UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
November 25, 2003
Date of Report (Date of earliest event reported)
Euronet Worldwide, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 000-22167 | 74-2806888 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
4601 College Boulevard, Suite 300
Leawood, Kansas 66211
(Address of principal executive offices)
(913) 327-4200
(Registrant’s telephone number, including area code)
This Form 8-K/A amends the Form 8-K filed by Euronet Worldwide, Inc. (“Euronet”) on November 25, 2003 to add information pursuant to Item 7(a) – Financial Information and Item 7(b) – Pro Forma Financial Information.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
The financial statements of transact Elektronische Zahlungssysteme GmbH, Martinsried (“Transact”) required by this item are attached as Exhibit 99.1.
(b) Pro Forma Financial Information
The accompanying unaudited pro forma consolidated statement of operations for the year ended December 31, 2002 is attached as Exhibit 99.2 and gives effect to the acquisition of Transact which closed on November 25, 2003 (the “Transact Acquisition”) as if it had occurred on January 1, 2002. The acquisition of Transact is more fully described in Euronet’s Form 8-K filed on November 25, 2003.
The accompanying unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2003 is attached as Exhibit 99.2 and gives effect to the acquisition by Euronet of e-pay Limited, which closed on February 19, 2003, and the Transact Acquisition (the “Transactions”) as if they both had occurred on January 1, 2003.
The accompanying unaudited pro forma condensed consolidated balance sheet as of September 30, 2003 gives effect to the Transact Acquisition as if it had occurred on September 30, 2003 as well as the sale of approximately 1.1 million common shares of Euronet, the proceeds of which were largely used to acquire Transact.
The unaudited pro forma condensed consolidated balance sheet and statements of operations should be read in conjunction with Euronet’s Form 8-K filed on November 25, 2003 as well as the historical financial statements and management’s discussion and analysis of financial condition and results of operations in its annual report on Form 10-K for the year ended December 31, 2002 and quarterly reports for the periods ended March 31, June 30 and September 30, 2003. The unaudited pro forma financial information is presented for comparative purposes only and is not intended to be indicative of the results of continuing operations or financial position that would have been achieved had the Transactions been consummated as of the dates indicated above, nor do they purport to indicate results which may be attained in the future.
(c) Exhibits
| Exhibit 23 |
Consent of Grant Thornton GmbH, Independent Public Accountant | |
| Exhibit 99.1 |
Financial Statements of transact Elektronische Zahlungssysteme GmbH, Martinsried | |
| Exhibit 99.2 |
Pro Forma Unaudited Condensed Consolidated Financial Statements of Euronet Worldwide, Inc. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Euronet Worldwide, Inc.
| /s/ Rick L. Weller Chief Financial Officer |
Date: February 9, 2004
Exhibit Index
| Exhibit Number |
Description | |
| Exhibit 23 | Consent of Grant Thornton GmbH, Independent Public Accountant | |
| Exhibit 99.1 | Financial Statements of transact Elektronische Zahlungssysteme GmbH, Martinsried | |
| Exhibit 99.2 | Pro Forma Unaudited Condensed Consolidated Financial Statements of Euronet Worldwide, Inc. |
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statement on Forms S-3 (No. 333-84046) (No. 333-111361), (No. 333-111363), (No. 333-105478) and (No. 333-56915) and Forms S-8 (No. 333-102875), (No. 333-98013), (No. 333-71766), (No. 333-64634), (No. 333-44890), (No. 333-83555) and (No. 333-24539) of Euronet Worldwide, Inc. of our report dated February 6, 2004 relating to the financial statements of transact Elektronische Zahlungssysteme GmbH, Martinsried which appears in the Current Report on Form 8-K/A of Euronet Worldwide, Inc. dated November 25, 2003.
Grant Thornton GmbH
Hamburg, Germany
February 6, 2004
Exhibit 99.1
REPORT ON INTERIM FINANCIAL STATEMENTS
Report of Independent Accountants
To the Board of Directors and Shareholders of transact Elektronische Zahlungssysteme GmbH, Martinsried:
We have audited the accompanying balance sheets of transact Elektronische Zahlungssysteme GmbH, Martinsried as of December 31, 2002 and October 31, 2003, and the related statement of income for the ten-month period then ended, which have been prepared on the basis of accounting principles generally accepted in Germany and are all expressed in EURO. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit 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 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of transact Elektronische Zahlungssysteme GmbH, Martinsried as of December 31, 2002 and October 31, 2003, and the results of its operations for the ten-month period then ended in conformity with accounting principles generally accepted in Germany.
Accounting principles generally accepted in Germany vary in certain respects from accounting principles generally accepted in the United States of America. The application of the latter would have affected the determination of net income for the period ended December 31, 2002 and the ten-month period ended October 31, 2003 and the determination of shareholders’ equity at December 31, 2002 and October 31, 2003. See the Notes to the financial statements for further discussion of these differences.
Grant Thornton GmbH
Hamburg, Germany
February 6, 2004
transact Elektronische Zahlungssysteme GmbH,
Martinsried
Statement of income for ten months ended October 31, 2003 (interim)
| € |
01.01.-31.10.03 € |
pr. Year T€ | ||||||
| 1. |
Sales | 7,320,053.72 | 5,832 | |||||
| 2. |
Other operating income | 208,713.99 | 100 | |||||
| 3. |
Cost of materials | |||||||
| a) Expenses for materials | 1,226,357.51 | 1,510 | ||||||
| 4. |
Personnel expenses | |||||||
| a) Wages and salaries | 1,404,587.08 | 1,332 | ||||||
| b) Social security, pension and other benefit costs | 179,825.92 | 1,584,413.00 | 189 | |||||
| - thereof for pensions € 2.798,50 (pY. T€ 0) | ||||||||
| 5. |
Depreciation on intangible assets, plant and equipment | 277,020.90 | 179 | |||||
| 6. |
Other operating expenses | 2,831,027.27 | 2,300 | |||||
| 7. |
Other interest and similar income | 5,629.43 | 8 | |||||
| 8. |
Interest and similar expenses | 45,087.56 | 61 | |||||
| 9. |
Profit from ordinary operations | 1,570,490.90 | 369 | |||||
| 10. |
Taxes on income | 588,797.51 | 134 | |||||
| 11. |
Other taxes | 420.69 | 1 | |||||
| 12. |
Net income | 981,272.70 | 234 | |||||
transact Elektronische Zahlungssysteme GmbH,
Martinsried
Balance sheet as of October 31, 2003 (interim)
| € |
€ |
pr. Year T € | ||||||||
| ASSETS |
||||||||||
| A. |
FIXED ASSETS | |||||||||
| I. | Intangible assets | |||||||||
| Franchise, trademarks, patents, licences and similar rights |
188,076.98 | 112 | ||||||||
| II. | Property, plant and equipment | |||||||||
| 1. Technical equipment, plant and machinery |
165,188.52 | 117 | ||||||||
| 2. Other equipment, fixtures, fittings and equipment |
476,843.85 | 642,032.37 | 243 | |||||||
| III. | Financial Assets | |||||||||
| Other loans receivable |
30,000.00 | 0 | ||||||||
| B. |
CURRENT ASSETS | |||||||||
| I. | Inventories | |||||||||
| Finished goods |
1,263,451.49 | 756 | ||||||||
| II. | Accounts receivable and other assets | |||||||||
| 1. Accounts receivable from trading |
1,106,212.01 | 379 | ||||||||
| 2. Other assets |
48,758.98 | 1,154,970.99 | 45 | |||||||
| - thereof with a remaining term of more than one year € 2.479,04 (pY. T€ 3) |
||||||||||
| III. | Cash on hand and cash in banks | 816,962.24 | 1,028 | |||||||
| C. |
DEFERRED CHARGES AND PREPAID EXPENSES | 12,220.80 | 21 | |||||||
| 4,107,714.87 | 2,701 | |||||||||
| € |
€ |
T € | ||||||||
| LIABILITIES |
||||||||||
| A. |
SHAREHOLDERS’ EQUITY | |||||||||
| I. Capital subscribed | 50,000.00 | 50 | ||||||||
| II. Outstanding capital contributions | -12,217.71 | -12 | ||||||||
| III. Retained earnings | 217,347.67 | -16 | ||||||||
| IV. Net income | 981,272.70 | 1,236,402.66 | 234 | |||||||
| B. |
PROVISIONS AND ACCRUED LIABILITIES | |||||||||
| 1. Accrued taxes | 665,999.32 | 112 | ||||||||
| 2. Other provisions and accrued liabilities | 439,197.00 | 1,105,196.32 | 220 | |||||||
| C. |
LIABILITIES | |||||||||
| 1. Liabilities due to banks | 703,534.40 | 1,492 | ||||||||
| - thereof with a remaining term up to one year € 268.936,32 (pY. T€ 669) |
||||||||||
| 2. Trade accounts payable | 569,901.18 | 272 | ||||||||
| - thereof with a remaining term up to one year € 569.901,18 (pY. T€ 272) |
||||||||||
| 3. Other liabilities | 492,680.31 | 1,766,115.89 | 350 | |||||||
| - thereof with a remaining term up to one year € 492.680,31 (pY. T€ 350) |
||||||||||
| - thereof for taxes € 154.169,27 (pY. T€ 51) |
||||||||||
| - thereof for social security € 31.952,79 (pY. T€ 21) |
||||||||||
| 4,107,714.87 | 2,701 | |||||||||
transact Elektronische Zahlungssysteme GmbH, Martinsried
Notes to the financial statements as of October 31, 2003 (interim)
General information
The interim financial statements of transact Elektronische Zahlungssysteme GmbH, Martinsried have been prepared in accordance with applicable accounting standards in Germany. A summary of the more important policies, which have been applied consistently, are set out below.
The financial statements have been prepared in accordance with the historical cost convention.
The profit and loss statement has been prepared in the total expenditure format.
Statements, which could alternatively have been shown in the balance sheet, are not further discussed in the notes to the financial statements.
According to the size ranges stated in § 267 HGB (German Commercial Code), the company is a small corporation. Therefore it made use of the reliefs of § 274a HGB.
Accounting and valuation principles
Additionally to the regulations mentioned above, attention has to be paid to the regulations of the law for limited liability companies (GmbH-Gesetz).
Acquired intangible assets are valued at acquisition costs and, if they are subject to depreciation, reduced by scheduled depreciation.
The fixed assets are valued at acquisition costs and reduced by normal depreciation if the assets have limited useful lives.
The scheduled depreciation is determined by the company´s expected using period with the straight-line method of depreciation and the declining-balance method applied according to tax regulations.
The transition from the declining-balance method to the straight-line method of depreciation will occur when the straight-line method will lead to a higher annual depreciation than the declining-balance method.
The depreciation periods are based on fiscally approved useful life expectancy. Additions to the movable assets in the first half of the period will be depreciated with the full annual depreciation rate, additions in the second half of the business year will be depreciated with half of the annual depreciation rate. Low-value items (up to € 410,00) were depreciated at the period of their acquisitions.
The inventories are rated at acquisition costs and the lower of cost or market principle is regarded.
Accounts receivable and securities are rated with their nominal value or the lower value to be attributed at the balance sheet date, under consideration of all identifiable risks.
Other accrued liabilities were set up for all other uncertain liabilities. All recognizable risks were accounted for.
The liabilities were valued at their repayment amount. If the current value at the balance sheet date lied above the repayment amount, the liabilities were valued at the higher current value.
Information on the balance sheet and the profit and loss statement
Amount of liabilities and security interests with a duration of more than 5 years
The total value of liabilities accounted for with a duration of more than 5 years amounts to € 0,00.
Amount of liabilities and security interests with a duration of less than 5 years
The value of loans accounted for with a duration of less than 5 years amounts to € 635.565,80.
Other financial obligations
Contingent liabilities
The company has ceded accounts receivables to Sparkasse Starnberg (blanket assignment).
The company took on a debt guarantee for the rental charges of an employee. This debt guarantee is limited to possible arrears of rent within the scope of the actual lease contract.
Average number of employees
The average number of employees amounts to 36.
Names of the general managers
During the last fiscal year, the operations of the company were led by:
Mr. Bernd Artinger, Dipl.-Ing. (FH)
Mr. Jürgen Platt, Dipl.-Kfm.
Compensations for the general managers
A compensation of € 436.455,70 was granted to the general managers during the period under report.
Information according to § 42 para. 3 GmbHG
The following rights and obligations exist towards shareholders:
| Circumstance |
Amount |
||
| Loans receivable |
30.000,00 | € | |
| Accounts receivable |
0,00 | € | |
| Liabilities |
200.967,72 | € | |
The liabilities concern different bank loans, taken up by the shareholders in the name of the company and paid directly to the company from the bank. A financing agreement exists stating that these loans are repaid directly by the company and are therefore an element of corporate finance.
Differences between German GAAP and US GAAP
The following differences (besides terminology and financial statements presentation) between accounting principles generally accepted in Germany and accounting principles generally accepted in the United States of America (US GAAP) are as follows and are not considered to be significant to the overall financial statements:
Tangible Assets—Because of the general focus on tax requirements in Germany, depreciation periods and methods do not necessarily reflect economic reality. German depreciation periods and methods are generally more conservative (accelerated methods) and typically utilize declining balance depreciation. Following German tax rules, assets purchased during the first six months of a year may be depreciated at the full annual rate and those acquired during the second half of the year may be depreciated at a half year rate. Low value items may be fully depreciated in the year of acquisition or over their useful lives. The company followed this valuation method.
Internal-use Software:
| • | Under US GAAP, costs incurred in application development stage are to be capitalized (e.g., design chosen path, coding, installation to hardware, testing). |
| • | Under US GAAP, costs incurred in post-implementation stage are expensed as incurred (e.g., training and application maintenance). |
| Martinsried, February 6, 2004 | ||
| Jürgen Platt |
Bernd Artinger |
Exhibit 99.2
Euronet Worldwide, Inc.
Pro Form Condensed Consolidated Balance Sheet (unaudited)
As of September 30, 2003
(In thousands of U.S. dollars)
| Historical Euronet Worldwide |
Acquisition of Transact |
Pro Forma Euronet Worldwide |
|||||||||
| (A) | (B), (C) | ||||||||||
| Assets |
|||||||||||
| Current assets: |
|||||||||||
| Cash and cash equivalents |
$ | 12,851 | $ | 2,922 | $ | 15,773 | |||||
| Restricted cash |
43,379 | 43,379 | |||||||||
| Trade accounts receivable, net |
49,968 | 1,343 | 51,311 | ||||||||
| Other current assets |
10,093 | 1,483 | 11,576 | ||||||||
| Total current assets |
116,291 | 5,748 | 122,039 | ||||||||
| Property, plant and equipment, net |
18,214 | 747 | 18,961 | ||||||||
| Goodwill |
63,263 | 22,983 | 86,246 | ||||||||
| All other assets, net |
20,671 | 7,915 | 28,586 | ||||||||
| Total assets |
$ | 218,439 | $ | 37,393 | $ | 255,832 | |||||
| Liabilities and Stockholders’ Equity/(Deficit) |
|||||||||||
| Current liabilities |
$ | 107,899 | $ | 2,190 | $ | 110,089 | |||||
| Notes payable |
59,383 | 59,383 | |||||||||
| All other long term liabilities |
8,795 | 4,676 | 13,471 | ||||||||
| Total liabilities |
176,077 | 6,866 | 182,943 | ||||||||
| Stockholders’ equity/(deficit): |
|||||||||||
| Common stock and additional paid in capital |
159,390 | 30,527 | 189,917 | ||||||||
| Accumulated deficit |
(115,635 | ) | (115,635 | ) | |||||||
| Other stockholders’ equity/(deficit) |
(1,393 | ) | (1,393 | ) | |||||||
| Total stockholders’ equity |
42,362 | 30,527 | 72,889 | ||||||||
| Total liabilities and stockholders’ equity |
$ | 218,439 | $ | 37,393 | $ | 255,832 | |||||
Euronet Worldwide, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
Nine Months Ended September 30, 2003
(In thousands of U.S. dollars, except share and per share data)
| Historical Euronet Worldwide |
Addition of e-pay for the |
Addition of transact for the nine months ended |
Pro Forma Euronet Worldwide |
|||||||||||||
| (A) | (F) | (C) | ||||||||||||||
| Revenues: |
||||||||||||||||
| ATM network and related revenue |
$ | 36,983 | $ | 36,983 | ||||||||||||
| Prepaid processing and related revenue |
86,096 | $ | 10,188 | $ | 7,818 | 104,102 | ||||||||||
| Software and related revenue |
11,223 | 11,223 | ||||||||||||||
| Total revenue |
134,302 | 10,188 | 7,818 | 152,308 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Direct operating costs |
86,862 | 8,221 | 3,520 | 98,603 | ||||||||||||
| Salaries and benefits |
22,633 | 583 | 1,588 | 24,804 | ||||||||||||
| Selling, general and admin. |
8,263 | 452 | 954 | 9,669 | ||||||||||||
| Depreciation and amortization |
8,919 | 304 | 902 | (D) | 10,125 | |||||||||||
| Total operating expenses |
126,677 | 9,560 | 6,964 | 143,201 | ||||||||||||
| Operating income |
7,625 | 628 | 854 | 9,107 | ||||||||||||
| Other income/(expenses): |
||||||||||||||||
| Interest income |
926 | 41 | 1 | 968 | ||||||||||||
| Interest expense |
(5,358 | ) | (44 | ) | (5,402 | ) | ||||||||||
| Gain on Sale of UK ATM Network |
18,001 | 18,001 | ||||||||||||||
| Equity in income from investee companies |
380 | 380 | ||||||||||||||
| Foreign exchange loss, net |
(5,193 | ) | (5,193 | ) | ||||||||||||
| Total other income (expense) |
8,756 | 41 | (43 | ) | 8,754 | |||||||||||
| Income from continuing operations before income taxes |
16,381 | 669 | 811 | 17,861 | ||||||||||||
| Income tax expense |
(2,310 | ) | (201 | ) | (307 | )(E) | (2,818 | ) | ||||||||
| Income from continuing operations |
14,071 | 468 | 504 | 15,043 | ||||||||||||
| Loss from Disc. Operations, net of tax |
(51 | ) | (51 | ) | ||||||||||||
| Net Income |
$ | 14,020 | $ | 468 | $ | 504 | $ | 14,992 | ||||||||
| Income from continuing operations - basic |
$ | 0.54 | $ | 0.53 | ||||||||||||
| Basic weighted average shares outstanding |
26,158,391 | 416,251 | 1,774,411 | 28,349,053 | ||||||||||||
| Income from continuing operations - diluted |
$ | 0.49 | $ | 0.49 | ||||||||||||
| Diluted weighted average shares outstanding |
28,431,142 | 416,251 | 1,774,411 | 30,621,804 | ||||||||||||
Euronet Worldwide, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
Year Ended December 31, 2002
(In thousands of U.S. dollars, except share and per share data)
| Pro Forma As Previously Reported on Form 8K/A -Euronet Worldwide (dated May 2, 2003) |
Acquisition of Transact |
Pro-forma Euronet Worldwide |
||||||||||
| (A) | (C) | |||||||||||
| Revenues: |
||||||||||||
| ATM network and related revenue |
$ | 40,925 | $ | 40,925 | ||||||||
| Prepaid processing and related revenue |
54,654 | $ | 3,887 | 58,541 | ||||||||
| Software and related revenue |
17,130 | 17,130 | ||||||||||
| Total Revenue |
112,709 | 3,887 | 116,596 | |||||||||
| Operating expenses: |
||||||||||||
| Direct operating costs |
61,954 | 913 | 62,867 | |||||||||
| Salaries and benefits |
27,569 | 1,584 | 29,153 | |||||||||
| Selling, general and administrative |
8,552 | 764 | 9,316 | |||||||||
| Depreciation and amortization |
13,551 | 991 | (D) | 14,542 | ||||||||
| Total operating expenses |
111,626 | 4,252 | 115,878 | |||||||||
| Operating Income (Loss) |
1,083 | (365 | ) | 718 | ||||||||
| Other income/(expenses): |
||||||||||||
| Interest income |
524 | 524 | ||||||||||
| Interest expense |
(8,110 | ) | (55 | ) | (8,165 | ) | ||||||
| Loss on facility sublease |
(249 | ) | — | (249 | ) | |||||||
| Equity in income/(losses) from investee companies |
(38 | ) | — | (38 | ) | |||||||
| Loss on early retirement of debt |
(955 | ) | — | (955 | ) | |||||||
| Foreign exchange loss, net |
(4,834 | ) | — | (4,834 | ) | |||||||
| Total other income (expense) |
(13,662 | ) | (55 | ) | (13,717 | ) | ||||||
| Loss from continuing operations before income taxes and minority interest |
(12,579 | ) | (420 | ) | (12,999 | ) | ||||||
| Income tax benefit |
2,186 | 182 | (E) | 2,368 | ||||||||
| Loss from continuing operations before minority interest |
(10,393 | ) | (238 | ) | (10,631 | ) | ||||||
| Minority interest |
51 | 51 | ||||||||||
| Loss from continuing operations |
$ | (10,342 | ) | $ | (238 | ) | $ | (10,580 | ) | |||
| Loss from continuing operations - basic |
$ | (0.40 | ) | $ | (0.39 | ) | ||||||
| Basic weighted average shares outstanding |
25,653,632 | 1,774,411 | 27,428,043 | |||||||||
Euronet Worldwide, Inc.
Notes to the Pro Forma Unaudited Condensed Consolidated Financial Statements
| A. | Reflects the historical financial position and results of operations of Euronet. Certain amounts have been reclassified to conform to current presentation and reflect continuing operations. The Pro Forma Condensed Consolidated Statement of Operations (unaudited) for the year ended December 31, 2002 begins with the pro-forma results previously reported on Form 8-K/A filed on May 2, 2003 that gives effect to the sale of Euronet’s U.K. subsidiary (Euronet UK), which closed on January 17, 2003, and the acquisition of e-pay Limited, which closed on February 19, 2003. |
| B. | To record the acquisition of Transact’s assets and liabilities and to record the consideration paid for the shares of Transact as if the transaction had occurred on September 30, 2003. The following table summarizes the consideration paid for Transact (in thousands of U.S. dollars): |
| Cash |
$ | 17,800 | |
| Euronet common stock: 643,048 shares |
10,550 | ||
| Total paid to shareholders |
28,350 | ||
| Transaction costs and share registration fees |
676 | ||
| Total cost of acquisition |
$ | 29,026 | |
| C. | To record the cash acquired with the purchase of Transact of $.7 million, the total cash of $20.0 million received from the issuance of 1,131,363 shares of common stock in a private placement to facilitate the purchase of Transact, reduced by the total cash paid to shareholders of $17.8 million and transaction costs of $.7 million. Under the purchase method of accounting, the total purchase price is allocated to acquired tangible and intangible assets based on a preliminary estimate of their fair values as determined by management. |
Of the total purchase price, $.9 million has been preliminarily allocated to net tangible assets and working capital acquired and approximately $7 million has been allocated to amortizable intangible assets acquired. The depreciation and amortization related to the fair value adjustment to net tangible assets and the amortization related to the amortizable intangible assets are reflected as pro forma adjustments to the unaudited pro forma condensed combined consolidated statements of operations.
Of the total estimated purchase price, approximately $24 million has been allocated to goodwill. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets.
In accordance with the Statement of Financial Accounting Standards No. 142 – Goodwill and Other Intangible Assets, goodwill and intangible assets with indefinite lives resulting from business combinations completed subsequent to December 31, 2001, will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). In the event that the management of the combined company determines that the value of goodwill or intangible assets with indefinite lives has become impaired, the combined company will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made.
| D. | Includes amortization of the amortizable intangible assets acquired with the purchase of Transact in the amount of $603,000 for the nine months ended September 30, 2003 and $804,000 for the year ended December 31, 2002. See Note C above. |
| E. | Includes the income tax benefit of $241,000 for the nine months ended September 30, 2003 and $322,000 for the year ended December 31, 2002, respectively, in connection with amortization expense of the amortizable intangible assets acquired. |
| F. | To record the results of e-pay in continuing operations for the one month ended January 31, 2003, including the amortization of amortizable intangibles of approximately $150,000 and the related tax benefit of approximately $50,000. |