UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 or 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
July
26, 2005
Date
of Report (date of earliest event reported):
Euronet
Worldwide, Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
|
0-22167
|
|
74-2806888
|
|
(State
or other jurisdiction
of
incorporation)
|
|
(Commission
File Number)
|
|
(IRS
Employer
ID
Number)
|
|
4601
College Boulevard
Leawood,
Kansas
|
|
66211
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Registrant’s
Telephone Number, including area code: (913) 327-4200
N/A
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
ITEM 2.02. Results of Operations and Financial Condition
On
July 26, 2005, Euronet Worldwide, Inc. issued a press release to announce
its
financial results for the second quarter ended June 30, 2005. The press release
is attached hereto as Exhibit 99.1.
The
information in this Current Report, including without limitation Exhibit
99.1,
is being furnished and shall not be deemed “filed” for the purposes of Section
18 of the Securities Exchange Act of 1934, or otherwise subject to the
liabilities of that Section. The information in this Current Report shall
not be
incorporated by reference into any registration statement or other document
filed pursuant to the Securities Act of 1933, except as shall be expressly
set
forth by specific reference in such a filing.
| ITEM 9.01. Financial Statements and Exhibits |
|
|
(c)
|
Exhibits
|
Exhibit
99.1 - Press Release dated July 26, 2005
2
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. | ||
| |
|
|
| Date: July 26, 2005 | By: | /s/ Rick L. Weller |
|
Rick L. Weller |
||
|
Chief
Financial
Officer
|
||
3
 |
N
e w s R e l e a s e
|
||||||||
|
Corporate
Headquarters
4601
College Boulevard,
Suite
300
Leawood,
Kansas 66211
USA
+1-913-327-4200
|
For
Immediate Release
|
Date:
July 26, 2005
|
|||||||
|
Media
Contact:
|
Shruthi
Dyapaiah
|
1-913-327-4225
|
sdyapaiah@euronetworldwide.com
|
||||||
|
Investor
Relations (US):
|
IR Dept |
1-913-327-4200
|
investor@euronetworldwide.com | ||||||
Euronet
Worldwide Reports Second Quarter 2005 Financial Results
LEAWOOD,
KANSAS, USA—July 26, 2005—Euronet
Worldwide, Inc. (NASDAQ: EEFT), a leading electronic payments provider,
announced consolidated revenues of $132.2 million for the second quarter ended
June 30, 2005. These results compare to $87.0 million for the second quarter
ended June 30, 2004. Consolidated operating income for the quarter was $12.5
million, compared to $7.4 million for the second quarter 2004. Adjusted EBITDA
(operating income plus depreciation and amortization) was $18.2 million for
second quarter 2005, compared to $10.8 million for the second quarter 2004.
Net
income for the second quarter 2005 was $3.9 million, or $0.10 diluted earnings
per share, compared to a net income of $4.4 million, or $0.13 diluted earnings
per share, for the second quarter 2004. The second quarter 2005 net income
included a foreign exchange translation loss of $4.7 million; excluding this
loss, diluted earnings per share were $0.23, and net income was $8.6 million.
Net income for the second quarter 2004 included a foreign exchange translation
gain of $0.3 million and a loss of less than $0.1 million on early retirement
of
debt; excluding this gain and loss, diluted earnings per share were $0.12,
and
net income was $4.1 million.
The
EFT Processing Segment
posted
second quarter 2005 revenues of $26.0 million, compared to $18.0 million
reported for the second quarter 2004. Operating income for the second quarter
was $6.3 million, compared to the prior year’s second quarter of $3.1 million.
Second quarter 2005 Adjusted EBITDA was $8.7 million, compared to $4.9 million
for the second quarter 2004. The
EFT
Processing Segment
processed 86.8 million transactions in the second quarter 2005 compared to
54.1
million transactions for the same period last year. The segment completed the
quarter with 6,565 ATMs owned or operated, compared to 5,097 ATMs at the end
of
the second quarter 2004. The improved results of the second quarter 2005 over
the same quarter last year are largely attributable to the continued growth
in
ATMs under management, primarily in our Indian, Polish and Romanian markets,
together with transactional growth from those ATMs and all other managed ATMs.
Euronet owns and/or operates ATMs in Hungary, Poland, Germany, Croatia, the
Czech Republic, U.K., Greece, Romania, Serbia, Slovakia, Kosovo, Albania and
India.
The
Prepaid Processing Segment
reported
second quarter 2005 revenues of $102.5 million, compared to $65.6 million
reported for the second quarter 2004. Operating income for the second quarter
2005 was $8.3 million, compared to the prior year’s second quarter results of
$6.3 million. Adjusted EBITDA for the second quarter 2005 was $11.3 million,
compared to $7.7 million for the second quarter 2004. Total transactions
processed by the Prepaid Processing Segment in the second quarter 2005 were
86.2
million, compared to 54.6 million prepaid transactions processed in the second
quarter 2004.
The
Prepaid Processing Segment processes electronic point-of-sale prepaid
transactions at more than 208,000 point-of-sale terminals across more than
101,000 retailers in Europe, Asia Pacific, Africa, and the U.S. As previously
announced, the company intends to expand its Prepaid Processing Segment both
domestically and internationally through internal sales and promotional efforts
as well as, if appropriate, acquisitions.
The
Prepaid Processing Segment’s second quarter’s year-over-year revenue
improvements were the result of a continuation of transaction growth together
with benefits of acquisitions completed during and after the first quarter
2004.
The
quarterly Adjusted EBITDA and operating income improvements generally correlated
to the increases in revenues. Operating income in the second quarter 2005
included approximately $0.2 million in operating losses related to a recently
acquired money transfer company, TelecommUSA, and approximately $0.7 million
in
incremental and recurring marketing expenses in the U.S. market. Depreciation
and amortization included approximately $1.6 million for amortization of
intangible assets assigned for purchase accounting related to the acquisitions
in the Prepaid Processing Segment.
Corporate
Services and Other had
$2.8
million of operating expenses in the second quarter 2005, compared to $2.4
million for the second quarter 2004, primarily due to increases in professional
fees, largely driven by the requirements of the Sarbanes-Oxley Act of 2002,
professional fees related to acquisition analysis and salary expense resulting
from overall company growth.
All
segments included, transactions processed in the second quarter 2005 were 173.0
million, compared to 108.7 million processed in the second quarter 2004. This
increase was primarily due to the EFT Processing Segment implementation of
ATM
outsourcing agreements in India, Romania and Poland, combined with continued
growth and acquisitions in the Prepaid Processing Segment.
The
company’s unrestricted cash on hand was $50.3 million as of June 30, 2005 as
compared to $73.0 million at March 31, 2005. The decrease in unrestricted cash
was largely due to acquisition-related payments. Euronet’s total indebtedness
was $178.7 million, including $140 million in contingently convertible bonds
issued in December 2004, as of June 30, 2005, compared to $164.5 million at
March 31, 2005. The increase of $14.2 million largely related to short-term
draws on the company’s $50 million revolving credit agreement to accommodate
certain month-end trade payables and has been largely repaid after June 30,
2005.
Euronet
also announced that it expects diluted earnings per share for the third quarter
2005 to be approximately $0.24. This increase does not take into consideration
the effects of foreign exchange gains or losses, gains or losses on the early
retirement of debt, discontinued operations, and other non-operating or unusual
items that Euronet cannot reasonably project.
In
December 2004, the company issued convertible senior debentures, that if
converted in the future, would have a potentially dilutive effect on the
company’s stock. The debentures are potentially convertible into approximately
4.2 million shares of common stock, subject to adjustment. As required by EITF
04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings per
Share,” contingently convertible shares shall be included in the per share
calculations on the “if converted” basis if the per share result is dilutive.
Since the assumed conversion of the debentures is not dilutive for the three
months ended June 30, 2005, the impact has been excluded from the calculation
of
diluted earnings per share; however, the impact on earnings per share is
expected to be dilutive in future periods, and, accordingly, the 4.2 million
shares would be included in the calculation of diluted earnings per
share.
We
believe that Adjusted EBITDA provides useful information to investors because
it
is an indicator of the strength and performance of our ongoing business
operations, including our ability to fund capital expenditures, acquisitions
and
operations and to incur and service debt. While depreciation and amortization
are considered operating costs under accounting principles generally accepted
in
the United States, these expenses primarily represent non-cash current period
allocation of costs associated with long-lived assets acquired in prior periods.
Adjusted EBITDA is a calculation commonly used as a basis for investors,
analysts and credit rating agencies to evaluate and compare the periodic and
future operating performance and value of companies within the transaction
processing industry. Moreover, management analyzes historical results adjusted
for certain items that are non-operational or not necessarily ongoing in nature
and that are incremental to the baseline of the business. Generally, these
items
include gains or losses associated with the sale of business assets or
operations, market development costs, foreign exchange translations,
discontinued operations, early debt retirement and other similar items as
discussed in this press release. Management believes the exclusion of these
items provides a more informed basis for evaluating the underlying business
unit
performance. The attached schedules provide a full reconciliation of any such
non-GAAP financial measures.
Euronet
Worldwide will host an analyst conference call on Wednesday, July 27, 2005,
at
10:00 a.m. U.S. Eastern Time to discuss these results. The conference call
will
be broadcast on the Internet and can be accessed via the Euronet Worldwide
Internet site at www.euronetworldwide.comor
via Vcall at http://www.vcall.com/CEPage.asp?ID=92670.
Participants should go to the web site at least 15 minutes before this event
to
download and install any necessary audio software. For those without Internet
access, the conference call-in number is +1-877-407-9210 (USA) or
+1-201-689-8049 (non-USA). The password is “Euronet.”
For
those
unable to attend the live broadcast, a replay will be available beginning
approximately one hour after the event at http://www.vcall.com/CEPage.asp?ID=92670
as well as via phone. To dial in for the replay, the call-in number is
+1-877-660-6853 (USA)
or
+1-201-612-7415 (non-USA).
The account number is 286 and the conference ID number is 160753. The call
and
webcast replay will be available for one month. You can also access the Earnings
presentation at www.euronetworldwide.com/investors/library/presentations.asp.
No fees are charged to access any event.
About
Euronet Worldwide
Euronet
Worldwide is an industry leader in processing secure electronic financial
transactions. The company offers outsourcing and consulting services, integrated
EFT software, network gateways, and electronic prepaid top-up services to
financial institutions, mobile operators and retailers. Euronet operates and
services the largest pan-European group of ATMs and operates the largest India
shared ATM network. Euronet is also the largest provider of prepaid processing,
or top-up services, for prepaid mobile airtime. The company has processing
centers located in the U.S., Europe and Asia, and processes electronic top-up
transactions at more than 208,000 point-of-sale terminals across more than
101,000 retailers in Europe, Asia Pacific, Africa and the U.S. With corporate
headquarters in Leawood, Kansas, USA, and 23 worldwide offices, Euronet serves
clients in approximately 70 countries. Visit the company’s web site at www.euronetworldwide.com.
Any
statements contained in this news release that concern the company's or
management's intentions, expectations, or predictions of future performance,
are
forward-looking statements. Euronet's actual results may vary materially from
those anticipated in such forward-looking statements as a result of a number
of
factors, including: technological developments affecting the market for the
company’s products and services; foreign exchange fluctuations; and changes in
laws and regulations affecting the company's business. These risks and other
risks are described in the company’s periodic filings with the Securities and
Exchange Commission, including but not limited to Euronet’s Form 10-K for the
year ended December 31, 2004 and its Form 10-Q for the period ended March 31,
2005. Copies of these filings may be obtained by contacting the company or
the
SEC.
|
EURONET
WORLDWIDE, INC.
|
|||||||
|
Consolidated
Statements of Income and Comprehensive Income
|
|||||||
|
(unaudited
- in thousands, except share and per share
data)
|
|||||||
|
|
Three
Months Ended
|
||||||
|
|
June
30,
|
||||||
|
2005
|
2004
|
||||||
|
Revenues:
|
|||||||
|
EFT
Processing
|
$
|
26,041
|
$
|
18,002
|
|||
|
Prepaid
Processing
|
102,480
|
65,634
|
|||||
|
Software
Solutions
|
3,724
|
3,386
|
|||||
|
Total
revenues
|
132,245
|
87,022
|
|||||
|
Operating
expenses:
|
|||||||
|
Direct
operating costs
|
92,157
|
60,501
|
|||||
|
Salaries
and benefits
|
13,724
|
10,031
|
|||||
|
Selling,
general and administrative
|
8,197
|
5,691
|
|||||
|
Depreciation
and amortization
|
5,645
|
3,433
|
|||||
|
Total
operating expenses
|
119,723
|
79,656
|
|||||
|
Operating
income
|
12,522
|
7,366
|
|||||
|
Other
income (expenses):
|
|||||||
|
Interest
income
|
1,105
|
615
|
|||||
|
Interest
expense
|
(1,617
|
)
|
(1,672
|
)
|
|||
|
Income
from unconsolidated affiliates
|
407
|
125
|
|||||
|
Loss
on early retirement of debt
|
-
|
(23
|
)
|
||||
|
Foreign
exchange gain (loss), net
|
(4,715
|
)
|
258
|
||||
|
Total
other expense
|
(4,820
|
)
|
(697
|
)
|
|||
|
Income
from continuing operations before
|
|||||||
|
income
taxes and minority interest
|
7,702
|
6,669
|
|||||
|
Income
tax expense
|
(3,471
|
)
|
(2,289
|
)
|
|||
|
Minority
interest
|
(313
|
)
|
-
|
||||
|
Net
income
|
3,918
|
4,380
|
|||||
|
Translation
adjustment
|
(3,621
|
)
|
274
|
||||
|
Comprehensive
income
|
$
|
297
|
$
|
4,654
|
|||
|
Net
Income per share - basic:
|
|||||||
|
Net
income
|
$
|
0.11
|
$
|
0.14
|
|||
|
Basic
weighted average shares outstanding
|
35,129,878
|
30,966,937
|
|||||
|
Net
Income per share - diluted:
|
|||||||
|
Net
income
|
$
|
0.10
|
$
|
0.13
|
|||
|
Diluted
weighted average shares outstanding
|
37,745,274
|
34,058,533
|
|||||
|
EURONET
WORLDWIDE, INC.
|
|||||||
|
Consolidated
Summary Balance Sheets
|
|||||||
|
(unaudited
- in thousands)
|
|||||||
|
As
of
|
|
As
of
|
|||||
|
|
June
30,
|
December
31,
|
|||||
|
2005
|
2004
|
||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
50,333
|
$
|
124,198
|
|||
|
Restricted
cash
|
80,243
|
69,300
|
|||||
|
Inventory
- PINs and other
|
29,438
|
18,949
|
|||||
|
Trade
accounts receivable, net of allowance for doubtful accounts
|
113,826
|
110,306
|
|||||
|
Other
current assets, net
|
32,699
|
22,013
|
|||||
|
Total
current assets
|
306,539
|
344,766
|
|||||
|
Property,
plant and equipment, net
|
41,334
|
39,907
|
|||||
|
Goodwill
and intangible assets, net
|
297,273
|
212,598
|
|||||
|
Other
assets, net
|
18,110
|
21,204
|
|||||
|
Total
assets
|
$
|
663,256
|
$
|
618,475
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable and other current liabilities
|
$
|
266,400
|
$
|
283,918
|
|||
|
Current
portion of capital lease obligations and short-term borrowings
|
10,023
|
9,265
|
|||||
|
Total
current liabilities
|
276,423
|
293,183
|
|||||
|
Obligations
under capital leases, excluding current installments
|
14,087
|
16,894
|
|||||
|
Deferred
income tax
|
24,459
|
17,520
|
|||||
|
Debt
obligations
|
154,570
|
140,000
|
|||||
|
Other
long-term liabilities
|
2,152
|
3,093
|
|||||
|
Minority
interest
|
6,944
|
5,871
|
|||||
|
Total
liabilities
|
478,635
|
476,561
|
|||||
|
Stockholders'
equity
|
184,621
|
141,914
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
663,256
|
$
|
618,475
|
|||
|
EURONET
WORLDWIDE, INC.
|
|||||||||||||
|
Reconciliation
of Net Income to Adjusted EBITDA by Segment
|
|||||||||||||
|
(unaudited
- in millions)
|
|||||||||||||
|
|
Three
Months Ended June 30, 2005
|
||||||||||||
|
|
EFT
|
Prepaid
|
Software
|
||||||||||
|
|
Processing
|
Processing
|
Solutions
|
Consolidated
|
|||||||||
|
Net
income
|
$
|
4.4
|
$
|
6.8
|
$
|
0.8
|
$
|
3.9
|
|||||
|
Add:
Income tax
|
1.5
|
2.3
|
-
|
3.5
|
|||||||||
|
Add:
Interest expense
|
0.5
|
0.1
|
-
|
1.6
|
|||||||||
|
Add:
Foreign exchange loss
|
-
|
-
|
-
|
4.7
|
|||||||||
|
Add:
Minority interest
|
0.1
|
0.2
|
-
|
0.3
|
|||||||||
|
Less:
Income from unconsolidated affiliates
|
(0.2
|
)
|
(0.2
|
)
|
-
|
(0.4
|
)
|
||||||
|
Less:
Interest income
|
(0.1
|
)
|
(0.9
|
)
|
-
|
(1.1
|
)
|
||||||
|
Rounding
and other
|
0.1
|
-
|
-
|
-
|
|||||||||
|
Subtotal
- Operating income
|
6.3
|
8.3
|
0.8
|
12.5
|
|||||||||
|
Add:
Depreciation and amortization
|
2.4
|
3.0
|
0.3
|
5.6
|
|||||||||
|
Rounding
|
-
|
-
|
(0.1
|
)
|
0.1
|
||||||||
|
Earnings
before interest, taxes, depreciation and
|
|||||||||||||
|
amortization
(Adjusted EBITDA)
|
$
|
8.7
|
$
|
11.3
|
$
|
1.0
|
$
|
18.2
|
|||||
|
EURONET
WORLDWIDE, INC.
|
|||||||||||||
|
Reconciliation
of Net Income to Adjusted EBITDA by Segment
|
|||||||||||||
|
(unaudited
- in millions)
|
|||||||||||||
|
|
Three
Months Ended June 30, 2004
|
||||||||||||
|
|
EFT
|
Prepaid
|
Software
|
||||||||||
|
|
Processing
|
Processing
|
Solutions
|
Consolidated
|
|||||||||
|
Net
income
|
$
|
2.0
|
$
|
5.6
|
$
|
0.3
|
$
|
4.4
|
|||||
|
Add:
Income tax
|
0.8
|
1.5
|
-
|
2.3
|
|||||||||
|
Add:
Interest expense
|
0.3
|
-
|
-
|
1.7
|
|||||||||
|
Less:
Foreign exchange gain
|
-
|
-
|
-
|
(0.3
|
)
|
||||||||
|
Less:
Income from unconsolidated affiliates
|
-
|
(0.1
|
)
|
-
|
(0.1
|
)
|
|||||||
|
Less:
Interest income
|
-
|
(0.6
|
)
|
-
|
(0.6
|
)
|
|||||||
|
Less:
Rounding and other
|
-
|
(0.1
|
)
|
-
|
-
|
||||||||
|
Subtotal:
Operating income
|
3.1
|
6.3
|
0.3
|
7.4
|
|||||||||
|
Add:
Depreciation and amortization
|
1.8
|
1.4
|
0.2
|
3.4
|
|||||||||
|
Rounding
|
-
|
-
|
0.1
|
-
|
|||||||||
|
Earnings
before interest, taxes, depreciation and
|
|||||||||||||
|
amortization
(Adjusted EBITDA)
|
$
|
4.9
|
$
|
7.7
|
$
|
0.6
|
$
|
10.8
|
|||||
|
EURONET
WORLDWIDE, INC.
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|
Reconciliation
of Net Income Excluding FX, Discontinued Operations, Gain on Sale
and
Retirement of Debt
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(unaudited
- in millions, except share and per share data)
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Three
months ended
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June
30,
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2005
|
2004
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Net
income
|
$
|
3.9
|
$
|
4.4
|
|||
|
Foreign
exchange loss (gain)
|
4.7
|
(0.3
|
)
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||||
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Net
income before foreign exchange loss (gain)
|
$
|
8.6
|
$
|
4.1
|
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|
Adjusted
income per share - diluted *
|
$
|
0.23
|
$
|
0.12
|
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|
Diluted
weighted average shares outstanding
|
37,745,274
|
34,058,533
|
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| * Adjusted income per share is a non-GAAP measure that should be considered in addition to, and | |||||||
|
not
as a substitute for, earnings per share computed in accordance
with
GAAP.
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| Note: Gains on Sale of assets and Retirement of Debt were less than $0.1 million combined and therefore excluded from the table. | |||||||