UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
November 21, 2003
Date of Report (Date of earliest event reported)
Euronet Worldwide, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-22167
(Commission File Number)
74-2806888
(IRS Employer Identification No.)
4601 College Boulevard
Leawood, Kansas 66211
(Address of principal executive offices)
(913) 327-4600
(Registrant’s telephone number, including area code)
Item 7—Exhibits
Exhibit 99.1: Press Release
Exhibit 99.2: Investor Slide Presentation
Item 12—Results of Operations and Financial Condition
On November 21, 2003, Euronet Worldwide, Inc. (“Euronet”) issued the press release attached as Exhibit 99.1. On November 24, 2003, Euronet presented the slide presentation attached as Exhibit 99.2.
This Current Report on Form 8-K as well as the earnings press release and investor slide presentation attached as Exhibits hereto are being furnished by Euronet Worldwide, Inc. pursuant to Item 12 of Form 8-K.
In accordance with General Instruction B.6 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
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/ Jeffrey B. Newman |
|
Executive Vice President General Counsel |
Date: November 26, 2003
Index to Exhibits
Exhibit 99.1: Press Release
Exhibit 99.2: Investor Slide Presentation.
Exhibit 99.1
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: November 21, 2003 | ||||||
| Media Contact:
Investor Relations (U.S.): |
Misti Garffie
IR Dept |
1-913-327-4257
1-913-327-4200 |
mgarffie@euronetworldwide.com
investor@euronetworldwide.com | |||||
Euronet acquires Transact GmbH, a leading German processor of mobile phone top-ups, and signs a private equity placement
LEAWOOD, KANSAS—Nov. 21, 2003—Euronet Worldwide, Inc. (Nasdaq: EEFT), a leading electronic payments provider, announced the execution of an agreement on November 20, 2003 to acquire the German company transact Elektronische Zahlungssysteme GmbH (“Transact”) in consideration for €15.0 million (approximately $17.8 million) in cash and 643,048 shares of Euronet common stock. Transact is one of the leading independent electronic payments processors and the market leader in processing of prepaid mobile airtime top-up services in Germany, with a market share of nearly 60 percent of electronic top-up transactions. Euronet also announced that, following the signing of the Transact acquisition agreement, Euronet closed a $20.0 million private placement of common stock with an accredited institutional investor (1,131,363 shares at a purchase price of $17.68 per share). Substantially all of the proceeds from the private placement will be used to purchase the shares of Transact.
Transact, which was founded in 1996, specializes in payment processing services and software for EFT and prepaid mobile phone transactions on point of sale (POS) terminals, as well as retailer till systems. Additionally, Transact offers a line of proprietary GPRS-based POS terminal products. After commencing implementation of electronic mobile phone top-up solutions in 2001, Transact quickly became the German market leader in processing electronic purchases of prepaid mobile airtime. The company currently supports top-up purchases at more than 8,000 of their installed base of over 20,000POS terminals in approximately 18,500 retail locations.
Transact has agreements or top-up supply relationships with all of the large mobile service providers in Germany, including Vodafone, T-Mobile, O2, and E-Plus, as well as with a number of virtual mobile service providers such as Mobilcom, either directly or via agreements with distributors of mobile airtime electronic vouchers. Transact also has agreements or relationships with the major distributors of airtime in Germany, such as Lekkerland, DTV and Telexpress, as well as with major retailers such as Shell, DEA, Jet, AGIP, ESSO, Total Fina Elf, PKN Orlen, and Karstadt.
In 2003, according to Transact’s unaudited financial information, Transact has experienced transaction growth of approximately 41 percent per quarter. Based on its most recent three months, Transact generated net revenue, on a recognition basis consistent with Euronet’s other prepaid processing revenues, of approximately $3.3 million and EBITDA of approximately $1.1 million, according to its unaudited financial information. Also for that same three-month period, Transact processed approximately 8.5 million transactions.
Taking into account the acquisition of Transact together with the related funding, Euronet expects that Transact will contribute approximately $0.07 to $0.10 per share to its fully diluted earnings per share for the year 2004. 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 Transact, as determined from financial information provided in the transaction. Euronet will closely monitor the results of Transact and update its expectations as appropriate.
“The number of electronic top-up transactions in Germany is growing rapidly, and Transact is on the leading edge of this trend,” said Michael J. Brown, Euronet Worldwide Chairman and CEO. “The founders of Transact have built a quality company poised to take advantage of these opportunities, and Euronet is looking for entrepreneurial partners like Transact to build the bridge between EFT and top-up processing and to expand its prepaid business. Our goal is to take advantage of the prepaid market growth and become the largest processor of prepaid transactions in Europe.”
Germany is one of the largest prepaid markets in Europe. According to mobile operator data and EMC, a leading research group, more than 70% percent of Germany’s population of 82 million subscribes to mobile phone service. Of those users, more than 50% percent have prepaid services, spending more than $4 billion annually.
“Transact has been quite successful in Germany because of its high service levels and advanced technology,” said Transact’s co-Managing Director, Bernd Artinger. “The shift to electronic top-up and the shift to integrating EFT and top-up processing is underway in Germany, and we want to continue driving this industry trend.”
In established markets like Germany, 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 Transact estimates, in the third quarter 2003 about 25% percent of the prepaid airtime in Germany was sold electronically. Transact estimates that it has processed approximately 60% of these electronic top-ups in Germany.
“In addition to the prepaid processing business, we are excited about contributing to the Euronet group our capabilities and expertise in the EFT/merchant processing business together with our exciting line of GPRS-based POS terminal products,” said Jurgen Platt, co-Managing Director of Transact. “And, we look forward to bringing these solutions to Euronet across their European and other markets.”
Under the Transact acquisition agreement, Euronet will purchase 100% of the shares of Transact for a purchase price of €15.0 million (approximately $17.4 million) in cash and 643,048 shares of Euronet common stock at closing plus an additional “earn out” payment due on January 14, 2005. The closing is expected to occur within the next week. The “earn out” will be calculated based on the EBITDA of the company for the third quarter 2004, together with certain other performance criteria. Based upon current projections of the future performance of Transact, as to which there can be no assurance, the second installment is estimated to be between $20.0 and $30.0 million. This second installment of the purchase price is payable, at the option of Euronet, either in cash or in common stock of Euronet.
The transfer of Transact shares to Euronet is staged, with 96% of the shares being transferred at closing and the remaining 4% being transferred on payment of the second installment of the purchase price. All of Transact’s 35 employees will be retained to continue operations, sales, development and customer service activities in Germany.
Also, Euronet closed a $20.0 million private placement of common stock with an accredited institutional investor (1,131,363 shares at a purchase price of $17.68 per share). In addition, Euronet granted the
investor certain “additional investment rights” entitling them to purchase up to $16.0 million in additional shares of Euronet common stock. The additional investment rights may be exercised on one or multiple occasions commencing March 19, 2004 and for a 15-month period thereafter, which period may be extended under certain circumstances.
Euronet has agreed to file a resale shelf registration statement with respect to the shares of Euronet common stock issued under the private placement and acquisition agreements. The securities offered and sold by Euronet in these private placements have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Euronet will host an investor call on Monday, November 24, 2003 at 9:00 a.m. EST to discuss these transactions. This event will be carried live in a webcast and audiocast. Internet users can access the conference call at http://www.vcall.com/CEPage.asp?ID=85275 or from www.euronetworldwide.com. 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 (U.S.) or 1-201-689-8049 (non-U.S.). The password is “Listener.”
For those unable to attend the live broadcast, a replay will be available beginning approximately one hour after the event via the web locations, as well as via phone. To access the web replay, go to http://www.vcall.com/CEPage.asp?ID=85275. To dial in for the replay, the call-in number is 1-877-660-6853 (U.S.) or 1-201-612-7415 (non-U.S.). The call replay will be available for two weeks. No fees are charged to access any event.
About Euronet Worldwide
Euronet Worldwide is an industry leader in providing secure electronic financial transaction solutions. The company offers outsourcing and consulting services, integrated EFT software, network gateways, and electronic top-up services to financial institutions, mobile operators and retailers. These solutions enable our clients’ customers to access personal financial information and to perform secure payment transactions-any time, any place. Euronet operates the largest independent pan-European ATM network, and is a leading provider of electronic distribution service, 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 75,000 points of sale across 29,000 retailers in Europe, Australia and the U.S. With corporate headquarters in Leawood, Kansas, USA, and European headquarters in Budapest and London, Euronet serves clients in more than 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: competition, 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, 2003 and its Form 10-K for the year ended Dec. 31, 2002. Copies of these filings may be obtained by contacting the Company or the SEC.
# # #
Contacts:
Name: Misti (Keys) Garffie at Euronet Worldwide, Inc.
Telephone: 913-327-4257
Email: mgarffie@euronetworldwide.com
Name: IR Department at Euronet Worldwide
Telephone: 913-327-4200
Email: investor@euronetworldwide.com
Symbol: EEFT www.euronetworldwide.com 24, 2003 Investor Conference Call November Presenters Michael J. Brown, Chairman & CEO Rick Weller, EVP & CFO Platt, Co-Managing Director Transact Jeff B. Newman, EVP & General Counsel Welcome to Euronet Worldwide J Bernd Artinger, Co-Managing Director Transact
• 11/21/03 • the are of the the in for the from by concern or statements. anticipated number exchange described Exchange 10-Q for information unaudited differ obtained a affecting affecting and Form 10-K this may be those of foreign are which expectations, Form Financial while it may from result risks Securities Euronet’s its a services; regulations and filings forward-looking as developments other the to accurate, Statements and and Transact be presentation, are materially and 2003 unaudited; these . intentions, with limited to this vary laws risks 30, 2002. is of SEC in statements products in filings not the may These but 31, believed Copies or contained management’s performance, results technological Company’s changes periodic September presentation is Company future and including December this amounts. or of actual including: the business. ended the statements forward-looking for Company’s period ended in information audited Euronet’s such Forward-Looking Any Company’s predictions in factors, market fluctuations; Company’s the Commission, the year included financial final contacting • 2
11/21/03 Euronet Overview Michael Brown Chairman & CEO 3
• 11/21/03 to • the in product rapid for $0.07 diluted based processing Germany incremental processing processing for value—fully European prepaid deployment 2004 leadership terminal offers per in With and transaction market Accretive European transaction with largest Country, Profitable, EFT GPRS line opportunity shareholders $0.10 share • Fit • • • • Engine per Strategic not Economic Profit touchpoint/ gateway millions have electronic payment to who before Passion it Bringing financial people had World EFT for convenience of innovative consumer the needs in end-to-end solutions Transact’sEuronet Best Providing emerging • 4
11/21/03 Prepaid Processing Transact EPAY PaySpot R&D Asia/Pacific Corporate EFT Processing EMEA Euronet’s Business Lines Software Solutions More than 90% of revenues are recurring 5
11/21/03 Euronet Financials Rick Weller EVP & CFO 6
11/21/03 2003 2002 2001 2000 1999 1998 1997 20 18 16 14 12 10 8 6 4 2 0 Transact Retail Locations Thousands 7
11/21/03 last 3 M Payment Q3 03 Pre-Paid Q2 03 Q1 03 There can be no assurance that these growth rates will continue. Quarterly Transaction Growth 9 8 7 6 5 4 3 2 1 0 Transact Total Transactions Millions USD 8
11/21/03 last 3 M Q3 03 Payment e t t a r h t t w o r g y l l r e t t r a u Q2 03 q % Pre-Paid 8 1 on a recognition basis consistent with Euronet’s other pre-paid processing revenues Q1 03 Quarterly Revenue Growth * 3.5 3.0 2.5 2.0 1.5 1.0 0.5 - Transact Revenue Millions USD *Transact unaudited net revenue There can be no assurance that these growth rates will continue. 9
11/21/03 last 3 M Payment Q3 03 Pre-Paid Q2 03on a recognition basis consistent with Euronet’s other pre-paid Q1 03*Transact unaudited ebitda processing revenues There can be no assurance that these growth rates will continue. Quarterly Growth 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Transact EBITDA Growth Millions USD 10
11/21/03 Euronet and Transact Michael Brown Chairman & CEO J Platt & Bernd Artinger Co-Managing Director Transact 11
• 11/21/03 more prepaid to ability as 93% have for the see methods throughout to customers accounts 23% users challenges Operators operators recharge Survey from stimulate prepaid growth AMS • Mobile biggest to the and representation prepaid is their of multiple 2002 ranges all the future 2000 • Statistics of 45% 40% January 3, • Prepaid of operators offer to Aug. • Europe 84% than One recharge Over to key • Prepaid • • • Systems), www.strategyanalytics.com, Management Global Sources: (American • 12
• 11/21/03 e-top- cards online applications and secure locations credit in Germany cardholders retail in • cash-based and solutions eCommerce of Country • debit experience institutions in 18,500 providing years pre-paid integrate verification Largest e-top-up across both 12 EFT, of than financial to for POS, realtime share company more 50 fast Europe’s market points-of-sale Transact? solutions with than secure, of more independent Server-Software 60% 20,000 • Is transaction EFT 1996 of accounts leader—than • and founded transactions partner hardware integrated supporting their Germany More • Who POS up Market • 13
• 11/21/03 of • per EBITDA 18% 2003 of in Munich, • growth rate months operation location • Facts growth 1 team • business three scaleable Key revenue revenue • recent million and employees, • 2003 quarter Most $1.1 35 Germany Management Unaudited • Transact Strong Profitable Lean • • • 14
11/21/03 1,000 Small Retailers Retailers and Airtime Suppliers Major Multiple Retailers All Major German Operators, 20,000 Points of Sale, 18,500 Retail Outlets Transact 15
11/21/03 Mobile Operator(s) Mobile Operator A Mobile Operator B Mobile Operator C Distributors Transact Transaction Processing Network & Technology Platform Major Retailer Data Center Transact’s Transaction Processing Network GPRS POS Terminals POS Terminals e-POS 16
11/21/03 0 3 2 0 0 2 2 0 0 1 Germany Germany 2 0 0 0 2 0 Source: EMC in 9 9 1 9 9 8 1 9 35 30 25 20 15 10 5 0 Pre-Paid Users Pre Millions 17
• 11/21/03 Shift • point, at 55% data. • the underway currently provided experience • is reference will • a is operator • Shift As UK approximately e-top-up market • • mobile • Distribution on German • based the estimates market • Scratch card 75% 2003 assurance UK • Airtime off no the • Company be as can shift Source: There same • Prepaid e-top-up 25% Germany • 18
11/21/03 Per-Transaction Product Economics Merchant Card Processing: $0.23 Average per transaction, including service charge Prepaid Through Distributor: Based on average top-up amount $0.16 average per transaction, including service charge Prepaid Directly to Retailer: Based on average top-up amount $0.51 average per transaction, including service charge 19
11/21/03 (unaudited) 3.3 (2.2) (0.3) 0.8 1.1 USD Millions $ $ $ $ $ Economic Model: TransactMost Recent Three Months Total Revenue, net Direct Costs & Operating Expenses Depreciation & Amortization Operating Income EBITDA EBITDA is the result of adding depreciation and amortization to operating income. Intangible amortization of approx. $0.2 M qtrly. 20
• 11/21/03 other effort for and customers lead based across their Switzerland) to implementation especially Advantages advantage following (Austria, team for markets; internet Euronet management hardware especially • Transact markets Lekkerland POS current systems Cost terminals till as Euronet’s expertise, Transact Leveraging European such Experienced Lower in GPRS EFT EPOS • • • 21
11/21/03 Loyalty Schemes Content Purchase Money Transfer Insurance Top-Up Emerging Opportunities International Authorization Cross-Border Electronic Solutions Cash-Based Top-Up Card-Based Top-Up Top-Up Future Value-Added Services Top-Up Touchpoints 22
11/21/03 Transaction Summaries Rick Weller EVP and CFO 23
11/21/03 . . million USD total purchase price million cash million in 643,048 EWI shares (approximately 2.3% of current Estimated at $20.0 million USD to $30.0 million USD based on growth estimate Half cash; half Euronet stock** (Euronet has the right to pay in cash) *Based on current projections of future performance of Transact, as to which there can be no assurance ** Stock payment in excess of 2.5% of shares outstanding subject to shareholder vote. Transact Deal Summary Initial Payment $27.4 $17.8 $9.6 shares outstanding) Second Payment* • • 9 9 24
• 11/21/03 • certain period than month 45 less market with day is • accredited 15 • Management the a trailing 45 price an to over over average, that • with Asset right $2.00 • premium registration price within prevailing Placement Fletcher purchase weighted date less Shares $2.00 investment to market price investment a right effective volume maximums purchase Equity initial investor, Common share, second days, prevailing days’ and prevailing per 120 following on second • million million at • 1,131,363 $17.68 After period Based business minimums If $17.68, • Private $20 institutional $16 • • • 25
• 11/21/03 • EPS to fully will of funding, $0.07 diluted of acquisition Transact fully transactions 6% performance assurance • the its future no be • related of • contribution that to these can • account the share 2004 in projections there approximately approximately which with expects current to into per year issued shares as • on the *Based Transact, • Transaction Taking together Euronet contribute $0.10* for Shares represent diluted • • • 26
• 11/21/03 are • awards Zealand contract Indonesia-JV Malaysia-JV New Romania Poland Serbia-JV Slovakia U.K. U.S. • recent implemented Republic when fully • Today transactions/quarter 4,900+ Australia Czech Croatia Germany Greece Egypt Hungary India Ireland • ATMs; points-of-sale retailers employees countries million 3,200+ Euronet 65 95,000 47,000 503 18 • • • • • • 27
• 11/21/03 • Leadership • Market Australia Germany • UK • PrepaidPositions • • • 28
11/21/03 Daniel Henry President & COO Rick Weller EVP & CFO Jeff Newman EVP & Corporate Counsel Platt Transact Questions? Michael Brown Chairman & CEO J Bernd Artinger Co-Managing Directors 29