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 February 18, 2003 Date of Report (date of earliest event reported): Euronet Worldwide, Inc. ------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 000-22167 04-2806888 - ---------------------------- ------------ ------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) 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) 1
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. The press releases attached to this Form 8-K as Exhibits 99.1 and 99.2 are not filed but are furnished pursuant to Regulation FD. Exhibit 99.1 -- Press Release Dated February 18, 2003 Exhibit 99.2 -- Press Release Dated February 19, 2003 Item 9. Regulation FD Disclosure. On February 18, 2003, Euronet Worldwide, Inc. ("Euronet") issued a press release announcing its fourth quarter financial results. A copy of this press release is attached hereto as Exhibit 99.1. On February 19, 2003, Euronet issued a press release announcing the execution of an agreement to acquire United Kingdom based e-pay Ltd, the largest electronic payments processor of prepaid mobile airtime top-up services in the United Kingdom and Australia. A copy of this press release is attached hereto as Exhibit 99.2. Euronet's acquisition of e-pay was consummated today. A Current Report on Form 8-K under Item 2 will be filed in due course with respect to this acquisition. Also on February 19, 2003, during Euronet's quarterly results conference call, Michael J. Brown, Euronet's Chief Executive Officer, stated that EBITDA of e-pay Ltd for the fourth quarter 2002 was $3.1 million and the positive cash flow of e-pay Ltd. is currently approximately $1 million per month. 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. By: /S/ ---------------------------- Daniel R. Henry Chief Operating Officer Date: February 19, 2003 2
EXHIBIT 99.1 Euronet Worldwide Announces Fourth Quarter 2002 Financial Results LEAWOOD, KANSAS--February 18, 2003--Euronet Worldwide, Inc. (Nasdaq: EEFT), a leading electronic payments provider, announced annual consolidated revenues of $71.0 million for 2002, an increase of 16.5 percent over 2001 revenues of $61.0 million. Consolidated revenue for the fourth quarter 2002 was $18.6 million, an increase of 10.4 percent over fourth quarter 2001 revenues of $16.8 million. The Processing Services Segment reported annual revenues for 2002 of $53.9 million, an increase of 17.4 percent over 2001 revenues of $45.9 million. Fourth quarter 2002 revenues were $15.1 million, up 10.5 percent over fourth quarter 2001 revenues of $13.6 million and up 9.6 percent over third quarter 2002 revenues of $13.8 million. The Software Solutions Segment reported annual revenues of $17.1 million in 2002, an increase of 13.9 percent over 2001 revenues of 15.0 million. The 2002 annual revenues include approximately $3.9 million of license and maintenance fees related to the Alltel licensing agreement signed in January 2002. Software revenue for the fourth quarter was $3.5 million, an increase of 9.7 percent over fourth quarter 2001 revenues of $3.2 million. The Company reported a consolidated operating loss in the fourth quarter 2002 of $900,000. In the fourth quarter 2002, expenses were recognized for approximately $250,000 related to a terminated acquisition effort. Excluding this one-time charge, the fourth quarter operating loss would have been approximately $650,000. The Processing Services Segment reported operating income in the fourth quarter 2002 of $1.4 million, an increase of $300,000 over the third quarter 2002. The Company's cash on hand was $17.2 million as of December 31, 2002, including restricted cash of $4.4 million. Additionally, cash proceeds received in January 2003 from the sale of Euronet's UK subsidiary were approximately $27 million after costs of sale. Euronet's indebtedness under its 12 3/8% senior discount notes was $36.3 million as of December 31, 2002. The continued weakening of the US dollar against the euro resulted in a foreign exchange loss of $1.1 million for the fourth quarter 2002 and $4.2 million for the year ended December 31, 2002. As previously reported, Euronet sold its U.K. subsidiary for $29.6 million. The effects of this transaction will be included in its 2003 results of operations. If the results of the U.K. subsidiary were excluded from historical results, the "pro-forma" effect of the sale of the U.K. subsidiary would increase net loss from continuing operations by an estimated $700,000 for the fourth quarter 2002 and by an estimated $1.4 million for the year ended December 31, 2002. These estimates give effect to the disposition of the UK subsidiary's operations and the commencement of the recurring revenues and costs of the related services agreement as if the transaction had occurred January 1, 2002. As of December 31, 2002, Euronet owned and/or operated a total of 3,005 ATMs compared to 2,951 ATMs in the prior quarter. Quarterly transactions on the network reached 22.7 million in the fourth quarter 2002, a 45 percent increase over 15.6 million in the fourth quarter 2001. Fourth quarter transactions improved by 400,000 1
compared to the prior quarter. Euronet owns and/or operates ATMs in Hungary, Poland, Germany, Croatia, the Czech Republic, the UK, Greece and Egypt. All revenue, operating profit, and ATM transaction amounts reported for the current and prior periods exclude the France and US-based Dash business components sold in 2002. Euronet Worldwide will host an analyst conference call on Wednesday, Feb. 19, 2003 at 10:00 a.m. U.S. Eastern Standard 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.com or via Vcall's Internet site at www.vcall.com. For those without Internet access, the conference call-in number is 877-407-9210 (USA) or 1-201-689-8049 (non-USA). The password is "Listener." About Euronet Worldwide Euronet Worldwide is an industry leader in providing secure electronic financial transaction solutions. The Company offers financial payment middleware, financial network gateways, outsourcing and consulting services to financial institutions and mobile operators. These solutions enable their customers to access personal financial information and perform secure financial transactions - -- any time, any place. The Company has processing centers located in the United States, Europe and Asia, and operates the largest independent ATM network in Europe. With corporate headquarters in Leawood, Kansas, USA, and European headquarters in Budapest, Hungary, Euronet serves more than 200 clients in 60 countries. Visit the Company's web site at www.euronetworldwide.com Any statements contained in this news release, which concern the Company's or management's intentions, expectations, or are 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-Q for the period ended September 30, 2002 and its Form 10-K for the year ended December. 31, 2001. Copies of these filings may be obtained by contacting the Company or the SEC. 2
EURONET WORLDWIDE, INC. CONSOLIDATED SUMMARY STATEMENTS OF OPERATIONS (In thousands, except share and per share data) Three Months Ended Year Ended December 31, December 31, 2002 2001 2002 2001 ---- ---- ---- ---- Revenues: ATM network and related revenue $ 15,079 $ 13,644 $ 53,918 $ 45,941 Software, maintenance and related revenue 3,515 3,205 17,130 15,042 -------- -------- --------- --------- Total revenues 18,594 16,849 71,048 60,983 ------- ------- ------- ------- Operating expenses: Direct operating costs 8,012 6,538 29,609 26,469 Salaries and benefits 6,674 5,338 25,282 24,091 Selling, general and administrative 2,082 2,438 6,917 7,688 Depreciation and amortization 2,729 2,488 9,659 8,785 -------- -------- -------- -------- Total operating expenses 19,497 16,802 71,467 67,033 -------- ------- -------- ------- Operating (loss)/income (903) 47 (419) (6,050) ----- -- ----- ------- Other (expense)/income: Interest income 20 64 247 278 Interest expense (1,446) (2,334) (6,253) (9,386) Loss on facility sub-lease - - (249) - Equity in losses from investee companies (24) - (183) - (Loss) / gain on early retirement of debt - (1,186) (955) 9,596 Foreign exchange (loss) / gain, net (1,054) 1,547 (4,233) 5,425 ------------ ------- ------------ ------- Total other (expense)/income (2,504) (1,909) (11,626) 5,913 -------------- --------- ------------ ----- Loss from continuing operations before income taxes and minority interest (3,407) (1,862) (12,045) (137) Income tax benefit 460 1,185 2,312 930 ---------- ---------- ---------- ------ (Loss)/income from continuing operations before minority interest (2,947) (677) (9,733) 793 Minority interest 23 - 100 - -- ----- --- ------ (Loss)/income from continuing operations (2,924) (677) (9,633) 793 ------- ----- ------- --- Discontinued operations: Income/(loss) from operations of discontinued U.S. and France components 78 102 5,054 (123) (including gain on disposal of $4,726 for the year ended December 31, 2002) Income tax expense - - (1,935) - ----- ----- ------- ----- Income/(loss) from discontinued operations 78 102 3,119 (123) -- --- ----- ----- Net (loss)/income $ (2,846) $ (575) $ (6,514) $ 670 Translation adjustment 559 (197) 769 (406) ---------------- ------------ ------------ ------------ Comprehensive (loss)/income $ (2,287) $ (772) $ (5,745) $ 264 ============= ====== =========== ======= (Loss)/income per share - basic: (Loss)/income from continuing operations and before minority interest per share $ (0.12) $ (0.03) $ (0.42) $ 0.04 (Loss)/income from discontinued operations per share - - 0.14 (0.01) ------ ----- ---- ------ 3
Net (loss)/income per share $ (0.12) $ (0.03) $ (0.28) $ 0.03 ====== ======== ===== ======= Basic weighted average number of shares outstanding 23,677,332 21,452,447 23,156,129 19,719,253 (Loss)/income per share - diluted: (Loss)/income from continuing operations and before minority interest per share $ (0.12) $ (0.03) $ (0.42) $ 0.04 (Loss)/income from discontinued operations per share - - 0.14 (0.01) ------ ----- ---- ------ Net (loss)/income per share $ (0.12) $ (0.03) $ (0.28) $ 0.03 ====== ======== ===== ====== Diluted weighted average number of shares outstanding 23,677,332 21,452,447 23,156,129 22,413,408 EURONET WORLDWIDE, INC. CONSOLIDATED SUMMARY BALANCE SHEETS (In thousands) December 31, December 31, 2002 2001 --------------- -------------- Cash and cash equivalents $ 12,762 $ 8,818 Restricted cash 4,401 1,877 Trade accounts receivable 8,554 8,908 Other current assets 4,622 6,130 Assets held for sale - 1,273 -------- --------- Total current assets 30,339 27,006 -------- --------- Property, plant, and equipment, net 30,400 29,086 Intangible assets, net 1,834 1,551 Other assets, net 3,986 3,748 -------- --------- Total assets $ 66,559 $ 61,391 ======== ========= Current liabilities $ 19,099 $ 23,081 Liabilities held for sale - 498 Obligations under capital leases, excluding current installments 4,971 7,353 Minority interest - - Notes payable 36,318 38,146 -------- --------- Total liabilities 60,388 69,078 -------- --------- Stockholders' equity/(deficit) 6,171 (7,687) -------- --------- Total liabilities and stockholders' equity / (deficit) $ 66,559 $ 61,391 ======== ========= 4
EXHIBIT 99.2 Euronet acquires e-pay, U.K.'s largest processor of mobile phone top-ups LEAWOOD, KANSAS--Feb. 19, 2003--Euronet Worldwide, Inc. (Nasdaq: EEFT), a leading electronic payments provider, announced the signature of an agreement to acquire U.K.-based e-pay Ltd. e-pay is the largest electronic payments processor of prepaid mobile airtime top-up services in the U.K. and Australia, with approximately 35 percent and 75 percent market share in their regions, respectively. e-pay, which was founded in 1999, quickly became a leader in the cash-based recharge, or "top-up," market for processing electronic purchases of prepaid mobile airtime and long-distance calling cards. The company currently supports top-up purchases for mobile service providers at more than 50,000 point-of-sale (POS) terminals in approximately 18,000 retail locations. e-pay has agreements with nine mobile service providers, including five U.K. mobile service providers, Vodafone, T-Mobile, O2, Orange and Virgin. Australian mobile operator agreements include Telstra, Virgin Mobile, Vodafone and Optus. In addition to delivering top-up services at the mobile operator retail outlets, e-pay also has distribution agreements with many major retailers, such as Tesco, Safeway, Woolworths (Aus), Asda, Boots, 7-Eleven (Aus), BP, Esso and Forbouys. Additionally, e-pay has a significant number of POS terminals in independent retail merchants. In addition to the U.K. and Australia operations, e-pay owns 40 percent of e-pay Malaysia, which offers electronic top-up through approximately 2,600 POS terminals. e-pay Malaysia has approximately 60 percent of the electronic top-up market share in that region. Major clients include mobile operators, such as Maxis, Celcom, TM Touch and Digi, in addition to major retailers like BP, 7-Eleven and Shell. Mobile operators and retailers are moving to electronic top-ups to save distribution costs and to reduce fraud. Until the development of electronic recharge in the U.K., in which e-pay played a key role, prepaid airtime was distributed primarily through scratch-off cards, which were offered in retail outlets. This distribution method is very costly to mobile operators and retailers in terms of inventory, distribution costs, theft and fraud. By moving to real-time electronic transactions, mobile operators and retailers eliminate these costs and afford their consumers the added convenience of multiple purchase locations. Consumers also gain the ability to credit their prepaid accounts through cash and/or card-based transactions. Retailers, who previously would run out of one particular denomination, also appreciate electronic transactions because inventory is not an issue. In established markets like the U.K., top-up growth comes primarily from the mobile operators' shift from scratch-off cards to electronic distribution and from the addition of new retailers and POS devices. According to Oftel, the U.K. telecommunications regulator, and EMC, a leading research group, 82 percent of the U.K.'s 59.7 million population carry mobile phones and spend $14.6 billion annually on mobile services, which grew by 9 percent last year. Of those users, 69 percent have prepaid services, spending approximately $7.1 billion annually. e-pay benefited significantly from this shift in 2002, when its mobile operators increased electronic distribution transactions, based on operators' representations, from approximately 10 percent at the beginning of the year to more than 40 percent, on average, by the end of the year. In growing markets, like Australia, the growth potential is a combination of the increase in prepaid users as well as the shift to electronic distribution. In Australia, 69 percent of the 19.5 million population has a mobile 1
phone. Although only 32 percent of mobile phone users currently have prepaid accounts, spending approximately $900 million annually, prepaid service has grown at an annualized rate of 26 percent. "The number of electronic prepaid transactions is growing at a significant pace, and e-pay has positioned itself to take advantage of the growth," said Michael J. Brown, Euronet Worldwide chairman and CEO. "In three short years, this company has turned profitable and it continues to grow rapidly. Last year in the U.K. market, more than $7 billion worth of prepaid airtime was sold, and by fourth quarter 2002 about 40 percent of that airtime was sold via electronic top-ups. e-pay secured more than one-third of these electronic top-ups. Annualized from recent months, e-pay processes more than $1 billion per year worth of prepaid airtime from their retail locations." Over the past year, e-pay has experienced revenue growth of approximately 37 percent per quarter. In fourth quarter 2002, e-pay generated net revenue of approximately $24 million and operating income of approximately $2.5 million. Also in the fourth quarter, e-pay processed approximately 15.7 million transactions, which was an increase of 214 percent from 5 million transactions in fourth quarter 2001. In 2002, the company processed approximately 42 million transactions, which was an increase of 281 percent from 11 million transactions in 2001. The transaction is expected to close by the end of the week. Of the $76.2 million purchase price, $30.2 million will be paid in cash at closing, $19.0 million, or 2,497,504 shares, in Euronet common stock and the remainder in deferred purchase price or under promissory notes executed at closing with 24 month maturity dates bearing interest rates averaging approximately 7.25 percent. The deferred portion of the purchase price, approximately $8.6 million, is payable based upon e-pay's free cash flows. Approximately $7.4 million of the notes are convertible into Euronet common stock at a conversion price of $11.43 per share, or approximately 647,000 shares, and the remaining $11.0 million are unsecured promissory notes. Shares issued in this transaction represent a 10.5 percent increase over current shares outstanding. If all rights of conversion are exercised, shares issued in the transaction would be approximately 13.2 percent of current shares outstanding. Upon completion of the transaction, Euronet will expand its mobile operator prepaid airtime program. e-pay's cash-recharge solution will complement Euronet's products that enable consumers to purchase prepaid airtime from ATMs and directly from the handset. Currently, Euronet supports top-up services for 16 mobile operators in nine countries, including Hungary, Poland, Czech Republic, Croatia, Romania, Slovakia, Egypt, India and Indonesia. With this acquisition, Euronet will benefit from e-pay's robust technologies, distribution management expertise and industry expertise to serve mobile operators and retailers in established and emerging markets. Mobile phone penetration in the countries in which Euronet has operations and mobile operator agreements ranges from 1 percent in India to 88 percent in Slovakia. Last year's prepaid service growth rates in these countries ranged from 19 percent in Greece to 80 percent in Indonesia. "Partnering with Euronet is a huge step towards our goal of offering our products and services to the global market," said Paul Althasen, e-pay co-founder and CEO. "We believe that the prepaid market has great potential throughout Europe, the U.S., Australia and Asia. In 2001, many countries doubled their numbers of prepaid subscribers, and in 2002, the countries in which Euronet operates increased prepaid services collectively by 12 percent. These growth rates combined with the mobile operators' and retailers' desire to transition to electronic distribution are very promising for our top-up services." 2
e-pay's product distribution is supported through a proprietary technology platform that features a state-of-the-art switching engine, offering billing, customer service, trouble reporting, credit management, settlement and reconciliation. This system supports online electronic top-up and vouchers at retail locations via a small terminal or for retailers with multiple locations by EPoS (electronic point-of-sale). The system has been designed to handle the processing for prepaid products extending well beyond mobile services. e-pay has recently extended its product line to include complementary offerings, such as long distance and mobile content. At e-pay locations, consumers can purchase prepaid long-distance service from several carriers, including Alpha Telecom, First National, IDT and Telco. Consumers can also purchase prepaid mobile content, such as ring tones and games. In the future, consumers will be able to use e-pay terminals to participate in mobile loyalty programs and purchase other products. "Euronet is excited to partner with this entrepreneurial firm, which has identified the vast market potential in electronic prepaid top-ups," said Brown. "The acquisition of this profitable and successful organization fits nicely within our strategy of growing our electronic financial transaction processing business, and it is accretive to shareholders." The share purchase agreement signed today provides for the purchase of 100 percent of the shares of e-pay Ltd. from certain individual shareholders, including the founders of e-pay, John Gardiner and Paul Althasen. All key executives have signed long-term employment agreements with the company and will lead Euronet's prepaid and POS business segment. The two founders have 25 years business and marketing experience in mobile phone, telecommunications and financial transaction areas. All of e-pay's 83 employees will be retained to continue operations, sales, development and customer service activities. Excluding the one-time gain of $0.62 per share for the previously announced sale of Euronet's U.K. subsidiary, Euronet expects that, taking into account the acquisition of e-pay, its fully diluted earnings per share for 2003 will be approximately $0.20 to $0.22 per share. This estimate is subject to refinement, if any, resulting from purchase price allocation and the related amortization, and it is based on current and projected financial performance of e-pay, as determined from financial information provided in the transaction. Euronet will closely monitor its combined financial results, and update this guidance as appropriate. About Euronet Worldwide Euronet Worldwide is an industry leader in providing secure electronic financial transaction solutions. The company offers financial payment middleware, financial network gateways, outsourcing and consulting services to financial institutions and mobile operators. These solutions enable their customers to access personal financial information and perform secure financial transactions - -- any time, any place. The company has processing centers located in the United States, Europe and Asia, and operates the largest independent ATM network in Europe. With corporate headquarters in Leawood, Kansas, USA, and European headquarters in Budapest, Hungary, Euronet serves more than 200 clients in 60 countries. Visit our web site at www.euronetworldwide.com ------------------------- Any statements contained in this news release, which concern the Company's or management's intentions, expectations, or are 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-Q for the period ended September 30, 2002 and its Form 10-K for the year ended Dec. 31, 2001. Copies of these filings may be obtained by contacting the Company or the SEC. 3