Separation of eFunds to be achieved by spin-off; Plaid Moon initiative scaled back

 St. Paul, Minn.— Deluxe Corporation (NYSE: DLX) announced today that its board of directors has approved a plan to complete the separation of eFunds Corporation (Nasdaq: EFDS) from Deluxe by means of a tax-free spin-off to its shareholders rather than by an exchange offer, or split-off, as previously announced. Deluxe also said it will scale back its Plaid Moon(SM) e-commerce retailing initiative and reposition it within the Company's existing businesses. This decision will result in a temporary suspension of the PlaidMoon.com Web site and a reduction in expenditures for this initiative.

"Our primary business objective is to enhance shareholder value," said J.A. Blanchard, chairman and CEO. "Both of these decisions are directly tied to that goal. They also demonstrate the board's sensitivity to our shareholders' interests."

eFunds spin-off vs. split
Deluxe announced on January 31, 2000 that it intended to implement a strategic decision to separate eFunds from Deluxe in order to enhance shareholder value. The intent of the separation was to: 1) create two strategically focused enterprises that could independently achieve their business objectives, 2) allow the companies to pursue opportunities in their respective markets, 3) permit each company independent access to capital markets, and 4) give each company a chance to optimize its capital structure.

The first step of this plan involved an initial public offering (IPO) of a portion of eFunds that took place in June of this year. The plan's second step was to distribute Deluxe's remaining ownership interest in eFunds to Deluxe's shareholders via an exchange offer.

Today's announcement signals no change in the Company's strategy. "Separating Deluxe's core check printing businesses and its eFunds business is still the best strategic business decision," said Blanchard. "However, with adverse changes in market conditions, particularly the decline in eFunds' stock price since the IPO, we are doubtful that the exchange would have been successful. Moreover, in contrast to what was previously expected, in today's market, the higher premium that the Company anticipates would be required to be offered in eFunds stock to induce current Deluxe shareholders to participate would create an unacceptable value disparity in the treatment of exchanging and non-exchanging Deluxe shareholders."

"When we first explored the idea of separating the two companies, we believed a split would be the best alternative for accomplishing our objective," Blanchard said. "However, we've re-evaluated our options and, in conjunction with our financial advisors, concluded that a traditional spin-off is the surest and fairest means of meeting our shareholder value goal in today's market."

The spin-off will distribute 40 million shares of eFunds common stock currently owned by Deluxe to Deluxe's shareholders, and is conditioned upon obtaining Internal Revenue Service (IRS) confirmation that the spin-off will be tax-free to the Company and its shareholders. While there can be no assurance that such confirmation will be obtained, the Company is still targeting year-end for completion of the spin-off. Under the spin-off, every Deluxe shareholder of record on a designated record date will receive a fixed number of eFunds shares for each Deluxe share owned.

In accordance with applicable accounting rules for split-offs, the Company recognized a gain of $30.1 million from the IPO of eFunds shares in June of 2000. Due to its decision to pursue a spin-off, the Company will be required to unwind this $30.1 million gain in its June 30 consolidated income statement and reclassify it to retained earnings. A spin-off transaction requires a gain on the sale of subsidiary stock to be recorded as a capital transaction, directly in shareholders' equity, rather than in the consolidated income statement.

Plaid Moon scale-back
Deluxe's Paper Payment Systems business previously announced that it was embarking on an e-commerce growth strategy that was intended to leverage its personalization and information management competencies from its core check printing business into other profitable revenue growth opportunities. The initiative was expected to result in new products and services for customers and consumers. The first outcome of this strategy was PlaidMoon.com, an Internet-based business that allows consumers to design and purchase personalized items.

The PlaidMoon.com business concept is being repositioned within Deluxe's existing direct-to-consumer business (Direct Checks) and the business-to-business unit (Business Forms).

"Instead of being a stand-alone business as we'd planned, PlaidMoon.com will be folded into existing businesses where we have a proven track record of e-commerce success," said Lawrence J. Mosner, vice chairman of Deluxe. "This decision increases the prospects for success of the PlaidMoon concept and also follows from our goal of enhancing shareholder value."

"Because of the high risk, high return potential for e-commerce investments, we've said all along that Deluxe would subject this new venture to a particularly stringent measurement system, and we have. Since PlaidMoon.com was launched last summer, the site has not converted site visits into orders at a percentage that meets our expectations. However, we still believe that the business concept has potential." The Plaid Moon site will be inactive while it is being repositioned.

Deluxe indicated that the impact of repositioning Plaid Moon into its direct marketing businesses would not change its fourth quarter operating earnings projections, excluding one-time expenses associated with the separation of the eFunds and Paper Payments businesses. "Our investment in Plaid Moon will be less than what we originally projected," said Lois Martin, Deluxe's CFO, "but we still have fixed costs and repositioning expenses associated with Plaid Moon that will be incurred in the fourth quarter of this year. Nonetheless, we expect this decision will result in an upward adjustment to Paper Payment's 2001 operating targets." Deluxe previously estimated that Paper Payment's total operating income would be flat to slightly down next year compared to this year, but now expects next year's targets to remain flat compared to 2000.

Conference call
On October 20, 2000, Deluxe intends to release its financial results for the third quarter ended September 30, 2000. In addition, the Company will hold an open-access teleconference call for all interested persons. During the call, Deluxe will address its earnings results, the anticipated effects of the spin-off and e-commerce plans announced today, and its outlook for the fourth quarter and fiscal year 2001. Interested persons may listen to the call by dialing a toll-free number that will be announced shortly before the release of the Company's third quarter financial results. The audio will also be available via a simultaneous webcast at www.deluxe.com.

About Deluxe
Deluxe provides checks and related products to financial services companies, consumers and small businesses through multiple distribution channels. Since its beginning in 1915, Deluxe has been instrumental in shaping the payments industry and serving financial services companies by focusing on consumers and small businesses. As the provider of The Most Popular Checks in the World(R), the company also offers comprehensive check security features, profit-maximization and retention programs, and flexible check ordering. The company is headquartered in St. Paul, Minn. More information about Deluxe can be found at www.deluxe.com.

About eFunds
eFunds is a leading provider of transaction processing, risk management, information technology professional services, and business process management services. eFunds customers include financial institutions, financial services companies, electronic funds networks, retailers, e-commerce providers and government agencies. For more information, visit www.efunds.com.

Statements made in this release concerning the Company's or management's intentions, expectations, or predictions about future results or events are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are necessarily subject to risks and uncertainties that could cause actual results to vary from stated expectations, and such variations could be material and adverse. Factors that could result in such a variation include, but are not limited to, the inherent unreliability of earnings and revenue growth predictions due to numerous factors, including many beyond the Company's control, potential difficulties, delays and unanticipated expenses inherent in the development and marketing of new products and services, competitive factors, and the numerous risks and potential additional costs, disruptions and delays associated with the reorganization and separation of our business units, and the establishment of new business ventures and e-commerce business initiatives. There can no assurance that PlaidMoon.com when repositioned within the Company's other operations will achieve desired levels of revenue or profit or that reductions in costs associated with the repositioning or suspension of PlaidMoon.com will favorably affect future financial results. Additionally, investments in electronic and internet businesses have many risks, including risks associated with new technologies, business methods and markets, and there is no assurance that the amount of investment required in such businesses will not exceed the Company's expectations or that such businesses will achieve desired levels of revenue or profit. The timing of the proposed spin-off may be affected by actions of the IRS and, assuming the Company receives the desired confirmation that the spin-off will be tax free, completion of the spin-off could occur during 2001 rather than during the fourth quarter of 2000. Our intentions with respect to eFunds Corporation are subject to further risks and uncertainties, including the ability of eFunds to successfully manage and complete the integration of three business segments into eFunds; the potential that the separation of the two companies may disrupt one or more of Deluxe's businesses and customer relationships; and the uncertainty of obtaining confirmation from the IRS, which is a necessary condition of the spin-off. There can be no assurance that the separation of the Company and eFunds will result in increased value to the Company's shareholders for many reasons, including prevailing market conditions and potential dispositions by holders of the common stock of either company following the spin-off. Additional information concerning these and other factors that could cause actual results to differ materially from the Company's current expectations is contained in the Company's Form 10-Q for the quarter ended June 30, 2000.