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
Date
of Report (date of earliest event reported):
July
22, 2007
Euronet
Worldwide, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-31648
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74-2806888
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(State
or other jurisdiction of
incorporation)
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(Commission
File Number)
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(IRS
Employer ID Number)
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4601
College Boulevard, Suite 300
Leawood,
Kansas
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66211
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(Address
of principal executive offices)
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(Zip
Code)
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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:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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ITEM
2.02. Results of Operations and Financial Condition.
On
July
22, 2007, Euronet Worldwide, Inc. issued a press release to announce its
financial results for the second quarter ended June 30, 2007. 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, and 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.
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(c)
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Exhibits
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Exhibit
99.1 - Press Release dated July 22,
2007
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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.
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Euronet
Worldwide, Inc.
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By:
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/s/ Rick
L. Weller
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Rick
L. Weller
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Chief
Financial Officer
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Date:
July 22, 2007
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Exhibit
99.1
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N
e w s R e l e a s e
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Corporate
Headquarters
4601
College Boulevard, Suite 300
Leawood,
Kansas 66211 USA
+1-913-327-4200
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For
Immediate Release
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Date:
July 22, 2007
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Media
and Investor
Relations
Contact:
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Shruthi
Dyapaiah
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1-913-327-4225
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sdyapaiah@euronetworldwide.com
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Euronet
Worldwide Reports Second Quarter 2007 Financial Results
LEAWOOD,
KANSAS, USA — July 22, 2007 — Euronet Worldwide Inc. (NASDAQ: EEFT), a
leading electronic payments provider, today announced its second quarter
2007
financial results.
A
significant factor in Euronet’s second quarter results was its acquisition on
April 4, 2007 of Ria Envia Inc. (“RIA”), the third-largest global money transfer
company. Commencing in the second quarter, Euronet included the results of
RIA
in its consolidated financial statements, together with the related equity
and
debt issued to complete the acquisition. RIA’s operating results are reported
below under the newly established Money Transfer Segment.
Euronet’s
second quarter 2007 financial highlights included:
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·
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Consolidated
revenues of $237.1 million, compared to $153.8 million for the
second
quarter 2006.
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·
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Adjusted
EBITDA of $30.4 million, compared to $21.3 million for the second
quarter
2006.
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·
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Operating
income of $15.9 million, compared to $12.2 million for the second
quarter
2006.
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·
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Net
income of $8.6 million, or $0.17 diluted earnings per share,
compared to
net income of $11.1 million, or $0.28 diluted earnings per share,
for the
second quarter 2006.
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·
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Diluted
cash earnings per share of $0.29, compared to $0.29 for the second
quarter
2006 (see reconciliation of diluted cash earnings per share in
attachments.)
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·
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Transactions
of 310.9 million, compared to 221.4 million for the second quarter
2006.
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Segment
and Other Results
As
previously stated, beginning in the second quarter 2007, Euronet reported
the
results of RIA as a separate business segment, the ‘Money Transfer
Segment.’ This segment also includes the company’s existing money
transfer business, which was previously included in the Prepaid Processing
Segment. The Segment results reported below have been restated for
prior periods to reflect the existing money transfer business in the Money
Transfer Segment and the combination of the EFT Processing and Software
segments
for comparative purposes. These restatements were for comparative purposes
only
and had no impact on Euronet’s consolidated results.
The
EFT Processing Segment reported the following results:
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·
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Second
quarter 2007 revenues of $45.7 million, compared to $39.6 million
for the
second quarter 2006.
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·
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Second
quarter 2007 adjusted EBITDA of $13.2 million, compared to $12.3
million
for the second quarter 2006.
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·
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Second
quarter 2007 operating income of $9.2 million, compared to $8.8
million
for the second quarter 2006.
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·
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Transactions
processed for the second quarter 2007 of 146.9 million, compared
to 113.6
million transactions processed for the second quarter
2006.
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1
The
EFT
Processing Segment completed the quarter with 9,858 ATMs owned or operated
compared to 7,866 ATMs at the end of the second quarter 2006. The year-over-year
improvements in revenue, operating income and Adjusted EBITDA were primarily
attributable to a 25% increase in ATMs under management together with the
related transactions processed over those and other ATMs under
management. Expansion over the prior year of the EFT Processing
Segment’s adjusted EBITDA and operating income was partially offset by continued
investments the Company has made to position itself for expanding card
processing opportunities across Europe, investments to expand in additional
Eastern European markets and the effect of certain rate concessions granted
by
the Company in prior periods to extend contracts through 2011.
Euronet
owns and/or operates ATMs in Hungary, Poland, Germany, Croatia, the Czech
Republic, the United Kingdom, Greece, Romania, Slovakia, Albania, Serbia,
Montenegro, Ukraine, India and China.
The
Prepaid Processing Segment reported the following results:
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·
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Second
quarter 2007 revenues of $142.2 million, compared to $113.4 million
for
the second quarter 2006.
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·
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Second
quarter 2007 adjusted EBITDA of $13.7 million, compared to $12.2
million
for the second
quarter 2006.
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·
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Second
quarter 2007 operating income of $9.9 million, compared to $8.7
million
for the second quarter 2006.
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·
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Transactions
processed of 160.2 million in the second quarter 2007, compared
to 107.7
million processed in the second quarter
2006.
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The
year-over-year improvement in revenue was primarily attributable to organic
transaction growth as well as the benefit from the first quarter 2007
acquisition of a U.K. based prepaid processing company that contributed
approximately 10% of the segment’s revenue growth when compared to the second
quarter of last year, but had a minimal impact on the segment’s operating
income.
The
Prepaid Processing Segment processes electronic point-of-sale prepaid
transactions at approximately 358,000 point-of-sale terminals across more
than
183,000 retailer locations in Europe, Asia Pacific, Africa and the
U.S.
The
Money Transfer Segment reported the following results:
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·
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Second
quarter 2007 revenues of $49.2 million, compared to $0.8 million
for the
second quarter 2006.
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·
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Second
quarter 2007 adjusted EBITDA of $6.2 million, compared to negative
($0.5)
million for the second
quarter 2006.
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·
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Second
quarter 2007 operating income of $1.4 million, compared to negative
($0.6)
million for the second quarter
2006.
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·
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Transactions
processed of 3.8 million in the second quarter 2007, compared to
0.1
million processed in the second quarter
2006.
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“I
am very
excited about this quarter’s addition of RIA to Euronet’s EFT and Prepaid
Segments,” said Michael J. Brown, chairman and chief executive officer, Euronet
Worldwide Inc. “In just the first three months of our ownership of RIA, we have
made significant progress towards integrating Euronet’s Veloz business with RIA,
cross-selling prepaid products through RIA agents and stores, cross-selling
our
money transfer product through prepaid retailers and expanding RIA’s payout
network through the EFT Segment’s banking relationships across the globe. While
we were disappointed to see a weakening of growth in transfers to Mexico
before
we closed on the acquisition, we have seen a consistently improving trend
since
February. More importantly, however, RIA saw second quarter 2007 transactions
sent from non-US locations grow 68% over those of the second quarter 2006.
These
high growth rate international markets match up very nicely with our prepaid
markets and were very key to our decision to acquire RIA. RIA’s an exciting
business and I believe we are off to a great start with this initial quarter’s
results.”
Corporate
and Other had $4.6 million of operating expenses for the second quarter
2007, compared to $4.7 million
in the second quarter 2006. This small decrease is attributable to
share-based compensation.
2
Euronet’s
interest expense for the second quarter 2007 was $7.7 million compared to
$3.7
million in the second quarter of 2006; while total indebtedness was $568.8
million as of June 30, 2007 as compared to $353.5 million as of March 31,
2007.
The Company’s unrestricted cash on hand was $282.3 million as of June 30, 2007
as compared to $419.5 million as of March 31, 2007. The increases in
interest expense and total indebtedness and the decrease in cash were directly
applicable to Euronet’s financing to complete the acquisition of
RIA.
Euronet
also announced that it expects cash earnings per share for the third quarter
2007 to be approximately $0.31 to $0.32 per share.
We
believe
that adjusted EBITDA and cash earnings per share provide useful information
to
investors because they are indicators 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. These
calculations are commonly used as a basis for investors, analysts and credit
rating agencies to evaluate and compare the operating performance and value
of
companies within the payment processing industry.
The
Company’s management analyzes historical results adjusted for certain items that
are non-operational, not necessarily ongoing in nature or that are incremental
to the baseline of the business, and management believes the exclusion of
these
items provides a more complete basis for evaluating the underlying business
unit
performance.
Adjusted
EBITDA is defined as operating income excluding depreciation,
amortization and share-based compensation expenses. While
depreciation and amortization are considered operating costs under generally
accepted accounting principles, these expenses primarily represent a non-cash
current period allocation of costs associated with long-lived assets acquired
in
prior periods. Similarly, the expense recorded for share-based
compensation does not represent a current or future period cash
cost.
Cash
earnings per share is defined as diluted GAAP earnings per share
excluding the impacts of a) foreign exchange gains or losses, b) discontinued
operations, c) debt restructuring charges, d) share based compensation, e)
tax-effected intangible asset amortization and f) other non-operating or
unusual
items that cannot be accurately projected.
The
attached schedules provide a full reconciliation of these and other non-GAAP
financial measures to a corresponding GAAP financial measure.
Euronet
Worldwide will host an analyst conference call on Monday, July 23, 2007,
at 9:00
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.com or via Vcall at
http://www.vcall.com/IC/CEPage.asp?ID=118524. For those without Internet
access, the conference call-in number is +1-877-407-9210 (USA) or
+1-201-689-8049 (non-USA).
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/IC/CEPage.asp?ID=118524 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 247768. The call and webcast replay will be available for one month
and three months respectively. You can also access the Earnings presentation
at
http://www.eeft.com/investors/library/presentations.asp. No fees are
charged to access any event.
3
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, electronic prepaid top-up services to financial
institutions, mobile operators and retailers, as well as electronic consumer
money transfer and bill payment services. Euronet operates and services the
largest pan-European group of ATMs and operates the largest Indian shared
ATM
network. Euronet is also one of the largest providers of prepaid processing,
or
top-up services, for prepaid mobile airtime. Additionally, with the completion
of the acquisition of Ria Envia Inc. in April 2007, Euronet has established
itself as the third-largest global money transfer company having approximately
42,000 payout locations in 88 countries. The Company has processing centers
located in the U.S., Europe and Asia, and processes electronic top-up
transactions at approximately 358,000 point-of-sale terminals across more
than
183,000 retailers in Europe, Asia Pacific, Africa and the U.S. With corporate
headquarters in Leawood, Kansas, USA, and 35 worldwide offices, Euronet serves
clients in approximately 130 countries. Visit the Company’s web site at
www.euronetworldwide.com.
Statements
contained in this news release that concern Euronet’s or its 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 filings with the Securities and Exchange
Commission, including our Annual Report on Form 10-K, Quarterly Reports on
Form
10-Q and Current Reports on Form 8-K. Copies of these filings may be obtained
by
contacting the Company or the SEC.Euronet does not intend to update
these forward-looking statements and undertakes no duty to any person to
provide
any such update under any circumstances.
4
|
EURONET
WORLDWIDE, INC.
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Consolidated
Statements of Income
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|
(unaudited
- in millions, except share and per share
data)
|
|
Three
Months Ended
|
||||||||
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June
30,
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||||||||
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2007
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2006
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|||||||
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Revenues:
|
||||||||
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EFT
Processing
|
$ |
45.7
|
$ |
39.6
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||||
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Prepaid
Processing
|
142.2
|
113.4
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||||||
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Money
Transfer
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49.2
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0.8
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||||||
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Total
revenues
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237.1
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153.8
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||||||
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Operating
expenses:
|
||||||||
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Direct
operating costs
|
160.4
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105.8
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||||||
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Salaries
and benefits
|
30.8
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19.4
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||||||
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Selling,
general and administrative
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17.4
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9.2
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||||||
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Depreciation
and amortization
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12.6
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7.2
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||||||
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Total
operating expenses
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221.2
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141.6
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||||||
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Operating
income
|
15.9
|
12.2
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||||||
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Other
income (expense):
|
||||||||
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Interest
income
|
4.1
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3.4
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||||||
|
Interest
expense
|
(7.7 | ) | (3.7 | ) | ||||
|
Income
from unconsolidated affiliates
|
0.6
|
0.2
|
||||||
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Foreign
exchange gain, net
|
1.3
|
2.8
|
||||||
|
Total
other income (expense)
|
(1.7 | ) |
2.7
|
|||||
|
Income
before income taxes and minority interest
|
14.2
|
14.9
|
||||||
|
Income
tax expense
|
(5.0 | ) | (3.6 | ) | ||||
|
Minority
interest
|
(0.6 | ) | (0.2 | ) | ||||
|
Net
income
|
$ |
8.6
|
$ |
11.1
|
||||
|
Earnings
per share - diluted:
|
||||||||
|
Earnings
per Share
|
$ |
0.17
|
$ |
0.28
|
||||
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Diluted
weighted average shares outstanding
|
49,359,226
|
42,748,568
|
||||||
5
|
EURONET
WORLDWIDE, INC.
|
|
Consolidated
Summary Balance Sheets
|
|
(in
millions)
|
|
As
of
|
||||||||
|
June
30,
|
As
of
|
|||||||
|
2007
|
December
31,
|
|||||||
|
(unaudited)
|
2006
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ |
282.3
|
$ |
321.1
|
||||
|
Restricted
cash
|
130.5
|
80.7
|
||||||
|
Inventory
- PINs and other
|
51.4
|
49.5
|
||||||
|
Trade
accounts receivable, net
|
264.1
|
212.6
|
||||||
|
Other
current assets, net
|
34.7
|
24.6
|
||||||
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Total
current assets
|
763.0
|
688.5
|
||||||
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Property
and equipment, net
|
69.9
|
55.2
|
||||||
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Goodwill
and intangible assets, net
|
867.7
|
326.2
|
||||||
|
Other
assets, net
|
44.7
|
38.2
|
||||||
|
Total
assets
|
$ |
1,745.3
|
$ |
1,108.1
|
||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable and other current liabilities
|
$ |
485.1
|
$ |
393.1
|
||||
|
Short-term
debt obligations
|
13.0
|
11.0
|
||||||
|
Total
current liabilities
|
498.1
|
404.1
|
||||||
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Debt
obligations, net of current portion
|
542.9
|
349.1
|
||||||
|
Capital
lease obligations, net of current portion
|
12.9
|
13.4
|
||||||
|
Deferred
income tax
|
56.0
|
43.1
|
||||||
|
Other
long-term liabilities
|
2.2
|
1.8
|
||||||
|
Minority
interest
|
8.1
|
8.3
|
||||||
|
Total
liabilities
|
1,120.2
|
819.8
|
||||||
|
Stockholders'
equity
|
625.1
|
288.3
|
||||||
|
Total
liabilities and stockholders' equity
|
$ |
1,745.3
|
$ |
1,108.1
|
||||
6
|
EURONET
WORLDWIDE, INC.
|
|
Reconciliation
of Operating Income to Adjusted EBITDA by
Segment
|
|
(unaudited
- in millions)
|
|
Three
Months Ended June 30, 2007
|
||||||||||||||||
|
EFT
|
Prepaid
|
Money
|
||||||||||||||
|
Processing
|
Processing
|
Transfer
|
Consolidated
|
|||||||||||||
|
Operating
Income
|
$ |
9.2
|
$ |
9.9
|
$ |
1.4
|
$ |
15.9
|
||||||||
|
Add:
Depreciation and amortization
|
4.0
|
3.7
|
4.8
|
12.6
|
||||||||||||
|
Add:
Share-based compensation
|
-
|
0.1
|
-
|
1.9
|
||||||||||||
|
Earnings
before interest, taxes, depreciation,
|
||||||||||||||||
|
amortization
and share-based
|
||||||||||||||||
|
compensation
(Adjusted EBITDA)
|
$ |
13.2
|
$ |
13.7
|
$ |
6.2
|
$ |
30.4
|
||||||||
|
Three
Months Ended June 30, 2006
|
||||||||||||||||
|
EFT
|
Prepaid
|
Money
|
||||||||||||||
|
Processing
|
Processing
|
Transfer
|
Consolidated
|
|||||||||||||
|
Operating
Income
|
$ |
8.8
|
$ |
8.7
|
$ | (0.6 | ) | $ |
12.2
|
|||||||
|
Add:
Depreciation and amortization
|
3.5
|
3.5
|
0.1
|
7.2
|
||||||||||||
|
Add:
Share-based compensation
|
-
|
-
|
-
|
1.9
|
||||||||||||
|
Earnings
before interest, taxes, depreciation,
|
||||||||||||||||
|
amortization
and share-based
|
||||||||||||||||
|
compensation
(Adjusted EBITDA)
|
$ |
12.3
|
$ |
12.2
|
$ | (0.5 | ) | $ |
21.3
|
|||||||
7
|
EURONET
WORLDWIDE, INC.
|
|
Reconciliation
of Diluted Cash Earnings per Share
|
|
(unaudited
- in millions, except share and per share
data)
|
|
Three
Months Ended
|
||||||||
|
June
30,
|
||||||||
|
2007
|
2006
|
|||||||
|
Net
income
|
$ |
8.6
|
$ |
11.1
|
||||
|
Amortization
of convertible debt issuance costs
|
0.2 | (2) | 0.2 | (1) | ||||
|
Interest
on convertible debt
|
0.6 | (2) | 0.6 | (1) | ||||
|
Earnings
applicable for common shareholders
|
9.4
|
11.9
|
||||||
|
Money
transfer integration charges
|
0.9
|
-
|
||||||
|
Foreign
exchange gain
|
(1.3 | ) | (2.8 | ) | ||||
|
Share-based
compensation
|
1.8
|
1.9
|
||||||
|
Intangible
asset amortization, net of tax
|
4.9
|
1.6
|
||||||
|
Earnings
applicable for common shareholders before
|
||||||||
|
foreign
exchange gains/losses and share-based compensation
|
$ |
15.7
|
$ |
12.6
|
||||
|
Cash
earnings per share - diluted (3)
|
$ |
0.29
|
$ |
0.29
|
||||
|
Diluted
weighted average shares outstanding, before
|
||||||||
|
assumed
conversion of 1.625% convertible debentures
|
49,359,226
|
38,585,080
|
||||||
|
Effect
of assumed conversion of 1.625% convertible debentures (1)
|
-
|
4,163,488
|
||||||
|
Diluted
weighted average shares outstanding used for GAAP earnings per
share
|
49,359,226 | 42,748,568 | ||||||
|
Effect
of assumed conversion of 1.625% convertible debentures (2)
|
4,163,488
|
-
|
||||||
|
Effect
of unrecognized share-based compensation on diluted shares
outstanding
|
1,025,403
|
674,735
|
||||||
|
Diluted
weighted average shares outstanding used for cash earnings per
share
|
54,548,117
|
43,423,303
|
||||||
|
(1) As
required by GAAP, the interest cost and amortization of the convertible
debt issuance cost are excluded from income for the purpose of calculating
diluted earnings per share for any period when the convertible debentures,
if converted, would be dilutive to earnings per share. Further,
the convertible shares are treated as if all were outstanding for
the
period. The assumed conversion of the Company's 1.625%
convertible debentures was dilutive to the Company's diluted GAAP
earnings
per share for the second quarter 2006, but was not dilutive for the
second
quarter 2007.
|
|
(2) Although
the assumed conversion of the 1.625% convertible debentures was not
dilutive to the Company's diluted GAAP earnings per share for the
second
quarter 2007, it was dilutive to the Company's diluted cash earnings
per
share. Accordingly, the interest cost and amortization of the
convertible debt issuance cost are excluded from income and the
convertible shares are treated as if all were outstanding for the
period.
|
|
|
|
(3) Diluted
Cash Earnings 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.
|
8