit (provision):
Federal........................................ 14,574 6,157 (10,811)
State.......................................... 34 (81) (31)
------- ------ --------
Total........................................ $ 6,397 $8,569 $ (5,586)
======= ====== ========
</TABLE>

The Company's effective tax rate on pretax loss differs from the U.S.
Federal statutory tax rate of 35% as follows (dollars in thousands):

<TABLE>
<CAPTION>
1997 1998 1999
------- ------ -------
<S> <C> <C> <C>
Income tax at Federal statutory rate............. $14,163 $8,106 $ 924
State income taxes net of Federal income tax
benefit......................................... (852) 707 (196)
Amortization and write-down of non-deductible
intangibles..................................... (3,132) (231) (1,074)
Change in valuation allowance.................... (1,810) 636 (4,591)
Other............................................ (1,972) (649) (649)
------- ------ -------
Benefit (provision) for income taxes............. $ 6,397 $8,569 $(5,586)
======= ====== =======
</TABLE>

F-52
<PAGE>

Tax effected temporary differences which give rise to a significant portion
of deferred tax assets and liabilities at December 31, 1998 and 1999, are as
follows (dollars in thousands):

<TABLE>
<CAPTION>
1998 1999
--------------------- ---------------------
Deferred Deferred Deferred Deferred
tax tax tax tax
assets liabilities assets liabilities
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Net operating loss
carryforwards................. $ 8,123 $ -- $ 13,249 $--
Reserve for legal proceedings.. 12,669 -- 646 --
Accrued contract losses........ 5,664 -- 8,085 --
Restructuring accruals......... 1,793 -- 476 --
Property and equipment......... -- 1,941 954 --
Intangibles.................... 1,343 -- 718 --
Employee benefit plans......... 840 -- 879 --
Miscellaneous reserves and
accruals...................... 854 -- 1,327 --
All other...................... 175 595 131 239
------- ------ -------- ----
Subtotal....................... 31,461 2,536 26,465 239
Valuation allowance............ (9,340) -- (14,125) --
------- ------ -------- ----
Total deferred taxes........... $22,121 $2,536 $ 12,340 $239
======= ====== ======== ====
</TABLE>

The valuation allowance at both dates relates to the uncertainty of
realizing foreign and state deferred tax assets.

At December 31, 1999, net operating loss carryforwards relating to both
foreign and state jurisdictions totaled $92.1 million. Of these carryforwards,
$83.0 million expire in various years between 2001 and 2014 and $9.1 million
may be carried forward indefinitely.

Note 9: Employee benefit plans

Stock purchase plan--The Company participates in Deluxe's employee stock
purchase plan that enables eligible employees to purchase Deluxe's common stock
at 75% of its fair market value on the first business day following each three-
month purchase period. Compensation expense recognized for the difference
between the employees' purchase price and the fair value of the stock was $0.6
million, $0.7 million and $0.7 million in 1997, 1998 and 1999, respectively.

Stock incentive plan--The Company participates in Deluxe's stock incentive
plan. In connection with the IPO, the Company has also adopted a new stock
incentive program. Under these plans, stock-based awards may be issued to
employees via a broad range of methods, including non-qualified or incentive
stock options, restricted stock and restricted stock units, stock appreciation
rights and other awards based on the value of the respective Company's common
stock. Options become exercisable in varying amounts beginning generally one
year after the date of grant. As of the IPO, the Company issued 2.8 million
options to purchase shares of the Company's common stock to employees and
outside directors. The exercise price is equal to the IPO price. Option issued
to employees vest in three years and options issued to outside directors vest
in two years.

The Company also participates in Deluxe's DeluxeSHARES program. In 1998,
under this program, options were awarded to substantially all employees of the
Company (excluding foreign employees), allowing them, subject to certain
conditions, to purchase 100 shares of Deluxe common stock. The options become
exercisable when the value of Deluxe's common stock reaches $49.50 per share or
January 30, 2001, whichever occurs first.

All options issued under the Deluxe stock incentive and DeluxeSHARES
programs allow for the purchase of shares of Deluxe's common stock at prices
equal to their market value at the date of grant. Options issued to

F-53
<PAGE>

Company employees under these Deluxe plans for the purchase of 698,000 and 1.1
million shares were outstanding at December 31, 1998 and 1999, respectively.

Deluxe issued restricted shares and restricted stock units to Company
employees as follows: 1,338 shares and units at a weighted-average fair value
of $33.00 per share during 1997, 979 shares and units at a weighted-average
fair value of $35.63 per share during 1998, and 6,264 shares and units at a
weighted-average fair value of $26.19 per share during 1999. These awards
generally vest over periods ranging from one to five years. No consideration is
paid by the employees for these awards. As such, the Company recorded
compensation expense of $23,000, $57,000 and $164,000 for restricted share and
restricted stock unit awards for the years ended December 31, 1997, 1998 and
1999, respectively.

In connection with the exchange offer (see Note 1), Deluxe and the Company
have decided that options outstanding as of the exchange offer date will be
converted to options of the Company and options of Deluxe based on a formula.
The formula will be based on the market value of the Company's and Deluxe's
common stock immediately prior to completion of the exchange offer and is
designed to maintain an equivalent intrinsic value for the option holder
utilizing the criteria described in Emerging Issues Task Force No. 90-9,
Changes to Fixed Employee Stock Option Plans as a Result of Equity
Restructuring. The Company does not expect a compensation charge to result from
this conversion process.

Pro forma information regarding net loss and net loss per share has been
determined as if the Company had accounted for its employee stock-based
compensation under the fair value method. The fair value of options was
estimated at the date of grant using a Black-Scholes option pricing model. The
following weighted-average assumptions were used in valuing options issued in
1997, 1998 and 1999, respectively: risk-free interest rate of 6.0%, 5.9% and
6.7%; dividend yield of 4.0%, 4.5% and 4.6%; and expected volatility of 23.0%,
21.8% and 24.0%. The weighted-average expected option life was 7.2 years, 5.9
years and 9.0 years for 1997, 1998 and 1999, respectively. The weighted-average
fair value of options granted in 1997, 1998 and 1999 was $6.87, $6.13 and $8.28
per share, respectively. For purposes of pro forma disclosures, the estimated
fair value of the options was recognized as expense over the options' vesting
periods. The Company's pro forma net loss and net loss per share were as
follows (dollars in thousands, except per share amounts):

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net loss:
As reported................................. $(34,068) $(14,591) $ (8,226)
Pro forma................................... $(34,501) $(15,299) $(10,638)
Basic and diluted net loss per share:
As reported................................. $ (0.85) $ (0.36) $ (0.21)
Pro forma................................... $ (0.86) $ (0.38) $ (0.27)
</TABLE>

These pro forma calculations only include the effects of grants made
subsequent to January 1, 1995. As such, these impacts are not necessarily
indicative of the pro forma effects on reported net income of future years.
Also, these calculations relate to options issued under the Deluxe plan that
will be converted into options of the Company as noted above.

Profit sharing, defined contribution and 401(k) plans--The Company
participates in Deluxe's profit sharing plans, defined contribution pension
plan and plans established under section 401(k) of the Internal Revenue Code to
provide retirement benefits for certain employees. The plans cover
substantially all full-time employees with approximately 15 months of service.
Contributions to the profit sharing and defined contribution plans are made
solely by the Company. Employees may contribute up to the lesser of $10,000 or
10% of their wages to the 401(k) plan. The Company will match the first 1% of
wages contributed and 50% of the next 4% of wages contributed. All
contributions are remitted to the plans' respective trustees, and benefits
provided are paid from accumulated funds of the trusts.

F-54
<PAGE>

Contributions to the defined contribution pension plan equaled 6% of
eligible compensation in 1997 and 4% of eligible compensation in 1998 and 1999.
Related expense allocated to the Company for these years was $2.1 million, $2.5
million and $3.2 million, respectively. Contributions to the profit sharing
plans vary based on the Company's performance. Related expense allocated to the
Company for these plans was $2.2 million, $4.6 million and $4.8 million in
1997, 1998 and 1999, respectively. Company contributions to the 401(k) plan
were $1.2 million, $1.5 million and $1.5 million in 1997, 1998 and 1999,
respectively.

Profit sharing and defined contribution expenses are recorded by the Company
based on system generated payroll reports detailing the eligible wages on which
the contribution is based. The expense is determined based on Deluxe's
contribution percentage for the plan year multiplied by the applicable wages.
Prior to 1999, 401(k) expense was allocated to the Company through the
Company's payroll system and determined based on the employee's 401(k)
withholding. During 1999, the allocation for 401(k) expense was based on a
fixed percentage of the Company's salaries and wages and varied by business
segment. The rate ranged from 1.4% to 2.3% of the Company's salaries and wages
and was determined based on the history of 401(k) expense for each particular
business segment.

In connection with the exchange offer (see Note 1), the Company intends to
establish its own employee benefit plans. The specific provisions of such plans
have not yet been determined and may be different than the provisions of
Deluxe's plans.

Note 10: Post-retirement benefits

The Company provides certain health care benefits for a portion of its
retirees. The plan covers employees in the former Deluxe Electronic Payment
Systems, Inc. business. Although the plan was combined with the Deluxe
Corporation Post-retirement Health Care Plan (the Deluxe plan), the Company did
not change the eligibility requirements to match those of the Deluxe plan. The
actuarial valuation for the Company's plan is calculated separately from the
rest of the Deluxe plan. Employees included in the plan may become eligible for
such benefits if they attain the appropriate years of service and age while
working for the Company. The Company's benefit obligation under this plan is
not funded.

The following table summarizes the change in benefit obligation during 1998
and 1999 (dollars in thousands):

<TABLE>
<CAPTION>
Benefit obligation, January 1, 1998..................................... $ 577
<S> <C>
Service cost.......................................................... 69
Interest cost......................................................... 41
Actuarial losses, net................................................. 125
Benefits paid from general funds of the Company....................... (8)
-----
Benefit obligation, December 31, 1998................................... 804
Service cost.......................................................... 86
Interest cost......................................................... 54
Actuarial gains, net.................................................. (138)
Benefits paid from general funds of the Company....................... (5)
-----
Benefit obligation, December 31, 1999................................... $ 801
=====
</TABLE>

F-55
<PAGE>

The status of the plan was as follows at December 31 (dollars in thousands):

<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Accumulated post-retirement benefit obligation.................... $804 $801
Less:
Unrecognized net loss........................................... 296 141
Unrecognized transition obligation.............................. 71 66
---- ----
Accrued post-retirement liability recognized in the consolidated
balance sheets................................................. $437 $594
==== ====
</TABLE>

Net post-retirement benefit cost for the years ended December 31 consisted
of the following components (dollars in thousands):

<TABLE>
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Service cost--benefits earned during the year............... $62 $ 69 $ 86
Interest cost on the accumulated post-retirement benefit
obligation................................................. 22 41 54
Amortization of transition obligation....................... 5 6 5
Recognized net amortization of gains and losses............. -- 6 17
--- ---- ----
Total post-retirement benefit cost.......................... $89 $122 $162
=== ==== ====
</TABLE>

In measuring the accumulated post-retirement benefit obligation as of
December 31, 1999, the Company's health care inflation rate for 2000 and beyond
was assumed to be 5%. A one percentage point increase in the health care
inflation rate for each year would increase the accumulated post-retirement
benefit obligation by $139,000 and the service and interest cost components of
the net post-retirement benefit cost by $29,000. A one percentage point
decrease in the health care inflation rate for each year would decrease the
accumulated post-retirement benefit obligation by $119,000 and the service and
interest cost components of the net post-retirement benefit cost by $24,000.
The discount rate used in determining the accumulated post-retirement benefit
obligation as of December 31, 1998 and 1999 was 6.75% and 7.50%, respectively.

The Company intends to terminate this plan as of the exchange offer (see
Note 1). Employees and retirees who are currently eligible for retiree medical
benefits as of the exchange offer would continue to receive this benefit.
Deluxe will assume the obligation for the eligible employees and retirees as of
the exchange offer. The Company intends to account for this as a reduction of
liabilities and a capital contribution. As of December 31, 1999, the
contribution would be approximately $150,000.

Note 11: Lease and debt commitments

Long-term debt was as follows (dollars in thousands):

<TABLE>
<CAPTION>
December 31, Unaudited
---------------- June 30,
1998 1999 2000
------- ------- ---------
<S> <C> <C> <C>
Capital leases and other......................... $ 5,519 $ 5,492 $ 5,072
Less amount due within one year.................. (1,490) (1,895) (2,149)
------- ------- -------
Total.......................................... $ 4,029 $ 3,597 $ 2,923
======= ======= =======
</TABLE>

Long-term debt consists principally of capital leases on equipment. The
capital lease obligations bear interest rates of 6.7% to 15.7% and are due
through the year 2004. Carrying value materially approximates fair value for
these obligations. Maturities of long-term debt for the five years ending
December 31, 2004, are $1.9 million, $2.1 million, $1.3 million, $0.1 million
and $0.1 million.

F-56
<PAGE>

The Company has entered into operating leases on certain facilities and
equipment. Future minimum lease payments for all noncancelable operating leases
for the five years ending December 31, 2004, are $17.0 million, $10.1 million,
$4.3 million, $2.2 million and $1.6 million and $2.9 million thereafter. Rental
expense was $14.7 million, $18.8 million and $20.7 million in 1997, 1998 and
1999, respectively, and $10.9 million and $9.5 million for the six months ended
June 30, 1999 and 2000, respectively.

As of December 31, 1999, the Company had a $5.0 million line of credit,
which is denominated in Indian rupees and guaranteed by Deluxe, available to
its international operations at an interest rate of 15.81%. The average amount
drawn on this line during 1999 was $2.7 million. As of December 31, 1999, $3.1
million was outstanding. The line of credit was increased on March 9, 2000 to
$10.0 million and remains guaranteed by Deluxe until October 1, 2000. The
average amount drawn on this line during the first six months of 2000 was $4.3
million. As of June 30, 2000, $4.8 million was outstanding.

Deluxe has agreed to provide the Company with an unsecured revolving credit
facility of up to $75 million until the earlier of the effective date of the
exchange offer or December 31, 2000. Borrowings under the facility will be due
at the exchange offer effective date or maturity and will accrue interest at
the London Interbank Offered Rate, or LIBOR, plus a variable additional margin
based on Deluxe's credit rating. As of June 30, 2000, there is $3.8 million
outstanding under this facility at an interest rate of 6.87%. The credit
facility includes financial and restrictive covenants. The Company is currently
in compliance with all covenants.

F-57
<PAGE>

Note 12: Stockholders' equity

<TABLE>
<CAPTION>
Retained Accumulated
Common stock Additional earnings other Total
------------- paid-in (accumulated comprehensive stockkholders'
Shares Amount capital deficit) income (loss) equity
------ ------ ---------- ------------ ------------- --------------
(dollars and shares in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996................... 40,000 $400 $ 7,071 $ 123,626 $ 800 $131,897
Net loss................ -- -- -- (34,068) -- (34,068)
Distributions to Deluxe,
net.................... -- -- (9,167) -- -- (9,167)
Translation adjustment.. -- -- -- -- (972) (972)
------ ---- -------- --------- ------- --------
Balance, December 31,
1997................... 40,000 400 (2,096) 89,558 (172) 87,690
Net loss................ -- -- -- (14,591) -- (14,591)
Contributions by Deluxe,
net.................... -- -- 16,660 -- -- 16,660
Translation adjustment.. -- -- -- -- 44 44
------ ---- -------- --------- ------- --------
Balance, December 31,
1998................... 40,000 400 14,564 74,967 (128) 89,803
Net loss................ -- -- -- (8,226) -- (8,226)
Contributions by Deluxe,
net.................... -- -- 277,634 -- -- 277,634
Dividends paid to
Deluxe................. -- -- -- (159,687) -- (159,687)
Translation adjustment.. -- -- -- -- (419) (419)
------ ---- -------- --------- ------- --------
Balance, December 31,
1999................... 40,000 400 292,198 (92,946) (547) 199,105
Net loss (unaudited).... -- -- -- (3,350) -- (3,350)
Adjustment for lag in
financial reporting
(see Note 2)
(unaudited)............ -- -- -- (1,125) -- (1,125)
Contributions by Deluxe,
net (unaudited)........ -- -- 35,092 -- -- 35,092
Dividends paid to Deluxe
(unaudited)............ -- -- -- (13,800) -- (13,800)
Sale of shares in
initial public offering
(unaudited)............ 5,500 55 61,940 -- -- 61,995
Translation adjustment
(unaudited)............ -- -- -- -- (747) (747)
------ ---- -------- --------- ------- --------
Balance, June 30, 2000
(unaudited)............ 45,500 $455 $389,230 $(111,221) $(1,294) $277,170
====== ==== ======== ========= ======= ========
</TABLE>

Note 13: Business segment information

The Company has organized its business units into three operating segments
based on the nature of the products and services offered by each: electronic
payments, professional services and government services. Electronic payments
provides transaction processing services and decision support and risk
management products to financial institutions, retailers, electronic funds
transfer networks, and e-commerce providers. Professional services provides
information technology consulting and business process management services to
financial services companies and to all of the Company's and Deluxe's
businesses. Government services provides online EBT services under entitlement
programs on behalf of state and local government and Medicaid eligibility
verification services. The Company's segments operate primarily in the United
States. The electronic payments and professional services segments also have
international operations. No single customer of the Company accounted for more
than 10% of total net sales in 1997, 1998 or 1999. Deluxe accounted for 15.1%
of the Company's total net sales during the six months ended June 30, 2000.

The accounting policies of the segments are the same as those described in
Note 2. In evaluating segment performance, management focuses on income from
operations. The income from operations measurement utilized by management
excludes special charges (e.g., restructuring charges, asset impairment
charges, certain one-time charges that management believes are not reflective
of on-going operations, etc.).

F-58
<PAGE>

Prior to the Company's acquisition of the remaining 50% interest in HCL-
Deluxe, N.V. in 1999 (see Note 4), the results of this business were recorded
under the equity method of accounting. As such, the Company recorded its 50%
ownership of the joint venture's results of operations prior to the acquisition
in other expense in the consolidated statements of operations. To be consistent
with management reporting, the entire results of the joint venture for the pre-
acquisition periods are reflected in the business segment information as if the
business had been a consolidated entity.

<TABLE>
<CAPTION>
Electronic Professional Government Total
Year Ended December 31, 1997 Payments Services Services Segments
---------------------------- ---------- ------------ ---------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales to unaffiliated
external customers.............. $199,662 $ 1,589 $26,965 $228,216
Net sales to external
affiliates...................... 2,438 1,615 -- 4,053
Total net sales to external
customers....................... 202,100 3,204 26,965 232,269
Intersegment sales............... -- 76 -- 76
Operating income (loss) excluding
special charges................. 27,744 (1,590) (12,269) 13,885
Asset impairment charges......... 11,831 -- -- 11,831
Other special charges............ 2,316 -- -- 2,316
Operating income (loss) including
special charges................. 13,597 (1,590) (12,269) (262)
Depreciation and amortization
expense......................... 19,168 12 3,580 22,760
Segment assets................... 141,360 3,704 46,115 191,179
Capital expenditures............. 17,295 151 690 18,136
</TABLE>

<TABLE>
<CAPTION>
Electronic Professional Government Total
Year Ended December 31, 1998 Payments Services Services Segments
---------------------------- ---------- ------------ ---------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales to unaffiliated
external customers.............. $221,964 $ 7,994 $ 43,970 $273,928
Net sales to external
affiliates...................... 1,586 4,100 -- 5,686
Total net sales to external
customers....................... 223,550 12,094 43,970 279,614
Intersegment sales............... -- 1,134 -- 1,134
Operating income (loss) excluding
special charges................. 23,459 (3,406) (6,496) 13,557
Asset impairment charges......... -- -- 26,252 26,252
Other special charges............ 2,375 -- 14,928 17,303
Operating income (loss) including
special charges................. 21,084 (3,406) (47,676) (29,998)
Depreciation and amortization
expense......................... 17,294 260 4,225 21,779
Segment assets................... 145,572 5,410 37,286 188,268
Capital expenditures............. 30,148 1,934 320 32,402
</TABLE>

<TABLE>
<CAPTION>
Electronic Professional Government Total
Year Ended December 31, 1999 Payments Services Services Segments
---------------------------- ---------- ------------ ---------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales to unaffiliated
external customers.............. $237,885 $ 10,745 $48,277 $296,907
Net sales to external
affiliates...................... 3,500 6,258 -- 9,758
Total net sales to external
customers....................... 241,385 17,003 48,277 306,665
Intersegment sales............... -- 2,372 -- 2,372
Operating income (loss) excluding
special charges................. 14,842 (7,809) 3,454 10,487
Special charges (recoveries)..... (225) 2,938 10,096 12,809
Operating income (loss) including
special charges................. 15,067 (10,747) (6,642) (2,322)
Depreciation and amortization
expense......................... 20,681 1,963 -- 22,644
Segment assets................... 210,661 36,200 34,410 281,271
Capital expenditures............. 34,068 3,373 929 38,370
</TABLE>

F-59
<PAGE>

<TABLE>
<CAPTION>
Six Months Ended June 30, 1999 Electronic Professional Government Total
(unaudited) Payments Services Services Segments
------------------------------ ---------- ------------ ---------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales to unaffiliated external
customers........................ $115,203 $ 4,710 $23,193 $143,106
Net sales to external affiliates.. 112 1,530 -- 1,642
Total net sales to external
customers........................ 115,315 6,240 23,193 144,748
Intersegment sales................ -- 885 -- 885
Operating income (loss) excluding
special charges.................. 10,387 (2,232) (1,093) 7,062
Special charges................... -- 898 -- 898
Operating income (loss) including
special charges.................. 10,387 (3,130) (1,093) 6,164
Depreciation and amortization
expense.......................... 10,583 371 -- 10,954
Segment assets.................... 193,750 33,897 37,032 264,679
Capital expenditures.............. 16,083 498 137 16,718
</TABLE>

<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 Electronic Professional Government Total
(unaudited) Payments Services Services Segments
------------------------------ ---------- ------------ ---------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales to unaffiliated
external customers.............. $140,915 $ 7,091 $22,777 $170,783
Net sales to external
affiliates...................... 478 29,964 -- 30,442
Total net sales to external
customers....................... 141,393 37,055 22,777 201,225
Intersegment sales............... -- 4,705 -- 4,705
Operating income (loss) excluding
special charges................. 7,374 (1,528) 3,864 9,710
Special charges.................. 2,135 740 9,700 12,575
Operating income (loss) including
special charges................. 5,239 (2,268) (5,836) (2,865)
Depreciation and amortization
expense......................... 11,620 1,812 -- 13,432
Segment assets................... 327,425 38,971 26,354 392,750
Capital expenditures............. 13,498 2,525 -- 16,023
</TABLE>

Segment information reconciles to consolidated amounts as follows (dollars
in thousands):

<TABLE>
<CAPTION>
Unaudited Six
Months Ended
Year Ended December 31, June 30,
---------------------------- ------------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total net sales to external
customers
Total segment net sales to
external customers.......... $232,269 $279,614 $306,665 $144,748 $201,225
Professional services pre-
acquisition elimination..... (3,204) (12,094) (4,325) (4,325) --
-------- -------- -------- -------- --------
Total consolidated net sales
to external customers...... $229,065 $267,520 $302,340 $140,423 $201,225
======== ======== ======== ======== ========
Operating income (loss)
including special charges
Total segment operating
income (loss)............... $ (262) $(29,998) $ (2,322) $ 6,164 $ (2,865)
Professional services pre-
acquisition elimination..... 1,590 3,387 1,234 1,234 --
-------- -------- -------- -------- --------
Total consolidated operating
income (loss).............. $1,328 $(26,611) $(1,088) $7,398 $(2,865)
======== ======== ======== ======== ========
Depreciation and amortization
expense
Total segment depreciation
and amortization expense.... $22,760 $21,779 $22,644 $10,954 $13,432
Professional services pre-
acquisition elimination..... (12) (260) (143) (143) --
-------- -------- -------- -------- --------
Total consolidated
depreciation and
amortization expense....... $22,748 $21,519 $22,501 $10,811 $13,432
======== ======== ======== ======== ========
</TABLE>

F-60
<PAGE>

<TABLE>
<CAPTION>
Unaudited
December 31, June 30,
---------------------------- -----------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total assets
Total segment assets.......... $191,179 $188,268 $281,271 $264,679 $392,750
Professional services pre-
acquisition elimination...... (3,369) (4,732) -- -- --
Income tax receivable and
long-term deferred tax asset
not allocated to segments.... -- 2,799 8,658 245 1,554
-------- -------- -------- -------- --------
Total consolidated assets... $187,810 $186,335 $289,929 $264,924 $394,304
======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
Unaudited
Six Months
Year Ended December 31, Ended June 30,
------------------------- ----------------
1997 1998 1999 1999 2000
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Capital expenditures
Total segment capital
expenditures.................... $18,136 $32,402 $38,370 $16,718 $16,023
Professional services pre-
acquisition elimination......... (151) (1,934) (145) (145) --
------- ------- ------- ------- -------
Total consolidated capital
expenditures.................. $17,985 $30,468 $38,225 $16,573 $16,023
======= ======= ======= ======= =======
</TABLE>

Revenues are attributed to geographic areas based on the location of the
assets and employees producing the revenues. The Company's operations by
geographic area are as follows (dollars in thousands):

<TABLE>
<CAPTION>
Long-Lived
Total External Net Sales Assets
-------------------------- ---------------
Year Ended December 31, December 31,
-------------------------- ---------------
1997 1998 1999 1998 1999
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
United States........................ $214,741 $245,682 $281,933 $55,763 $55,587
United Kingdom....................... 12,801 21,555 17,468 2,647 1,948
India................................ -- -- 2,939 -- 2,904
Other foreign countries.............. 1,523 283 -- 50 34
-------- -------- -------- ------- -------
Total consolidated................. $229,065 $267,520 $302,340 $58,460 $60,473
======== ======== ======== ======= =======
</TABLE>

<TABLE>
<CAPTION>
Total External Long-Lived
Net Sales Assets
----------------- ---------------
Unaudited
Six Months Ended Unaudited
June 30, June 30,
----------------- ---------------
1999 2000 1999 2000
-------- -------- ------- -------
<S> <C> <C> <C> <C>
United States................................. $131,173 $188,524 $55,542 $62,837
United Kingdom................................ 9,048 8,396 2,373 1,964
India......................................... 202 4,305 2,060 4,363
Other foreign countries....................... -- -- 43 31
-------- -------- ------- -------
Total consolidated.......................... $140,423 $201,225 $60,018 $69,195
======== ======== ======= =======
</TABLE>

Note 14: Legal proceedings

During 1997, a judgment was entered against the Company in the U.S. District
Court for the Western District of Pennsylvania. The case was brought against
the Company by Mellon Bank (Mellon) in connection with a potential bid to
provide electronic benefit transfer services for the Southern Alliance of
States. In September 1997, the Company recorded a charge of $40 million to
reserve for this judgment and other related costs. This charge is reflected in
legal proceedings in the 1997 consolidated statement of operations.

F-61
<PAGE>

In 1998, Mellon's motion for prejudgment interest was denied by the district
court. The Company reversed $4.2 million of the $40 million liability. This
reversal is reflected in legal proceedings in the 1998 consolidated statement
of operations. At December 31, 1998, the remaining liability of $34.4 million
was included in the reserve for legal proceedings in the consolidated balance
sheet.

In January 1999, the United States Court of Appeals for the Third Circuit
affirmed the judgment of the district court and the Company paid $32.2 million
to Mellon in February 1999. The portion of the reserve remaining after the
payment of this judgment ($2.1 million) was reversed and is reflected in legal
proceedings in the 1999 consolidated statement of operations.

Note 15: Recent events

During March 2000, the Company paid cash of $20.0 million for an
approximately 24% interest in a limited liability company that provides ATM
management and outsourcing services to retailers and financial institutions.
This investment is being accounted for under the equity method of accounting
and is included in other long-term investments in the Company's consolidated
balance sheet as of June 30, 2000. The Company's consolidated statements of
operations reflect the Company's share of the results of this business
subsequent to its acquisition date in other income (expense). The difference of
$20.0 million between the carrying value of the investment and the underlying
equity in the net assets of the limited liability company is being accounted
for in the same manner as goodwill and is being amortized over 15 years.

On March 31, 2000, the Company purchased real property and a data center
located in Phoenix, Arizona and personal property from a subsidiary of Deluxe
for $10.0 million. The Company previously rented portions of this facility. The
purchase price of the property and data center was at the net book value that
was recorded on the Deluxe subsidiary's general ledger. This transaction was
recorded via our intercompany account with Deluxe, the balance of which was
forgiven by Deluxe as of March 31, 2000. (See Note 3).

On April 4, 2000, the Company authorized 100 million shares of preferred
stock with a par value of $.01 per share. No such shares are issued or
outstanding.

During the second quarter of 2000, the Company recorded net charges of $9.7
million for additional expected future losses on the contracts of the
government services segment's EBT business. This amount is reflected in cost of
sales in the consolidated statements of operations for the six months ended
June 30, 2000. In April 2000, the Company completed negotiations with the prime
contractor for a state coalition for which the Company provides EBT services.
Prior to this, the Company and the prime contractor were operating without a
binding, legally enforceable contract. The Company increased its accrual for
expected future losses on long-term service contracts by $12.2 million to
reflect the fact that the Company now had a definitive agreement with this
contractor. Offsetting this charge was the reversal of $2.5 million of
previously recorded contract loss accruals. These reversals resulted from
productivity improvements and cost savings from lower than anticipated
telecommunications and interchange expenses.

Deluxe has agreed to provide the Company with an unsecured revolving credit
facility of up to $75 million until the earlier of the effective date of the
exchange offer or December 31, 2000. Borrowings under the facility will be due
at the exchange offer or maturity and will accrue interest at the London
Interbank Offered Rate, or LIBOR, plus a variable additional margin based on
Deluxe's credit rating. As of June 30, 2000, there is $3.8 million outstanding
under this facility at an interest rate of 6.87%. The credit facility includes
financial and restrictive covenants. The Company is currently in compliance
with all covenants.

F-62
<PAGE>

Beginning in 2000 the Company's information technology consulting services
to Deluxe have been formalized into a five year outsourcing agreement. During
the term of the agreement, the Company anticipates Deluxe will spend
approximately $43 million per year for information technology consulting
services for information technology applications. Amounts will be based on the
actual number of hours of information technology services that the Company
provides to Deluxe. If Deluxe fails to reach the $43 million spending target
per year, it will be obligated to make liquidated damages payments for a
portion of the Company's fees based on its estimates of lost margins. The
Company also will provide business process management services to Deluxe.
Deluxe's annual minimum spending target for business process management
services will range from $8.1 million in 2000 to $4.2 million in 2004. The
agreement will also provide for liquidated damages for non-performance by the
Company and bonuses for superior performances. The provision of services by the
Company under the agreement is non-exclusive, and Deluxe may contract with any
third party for the provision of professional services.

Deluxe has agreed to indemnify the Company for future losses arising from
litigation as well as future losses on identified loss contracts. The Company
plans to record any amounts received from Deluxe under the indemnification
agreement prior to the completion of the exchange offer and any spin-off as a
capital contribution. The Company plans to record any amounts earned from
Deluxe under the indemnification agreement after the completion of the exchange
offer and any spin-off, when the Company is no longer owned or controlled by
Deluxe, as a reduction of expense when the additional contract losses, if any,
are recognized. Under the indemnification agreement, the Company is required to
calculate increases or decreases to the loss contract reserve in a manner
consistent with Deluxe's loss accrual practices as of the date of the
agreement. Deluxe will also indemnify the Company against any liabilities,
losses or expenses arising from litigation or claims asserted against the
Company in connection with the operation of the government services business
prior to the completion of the IPO. Deluxe's total indemnification obligations
to the Company are limited to $14.6 million. Due to the uncertainty associated
with the transactions underlying the indemnification agreement, the Company
cannot state the impact to the Company's financial condition or results of
operations.

Under a registration rights agreement, the Company has agreed to indemnify
Deluxe against liabilities in connection with registrations in which Deluxe
participates, including liabilities under the Securities Act or to contribute
to payments Deluxe may be required to make for these liabilities.

The Company has entered into a tax-sharing agreement with Deluxe which
allocates tax liabilities between the Company and Deluxe during the period in
which the Company is included in Deluxe's consolidated group. The Company
could, however, be liable in the event that any federal tax liability is
incurred, but not discharged, by other members of Deluxe's consolidated group.
In determining the amount of the Company's tax-sharing payments, Deluxe will
prepare for the Company pro forma returns with respect to federal and
applicable state and local income taxes.

F-63
<PAGE>

eFUNDS CORPORATION

SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
1998 Quarter Ended
-------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales.......................... $63,316 $66,455 $ 67,726 $70,023
Cost of sales...................... 41,269 43,120 84,229 43,690
Net income (loss).................. 381 1,503 (22,067)(1) 5,592
Per share of common stock
Net income (loss)--basic and
diluted......................... $ 0.01 $ 0.04 $ (0.55) $ 0.14
</TABLE>

<TABLE>
<CAPTION>
1999 Quarter Ended
------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales......................... $67,856 $72,567 $79,895 $82,022
Cost of sales..................... 43,120 45,120 48,806 57,244
Net income (loss)................. 3,814 (2,479) (9,234) (327)(2)
Per share of common stock
Net income (loss)--basic and
diluted........................ $ 0.10 $ (0.06) $ (0.23) $ (0.01)
</TABLE>

<TABLE>
<CAPTION>
2000 Quarter
Ended
-----------------
March 31 June 30
-------- --------
<S> <C> <C> <C> <C>
Net sales............................ $100,255 $100,970
Cost of sales........................ 58,757 69,139
Net income (loss).................... 1,216 (4,566)(3)
Per share of common stock
Net income (loss)--basic and
diluted........................... $ 0.03 $ (0.11)
</TABLE>

--------
(1) 1998 third quarter results include charges of $14.7 million for losses
on existing contracts of the government services segment, asset
impairment charges of $26.3 million on the long-lived assets of the
government services segment and restructuring charges of $2.2 million.

(2) 1999 fourth quarter results include charges of $8.2 million to reserve
for additional expected future losses on existing contracts of the
government services segment.

(3) 2000 second quarter results include net charges of $9.7 million to
reserve for additional expected future losses on existing contracts of
the government services segment and $2.9 million in expenses related to
the Company's separation from Deluxe.

F-64
<PAGE>

Manually signed facsimile copies of the letter of transmittal will be
accepted. The letter of transmittal, stock certificates representing the Deluxe
shares and any other required documents should be sent or delivered by
tendering holders of Deluxe shares or his or her broker, dealer, commercial
bank, trust company or other nominee to the exchange agent prior to the
expiration date as set forth below.

The exchange agent for the exchange offer is:

Wells Fargo Bank Minnesota, N.A.

If delivered by mail, If delivered by hand, If delivered by
to: to: overnight
courier, to:

Wells Fargo Shareowner Wells Fargo Shareowner Services
Services Wells Fargo Shareowner
Services
c/o The Depository Trust Company
PO Box 64858 Transfer Agent Drop
St. Paul, MN 55164-0858 55 Water Street, 1st Floor 161 North Concord
Attn: Reorganization New York, New York 10041 Exchange
Department South St. Paul, MN 55075
Attn: Reorganization
Department

If by facsimile transmission:
(for eligible institutions only)

(651) 450-4163

Facsimile confirmation number

(651) 450-4110

You may direct any questions and requests for assistance to the information
agent or the dealer manager at their respective addresses and telephone numbers
listed below. You can obtain additional copies of this offering circular-
prospectus, the letter of transmittal, the instructions to the letter of
transmittal and other exchange offer materials from the information agent or
the dealer manager listed below. You may also contact your broker, dealer,
commercial bank or trust company for assistance concerning the exchange offer.

The information agent for the exchange offer is:

Morrow & Co., Inc.

455 Park Avenue, 5th Floor
New York, NY 10022
Call Collect: (212) 754-8000
Banks and Brokerage Firms, please call: (800) 662-5200

Shareholders please call: (800) 566-9061

The dealer manager for the exchange offer is:

Lehman Brothers

Call (212) 526-2610
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Officers and Directors

Section 145 of the Delaware General Corporation Law (DGCL) authorizes a
corporation's board of directors to grant indemnity to directors and officers
in terms sufficiently broad to permit indemnification under certain
circumstances for liabilities (including reimbursement for expenses incurred)
arising under the Securities Act.

As permitted by the DGCL, the Registrant's certificate of incorporation
provides that the Registrant shall indemnify its directors and officers to the
fullest extent permitted by the DGCL. As permitted by the DGCL, the
Registrant's certificate of incorporation also includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of the director's fiduciary duty, except for liability (1) for any
breach of the director's duty of loyalty to the Registrant or its shareholders;
(2) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (3) under Section 174 of the DGCL
regarding payments of dividends, stock purchases or redemptions which are
unlawful; or (4) for any transaction from which the director derived an
improper personal benefit.

The Registrant also intends to maintain director and officer liability
insurance.

Item 21. Exhibits

<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------
<C> <S>
1.1*** Form of Dealer Manager Agreement

2.1* Initial Public Offering and Distribution Agreement, dated as of March
31, 2000, by and between Deluxe and eFunds

3.1* Amended and Restated Certificate of Incorporation of eFunds
Corporation

3.2* Bylaws of eFunds Corporation

4.1* Form of eFunds common stock certificate

4.2*** Rights Agreement, by and between eFunds and EquiServe Trust Company
NA, the Rights Agent, dated May 1, 2000

4.3** Certificate of Designation of Series A Participating preferred Stock

5.1*** Opinion of Dorsey & Whitney LLP

8.1*** Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding certain
tax matters

10.1* Third Party Indemnification Agreement, dated as of May 1, 2000, by and
between eFunds and Deluxe

10.2* Registration Rights Agreement, dated as of March 31, 2000, by and
between Deluxe and eFunds

10.3* Tax Sharing Agreement, dated as of April 1, 2000, by and between
eFunds and Deluxe

10.4* Employee Matters Agreement, dated as of May 1, 2000, by and between
eFunds and Deluxe

10.5* Sublease, dated as of May 15, 2000, by and between eFunds and Deluxe
Financial Services, Inc., for property located in Shoreview, Minnesota

10.6* Lease, dated as of May 15, 2000, by and between eFunds and Deluxe
Financial Services, Inc., for property located in Phoenix, Arizona

10.7* Purchase Agreement, dated as of April 3, 2000, by and between eFunds
and Deluxe Financial Services, Inc., for property located in Phoenix,
Arizona

10.8* Transitional Services Agreement, dated as of May 1, 2000, by and
between eFunds and Deluxe

10.9* Professional Services Agreement, dated as of April 1, 2000, by and
between eFunds and Deluxe
</TABLE>

II-1
<PAGE>

<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------
<C> <S>
10.10* ONE Application Development and Support Agreement, dated as of
January 1, 2000, by and between eFunds and Deluxe Financial Services,
Inc.

10.11* EBT Support Services Agreement, dated as of April 17, 2000 but
effective as of April 1, 1996, by and between eFunds and Citicorp
Services, Inc.

10.12* Data Contribution Agreement, dated as of May 1, 2000, by and between
eFunds and Direct Checks Unlimited, Inc.

10.13* Processor Agreement, dated as of May 1, 2000 by and between eFunds
and Deluxe

10.14* Amendment to ATM Cash Agreements, dated February 20, 2000

10.15* Credit Agreement, dated as of April 1, 2000, by and between eFunds
and Deluxe

10.16* Government Services Indemnification Agreement, dated as of May 1,
2000, by and between eFunds and Deluxe

10.17* eFunds Corporation 2000 Stock Incentive Plan, as amended

10.18 Change in Control Agreement dated as of May 12, 2000 between eFunds
and Paul H. Bristow

10.19 Change in Control Agreement dated as of May 12, 2000 between eFunds
and Nikhil Sinha

10.20 Change in Control Agreement dated as of May 12, 2000 between eFunds
and Steven F. Coleman

10.21* Executive Employment Agreement, dated as of May 9, 2000, by and
between eFunds and John. A. Blanchard III.

10.22* Letter Agreement, dated as of February 28, 2000, by and between
eFunds and Debra Janssen

10.23* Letter Agreement, dated as of February 29, 2000, by and between
eFunds and Dr. Nikhil Sinha

10.24* Letter Agreement, dated as of February 7, 2000, by and between eFunds
and Paul H. Bristow

10.25* Letter Agreement, dated as of February 14, 2000, by and between
eFunds and Steven F. Coleman

10.26* Form of Automated Teller Machine Cash Agreement

10.27** Indemnification Agreement, dated June 26, 2000, by and between eFunds
and Deluxe

10.28*** Indemnification Agreement, dated , 2000, by and between eFunds
and Deluxe

21.1* Subsidiaries of eFunds

23.1 Consent of Deloitte & Touche LLP

23.2*** Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)

23.3*** Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 8.1)

24.1 Power of Attorney
99.1 Letter of Transmittal

99.2 Notice of Guaranteed Delivery

99.3 Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees

99.4 Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees

99.5 Guidelines for Certification of Taxpayer Identification on Number on
Substitute Form W-9
</TABLE>
--------
* Incorporated by reference to the Registration Statement on Form S-1 (File
No. 333-33992) of eFunds Corporation.
** Incorporated by reference to the quarterly report on Form 10-Q for the
quarter ended June 30, 2000 of eFunds Corporation.
*** To be filed by amendment.

II-2
<PAGE>

Item 22. Undertakings

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request. The undersigned Registrant hereby
further undertakes to supply by means of a post-effective amendment all
information concerning a transaction that was not the subject of and included
in the registration statement when it became effective.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in

II-3
<PAGE>

the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide thereof.

The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement on Form S-4 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Shoreview, State of
Minnesota, on August 25, 2000.

eFunds Corporation

/s/ John A. Blanchard III
By: _________________________________
John A. Blanchard III
Chairman of the Board and Chief
Executive Officer

Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-4 has been signed by the following persons in the indicated
capacities on August 25, 2000.

<TABLE>
<CAPTION>
Signature Title
--------- -----

<S> <C>
/s/ John A. Blanchard III Chairman of the Board and Chief Executive
______________________________________ Officer (Principal Executive Officer)
John A. Blanchard III

/s/ Paul H. Bristow Executive Vice President and Chief Financial
______________________________________ Officer (Principal Financial and Accounting
Paul H. Bristow Officer)

* Director
______________________________________
John J. (Jack) Boyle III

* Director
______________________________________
Jack Robinson

* Director
______________________________________
Hakim A. Tyabji

* Director
______________________________________
John H. LeFevre

* Director
______________________________________
Lois M. Martin

* Director
______________________________________
Lawrence J. Mosner

/s/ John A. Blanchard III
*By: _________________________________
Attorney-in-fact
</TABLE>

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- ----------------------

<C> <S>
10.18 Change in Control Agreement dated as of May 12, 2000 between eFunds
and Paul H. Bristow

10.19 Change in Control Agreement dated as of May 12, 2000 between eFunds
and Nikhil Sinha

10.20 Change in Control Agreement dated as of May 12, 2000 between eFunds
and Steven F. Coleman

23.1 Consent of Deloitte & Touche LLP

24.1 Power of Attorney
99.1 Letter of Transmittal

99.2 Notice of Guaranteed Delivery

99.3 Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees

99.4 Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees

99.5 Guidelines for Certification of Taxpayer Identification on Number on
Substitute Form W-9
</TABLE>