<PAGE> 1
_____________________________________________________________________________
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 SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER C00-22167
___________________________________________________________________________
EURONET SERVICES INC.
(Exact name of the registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
74-2806888
(I.R.S. employer identification no.)
14-24 HORVAT U.
1027 BUDAPEST
HUNGARY
(Address of principal executive offices)
36-1-224-1000
(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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As at October 31, 1997,
17,226,847 Common Shares.
<PAGE> 2
PART I
ITEM 1 FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- --------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents..................... $27,691 $ 2,541
Restricted cash............................... 3,401 818
Trade accounts receivable, net................ 456 172
Investment securities......................... 17,498 194
Prepaid expenses and other current assets..... 1,137 433
-------- --------
Total current assets......................... 50,183 4,158
Property and equipment, net.................... 15,966 7,284
Loans receivable, excluding current portion.... 23 21
Deferred income taxes.......................... 600 471
-------- --------
Total assets................................. $66,772 $11,934
======== =========
Liabilities and Shareholders' Equity
Current liabilities:
Trade accounts payable........................ $ 1,919 $ 1,670
Short term borrowings......................... 163 194
Current installments of capital
leases obligations........................... 2,352 637
Note payable -- shareholder................... 72 262
Accrued expenses and other current
liabilities.................................. 726 98
-------- --------
Total current liabilities.................... 5,232 2,861
Obligations under capital leases, excluding
current installments.......................... 8,189 3,834
Other long-term liabilities.................... 158 103
-------- --------
Total liabilities............................ 13,579 6,798
-------- --------
Shareholders' equity:
Common and preferred shares,
Euronet Holding N.V. ......................... -- 191
Common stock, $0.02 par value; 30,000,000
shares authorized; 15,235,068 shares
issued and outstanding........................ 300 --
Treasury stock................................. (4) --
Additional paid in capital..................... 63,081 11,666
Subscription receivable........................ -- (500)
Accumulated losses............................. (10,968) (7,005)
Restricted reserve............................. 784 784
-------- --------
Total shareholders' equity................... 53,193 5,136
-------- --------
Total liabilities and shareholders' equity... $66,772 $11,934
======== ========
</TABLE>
See accompanying notes to condensed consolidated statements.
<PAGE> 3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue........................ 1,577 378 3,433 638
Operating expenses:
ATM operating costs........... (1,393) (410) (3,046) (941)
Other operating costs......... (2,010) (840) (5,034) (2,365)
------ ------ ------ ------
Operating loss................ (1,826) (872) (4,647) (2,668)
Other income (expenses)........ 305 (29) 555 (106)
------ ------ ------ ------
Loss before income taxes....... (1,521) (901) (4,092) (2,774)
Deferred income tax benefit.... - (6) 129 219
------ ------ ------ ------
Net loss...................... (1,521) (907) (3,963) (2,555)
====== ====== ====== ======
Loss per share (Note 3)........ (0.09) (0.07) (0.24) (0.18)
Average shares outstanding
(Note 3)...................... 17,222,997 13,838,078 16,626,719 13,838,078
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
-------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................. (3,963) (2,555)
Adjustments to reconcile net loss to net cash used inc
operating activities
Share compensation expense.............................. 81 --
Depreciation of property, plant and equipment........... 1,013 393
Deferred income taxes................................... (129) (219)
Increase in restricted cash............................. (2,583) 169
Increase in trade accounts receivable................... (284) (57)
Increase in prepaid expenses and other current assets... (704) 191
Increase in trade accounts payable...................... 249 150
Increase/(decrease) in accrued expenses and other
long-term liabilities.................................. 685 461
-------- -------
Net cash used in operating activities.................. (5,635) (1,467)
Cash flows from investing activities:
Fixed asset purchases.................................... (2,844) (320)
Purchase of investment securities........................ (17,304) (206)
Net increase in loan receivable.......................... -- 8
-------- -------
Net cash used in investing activities.................. (20,148) (518)
Cash flows from financing activities:
Net proceeds from public offering........................ 47,857
Capital contributions.................................... 4,087 3,000
Purchase of treasury stock............................... (4) --
Repayment of obligations under capital leases............ (786) (957)
(Repayment of)/proceeds from bank borrowings............. (31) 206
(Repayment of)/proceeds from loan from shareholder....... (190) 101
-------- -------
Net cash provided by financing activities.............. 50,933 2,350
-------- -------
Net increase in cash and cash equivalents................. 25,150 365
Cash and cash equivalents at beginning of period.......... 2,541 411
-------- -------
Cash and cash equivalents at end of period................ $ 27,691 $ 776
======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Euronet Services Inc. have been prepared from the records of Euronet Services
Inc. and subsidiaries (collectively, the "Company"), pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, such financial statements include all adjustments (consisting only
of normal, recurring accruals) necessary to present fairly the financial
position of the Company at September 30, 1997 and the results of its operations
for the three month and nine month periods ended September 30, 1997 and 1996
and its cash flows for the nine months ended September 30, 1997 and 1996. The
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements of Euronet Holding N.V. ("Euronet
N.V.") for the year ended December 31, 1996, including the notes thereto, set
forth in the Company's Form S-1 Registration Statement (No. 33-18121).
The results of operations for the three month and nine month period ended
September 30, 1997 are not necessarily indicative of the results to be expected
for the full year.
NOTE 2 -- INVESTMENT SECURITIES
Significantly all of the investment securities at September 30, 1997
consist of government debt securities carried at amortized cost and are due
within one year. In accordance with the provisions of Statement of Financial
Accounting Standards Board No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," the Company classifies its investments as
held-to-maturity securities.
NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES
There have been no significant additions to or changes in accounting
policies of the Company since December 31, 1996 except as specified in note 2
above. For a description of these policies, see Note 2 of Notes to Consolidated
Financial Statements for the year ended December 31, 1996.
NOTE 4 -- NET LOSS PER SHARE
As the capital structure of the Company during 1996 is not indicative of
the capital structure after the initial public offering, pro-forma net loss per
share calculations for the three months and nine months ended September 30,
1996 have been included. The pro-forma number of common and common equivalent
shares, as described in the audited consolidated financial statements of
Euronet N.V. for the year ended December 31, 1996 have been applied to the
three months and nine months ended September 30, 1996. Common stock
equivalents consist of shares issuable under the Company's stock option plans
using the treasury stock method.
Loss per share for the three month and nine month periods ended September
30, 1997 have been computed by dividing net loss by the weighted average number
of common shares outstanding after giving effect to dilutive stock options. The
weighted average number of common shares outstanding assumes that the shares
issued by the Company prior to the date of the initial public offering, being
March 7, 1997 have been outstanding for all periods prior to this date..
NOTE 5 -- INITIAL PUBLIC OFFERING OF COMMON STOCK
On March 7, 1997, the Company consummated an initial public offering of
6,095,000 shares of common stock at a price of $13.50 per share. Of the
6,095,000 shares sold, 3,833,650 shares were sold by the Company and 2,261,350
shares by certain selling shareholders. Net proceeds to the Company were
approximately $47.9 million after deduction of the underwriting discount and
other expenses of the offering.
<PAGE> 6
NOTE 6 -- SHAREHOLDERS' EQUITY
Effective March 5, 1997, the Company changed the stated par value of all
common and preferred shares of Euronet N.V. from $0.10 to $0.14. Euronet N.V.
then effected a seven-for-one stock split which became effective on March 5,
1997, thus reducing the par value of such shares to $0.02. This change in par
value was retroactively taken into account for common and preferred shares of
Euronet N.V. as at September 30, 1996. Subsequently, effective March 6, 1997,
the holders of all of the preferred shares of Euronet N.V. converted all of
such preferred shares into common shares of Euronet N.V.
The increase in par value from $0.01 to $0.02 and the seven-for-one stock
split have been given retroactive treatment to September 30, 1996.
Pursuant to an Exchange Agreement which became effective on March 6, 1997,
entered into between Euronet Services Inc. and the shareholders and option
holders of Euronet N.V., 10,296,076 shares of common stock in Euronet Services
Inc. were issued to the shareholders of Euronet N.V. in exchange for all the
common shares of Euronet N.V. In addition, options to acquire 3,113,355 shares
of common stock of Euronet Services Inc. were issued to the holders of options
to acquire 3,113,355 common shares of Euronet N.V. and awards with respect to
800,520 shares of common stock of Euronet Services Inc. were issued to the
holders of awards with respect to 800,520 preferred shares of Euronet N.V. in
exchange for all such awards.
On February 3, 1997, the Company signed a Subscription Agreement with
General Electric Capital Corporation ("GE Capital") under which GE Capital
purchased preferred stock of Euronet N.V. for an aggregate purchase price of $3
million. Pursuant to the "claw back" option of this agreement, on June 16,
1997, the Company repurchased 292,607 shares of Euronet Services Inc. at the
original par value.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL OVERVIEW
Euronet Services Inc. and its subsidiaries (collectively, "Euronet" or the
"Company") are operators of independent shared automatic teller machine (ATM)
networks and are service providers to banks and financial institutions.
Euronet serves a number of banks by providing ATMs that accept cards with
international logos such as VISA, American Express and Mastercard and
proprietary bank cards issued by member banks. The subsidiaries of Euronet
are: Euronet-Bank 24 Rt and SatComNet Kft (Hungary), Bankomat 24/Euronet Sp. z
o.o. (Poland), Euronet Holding N.V. (Netherland Antilles), Euronet Services
GmbH (Germany), EFT-Usluge d.o.o. (Croatia), and Euronet Services s.r.o. (Czech
Republic).
The Company was formed and established its first office in Budapest in
July 1994. In May 1995, the Company opened its second office in Warsaw. To
date, the Company has devoted substantially all of its resources to
establishing its ATM network through the acquisition and installation of ATMs
and computers and software for its processing center pursuant to capital leases
and through the marketing of its services to banks and international card
organizations in Hungary, Poland, Germany, Croatia and other regions in Central
Europe.
The Company installed its first ATM in Hungary in June 1995, and at the
end of 1996 the Company had 166 ATMs installed. An additional 337 ATMs were
installed during the first nine months of 1997 and at September 30, 1997 the
Company's ATM network consisted of 503 ATMs. Euronet's network consisted of
249 ATMs in Poland, 246 ATMs in Hungary and 8 ATMs in Germany at September 30,
<PAGE> 7
1997 compared to 82 in Hungary and 17 in Poland at September 30, 1996. The
Company's expansion of its network infrastructure and administrative and
marketing capabilities has resulted in increased expenditures. Further planned
expansion will continue to result in substantial increases in general operating
expenses as well as expenses related to the acquisition and installation of
ATMs.
The Company has derived substantially all of its revenues from ATM
transaction fees since inception. The Company receives a fee from the card
issuing banks or international card organizations for ATM transactions
processed on its ATMs. As the Company continues to focus on expanding its
network and installing additional ATMs, the Company expects that transaction
fees will continue to account for substantially all of its revenues for the
foreseeable future. The Company recently began to sell advertising on its
network by putting clients' advertisements on its ATMs and also began
generating revenues from ATM network management services that it offers to
banks that own proprietary ATM networks. Although revenues from these
additional sources have been insignificant to date, the Company believes that
they will increase.
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO THE QUARTER ENDED SEPTEMBER 30,
1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1996.
Revenues. Total revenues increased to $1.6 million for the quarter ended
September 30, 1997 from $0.4 million for the quarter ended September 30, 1996
and to $3.4 million for the nine months ended September 30, 1997 from $0.6
million for the nine months ended September 30, 1996. These increases were due
primarily to the significant increase in transaction fees resulting from both
the increased number of ATMs operated by the Company during the periods and the
greater number of credit and debit card holders who were able to use their
cards at Euronet's ATMs. Transaction fee revenue represented approximately
87% of total revenues for the quarter ended September 30, 1997 and 87% of total
revenues for the nine months ended September 30, 1997.
Operating expenses. Total operating expenses increased by $2.1 million to
$3.4 million for the quarter ended September 30, 1997 from $1.3 million for
the quarter ended September 30, 1996. For the nine months ended September 30,
1997, total operating expenses increased by $4.8 million to $8.1 million, from
$3.3 million for the nine months ended September 30, 1996. This increase was
due primarily to costs associated with the installation of significant numbers
of ATMs during the periods and expansion of the Company's operations during the
period in both existing markets of Poland and Hungary, as well as in Croatia,
Germany, and the Czech Republic.
ATM operating costs, which consists primarily of ATM site rentals,
depreciation, installation, maintenance, cash delivery and telecommunications,
increased $1 million to $1.4 million for the quarter ended September 30, 1997
from $410,000 for the quarter ended September 30, 1996. For the nine months
ended September 30, 1997 operating costs increased $2.2 million to $3.1 million
from $941,000 for the nine months ended September 30, 1996. The percentage of
ATM operating costs to total expenses for quarter ended September 30, 1997
increased to 41% as compared to 33% for the same period in 1996. For the nine
months ended September 30, 1997 the percentage of ATM operating costs to total
expenses was 38%, compared to 28% for the same period in 1996. The increase
in ATM operating costs was primarily attributable to costs associated with
operating an increased number of ATMs in Poland and Hungary during the period.
Other operating expenses, which includes salaries, professional fees and
other general and administrative expenses, increased $1.2 million to $2 million
in the quarter ended September 30, 1997 from $840,000 for the same period in
1996. For the nine months ended September 30, 1997 other operating expenses
increased $2.6 million to $5 million from $2.4 million for the same period in
1996.
<PAGE> 8
This increase was due primarily to the expansion of the Company's
operations during the period in current and new markets, including the increase
in the number of employees in the Company. In Poland the number of employees
increased from 18 at September 30, 1996 to 56 at September 30, 1997. In
Hungary, the number of employees increased from 36 to 64 during the same
period. Euronet also employs 13 individuals in Germany , Croatia and the
Czech republic who were not employed by the Company at September 30, 1996. The
percentage of other operating costs to total expenses for quarter ended
September 30, 1997 decreased to 59% as compared to 67% for the same period in
1996. For the nine months ended September 30, 1997 the percentage of other
operating costs to total expenses was 62%, compared to 72% for the same period
in 1996.
Other income/expense. Interest income increased $323,000 to $429,000 for
the quarter ended September 30, 1997 from $106,000 for the quarter ended
September 30, 1996. Interest income increased $974,000 to $1,151,000 for the
nine months ended September 30, 1997 from $177,000 for the nine months ended
September 30, 1996. The increase was due to larger amounts held in interest
bearing securities primarily as a result of investing the proceeds of the
public offering. See "--Liquidity and Capital Resources".
Interest expense, relating principally to capital leases of ATMs and the
Company's computer systems, increased $85,000 to $271,000 for the quarter
ended September 30, 1997 from $186,000 for the quarter ended September 30,
1996. Interest expense increased $279,000 to $520,000 for the nine months
ended September 30, 1997 from $241,000 for the nine months ended September 30,
1996. This increase was due primarily to the increase in capital lease
obligations for ATMs outstanding during the period.
Other financial gains, relating primarily to foreign exchange gains and
losses increased $96,000 to $147,000 for the quarter ended September 30, 1997
from $51,000 for the quarter ended September 30, 1997. Other net financial
costs for the nine months ended September 30, 1997 increased $34,000 to $76,000
from $42,000 for the same period to September 1996.
Net loss. The Company's net loss increased $614,000 to $1.5 million, or
$(0.09) per share, during the quarter ended September 30, 1997 from $907,000,
or $(0.07) per share, for the quarter ended September 30, 1996. For the nine
months ended September 30, 1997 the Company's net loss increased $1.4 million,
to $4 million or $(0.24) per share from $2.6 million or $(0.18) per share for
the nine months ended September 30, 1997. These movements in results are a
result of the factors previously discussed.
LIQUIDITY AND CAPITAL RESOURCES
On March 7, 1997, the Company consummated an initial public offering of
6,095,000 shares of common stock at the price of $13.50 per share. Of the
6,095,000 shares sold, 3,833,650 shares were sold by the Company and 2,261,350
shares by certain selling shareholders. Net proceeds to the Company were
approximately $47.9 million after deduction of the underwriting discount and
other expenses of the offering. The Company has been using, and intends to
continue using, the proceeds to cover expenditures relating to the expansion
and operation of its ATM network and the provision of ATM management services.
Since its inception, the Company has sustained negative cash flows from
operations and has financed its operations and capital expenditures primarily
through private placements of equity securities and through equipment lease
financing.
The Company had $45 million of working capital at September 30, 1997,
including $27.7 million of cash and cash equivalents and $17.5 million of
investment securities. Significantly all of the cash and cash equivalents and
investment securities resulted from the net proceeds from the offering. Cash
has been, and the Company contemplates that it will continue to be, invested in
interest bearing, investment grade securities pending use in the Company's
business.
The Company leases the majority of its ATMs under capital lease
arrangements. The lease arrangements expire between July 1999 and August 2002
and bear interest from 8% to 15%. The
<PAGE> 9
Company also leases a number of automobiles and computer equipment under
capital lease obligations. As of September 30, 1997 the Company owed
approximately $10.5 million under capital lease arrangements. The amount owed
by the Company under such lease agreements is expected to increase
significantly as the Company continues to lease increased numbers of ATMs in
pursuit of its business strategy.
The Company anticipates that its existing capital resources and
anticipated cash flow from planned operations, will be adequate to satisfy its
capital requirements, capital lease payment obligations and other requirements,
including possible acquisitions, until the Company begins to generate
sufficient cash flows to fund its current operations. There can be no
assurance, however, that the Company will achieve or sustain profitability or
generate significant revenues in the future. It is possible that the Company
may seek additional equity or debt financing in the future.
FORWARD LOOKING STATEMENTS
Statements in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and elsewhere in this quarterly report that are not
descriptions of historical fact may be forward looking statements that are
subject to risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors, including but not
limited to, the Company's dependence on the maintenance of its contracts with
banks and international card organizations, dependence on key personnel,
dependence on ATM transaction fees, competition, and political, economic and
legal risks in the markets in which the Company operates.
INFLATION
Since the fall of Communist rule, both Hungary and Poland have experienced
high levels of inflation and significant fluctuation in the exchange rate for
their currencies. Although revenues generally are received by the Company in
local currency, primarily Hungarian forints and Polish zlotys to date, the
Company's Card Acceptance Agreements and agreements relating to the provision
of ATM management services have generally provide for fees that are denominated
in U.S. dollars or inflation adjusted. Any deduction of foreign currencies in
excess of the local inflation rate will have an adverse effect on revenues.
A significant portion of the Company's expenditures, including costs associated
with the acquisition of ATMs and executive salaries, are made in or are
denominated in U.S. dollars. A substantial portion of the assets and
liabilities of the Company are also denominated in U.S. dollars, including
fixed assets, shareholders' equity and capital lease obligations. The Company
attempts to match local currency receivables and payables. Hence, the amount
of unmatched assets and liabilities giving rise to foreign exchange gains and
losses is relatively limited. To the extent the Company is able to continue to
receive inflation adjusted Card Acceptance Agreements, and is able to match
foreign currency denominated assets and liabilities, it does not believe that
inflation will have a significant effect on results of operations or financial
condition.
IMPACT OF NEW ACCOUNTING STANDARDS NOT YET ADOPTED
FINANCIAL ACCOUNTING STANDARD No. 128, "Earnings Per Share", was issued in
February 1997. This Statement simplifies the standards for computing earnings
per share previously found in APB Opinion No. 15, "Earnings Per Share", and
makes them more comparable to international EPS standards. Statement 128
replaces the presentation of primary EPS with a presentation of basic EPS. In
addition, the Statement requires dual presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation. This Statement is required to be adopted for the fiscal year
ending December 31, 1997. The Company has not yet assessed the impact of
Statement 128 on its financial statements.
<PAGE> 10
FINANCIAL ACCOUNTING STANDARD No. 130 Reporting Comprehensive Income, was
issued in June 1997 and establishes standards for the reporting and
presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income encompasses all changes in
shareholders' equity (except those arising from transactions with owners) and
includes net income, net unrealized capital gains or losses on available for
sale securities and foreign currency translation adjustments. FAS No. 130 is
effective for fiscal years beginning after December 15, 1997, with earlier
application permitted. As this new standard only requires additional
information in financial statements, it will not affect the Company's financial
position or results of operations.
FINANCIAL ACCOUNTING STANDARD No. 131 Disclosures about Segment of an
Enterprise and Related information, was issued in June 1997 and establishes
standards for the reporting of information relating to operating segments in
annual financial statements, as well as disclosure of selected information in
interim financial reports. This statement supersedes FAS No. 14, Financial
Reporting for Segments of a Business Enterprise, which requires reporting
segment information by industry and geographic area (industry approach). Under
FAS No. 131, operating segments are defined as components of a company for
which separate financial information is available and used by management to
allocate resources and assess performance (management approach). This statement
is effective for year-end 1998 financial statements. Interim financial
information will be required beginning in 1999 (with comparative 1998
information). The Company is currently evaluating the impact of FAS No. 131 on
the presentation of future financial statements.
REPORT OF SALES OF SECURITIES AND USE OF PROCEEDS THEREFROM
On March 7, 1997, the Company consummated an initial public offering of
6,095,000 shares of common stock, par value $0.02, at a price of $13.50 per
share. Of the 6,095,000 shares sold, 3,833,650 shares were sold by the Company
and 2,261,350 shares by certain selling shareholders. Net proceeds to the
Company were approximately $47.9 million after deduction of the underwriting
discount and other expenses of the offering. The consideration received and the
use of proceeds by the Company are set forth below.
<TABLE>
<S> <C>
CONSIDERATION
For the amount of the issuer:
Amount Registered 3,833,650
Aggregate price of offering amount registered $51,754,275
Amount Sold 3,833,650
Aggregate offering price of amount sold $51,754,275
For the accounts of any selling security holder
Amount Registered 2,261,350
Aggregate price of offering amount registered $30,528,225
Amount Sold 2,261,350
Aggregate offering price of amount sold $30,528,225
PROCEEDS ($000s)
Underwriting discounts and commissions 2,588
Expenses paid to or for Underwriters 1,000
Other expenses 310
Total expenses 3,898
Net Offering Proceeds 47,898
USE OF PROCEEDS:
Purchase and installation of machinery and equipment 1,221
Repayment of indebtedness 249
Working Capital 3,094
Temporary Investments:
Municipal bonds and Treasury bills less than three months. 22,078
Rating A or better Municipal bonds and Treasury Bills
greater than three months. Rating grade A or better
17,335
Other purposes:
ATM Network Capital expenditures 1,623
ATM Network Operational expenditures 2,257
</TABLE>
With the exception of $219,000 repayment of indebtedness to a company
director and officer, all payments above were made to independent third parties.
UNDERWRITERS AND OTHER PURCHASERS ING Barings
Amhold and S Bleichroeder
Nomura Securities International Inc.
<PAGE> 11
PART II.
OTHER INFORMATION
<TABLE>
<S> <C>
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
see: Report of Sales of Securities and Use of Proceeds Therefrom
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSIONS OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
</TABLE>
<PAGE> 12
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, thereunto duly authorized.
<TABLE>
<S> <C>
November 13, 1997 /s/ MICHAEL J. BROWN
By: ------------------------
Michael J. Brown
Chief Executive Officer
November 13, 1997 /s/ BRUCE S. COLWILL
By: ------------------------
Bruce S. Colwill
Chief Financial Officer
(Principal Financial and
Accounting Officer)
</TABLE>
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
Exhibit No. Description of Documents
- ----------- -------------------------------------------------
10.4 Amendment to The Euronet Long Term Incentive Plan
11 Earnings Per Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
ITEM 6 (A) -- EXHIBIT 10.4
AMENDMENTS TO EURONET LONG TERM INCENTIVE OPTION PLAN
The following amendments to the Euronet Long Term Incentive Stock Option Plan
(the "Plan") were adopted at a meeting of the Board of Directors of Euronet
Services Inc. that occurred on October 16, 1997:
1. Authority of Option Committee. Section 5.1(i) of the Plan is
amended to read as follows:
(i) option grants shall be approved in advance by the Board or by
the Option Committee acting on behalf of the Board.
2. Definitions of "Group" and "Owner". Section 2 of the Plan is
amended by the addition of a definitions of "Group of Persons" and
"Owner", as follows:
"Group of Persons" - a "group" as such term is defined in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder (the "Exchange Act").
"Owner" - shall mean a person or Group which owns shares, including a
beneficial owner as defined under the Exchange Act.
In Section 5.9(1)(i), the words "group" and "owner" are capitalized.
3. Governing Law. Section 8.7 is amended to read as follows:
"8.7 Governing Law. All matters relating to the Plan or to Awards
granted hereunder shall be governed by the laws of the State of
Delaware."
<PAGE> 1
EXHIBIT 11
COMPUTATION OF PRIMARY EARNINGS PER ORDINARY SHARE
AND ORDINARY SHARE EQUIVALENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<S> <C>
THREE MONTHS
ENDED
SEPTEMBER 30, 1997
------------------
(UNAUDITED)
Earnings per ordinary share and ordinary share equivalents
Primary
Weighted average ordinary shares outstanding.................... 14,942,461
Average ordinary share options outstanding
(net of repurchased shares under the treasury
stock method).................................................. 2,280,536
Weighted average number of ordinary shares and
ordinary share equivalents outstanding......................... 17,222,997
Net Loss........................................................ (1,521,000)
Primary loss per ordinary share and ordinary share equivalent... $(0.09)
======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 31,092
<SECURITIES> 17,498
<RECEIVABLES> 456
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 50,183
<PP&E> 15,966
<DEPRECIATION> 0
<TOTAL-ASSETS> 66,772
<CURRENT-LIABILITIES> 5,232
<BONDS> 8,189
<COMMON> 300
0
0
<OTHER-SE> 52,893
<TOTAL-LIABILITY-AND-EQUITY> 66,772
<SALES> 0
<TOTAL-REVENUES> 3,433
<CGS> 0
<TOTAL-COSTS> (8,080)
<OTHER-EXPENSES> 555
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,092)
<INCOME-TAX> 129
<INCOME-CONTINUING> (3,963)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,963)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> 0
</TABLE>
