UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-22167
EURONET WORLDWIDE, INC.
(Exact name of the registrant as specified in its charter)
| Delaware | 74-2806888 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. 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)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of July 31, 2004, the Company had 31,642,415 common shares outstanding.
PART 1—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
| As of |
||||||||
| June 30, 2004 (unaudited) |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 32,011 | $ | 19,245 | ||||
| Restricted cash |
43,070 | 58,280 | ||||||
| Trade accounts receivable, net of allowances for doubtful accounts of $1,594 |
79,684 | 75,648 | ||||||
| Earnings in excess of billings on software installation contracts |
393 | 729 | ||||||
| Deferred income tax |
2,409 | 2,543 | ||||||
| Prepaid expenses and other current assets |
22,407 | 11,509 | ||||||
| Total current assets |
179,974 | 167,954 | ||||||
| Property, plant and equipment, net of accumulated depreciation of $47,685 at June 30, 2004 |
30,086 | 20,658 | ||||||
| Goodwill, net |
106,089 | 88,512 | ||||||
| Acquired intangible assets, net of accumulated amortization of $3,488 at June 30, 2004 and |
24,978 | 22,772 | ||||||
| Deferred income taxes |
276 | 279 | ||||||
| Other assets, net of accumulated amortization of $3,231 at June 30, 2004 and $2,380 |
5,968 | 3,598 | ||||||
| Total assets |
$ | 347,371 | $ | 303,773 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Trade accounts payable |
$ | 102,674 | $ | 97,188 | ||||
| Accrued expenses and other current liabilities |
43,224 | 39,277 | ||||||
| Debt obligations |
25,091 | 5,930 | ||||||
| Accrued interest on notes payable |
310 | 381 | ||||||
| Income taxes payable |
6,199 | 3,316 | ||||||
| Deferred income taxes |
1,284 | 1,374 | ||||||
| Other |
2,776 | 4,460 | ||||||
| Total current liabilities |
181,558 | 151,926 | ||||||
| Debt obligations |
45,166 | 59,032 | ||||||
| Deferred income tax |
8,677 | 7,828 | ||||||
| Other long-term liabilities |
3,085 | 3,118 | ||||||
| Total liabilities |
238,486 | 221,904 | ||||||
| Stockholders’ equity: |
||||||||
| Common Stock, $0.02 par value. Authorized 60,000,000 shares; issued and outstanding 31,367,509 |
627 | 590 | ||||||
| Additional paid-in-capital |
217,591 | 198,377 | ||||||
| Treasury stock |
(185 | ) | (145 | ) | ||||
| Employee loans for stock |
(338 | ) | (427 | ) | ||||
| Subscription receivable |
9 | 26 | ||||||
| Accumulated deficit |
(110,204 | ) | (117,871 | ) | ||||
| Restricted reserve |
776 | 777 | ||||||
| Accumulated other comprehensive income |
609 | 542 | ||||||
| Total stockholders’ equity |
108,885 | 81,869 | ||||||
| Total liabilities and stockholders’ equity |
$ | 347,371 | $ | 303,773 | ||||
See accompanying notes to the consolidated financial statements.
2
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Statements Of Operations And Comprehensive Income (Loss)
(Unaudited, in thousands, except share and per share data)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| EFT processing services |
$ | 18,002 | $ | 12,169 | $ | 32,942 | $ | 24,058 | ||||||||
| Prepaid processing services |
65,634 | 32,192 | 128,553 | 49,564 | ||||||||||||
| Software services |
3,386 | 3,780 | 6,582 | 7,619 | ||||||||||||
| Total revenues |
87,022 | 48,141 | 168,077 | 81,241 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Direct operating costs |
61,128 | 32,134 | 117,802 | 52,139 | ||||||||||||
| Salaries and benefits |
10,577 | 7,492 | 20,665 | 14,367 | ||||||||||||
| Selling, general and administrative |
4,518 | 2,635 | 8,744 | 4,948 | ||||||||||||
| Depreciation and amortization |
3,433 | 3,096 | 6,987 | 5,852 | ||||||||||||
| Total operating expenses |
79,656 | 45,357 | 154,198 | 77,306 | ||||||||||||
| Operating income |
7,366 | 2,784 | 13,879 | 3,935 | ||||||||||||
| Other income (expenses): |
||||||||||||||||
| Interest income |
615 | 273 | 1,186 | 626 | ||||||||||||
| Interest expense |
(1,672 | ) | (1,914 | ) | (3,508 | ) | (3,521 | ) | ||||||||
| Gain on sale of U.K. subsidiary |
— | — | — | 18,001 | ||||||||||||
| Equity in income from unconsolidated subsidiaries |
125 | 97 | 104 | 134 | ||||||||||||
| Loss on early retirement of debt |
(23 | ) | — | (94 | ) | — | ||||||||||
| Foreign exchange gain (loss), net |
258 | (3,120 | ) | 493 | (4,959 | ) | ||||||||||
| Total other income (expense) |
(697 | ) | (4,664 | ) | (1,819 | ) | 10,281 | |||||||||
| Income (loss) from continuing operations before income taxes |
6,669 | (1,880 | ) | 12,060 | 14,216 | |||||||||||
| Income tax expense |
(2,289 | ) | (895 | ) | (4,394 | ) | (1,570 | ) | ||||||||
| Income (loss) from continuing operations |
4,380 | (2,775 | ) | 7,666 | 12,646 | |||||||||||
| Loss from discontinued operations |
— | (2 | ) | — | (2 | ) | ||||||||||
| Net income (loss) |
4,380 | (2,777 | ) | 7,666 | 12,644 | |||||||||||
| Translation adjustment |
274 | 1,010 | 69 | 1,057 | ||||||||||||
| Comprehensive income (loss) |
$ | 4,654 | $ | (1,767 | ) | $ | 7,735 | $ | 13,701 | |||||||
| Income (loss) per share – basic: |
||||||||||||||||
| Income (loss) from continuing operations per share |
$ | 0.14 | $ | (0.10 | ) | $ | 0.25 | $ | 0.49 | |||||||
| Income from discontinued operations per share |
— | — | — | — | ||||||||||||
| Net income (loss) per share |
$ | 0.14 | $ | (0.10 | ) | $ | 0.25 | $ | 0.49 | |||||||
| Basic weighted average shares outstanding |
30,966,937 | 26,559,343 | 30,543,616 | 25,887,326 | ||||||||||||
| Income (loss) per share – diluted: |
||||||||||||||||
| Income (loss) from continuing operations per share |
$ | 0.13 | $ | (0.10 | ) | $ | 0.23 | $ | 0.44 | |||||||
| Income from discontinued operations per share |
— | — | — | — | ||||||||||||
| Net income (loss) per share |
$ | 0.13 | $ | (0.10 | ) | $ | 0.23 | $ | 0.44 | |||||||
| Diluted weighted average shares outstanding |
34,058,533 | 26,559,343 | 33,794,701 | 28,514,859 | ||||||||||||
See accompanying notes to unaudited consolidated financial statements.
3
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Six months ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Net income |
$ | 7,666 | $ | 12,644 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
6,987 | 5,852 | ||||||
| Unrealized foreign exchange (gain) loss |
(1,227 | ) | 4,671 | |||||
| Gain on sale of U.K. subsidiary |
— | (18,001 | ) | |||||
| Deferred income tax (benefit) expense |
(525 | ) | 1,587 | |||||