Euronet's first quarter 2006 financial highlights included:

• Consolidated revenues of $147.0 million, compared to $117.2 million for the first quarter 2005.
• Adjusted EBITDA of $21.0 million, compared to $16.8 million for the first quarter 2005.
• Operating income of $12.3 million, compared to $10.5 million for the first quarter 2005.
• Net income of $9.4 million, or $0.24 diluted earnings per share, compared to net income for the first quarter 2005 of $3.6 million, or $0.10 per share.
• In accordance with Statement of Financial Accounting Standards No. 123R (SFAS 123R), which the Company retroactively adopted on January 1, 2006, share-based compensation expense was $1.9 million, compared to $1.3 million for the first quarter 2005.
• The first quarter 2006 net income included a foreign exchange gain of $1.6 million. Excluding this gain and the share-based compensation expense noted above, diluted earnings per share were $0.25, or $10.5 million, for the first quarter 2006. The first quarter 2005 net income included a foreign exchange loss of $2.8 million; excluding this loss and the share-based compensation expense noted above, diluted earnings per share were $0.21, or $7.8 million.

Segment Results and Other

The EFT Processing Segment reported the following results:

• First quarter 2006 revenues of $29.9 million, compared to $23.9 million for the first quarter 2005.
• First quarter 2006 Adjusted EBITDA of $10.4 million, compared to $8.1 million for the first quarter 2005.
• First quarter 2006 operating income of $7.4 million, compared to $5.6 million for the first quarter 2005.
• Transactions processed in the first quarter 2006 were 103.1 million, compared to 77.3 million transactions in the same period last year.

The year-over-year increases in revenue, operating income and Adjusted EBITDA were primarily attributable to a 23% increase in ATMs under management and the inclusion of Euronet Card Services Greece (formerly Instreamline), which was acquired in the fourth quarter 2005, and the inclusion of the Serbian business, where on December 31, 2005, the Company increased its ownership from a less than wholly owned to a wholly owned position.

The EFT Segment completed the quarter with 7,613 ATMs owned or operated, including 50 ATMs Euronet installed in China - its newest market, compared to 6,201 ATMs at the end of the first quarter 2005. Euronet owns and/or operates ATMs in Hungary, Poland, Germany, Croatia, the Czech Republic, U.K., Greece, Romania, Slovakia, Albania, Serbia & Montenegro, India and China.

The Prepaid Processing Segment reported the following results:

• First quarter 2006 revenues of $111.0 million, compared to the $89.4 million reported for the first quarter 2005.
• First quarter 2006 Adjusted EBITDA of $12.3 million, compared to $10.1 million reported in the first quarter 2005.
• First quarter 2006 operating income of $9.0 million, compared to $7.8 million for the first quarter 2005.
• Transactions processed in the first quarter 2006 were 96.4 million, compared to 67.2 million transactions in the first quarter 2005.

The Segment's first quarter's year-over-year transactions and revenue improvements were the result of a continuation of transaction growth together with benefits of acquisitions completed during and after the first quarter 2005. The improvements in quarterly Adjusted EBITDA and operating income were generally correlated to the increases in revenues after considering the inclusion in the first quarter 2006 of approximately $0.6 million in net operating losses of the money transfer and bill payment business.

The Prepaid Processing Segment processes electronic point-of-sale prepaid transactions at more than 242,000 point-of-sale terminals across more than 134,000 retailer locations in Europe, Asia Pacific, Africa and the U.S. As previously announced, the Company intends to expand its Prepaid Processing Segment both domestically and internationally through internal sales and promotional efforts as well as, if appropriate, acquisitions.

The Software Solutions Segment reported the following results:

• First quarter 2006 revenues of $6.1 million, compared to the $3.9 million reported for the first quarter 2005.
• First quarter 2006 Adjusted EBITDA of $0.8 million, compared to the $1.2 million reported for the first quarter 2005.
• First quarter 2006 operating income of $0.4 million, compared to the $0.9 million reported for the first quarter 2005.

The change in results year-over-year was primarily due to the acquisition of Essentis in early January 2006.

Corporate and Other had $4.4 million of operating expenses for the first quarter 2006, compared to $3.8 million in the first quarter 2005. Share-based compensation expense, as required by the adoption of SFAS 123R, was included in Corporate and Other and amounted to $1.9 million for the first quarter of 2006, compared to $1.3 million in the first quarter 2005. All other expenses were $2.5 million for first quarter 2006, compared to $2.5 million in the first quarter 2005. The quarter-over-quarter increase in share-based compensation is due to awards to employees of companies acquired during and since the first quarter of 2005 and the required use of more accelerated expensing for performance-based awards.

Combining all segments, transactions processed in the first quarter 2006 were 199.5 million compared to 144.5 million processed in the first quarter 2005, a 38% increase. These increases were primarily due to the full year impact of the EFT Processing Segment's implementation of ATM outsourcing agreements, continued growth and acquisitions.

The Company's unrestricted cash on hand was $223.7 million as of March 31, 2006, as compared to $219.9 million at December 31, 2005. Euronet's total indebtedness was $355.2 million as of March 31, 2006, compared to $355.6 million at December 31, 2005.

The Company commenced accounting for share-based compensation in accordance with Statement of Financial Accounting Standards No. 123R ("SFAS 123R") on January 1, 2006. The Company adopted the "modified retrospective application" method and, accordingly, all prior periods have been restated.

Euronet also announced that it expects earnings per share for the second quarter 2006 to be approximately $0.26, excluding the effects of foreign exchange gains or losses, discontinued operations, share-based compensation charges, and/or other non-operating or unusual items that cannot be accurately projected.

In December 2004 and October 2005, the Company issued $140 million and $175 million, respectively, in convertible debentures. These debentures are potentially convertible into approximately 4.2 million and 4.3 million shares, respectively, of the Company's common stock, subject to adjustment. As required by EITF 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings per Share," regardless of whether the conditions upon which the debentures would be convertible into shares of the Company's common stock have been met, if dilutive, the impact of the contingently issuable shares is included in the calculation of diluted earnings per share under the "if converted" method. As in the fourth quarter 2005, the assumed conversion of the 1.625% 2004 debentures was dilutive for the first quarter 2006 and the assumed conversion of the October 2005 debentures was not dilutive. Accordingly, for the first quarter 2006, 4.2 million contingently issuable shares have been assumed to be outstanding for the period and $0.8 million in related interest charges and amortization of debt issuance costs have been excluded from income available to common shareholders to determine diluted earnings per share. The Company expects the 1.625% 2004 debentures to continue to be dilutive in future periods; the impact of the 3.50% 2005 debentures on future earnings per share may be dilutive if earnings per share continue to increase.Download the document now 42.5 kb (Adobe Acrobat Document)