SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ~~SECURITIES EXCHANGE ACT OF 1934~~

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2002~~March 31, 2003

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ~~SECURITIES EXCHANGE ACT OF 1934~~

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)

(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 NONo ¨

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:

ITEM 1. FINANCIAL STATEMENTS

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except for share and per share data)

(Unaudited)

	As of
	March 31, 2003			December 31, 2002
ASSETS
Current assets:
Cash and cash equivalents	$	13,930		$	12,021
Restricted cash and cash held on behalf of others		38,048			4,401
Trade accounts receivable, net of allowances for doubtful accounts of $1,073 at March 31, 2003 and $484 at December 31, 2002		36,184			8,380
Earnings in excess of billings on software installation contracts		763			334
Deferred income taxes		1,479			426
Assets held for sale		—			10,326
Prepaid expenses and other current assets		7,000			3,537

Total current assets		97,404			39,425
Property, plant and equipment, net		21,260			21,394
Intangible assets, net		80,128			1,834
Deferred income taxes		209			1,064
Other assets, net		2,992			2,842

Total assets	$	201,993		$	66,559

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	50,574		$	2,989
Current installments of obligations under capital leases		2,888			3,447
Accrued expenses and other current liabilities		27,004			4,979
Short-term borrowings		502			380
Advance payments on contracts		3,033			2,966
Accrued interest on notes payable		1,372			—
Liabilities held for sale		—			3,537
Billings in excess of earnings on software installation contracts		1,787			1,471

Total current liabilities		87,160			19,769
Obligations under capital leases, excluding current installments		3,469			4,301
Notes payable		64,016			36,318
Other long term liabilities		7,204			—

Total liabilities		161,849			60,388

Stockholders’ equity:
Common stock, $0.02 par value. Authorized 60,000,000 shares; issued and outstanding 26,518,966 shares at March 31, 2003 and 23,883,072 shares at December 31, 2002		532			480
Additional paid in capital		155,956			137,426
Treasury stock		(145	)		(145	)
Employee loans for stock		(427	)		(427	)
Subscription receivable		(35	)		42
Accumulated deficit		(114,234	)		(129,655	)
Restricted reserve		784			784
Accumulated other comprehensive loss		(2,287	)		(2,334	)

Total stockholders’ equity		40,144			6,171

Total liabilities and stockholders’ equity	$	201,993		$	66,559

See accompanying notes to unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands of U.S. dollars, except share and per share data)

September 30, 2002

December 31, 2001

ASSETS

Current assets:
Cash and cash equivalents    $ 15,338    $ 8,818
Restricted cash    3,872    1,877
Trade accounts receivable, net of allowances for doubtful accounts of $647 at September 30, 2002 and $675 at December 31, 2001    7,739    8,908
Earnings in excess of billings on software installation contracts    264    331
Assets from discontinued operations    —      1,273
Prepaid expenses and other current assets    4,598    5,799


Total current assets    31,811    27,006
Property, plant and equipment, net    30,074    29,086
Intangible assets, net    1,718    1,551
Deposits    41    41
Deferred income taxes    467    429
Other assets, net    3,046    3,278


Total assets    $ 67,157    $ 61,391


LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)

Current liabilities:
Trade accounts payable    $ 4,337    $ 4,762
Current installments of obligations under capital leases    5,001    4,627
Accrued expenses and other current liabilities    5,955    7,366
Short-term borrowings    —      513
Advance payments on contracts    2,149    2,266
Accrued interest on notes payable    1,059    —
Income taxes payable    26    90
Liabilities from discontinued operations    —      498
Billings in excess of earnings on software installation contracts    1,769    1,457
Credit facility    —      2,000


Total current liabilities    20,296    23,579
Obligations under capital leases, excluding current installments    5,339    7,353
Notes payable    33,980    38,146
Other long term liabilities    172    —


Total liabilities    59,787    69,078


Stockholders’ equity/(deficit):
Common stock, $0.02 par value. Authorized 60,000,000 shares; issued and outstanding 23,636,104 shares at September 30, 2002 and 22,038,073 at December 31, 2001    473    441
Additional paid in capital    136,345    117,940
Treasury stock    (145 )    (145 )
Employee loans for stock    (446 )    (463 )
Subscription receivable    61    —
Accumulated deficit    (126,809 )    (123,141 )
Restricted reserve    784    784
Accumulated other comprehensive loss    (2,893 )    (3,103 )


Total stockholders’ equity/(deficit)    7,370    (7,687 )


Total liabilities and stockholders’ equity/(deficit)    $ 67,157    $ 61,391

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)~~CASH FLOWS

(In thousands of U.S. ~~dollars, except share and per share data)~~dollars)

Nine Months Ended
September 30,

Three Months Ended
September 30,


2002

2001

2002

2001

Revenues:
ATM network and related revenue    $ 38,839    $ 32,297    $ 13,753    $ 11,181
Software, maintenance and related revenue    13,615    11,837    4,136    3,712




Total revenues    52,454    44,134    17,889    14,893




Operating expenses:
Direct operating costs    21,597    19,931    7,848    6,862
Salaries and benefits    18,608    18,753    6,368    5,681
Selling, general and administrative    4,835    5,250    1,769    1,269
Depreciation and amortization    6,930    6,297    2,519    2,164




Total operating expenses    51,970    50,231    18,504    15,976




Operating income/(loss)    484    (6,097 )    (615 )    (1,083 )




Other (expense)/income:
Interest income    227    214    63    70
Interest expense    (4,807 )    (7,052 )    (1,446 )    (2,041 )
Loss on facility sublease    (249 )    —      (249 )    —
Equity in losses from investee companies    (159 )    —      (159 )    —
(Loss)/gain on early retirement of debt    (955 )    9,682    (791 )    1,053
Foreign exchange (loss)/gain, net    (3,179 )    3,878    222    (3,757 )




Total other (expense)/income    (9,122 )    6,722    (2,360 )    (4,675 )




(Loss)/income from continuing operations before income taxes and minority interest    (8,638 )    625    (2,975 )    (5,758 )
Income tax benefit    1,852    845    449    154




(Loss)/income from continuing operations before minority interest    (6,786 )    1,470    (2,526 )    (5,604 )
Minority interest    77    —      30    —
Discontinued operations:
Income/(loss) from operations of discontinued US and France components (including gain on disposal of $4,726 for the nine months ended September 30, 2002 and nil for the three months ended September 30, 2002)    4,976    (225 )    (12 )    321
Income tax expense    (1,935 )    —      —      (125 )




Income/(loss) from discontinued operations    3,041    (225 )    (12 )    196




Net (loss)/income    (3,668 )    1,245    (2,508 )    (5,408 )
Translation adjustment    210    (209 )    (220 )    (3 )




Comprehensive (loss)/income    $ (3,458 )    $ 1,036    $ (2,728 )    $ (5,411 )




(Loss)/earnings per share—basic
(Loss)/income from continuing operations before minority   interest per share    $ (0.29 )    $ 0.08    $ (0.11 )    $ (0.27 )
Income/(loss) from discontinued operations per share    0.13    (0.01 )    —      0.01




Net (loss)/income per share    $ (0.16 )    $ 0.07    $ (0.11 )    $ (0.26 )
Basic weighted average number of shares outstanding    22,982,394    18,553,471    23,394,036    20,426,648




(Loss)/earnings per share—diluted
Diluted (loss)/income from continuing operations before minority interest per share    $ (0.29 )    $ 0.07    $ (0.11 )    $ (0.27 )
Diluted income/(loss) from discontinued operations per share    0.13    (0.01 )    —      0.01




Diluted net (loss)/income per share    $ (0.16 )    $ 0.06    $ (0.11 )    $ (0.26 )
Diluted weighted average number of shares outstanding    22,982,394    19,860,882    23,394,036    20,426,648

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(In thousands of U.S. dollars)~~

Nine Months Ended


September 30, 2002

September 30, 2001

Cash flows from operating activities:
Net (loss)/income    $ (3,668 )    $ 1,245
Adjustments to reconcile net (loss)/income to net cash provided by/(used in) operating activities:
Depreciation and amortization    6,930    6,550
Unrealized foreign exchange loss/(gain), net    4,477    (1,868 )
Accretion of discount on notes    2,482    5,465
Decrease in costs and estimated earnings in excess of billings on software installation contracts    67    —
Loss on facility sub-lease    219    —
Equity in losses from investee companies    159    —
Gain on sale of discontinued operations, net of tax    (2,988 )    —
Benefit from deferred income tax    (1,857 )    —
Loss/(gain) on early retirements of debt    955    (9,680 )
(Income)/loss from discontinued operations, net of tax    (250 )    225
Decrease in restricted cash    —      203
Decrease in trade accounts receivable    1,185    1,280
Increase in tax receivable    (184 )    (909 )
Decrease/(increase) in prepaid expenses and other current assets    1,228    (1,782 )
(Decrease)/increase in trade accounts payable    (424 )    6
Increase/(decrease) in billings in excess of costs and estimated earnings on software installation contracts, net    312    (893 )
Decrease in accrued expenses and other liabilities    (411 )    (606 )
Decrease in advance payments on contracts    (117 )    —
Other    415    673


Net cash provided by/(used in) operating activities    8,530    (91 )


Cash flows from investing activities:
Fixed asset purchases    (5,560 )    (2,272 )
Purchase of restricted certificate of deposit    (1,995 )    —
Purchase of intangibles and other long-term assets    (807 )    —
Proceeds from sale of fixed assets    546    492


Net cash used in investing activities    (7,816 )    (1,780 )


Cash flows from financing activities:
Proceeds from issuance of shares and other capital contributions    16,830    662
Repayments of credit facility    (2,000 )    —
Repayments of obligations under capital leases    (4,151 )    (3,018 )
(Repayments of)/proceeds from other borrowings    (10,923 )    2,417
Other    78    157


Net cash provided by financing activities    (166 )    218


Effects of exchange rate differences on cash    (150 )    31
Proceeds from sale of discontinued operations    5,872    —
Cash provided by/(used in) discontinued operations    250    (225 )


Net increase/(decrease) in cash and cash equivalents    6,520    (1,847 )
Cash and cash equivalents at beginning of period    8,818    7,151


Cash and cash equivalents at end of period    $ 15,338    $ 5,304

~~EURONET WORLDWIDE, INC. AND SUBSIDIARIES~~

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE ~~1- ORGANIZATION~~1—GENERAL

~~Euronet Worldwide, Inc. (“Euronet” or the “Company”) has recently acquired ownership in the following companies:~~

~~Asia Electronic Financial Transaction Holdings Limited (“AEFT”), incorporated in Hong Kong, S.A.R.~~

Basis of the People’s Republic of China of which 50% of the shares are owned by our wholly owned subsidiary EFT Services Holdings BV and 50% of the shares are owned by First Mobile Group Holding (“FMG”). Subsequent to the acquisition of its ownership interest in the first quarter of 2002, Euronet determined the business opportunities insufficient to support the required investment. We have no investment or continuing financial or operational obligations related to AEFT or FMG.

Europlanet a.d. (“Europlanet”), incorporated in the Federal Republic of Serbia, of which 36% of the shares are owned by our wholly owned subsidiary EFT Services Holdings BV, 34% by Komercijalna Banka and 30% by Arius a.d. Europlanet was formed on March 25, 2002, with a cash investment and contributions of licensed software by Komercijalna Banka; contributions of software, hardware, lease rights and certain contract rights by Arius a.d.; and contributions of certain software by the Company. During the first twelve months of operation of Europlanet, Komercijalna Banka is committed to contribute an additional $240,000 in monthly installments to cover cash flow requirements of Europlanet. Europlanet was formed to own and/or operate and manage ATM machines and point-of-sale terminals both for themselves and their customer banks. The Company accounts for Europlanet using the equity method of accounting.

~~NOTE 2 - FINANCIAL POSITION AND BASIS OF PRESENTATION~~Presentation

The accompanying unaudited consolidated financial statements of Euronet and subsidiaries have been prepared from the records of the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, such unaudited consolidated financial statements include all adjustments (consisting only of normal, recurring accruals) necessary to present fairly the financial position of the Company at ~~September 30, 2002,~~March 31, 2003, the results of its operations for the three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2003 and 2002, ~~and 2001,~~ and cash flows for the ~~nine-month~~three-month periods ended ~~September 30, 2002~~March 31, 2003 and ~~2001.~~

2002.

The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Euronet Worldwide, Inc. and subsidiaries for the year ended December 31, ~~2001,~~2002, including the notes thereto, set forth in the Company’s Form 10-K.

The results of operations for the three-month ~~and nine-month periods~~period ended ~~September 30, 2002~~March 31, 2003 are not necessarily indicative of the results to be expected for the full year.

NOTE ~~3 -~~ 2—SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS

For a description of the accounting policies of the Company, see Note 3 to the audited consolidated financial statements for the year ended December 31, ~~2001.~~

~~On January 1,~~ 2002 ~~we adopted Statement of~~set forth in the Company’s Form 10-K.

SFAS 143

In June 2001, Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142). Under SFAS 142 goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives.

The amortization and non-amortization provisions of SFAS 142 apply upon issuance to all goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, we adopted SFAS 142 effective January 1, 2002. In accordance with SFAS 142, we have performed an evaluation and determined that all intangible assets recorded in our consolidated financial statements comprise only goodwill. We have completed the impairment tests required by SFAS 142 and determined that there is no impairment of goodwill. The goodwill is reported in the Processing Services Segment and in the Germany reporting unit.

The application of the provisions of SFAS 142 resulted in a reduction of goodwill amortization expense of $0.3 million for the nine months ended and $0.1 million for the three months ended September 30, 2002, as compared to the same periods in the previous year. At September 30, 2002, the Company had goodwill, net of accumulated amortization, of $1.7 million.

~~On January 1, 2002, we adopted~~Board (FASB) issued Statement of Financial Accounting Standards No. 143, ~~Accounting~~“Accounting for Asset Retirement ~~Obligations~~Obligations” (SFAS 143). The Company adopted SFAS 143 on January 1, 2003. The adoption of SFAS 143 ~~had no~~did not have a material impact toon the Company’s financial ~~statements.~~

~~On January 1, 2002, we adopted Statement~~position or result of ~~Financial Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144).~~ operations.

SFAS 144 establishes accounting and reporting standards for the impairment and disposal of long-lived assets and discontinued operations. The application of this statement resulted in the classification and separate financial statement presentation of certain entities as discontinued operations, which are not included in continuing operations.

~~On January 4,~~146

In June 2002, the Company sold substantially all of the assets of the United States ATM processing business to ALLTEL Information Services, Inc. (“AIS”) in an asset purchase agreement. The United States processing business was owned by the Company’s subsidiary EFT Network Services, LLC and was commonly known as “DASH” or the “DASH network.” DASH was accounted for as a discontinued operation in accordance with SFAS 144 and, accordingly, amounts in the financial statements and related notes for all periods shown reflect discontinued operations accounting. Related assets and liabilities have been removed from continuing operations and classified under discontinued operations. (See Note 9—Discontinued Operations to the unaudited consolidated financial statements.)

On July 15, 2002, the Company sold substantially all of the non-current assets and capital lease obligations of its processing business in France to Atos Origin Services S.A.S. (“Atos”) for 1 euro plus reimbursement of certain operating expenses. France was accounted for as a discontinued operation in accordance with SFAS 144 and, accordingly, amounts in the financial statements and related notes for all periods shown reflect discontinued operations accounting. Non-current assets and capital lease obligations related to the France business have been removed from continuing operations and classified under discontinued operations. (See Note 9—Discontinued Operation to the unaudited consolidated financial statements.)

~~On April 1, 2002, we adopted~~FASB issued Statement of Financial Accounting Standards No. ~~145, Rescission~~146, “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS 146). The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. This statement addresses the timing and amount of costs recognized as a result of restructuring and similar activities. The Company will apply SFAS 146 prospectively to activities initiated after December 31, 2002. The adoption of SFAS 146 did not have a material impact on the Company’s financial position or result of operations.

FIN 45

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others—an Interpretation of FASB Statements No. ~~4, 44,~~5, 57, and ~~64, Amendment~~107 and a Rescission of FASB ~~Statement~~Interpretation No. ~~13,~~34” (FIN 45). FIN 45 clarifies and ~~Technical Corrections (SFAS 145).~~expands on existing disclosure requirements for guarantees, including loan guarantees. It also requires that, at the inception of a guarantee, the Company must recognize a liability for the fair value of its obligation under that guarantee. The ~~Statement covers~~disclosure requirements are effective for financial statements of periods ending after December 15, 2002. The initial fair value recognition and measurement provisions will be applied on a ~~variety~~prospective basis to certain guarantees issued or modified after December 31, 2002. The Company adopted the disclosure requirements of ~~technical issues that will~~FIN 45 as of March 31, 2003 and evaluated the adoption of the remainder of FIN 45. The adoption of FIN 45 did not have ana material impact on our financial ~~statements except~~position or result of operations.

FIN 46

In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, “Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51” (FIN 46). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the ~~rescission of SFAS 4, Reporting Gains and Losses~~entity to finance its activities without additional subordinated financial support from the Extinguishment of Debt. SFAS 4 required all gains and losses from early retirement of debt to be aggregated and classified as an extraordinary item, net of related income tax effect. Under SFAS 145, gains and losses from early retirement of debt should not be classified as extraordinary unless the early retirement meets the relevant criteria of APB Opinion 30 (Opinion 30) and such instances are expected to be rare. The rescission of SFAS 4other parties. FIN 46 is effective immediately for ~~fiscal years beginning~~variable interest entities created or acquired after ~~May 15, 2002 with early~~January 31, 2003. The adoption ~~encouraged. In accordance with SFAS 145, we~~of FIN 46 did not have ~~classified gains~~a material impact on our financial position and ~~losses from early retirement~~results of ~~debt as other income for current and prior periods in lieu of classification as an extraordinary item as previously required.~~

operations.

There have been no further significant additions to or changes in the accounting policies of the Company since December 31, ~~2001.~~

NOTE ~~4 -~~ 3—EARNINGS/(LOSS) PER ~~SHARE -~~ SHARE—BASIC AND DILUTED

Basic earnings per share has been computed by dividing net income/(loss) by the weighted average number of common shares outstanding. For the three-month and nine-month periods ended September 30, 2002 and the three-month period ended September 30, 2001, the effect of potential common stock is antidilutive because a net loss exists, accordingly dilutive earnings per share does not assume the exercise of outstanding stock options and warrants. For the nine-month period ended September 30, 2001, dilutiveDilutive earnings per share reflects the potential dilution that could occur if dilutive stock options and warrants were exercised using the treasury stock method, where applicable.

~~Weighted~~ The following table provided a reconciliation for weighted average number of common shares outstanding to the fully diluted weighted average number of common shares outstanding:

	As of March 31,
	2003	2002
Weighted average common shares outstanding	25,215,308	22,476,888
Dilutive effect of:
Convertible warrants	89,802	294,357
Stock options	1,631,880	3,374,488

Weighted average common shares outstanding, assuming dilution	26,936,990	26,145,733

NOTE 4—BUSINESS COMBINATION

In accordance with Statement of Financial Accounting No. 141, “Business Combinations” (SFAS 141), the Company allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The fair value assigned to intangible assets acquired is based on valuations prepared by an independent third party appraisal firms using estimates and assumptions provided by management. The intangible assets recorded as a result of this acquisition are not expected to be deductible for tax purposes. In accordance with the Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142), goodwill and intangible assets with indefinite lives resulting from business combinations will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). In the event that the Company determines that the value of goodwill or intangible assets with indefinite lives has become impaired, the Company will incur an accounting charge for be amount of impairment during the fiscal quarter in which the determination is made.

Purchase of e-pay

In February 2003, the Company purchased 100% of the shares of e-pay Limited (“e-pay”), a company based in the U.K. e-pay is an electronic payments processor of prepaid mobile phone airtime “top-up” services in the U.K. and Australia. It has agreements with mobile operators in those markets under which it supports the distribution of prepaid airtime to their subscribers through point-of-sale (POS) terminals in retail outlets. e-pay currently processes top-up sales at more than 50,000 points of sale in approximately 18,000 retail locations, including the ~~potentially dilutive effect~~mobile operators’ own retail outlets, major retail chains and independent retail outlets. In addition to the U.K. and Australia operations, e-pay owns 40% of ~~stock options~~the shares of ~~1,591,616~~e-pay Malaysia, a separate company that offers electronic top-up services through approximately 2,600 POS terminals in Malaysia.

In connection with the acquisition, Euronet also agreed to increase the size of its Board of Directors by one member and ~~warrants~~nominate and recommend for election as a Class III director at Euronet’s next annual meeting of ~~423,318~~stockholders the director candidate designated by a committee representing the former shareholders of e-pay.

The assets acquired include tangible long-term assets, such as computer equipment and other fixed assets, working capital and intangible assets, such as customer relationships computer software, trademarks and trade names and goodwill. A substantial amount of the purchase price was allocated to intangible assets including goodwill.

Purchase Price

The purchase price for the e-pay shares was approximately $76.2 million, including transaction costs and fees of approximately $1.4 million. Of the total purchase price, $30.0 million was paid in cash at closing, $18.0 million was paid through issuance at closing of 2,497,504 shares of Common Stock, and the remaining $26.9 million will be paid in deferred purchase price or under promissory notes executed at closing with 24 month maturity dates bearing interest rates ranging from 6% to 8%. The deferred portion of the purchase price, approximately $8.5 million, is payable based upon e-pay’s Excess Cash Flow, as defined in the acquisition agreement, with any remaining unpaid balance due in 24 months. Approximately $7.4 million of the notes (the “Convertible Notes”) are convertible into Common Stock at the option of the holders at a conversion price of $11.43 per share, or approximately 647,282 shares. The Convertible Notes may be redeemed by Euronet, in whole but not in part, under certain conditions, including if the average market price of the Common Stock over a thirty consecutive trading day period exceeds $15.72, for Common Stock at a redemption price of $11.43 per share. The conversion price and the redemption price are subject to customary anti-dilution provisions. The remaining $11.0 million of promissory notes are not convertible.

The following table summarizes the total cost of the acquisition of e-pay (unaudited, in thousands):

Cash paid at closing	$	29,996
Euronet common stock: 2,497,504 shares		17,972
Deferred consideration, payable quarterly from 90% of free cash flow, 6% interest per annum accruing daily, 24 month maturity		8,533
Notes payable, 7% interest per annum, convertible into 647,282 shares of Euronet common stock, 24 month maturity		7,353
Notes payable, 8% interest per annum, 24 month maturity		10,981

Total paid to shareholders		74,835
Transaction costs and share registration fees		1,358

Total purchase price	$	76,193

Assets Acquired

Under the purchase method of accounting, the total purchase price was allocated to acquired tangible and intangible assets based on a preliminary estimate of their fair values as determined by management and a third-party appraisal at the completion of the acquisition. The purchase price was allocated as follows (unaudited, in thousands):

Customer relationships	$	12,820
Software		1,038
Trademark and trade name		3,433
Goodwill		61,249

Total intangible assets		78,540
Net tangible assets and working capital		1,810
Deferred tax liability		(4,157	)

Total purchase price	$	76,193

Of the total purchase price, $1.8 million has been allocated to net tangible assets and working capital acquired and approximately $13.9 million has been allocated to amortizable intangible assets acquired. The amortizable intangible assets acquired will be amortized over their estimated useful lives, which range from 5 to 8 years.

Of the total estimated purchase price, approximately $64.7 million has been allocated to goodwill and other intangibles with indefinite lives. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets.

In accordance with SFAS 142, goodwill and intangible assets with indefinite lives resulting from business combinations completed subsequent to December 31, 2001, will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). In the event that the management of the combined company determines that the value of goodwill or intangible assets with indefinite lives has become impaired, the combined company will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made.

Pro forma results

The following unaudited pro forma financial information presents the combined results of operations of Euronet and e-pay as if the acquisition had occurred as of the beginning of the periods presented. Adjustments have been made to the combined results of operations for the periods reflecting amortization of purchased intangibles and interest expense, net of tax, as if the acquisition had occurred at the beginning of the periods presented. The unaudited pro forma financial information is not intended to represent or be indicative of the consolidated results of operations or financial condition of Euronet that would have ~~amounted~~been reported had the acquisition been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial condition of Euronet.

The following schedule presents the pro forma combined results of operations of Euronet and e-pay as if the acquisition had occurred on January 1, 2003 (unaudited, in thousands):

	For the three months ended March 31, 2003
	As reported		e-pay’s January results		Pro forma
Revenues	$	33,100	$	9,400	$	42,500
Income from continuing operations		15,421		828		16,249
Net income		15,421		828		16,249
Income per share—basic
Income from continuing operations	$	0.61			$	0.64
Net income	$	0.61			$	0.64
Income per share—diluted
Income from continuing operations	$	0.57			$	0.60
Net income	$	0.57			$	0.60

The following schedule presents the pro forma combined results of operations of Euronet and e-pay as if the acquisition had occurred on January 1, 2002 (unaudited, in thousands):

	For the three months ended March 31, 2002
	As reported		e-pay’s results			Pro forma
Revenues	$	17,040	$	7,314		$	24,354
Income from continuing operations		675		(392	)		283
Net income		3,580		(392	)		3,188
Income per share—basic
Income from continuing operations	$	0.03				$	0.01
Net income	$	0.16				$	0.13
Income per share—diluted
Income from continuing operations	$	0.03				$	0.01
Net income	$	0.14				$	0.11

NOTE 5—SALE OF SUBSIDIARY

Sale of U.K. ATM Network

In January 2003, the Company sold 100% of the shares in its United Kingdom subsidiary, Euronet Services (UK) Ltd. (or “Euronet UK”) to ~~22,441,581~~Bridgepoint Capital Limited (or “Bridgepoint”). This transaction was effected through a Share Purchase Agreement (the “Acquisition Agreement”) whereby EFT Services Holding B.V. (“Euronet Holding”), a Netherlands corporation and a wholly owned subsidiary of Euronet, sold all of its shares of Euronet UK to Bank Machine (Acquisitions) Limited (“BMAL”), a United Kingdom company owned by Bridgepoint, for approximately $29.4 million (or £18.2 million) in cash, subject to certain working capital adjustments. Of this amount, $1.0 million (£0.6 million) was placed in escrow or otherwise retained subject to the completion and settlement of certain post-closing matters and adjustments, with the remainder paid in cash at closing. The Acquisition Agreement provides that the benefits and burdens of ownership of the shares and all employees of Euronet UK were transferred to Bridgepoint effective as of January 1, 2003. Euronet Worldwide, Euronet Holding and BMAL are parties to the Acquisition Agreement. The Acquisition Agreement includes certain representations, warranties and indemnification obligations of Euronet concerning Euronet UK, which are customary in transactions of this nature in the United Kingdom, including a “Tax Deed” providing for the ~~three months ended September 30, 2001. Weighted average shares including~~indemnification of Bridgepoint by Euronet against tax liabilities of Euronet UK that relate to the ~~potentially dilutive effect~~periods prior to January 1, 2003, but arise after the sale.

Simultaneous with this transaction, Euronet and Bank Machine Limited (which is the new name of ~~stock options~~Euronet UK following the acquisition) signed an ATM and Gateway Services Agreement (the “Services Agreement”) under

which Euronet’s Hungarian subsidiary, Euronet Adminisztracios Kft. (“Euronet Hungary”) will provide ATM operating, monitoring, and transaction processing services (“ATM Services”) to Bank Machine Limited through December 31, 2007. The services provided by Euronet Hungary are substantially identical to the services provided to Euronet UK prior to its sale to Bridgepoint.

Management has allocated $4.5 million of ~~1,928,199~~the total sale proceeds of $29.4 million to the Services Agreement. This amount will be accrued to revenues on a straight-line basis over the five-year contract term beginning January 1, 2003. This allocation was made with reference to the agreed recurring fees under the Services Agreement and ~~warrants~~the estimated fair market value on a per ATM basis of ~~125,686 would have amounted~~the services to ~~25,447,921~~be provided under the Services Agreement.

The results of operations of Euronet UK continue to be included in continuing operations due to the ongoing revenues generated under the Services Agreement.

Gain on Sale

The following table summarizes the gain on the sale of Euronet UK (unaudited, in thousands):

Sale price of Euronet UK	$	29,423
Less: Portion of sale price attributed to value of ATM Services		(4,500	)

Total consideration received attributed to Purchase Agreement		24,923
Less: Net transaction and settlement costs		(505	)

Net cash consideration received		24,418
Less: value of net assets removed as of December 31, 2002
Euronet UK assets removed		(10,326	)
Euronet UK liabilities removed		3,537
Other liabilities removed		372

Gain on sale	$	18,001

Euronet UK’s assets and liabilities were classified as held for ~~the three months ended September 30, 2002.~~

~~Weighted average shares include the dilutive effect~~sale as of ~~stock options~~December 31, 2002, a summary of 1,017,176 and warrants of 290,235 for the nine months ended September 30, 2001. Weighted average shares including the potentially dilutive effect of stock options of 2,644,123 and warrants of 179,255 would have amounted to 25,805,773 for the nine months ended September 30, 2002.

which is as follows (unaudited, in thousands):

	As of December 31, 2002
Current assets	$	1,240
Fixed assets		9,086

Total assets held for sale	$	10,326

Current liabilities	$	2,866
Long term liabilities		671

Total liabilities held for sale	$	3,537

NOTE ~~5 -~~ 6—BUSINESS SEGMENT INFORMATION

Effective for the quarter ended March 31, 2003, the Company changed its segment reporting by adding a third segment, the Prepaid Processing Segment, as a result of its acquisition of e-pay. In addition, due to the e-pay acquisition and the sale of the Company’s U.K. subsidiary, the Company will no longer provide geographic sub-segment information because management believes this information is not material to EFT Processing Segment disclosure.

Effective for the quarter ended March 31, 2003, Euronet and its subsidiaries operate in ~~two~~three business segments: (1) a segment that provides an independent shared ATM network and other electronic payment processing services to banks, retail and financial institutions (the ~~“Processing Services~~“EFT Processing Segment”); (2) a segment that provides

electronic prepaid recharge, or top-up, services for retailer stores and mobile telephone operators (the “Prepaid Processing Segment”); and ~~(2)~~(3) a segment that produces application software and solutions for payment and transaction delivery systems (the “Software Solutions Segment”). These business segments are supported by a corporate service segment, which provides corporate and other administrative services to the ~~two~~three business segments (the “Corporate Services Segment”). The accounting policies of each segment are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses. Prior period segment information has been restated to conform to the current period’s presentation.

The Company divides the Processing Services Segment into three sub-segments: the “Central European Sub-segment” (including Hungary, Poland, the Czech Republic, Croatia, Greece and Romania), the “Western European Sub-segment” (including Germany and the United Kingdom) and the “Other Operations Sub-segment” (including Indonesia, Egypt and unallocated processing center costs).

The results from operations from France and DASH have been removed from continuing operations for all reported periods in accordance with SFAS 144. France was in previous filings reported under the Western European Sub-Segment and DASH was previously reported under the Other Operations Sub-segment.

The following tables present the segment results of the Company’s operations for the three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2003 and 2002 ~~and September 30, 2001.~~

Processing Services


Central
Europe

Western
Europe

Other

Processing
Services
Total

Software
Solutions

Corporate
Services

Total

(unaudited)

(in thousands)

For the three months ended September 30, 2002

Total revenues    $ 6,671    $ 6,996    $ 86    $ 13,753    $ 4,181    $ —      $ 17,934







Direct operating costs    3,563    3,932    127    7,622    181    —      7,803
Salaries and benefits    926    722    1,266    2,914    3,058    396    6,368
Selling, general and administrative    415    345    (822 )    (62 )    1,128    793    1,859
Depreciation and amortization    1,029    895    271    2,195    248    84    2,527







Total operating expenses    5,933    5,894    842    12,669    4,615    1,273    18,557







Operating income/(loss)    738    1,102    (756 )    1,084    (434 )    (1,273 )    (623 )
Interest income    8    4    2    14    7    42    63
Interest expense    (183 )    (98 )    —      (281 )    —      (1,165 )    (1,446 )
Loss on facility sublease    —      —      —      —      (249 )    —      (249 )
Equity in losses from investee companies    —      —      (159 )    (159 ) �� —      —      (159 )
Loss on early retirement of debt    —      —      —      —      —      (791 )    (791 )
Foreign exchange (loss)/gain, net    (254 )    142    (44 )    (156 )    —      378    222







Income/(loss) from continuing operations before income taxes    $ 309    $ 1,150    $ (957 )    $ 502    $ (676 )    $ (2,809 )    $ (2,983 )







Minority interest    $ —      $ —      $ 30    $ 30    $ —      $ —      $ 30
Loss from discontinued operations before income taxes    $ —      $ (12 )    $ —      $ (12 )    $ —      $ —      $ (12 )
Assets as of September 30, 2002

Segment assets    $ 25,577    $ 18,587    $ 5,084    $ 49,248    $ 6,552    $ 11,357    $ 67,157
Fixed assets    $ 14,056    $ 12,113    $ 2,938    $ 29,107    $ 924    $ 43    $ 30,074

Processing Services


Central
Europe

Western
Europe

Other

Processing
Services
Total

Software
Solutions

Corporate
Services

Total

(unaudited)

(in thousands)

For the three months ended September 30, 2001

Total revenues    $ 6,121    $ 5,057    $ 3    $ 11,181    $ 3,757    $ —      $ 14,938







Direct operating costs    3,543    3,307    —      6,850    57    —      6,907
Salaries and benefits    789    591    740    2,120    2,984    577    5,681
Selling, general and administrative    432    310    (919 )    (177 )    827    619    1,269
Depreciation and amortization    1,005    774    210    1,989    138    37    2,164







Total operating expenses    5,769    4,982    31    10,782    4,006    1,233    16,021







Operating income/(loss)    352    75    (28 )    399    (249 )    (1,233 )    (1,083 )
Interest income    13    6    1    20    3    47    70
Interest expense    (261 )    (54 )    —      (315 )    —      (1,726 )    (2,041 )
Gain on early retirement of debt    —      —      —      —      —      1,053    1,053
Foreign exchange (loss)/gain, net    (335 )    224    161    50    (25 )    (3,782 )    (3,757 )







(Loss)/income from continuing operations before income taxes    $ (231 )    $ 251    $ 134    $ 154    $ (271 )    $ (5,641 )    $ (5,758 )







Minority interest    $ —      $ —      $ —      $ —      $ —      $ —      $ —
Income from discontinued operations before income taxes    $ —      $ 37    $ 284    $ 321    $ —      $ —      $ 321
Assets as of December 31, 2001

Segment assets    $ 25,548    $ 17,127    $ 3,311    $ 45,986    $ 8,409    $ 5,723    $ 60,118
Fixed assets    $ 14,956    $ 11,744    $ 1,085    $ 27,785    $ 1,243    $ 58    $ 29,086
Assets from discontinued operations    $ —      $ 434    $ 839    $ 1,273    $ —      $ —      $ 1,273

Processing Services


Central
Europe

Western
Europe

Other

Processing
Services
Total

Software
Solutions

Corporate
Services

Total

(unaudited)
(in thousands)

For the nine months ended September 30, 2002

Total revenues    $ 19,341    $ 18,883    $ 640    $ 38,864    $ 13,850    $ —      $ 52,714







Direct operating costs    10,205    10,473    257    20,935    732    —      21,667
Salaries and benefits    2,725    2,062    3,318    8,105    9,117    1,386    18,608
Selling, general and administrative    1,297    1,334    (2,382 )    249    2,432    2,244    4,925
Depreciation and amortization    3,085    2,403    721    6,209    731    40    6,980







Total operating expenses    17,312    16,272    1,914    35,498    13,012    3,670    52,180







Operating income/(loss)    2,029    2,611    (1,274 )    3,366    838    (3,670 )    534
Interest income    25    10    4    39    137    51    227
Interest expense    (602 )    (246 )    —      (848 )    —      (3,959 )    (4,807 )
Loss on facility sublease    —      —      —      —      (249 )    —      (249 )
Equity in losses from investee companies    —      —      (159 )    (159 )    —      —      (159 )
Loss on early retirement of debt    —      —      —      —      —      (955 )    (955 )
Foreign exchange (loss)/gain, net    (155 )    479    765    1,089    —      (4,268 )    (3,179 )







Income/(loss) from continuing operations before income taxes    $ 1,297    $ 2,854    $ (664 )    $ 3,487    $ 726    $ (12,801 )    $ (8,588 )







Minority interest    $ —      $ —      $ 77    $ 77    $ —      $ —      $ 77
(Loss)/income from discontinued operations before income taxes    $ —      $ (45 )    $ 98    $ 53    $ 2,988    $ —      $ 3,041
Assets as of September 30, 2002

Segment assets    $ 25,577    $ 18,587    $ 5,084    $ 49,248    $ 6,552    $ 11,357    $ 67,157
Fixed assets    $ 14,056    $ 12,113    $ 2,938    $ 29,107    $ 924    $ 43    $ 30,074

Processing Services


Central
Europe

Western
Europe

Other

Processing
Services
Total

Software Solutions

Corporate
Services

Total

(unaudited)
(in thousands)

For the nine months ended September 30, 2001

Total revenues    $ 17,544    $ 14,751    $ 3    $ 32,298    $ 11,971    $ —      $ 44,269







Direct operating costs    10,686    8,796    —      19,482    584    —      20,066
Salaries and benefits    2,307    1,579    2,389    6,275    10,239    2,239    18,753
Selling, general and administrative    1,324    884    (1,768 )    440    2,615    2,195    5,250
Depreciation and amortization    2,987    2,194    633    5,814    375    108    6,297







Total operating expenses    17,304    13,453    1,254    32,011    13,813    4,542    50,366







Operating income/(loss)    240    1,298    (1,251 )    287    (1,842 )    (4,542 )    (6,097 )
Interest income    49    36    5    90    26    98    214
Interest expense    (738 )    (132 )    —      (870 )    —      (6,182 )    (7,052 )
Gain on early retirement of debt    —      —      —      —      —      9,682    9,682
Foreign exchange (loss)/gain, net    (235 )    8    440    213    (26 )    3,691    3,878







(Loss)/income from continuing operations before income taxes    $ (684 )    $ 1,210    $ (806 )    $ (280 )    $ (1,842 )    $ 2,747    $ 625







Minority interest    $ —      $ —      $ —      $ —      $ —      $ —      $ —
(Loss)/income from discontinued operations before income taxes    $ —      $ (910 )    $ 685    $ (225 )    $ —      $ —      $ (225 )
Assets as of December 31, 2001

Segment assets    $ 25,548    $ 17,127    $ 3,311    $ 45,986    $ 8,409    $ 5,723    $ 60,118
Fixed assets    $ 14,956    $ 11,744    $ 1,085    $ 27,785    $ 1,243    $ 58    $ 29,086
Assets from discontinued operations    $ —      $ 434    $ 839    $ 1,273    $ —      $ —      $ 1,273

~~The following is a reconciliation of the segmented information to the unaudited consolidated financial statements.~~

For the three months ended

For the nine months ended


Sept. 30, 2002

Sept. 30, 2001

Sept. 30, 2002

Sept. 30, 2001

(unaudited)
(in thousands)

Revenues:
Total revenues for reportable segments    $ 17,934    $ 14,938    $ 52,714    $ 44,269
Elimination of inter-segment revenues    (45 )    (45 )    (260 )    (135 )




Total consolidated revenues    $ 17,889    $ 14,893    $ 52,454    $ 44,134

For the three months ended

For the nine months ended


Sept. 30, 2002

Sept. 30, 2001

Sept. 30, 2002

Sept. 30, 2001

(unaudited)
(in thousands)

Operating expense:
Total operating expense for reportable segments    $ 18,557    $ 16,021    $ 52,180    $ 50,366
Elimination of inter-segment expenses    (53 )    (45 )    (210 )    (135 )




Total consolidated operating expenses    $ 18,504    $ 15,976    $ 51,970    $ 50,231

Total revenues for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2003 and March 31, 2002, ~~and September 30, 2001~~ and long-lived assets as of ~~September 30, 2002~~March 31, 2003 and December 31, ~~2001~~2002 for the Company, ~~analyzed~~summarized by geographical location, are as ~~follows:~~

Total Revenues for the nine months ended

Long-Lived Assets as of

Sept. 30, 2002

Sept. 30, 2001

Sept. 30, 2002

Dec. 31, 2001
(unaudited)
(in thousands)

United States    $ 13,850    $ 11,971    $ 924    $ 1,243
Germany    8,546    7,365    2,934    3,705
Poland    9,212    9,014    7,919    9,275
Hungary    5,434    5,449    6,658    5,391
UK    10,337    7,386    8,997    7,688
Other    5,075    2,949    2,642    1,784




Total    $ 52,454    $ 44,134    $ 30,074    $ 29,086

follows (unaudited, in thousands):

	Revenues
	For the three month ended March 31,				Long-lived Assets
	2003		2002		As of March 31, 2003		As of December 31, 2002
United States	$	3,894	$	4,908	$	805	$	854
Germany		3,139		2,553		2,721		2,741
Poland		3,681		2,963		7,199		8,223
Hungary		1,772		1,789		5,921		6,703
U.K.		12,244		3,009		1,061		—
Australia		5,126		—		774		—
Czech Republic		1,411		602		2,015		2,014
Other		1,833		1,216		764		859

Total	$	33,100	$	17,040	$	21,260	$	21,394

Total revenues are attributed to countries based on location of customer for the ~~ATM~~EFT Processing and ~~related services segment.~~Prepaid Processing segments. All revenues generated by Software Solutions Segment activities are attributed to the United States. Long-lived assets consist of property, plant, and equipment, net of accumulated depreciation.

NOTE ~~6 - CREDIT FACILITIES~~

~~Shareholder Credit Facility~~

On June 28, 2000, the Company entered into an unsecured revolving credit agreement (the “Credit Agreement”) providing a facility of up to $4.0 million from three shareholders as follows: DST Systems, Inc. in the amount of $2.4 million; Hungarian-American Enterprise Fund in the amount of $1.0 million; and Michael J. Brown, the CEO and a Director of the Company, in the amount of $0.6 million. The facility was originally available to be drawn upon until December 28, 2000, and repayment of any draws was due June 28, 2001. The Credit Agreement was amended and renewed for six-month periods on December 28, 2000 and June 28, 2001 and, as a result of such amendments, any amounts drawn on the facility were to be repaid by June 28, 2002.

A commitment fee was paid for the initial facility of 100,000 warrants issued pro-rata to the lenders with a warrant strike price set at the average share price, as quoted on Nasdaq for 10 trading days prior to the warrant issue date, less 10%. An additional 100,000, and 100,000 warrants, on the same terms, were issued on January 2, 2001 and June 28, 2001, respectively, for the subsequent extensions of the facility. The exercise price for Michael J. Brown was originally the same as for the other lenders. It was revised by an amendment to the Credit Agreement on January 27, 2002 to be no less than the full trading price of our stock on Nasdaq as of the date of the agreement providing for grant of the warrants, with the amount of the discount that would have resulted from the original terms of the Credit Agreement to be paid to Mr. Brown in cash. Warrants were issuable on similar terms and conditions for each draw on the facility at the rate of 80,000 warrants for each $1.0 million of funds drawn. On May 29, 2001, the Company drew $2.0 million and issued 160,000 warrants in respect of such draw.

The exercise prices for the warrants for DST Systems and Hungarian-American Enterprise Fund were $7.00 per share for the 100,000 warrants issued as of June 28, 2000, $4.12 per share for the 100,000 warrants issued as of December 29, 2000, $5.92 per share for the 160,000 warrants issued as of May 29, 2001 and $6.70 per share for the 100,000 warrants issued as of June 28, 2001. The exercise prices for the warrants for Michael J. Brown were $8.25 per share for the 100,000 warrants issued as of June 28, 2000, $4.12 per share for the 100,000 warrants

~~issued as of December 29, 2000, $7.05 per share for the 160,000 warrants issued as of May 29, 2001 and $9.00 per share for the 100,000 warrants issued as of June 28, 2001.~~

~~Amounts outstanding under the facility accrued interest at 10% per annum, payable quarterly. The Credit Agreement was not renewed in December 2001 and was repaid in full on March 21, 2002.~~

In 2001, two participants in the Credit Agreement, in three separate transactions, elected to exercise a total of 361,000 warrants for an equal number of shares. The total amount of cash received from these transactions was $2.1 million.

In May 2002, in two separate transactions, two participants in the Credit Agreement elected to exercise warrants to purchase a total of 99,000 shares. The total amount of cash received from these transactions was $0.7 million.

~~There are no further warrants outstanding related to this credit facility.~~

~~Letter of Credit~~

On July 9, 2002, a $2.0 million letter of credit was issued to replace a previously issued $5.0 million letter of credit. The $2.0 million letter of credit (the New Letter of Credit) reflects the change in the minimum requirement stipulated by the beneficiary. The $2.0 million letter of credit was fully secured by cash collateral. This cash is classified as Restricted Cash as of September 30, 2002. (See Note 8 – Related Party Transactions to the unaudited consolidated financial statements.)

~~NOTE 7 - EARLY RETIREMENT OF DEBT~~

During February 2001, the Company exchanged 3,000 units (principal amount of 1.5 million euro) of its 12 3/8% senior discount notes (the “Senior Discount Notes”) and 9,000 warrants for 95,000 shares of its common stock, par value $0.02 per share. This exchange has been accounted for as an early retirement of debt with a resulting $0.5 million recognized as a gain on such early retirement. The early retirement gain represents the difference between the allocated carrying value of the debt and any related warrants retired ($1.1 million) and the fair market value of the common stock issued ($0.6 million), offset by the write-off of the allocated unamortized deferred financing costs. This transaction was exempt from registration in accordance with the U.S. Securities Act of 1933 (the “Act”).

During March 2001, the Company exchanged 8,750 units (principal face amount of 4.5 million euro) of its Senior Discount Notes for two new senior discount notes having an aggregate face amount of $3.0 million (the “New Notes”). The interest, repayment and other terms of the New Notes are identical to those of the Senior Discount Notes for which they were exchanged, except that (i) the principal amount was reduced as indicated in the previous sentence, (ii) the Company has the right to prepay the New Notes at any time at its option by paying the “Accreted Value” of the Notes, and (iii) the New Notes are governed by a new Note Purchase Agreement rather than the indenture under which the Senior Discount Notes were issued; therefore, the New Notes are not covered by any of the provisions of such indenture relating to action by the trustee, voting or maintenance of listing on a stock exchange. This exchange has been accounted for as an early retirement of debt and issuance of new debt with a resulting $0.7 million recognized as a gain on such early retirement. The early retirement gain represents the difference between the allocated carrying value of the debt retired ($3.3 million) and the fair market value of the New Notes issued ($2.5 million), offset by the write-off of the allocated unamortized deferred financing costs ($0.1 million). This transaction was exempt from registration in accordance with the Act. The Senior Discount Notes that were acquired by the Company in the above exchanges have been retired.

During the three months ended June 30, 2001, in seven separate transactions, the Company exchanged 45,600 units (principal amount of 23.3 million euro) of its Senior Discount Notes and 136,800 warrants for 1,596,000 shares of its common stock, par value $0.02 per share. This exchange has been accounted for as an early retirement of debt with a resulting $7.4 million recognized as a gain on such early retirement. The early retirement

gain represents the difference between the allocated carrying value of the debt and any related warrants retired ($17.8 million) and the fair market value of the common stock issued ($9.9 million), offset by the write-off of the allocated unamortized deferred financing costs ($0.4 million). These transactions were exempt from registration in accordance with the Act.

During the three months ended September 30, 2001, in five separate transactions, the Company exchanged 34,000 units (principal amount of 17.4 million euro) of its Senior Discount Notes and 102,000 warrants for 1,157,000 shares of its common stock, par value $0.02 per share. This exchange has been accounted for as an early retirement of debt with a resulting $1.1 million recognized as an extraordinary gain on such early retirement. The early retirement gain represents the difference between the allocated carrying value of the debt and any related warrants retired ($13.6 million) and the fair market value of the common stock issued ($12.2 million), offset by the write-off of the allocated unamortized deferred financing costs ($0.3 million). These transactions were exempt from registration in accordance with Section 3(a)(9) of the Act.

~~These transactions result in a combined gain of $9.7 million for the nine months ended September 30, 2001.~~

~~For a description of additional debt early retirements during 2001, see Note 3 to the audited consolidated financial statements for the year ended December 31, 2001.~~

During May 2002, in a single transaction, the Company exchanged 2,500 units (principal amount of 1.3 million euro) of its 12 3/8% Senior Discount Notes for 75,000 shares of its common stock, par value $0.02 per share. This exchange has been accounted for as an early retirement of debt with a resulting $0.1 million recognized as a loss on such early retirement. The loss on such early retirement is calculated as the difference between the allocated carrying value of the debt and any related warrants retired ($1.2 million) and the fair market value of the common stock issued ($1.3 million), offset by the write-off of the allocated unamortized deferred financing costs. The transaction is exempt from registration in accordance with the Act.

During June 2002, in a single transaction, the Company exchanged $0.8 million of the New Notes for 56,483 shares of its common stock, par value $0.02 per share. This exchange has been accounted for as an early retirement of debt with no significant gain or loss resulting from such early retirement. The gain or loss on such an early retirement is calculated as the difference between the allocated carrying value of the debt and any related warrants retired ($0.8 million) and the fair market value of the common stock issued ($0.8 million). The transaction is exempt from registration in accordance with the Act.

~~The Senior Discount Notes that were acquired by the Company in the above exchanges have been retired.~~

On July 19, 2002, the Company exercised its right to partially redeem its 12 3/8% Senior Discount Notes. The Company redeemed 17,700 Senior Discount Notes (principal amount of 9.0 million euro) for $9.7 million cash plus accrued interest from July 1, 2002 through July 18, 2002. This partial redemption has been accounted for as an early retirement of debt with approximately $0.8 million recognized as a loss on such early retirement. The loss on such an early retirement is calculated as the difference between the allocated carrying value of the debt ($9.0 million), the write-off of the allocated unamortized deferred financing costs ($0.1 million), and the cash paid ($9.7 million). The cash payment included an early redemption premium of approximately 6% of the principle amount as defined in the Senior Discount Notes indenture. No warrants associated with these units were repurchased or otherwise retired in this transaction.

As of July 1, 2002, the Company may at any time exercise its right to partially or fully redeem the Senior Discount Notes for cash without restriction. Any redemption is subject to an early redemption premium as defined in the Senior Discount Notes indenture. The early redemption premium decreases throughout the term of the Senior Discount Notes.

~~NOTE 8 - RELATED PARTY TRANSACTIONS~~

In January 2001, the Company entered into a Credit Facility Loan Agreement under which it borrowed an aggregate of $0.5 million from Michael J. Brown, the CEO and a Director of the Company, to fund transactions on its Czech Republic ATM network. Amounts advanced under this loan agreement mature nine months from the date an advance was made, but were extended for a second six-month period. The loans were unsecured. Amounts advanced bore interest of 10% per annum. In January 2002, the loan of $0.5 million and related interest were paid in full.

In 2000, Michael J. Brown, the CEO and a Director of the Company, pledged approximately $4.0 million of marketable securities (not including any common stock of the Company) that he owns to obtain the release to the Company of cash collateral in the amount of $4.8 million held by a bank providing cash to the Company’s ATM network in Hungary. No consideration was payable for providing this security. On March 14, 2002, a letter of credit was obtained by the Company in the amount of $5.0 million, which replaced the above security pledge by Michael J. Brown and a related $0.8 million letter of credit supported by a certificate of deposit that had been obtained for the same purpose. The $5.0 million letter of credit has subsequently been replaced by a new letter of credit for $2.0 million. (See Note 6 – Credit Facilities to the unaudited consolidated financial statements.)

For the nine-month period ended September 30, 2002, the Company recorded $0.1 million in revenue related to CashNet Telecommunications Egypt SAE (“CashNet”), a 10% owned affiliate, with respect to a data processing and technical services agreement. CashNet was formed to own and/or operate and manage ATM machines and point of sale terminals for both their own account and for the account of customer banks. The Company currently monitors and processes transactions for all CashNet ATMs. The Company accounts for CashNet using the equity method of accounting because the Company exercises significant influence over the business activities of CashNet.

~~For the three-month and nine-month periods ended September 30, 2002, the Company recorded $0.1 million in revenue related to Europlanet.~~

~~NOTE 9 -~~ 7—DISCONTINUED OPERATIONS

Sale of USU.S. EFT Processing ~~Services~~ Business

On January 4, 2002, the Company concluded an asset purchase agreement with ~~AIS,~~Fidelity National Financial, Inc., formerly ALLTEL Information Systems (“FNF”), whereby EFT Network Services, LLC (also known as DASH) sold substantially all of its assets to ~~AIS~~FNF for $6.8 million in cash. Of this amount, $0.7 million is being held in escrow for a period of one year under the terms of a separate escrow agreement to provide for the payment of any damages that might arise from any breach of the representations and warranties contained in the asset purchase agreement and certain post-closing adjustments. DASH iswas a wholly owned subsidiary of Euronet USA Inc., which is a wholly owned subsidiary of Euronet Worldwide, Inc. ~~DASH, Euronet USA and AIS are parties to the asset purchase agreement.~~ The Company recorded a pre-tax gain of approximately $4.8 million related to this transaction. ~~As discussed in Note 10, the~~

The Company also entered into a ~~separate~~significant software license agreement with ~~AIS on January 4, 2002.~~

FNF. See Note 11 to the unaudited consolidated financial statements for a description of this agreement.

Sale of France EFT Processing ~~Services~~ Business

On July 15, 2002, the Company sold substantially all of the non-current assets and capital lease obligations of its processing business in France to Atos. Non-current assets and capital lease obligations related to the France business have been removed from continuing operations and classified under discontinued operations. The Company incurred a loss on disposal of the France business of $0.1 million.

As a result of the above, the results from operations from France and DASH have been removed from continuing operations ~~for all reported periods~~from the three months ended March 31, 2002 in accordance with SFAS 144. France ~~was~~and DASH were previously reported ~~under~~in the Western European Sub-segment and DASH was previously reported under the Other Operations Sub-segment. The following pro-forma financial statements show balance sheet extracts as of September 30, 2002 and

~~December 31, 2001 as well as the~~

The summary operating results of discontinued operations for the three months ended ~~September 30,~~March 31, 2002 are as follows (unaudited, in thousands):

	For the three months ended March 31, 2002
	Dash			France			Total
Total revenues	$	101		$	194		$	295
Total operating expenses		3			301			304

Operating income/(loss)		98			(107	)		(9	)

Other income/(expense)		—			(74	)		(74	)
Gain on disposal		4,845			—			4,845

Total other income/(expense)		4,845			(74	)		4,771

Net income before taxes		4,943			(181	)		4,762
Income tax expense		(1,857	)		—			(1,857	)

Net income/(loss) of discontinued operations	$	3,086		$	(181	)	$	2,905

NOTE 8—STOCK-BASED EMPLOYEE COMPENSATION

The Company accounts for its stock-based employee compensation plans under the recognition and ~~2001~~measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the fair market value of the Company’s shares at the date of the grant over the exercise price.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure,” to stock-based employee compensation (in thousands, except per share data):

	For the three months ended March 31,
	2003			2002
Net income, as reported	$	15,421		$	3,580
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(1,197	)		(827	)

Pro forma net income	$	14,224		$	2,753

Earnings per share:
Basic—as reported	$	0.61		$	0.16
Basic—pro forma	$	0.56		$	0.12
Diluted—as reported	$	0.57		$	0.14
Diluted—pro forma	$	0.53		$	0.11

Pro forma impact reflects only options granted since December 31, 1995. Therefore, the full impact of calculating compensation cost for stock options under SFAS No. 123 is not reflected in the pro forma amounts presented above because compensation cost is reflected over the options’ vesting periods and compensation cost for options granted prior to January 1, 1996 is not considered.

NOTE 9—CREDIT FACILITIES

As of March 31, 2003, banks have issued standby letters of credit on the Company’s behalf amounting to $3.1 million. These letters of credit are fully secured by cash deposits held by the respective issuing banks. This cash is classified as restricted cash as of March 31, 2003.

The Company has lines of credit totaling $0.5 million to meet cash requirements for the startup of our India market. The lines of credit are fully collateralized by a portion of those letters of credit described above.

NOTE 10—RELATED PARTY TRANSACTIONS

In February 2003, the Company paid approximately $74.8 million to the former shareholders of e-pay. The amount paid to the shareholders consisted of approximately $30.0 million in cash at closing, $18.0 million through issuance at closing of 2,497,504 shares of Euronet common stock, and the ~~nine months~~remaining $26.9 million in deferred cash consideration or promissory notes executed at closing with 24 month maturity dates bearing interest rates ranging from 6% to 8%. Ten of these former shareholders are now employees and/or officers of Euronet. Paul Althasen, a former shareholder of e-pay and current nominee for Euronet’s Board of Directors, received $15.4 million in total consideration consisting of cash, common stock, and notes payable for his ownership in
e-pay.

For the three-month period ended ~~September 30, 2002 and 2001.~~

As of September 30, 2002

As of December 31, 2001

DASH

France

  Total

DASH

  France

Total
(unaudited)
(in thousands)

Current assets    $ —      $ —      $ —      $ 384      $ —      $ 384
Fixed assets    —      —      —      —        434    434
Long term assets    —      —      —      455      —      455






Total assets from discontinued operations    $ —      $ —      $ —      $ 839      $ 434    $ 1,273






Current liabilities    $ —      $ —      $ —      $ 70      $ 138    $ 208
Long term liabilities    —      —      —      —        290    290






Total liabilities from discontinued operations    $ —      $ —      $ —      $ 70      $ 428    $ 498

Three months ended
September 30, 2002

Three months ended
September 30, 2001


  DASH

France

Total

DASH

France

Total

(unaudited)
(in thousands)

Revenues    $ —      $ 128    $ 128    $ 557    $ 231    $ 788
Operating expenses    —      105    105    262    381    643






Operating income/(loss)    —      23    23    295    (150 )    145
Other (expense)/income    —      (35 )    (35 )    (11 )    187    176
Gain on disposal    —      —      —      —      —      —






(Loss)/income before taxes    —      (12 )    (12 )    284    37    321
Income tax expense    —      —      —      (111 )    (14 )    (125 )






Net (loss)/income of discontinued operations    $ —      $ (12 )    $ (12 )    $ 173    $ 23    $ 196

Nine months ended
September 30, 2002

Nine months ended
September 30, 2001


DASH

France

Total

DASH

France

Total

(unaudited)
(in thousands)

Revenues    $ 101    $ 563    $ 664    $ 1,690    $ 619    $ 2,309
Operating expenses    3    708    711    990    1,438    2,428






Operating income/(loss)    98    (145 )    (47 )    700    (819 )    (119 )
Other income/(loss)    —      297    297    (15 )    (91 )    (106 )
Gain/(loss) on disposal    4,845    (119 )    4,726    —      —      —






Income/(loss) before taxes    4,943    33    4,976    685    (910 )    (225 )
Income tax expense    (1,857 )    (78 )    (1,935 )    —      —      —






Net income/(loss) of discontinued operations    $ 3,086    $ (45 )    $ 3,041    $ 685    $ (910 )    $ (225 )

March 31, 2003, the Company recorded $0.1 million in revenue related to Europlanet, a 36% owned joint-venture operating ATMs in the Federal Republic of Serbia.

NOTE ~~10 -~~ 11—SIGNIFICANT SOFTWARE LICENSE AGREEMENT

In January 4, 2002, the Company entered into a significant software license agreement (the “License Agreement”) whereby ~~Euronet USA~~the Company granted ~~AIS~~FNF a nonexclusive license to use, distribute and develop versions 1.5 and 2.2 of ~~Euronet USA’s~~our GoldNet ATM Network Processing Software (“GoldNet Software”). ~~The License Agreement includes certain territorial and other restrictions on the use and distribution of the GoldNet Software~~

~~by AIS.~~ Under the terms of the License Agreement, ~~AIS~~FNF agreed to pay license, professional services and maintenance fees of $5.0 million. In January 2002, 50% of the license fees were received, with remaining payments of 40% upon acceptance of the software (received in July 2002), and 10% twelve months from the date of the agreement ~~subject to completion of certain maintenance and support services.~~(received in January 2003). The License Agreement does not restrict the ability of Euronet USA to continue to sell its GoldNet Software, except that Euronet USA may not sell to former DASH customers or new ~~AIS~~FNF network processing customers. Revenue from the license fee and related services will be recognized under the percentage of completion contract accounting method. ~~The Company~~We recognized ~~$0.6~~$0.2 million in ~~license and services~~ revenues ~~associated with~~related to the License Agreement during the three months ended ~~September 30, 2002~~March 31, 2003, and ~~approximately $0.2~~$1.6 million ~~in maintenance revenues for the same period. The Company recognized $3.5 million in license and services revenues associated with the License Agreement~~ during the nine months ended September 30, 2002 and approximately $0.2 million in maintenance revenues for the same period. The Company expects to recognize approximately 75% to 80% of the fees in revenues during 2002 with the remaining to be recognized in 2003.

~~NOTE 11 - PRIVATE PLACEMENT~~

On February 6, 2002 the Company entered into seven subscription agreements for the sale of an aggregate of 625,000 new common shares of the Company. These agreements were signed with certain accredited investors in transactions exempt from registration under the Act pursuant to exemptions under Section 4(2) and Regulation D of the Act. The purchase price of each share was $20.00. The aggregate amount of proceeds to the Company from the private placement was $12.5 million. Net proceeds after $0.8 million in commission fees, legal fees, and Nasdaq registration and filing fees were approximately $11.7 million.

~~NOTE 12 - LOSS CONTINGENCIES~~

~~The Company recognized a loss of $0.3 million for~~ the three months ended ~~September 30, 2002 related~~March 31, 2002. Approximately $0.9 million of revenues remain to the sublease of excess office space. The Company subleased approximately 5,400 square feet in August 2002 to an unrelated third-party under a non-cancelable sublease agreement at lease rates lower than those being paid by the Company for the space.

~~The Company has additional excess space, which it is considering subleasing to a third-party. In the event that this excess space is subleased to a third-party, the excess of the total costs that will~~ be incurred related to the subleased space over the revenue received on the space will be recognized as a loss at that time. The potential loss could range from nil to $0.3 million depending on a number of factors including term of the sublease, the amount of space subleased,earned and ~~current market conditions at the time the sublease is executed. No loss contingency has been~~ recognized related to the ~~possible sublease~~License Agreement; $0.5 million of which will be earned and recognized during the ~~remaining space.~~

remainder of 2003 and $0.4 million of which has no specific recognition period.

NOTE ~~13 - SUBSEQUENT EVENTS~~12—RESTRICTED CASH

~~On November 6, 2002,~~

As of March 31, 2003, the Company ~~was advised~~has $38.0 million of restricted cash, of which $33.2 million is related to the administration of customer collection and vendor remittance activities in the Prepaid Processing Segment. The Company is responsible for the collection of cash receipts from the retailer for subsequent remittance to the telecommunication provider. Cash is collected and held in designated trust accounts classified as restricted cash balances that are not available for our operating business activities. The remaining $4.8 million is held as security with respect to cash provided by ~~a potential acquisition target that another potential acquirer had been selected for further purchase negotiations. For the three months ending December 31, 2002,~~banks participating in our ATM network or standby letters of credit.

NOTE 13—RECLASSIFICATION

Beginning in January 2003, the Company ~~will recognize approximately $0.2 million~~changed its business segment reporting to better align its financial reporting with its business operations and reflect the acquisition of ~~expense for costs previously capitalized that were directly associated with the Company’s acquisition efforts. These costs are included in other assets as of September 30, 2002.~~

~~NOTE 14 - RECLASSIFICATION~~

Certain amounts have been reclassified in the prior periods’ unaudited consolidated financial statements to conform to the current periods’ unaudited consolidated financial statements presentation.

~~As described in Note 3, gains and losses from the early retirement of debt were previously classified as extraordinary items (net of tax).~~e-pay. In accordance with SFAS ~~145, these amounts have~~No. 131, “Disclosures about Segments of an Enterprise and Related information” (SFAS 131), all prior segment information has been ~~reclassified and reported as other income (pre-tax).~~

As described in Note 9, France and DASH have been removed from continuing operations and classified under discontinued operations. The assets and liabilities associated with the sale have been classified under assets and liabilities from discontinued operations.

All operating amounts, ATM counts, transaction numbers and statistics reported in this filing exclude France and ~~DASH.~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Euronet Worldwide, Inc. is a leading provider of secure electronic financial transaction solutions. We provide financial payment middleware, financial network gateways, outsourcing, and consulting services to financial institutions, retailers and mobile phone operators.

Significant Events

During the three months ended March 31, 2003, we entered into two transactions that will significantly impact our future operating results.

First, in January 2003, we sold our U.K. ATM network for $29.4 million and simultaneously signed an ATM outsourcing agreement with the buyer. Since then, we have operated the ATMs in that network under a five-year outsourcing agreement. This transaction is discussed more fully in the EFT Processing Segment discussion below and in Note 5 to the unaudited consolidated financial statements.

Second, in February 2003, we acquired e-pay, Ltd., an electronic payments processor of prepaid mobile phone airtime “top-up” services in the U.K and Australia. e-pay has agreements with mobile operators in those markets under which it supports the distribution of airtime to their subscribers through point-of-sale (POS) terminals in retail outlets. This transaction is discussed more fully in the Prepaid Processing Segment discussion below and in Note 4 to the unaudited consolidated financial statements.

Business Summary

We ~~operate an independent~~process transactions for a network of 2,994 automated teller ~~machine, or ATM, network of 2,951 ATMs in~~machines (ATMs) across Europe (and until January 2002 in the United States). ~~In addition, through~~Through our subsidiary, e-pay Ltd., we operate a network of POS terminals providing electronic processing of prepaid mobile phone airtime (“top-up”) services in the U.K. and Australia. Through our software subsidiary, Euronet USA, Inc. (“Euronet USA”), we offer a suite of integrated electronic fund transfer (EFT) software solutions for electronic payment and transaction delivery systems. Our principal customers are banks, mobile phone operators and retailers that require electronic financial transaction processing services. We ~~offer~~provide comprehensive electronic payment solutions consisting of ATM network participation, outsourced ATM ~~POS,~~management solutions, electronic recharge services (for prepaid mobile airtime) and ~~debit card management and transaction software.~~integrated EFT software solutions. Our ~~principal customers~~solutions are banks and other companies such as mobile phone operators that require electronic financial transaction processing services. With nine offices in Europe, one in Indonesia, one in Egypt and two in the United States, Euronet serves clientsused in more than 60 countries around the world. As of March 31, 2003, we had nine offices in Europe, two in the United States and one each in India, Indonesia, Egypt, and Australia.

Throughout 2002 and continuing in 2003, Euronet has focused on product developments that would add transaction functionality via new and existing products, including mobile banking, event messaging and the new Electronic Recharge line, which enables purchasing prepaid mobile airtime from ATMs, POS terminals and directly from the mobile handset.

In 2002, we opened a small office in Slovakia to support expanding efforts in Central Europe during 2003. We also entered India, one of the largest emerging markets for ATM and card growth potential. In the India market, we will focus on ATM outsourcing and electronic recharge products for replenishing prepaid mobile airtime.

Effective for the quarter ended March 31, 2003, we changed our ~~name from Euronet Services Inc.~~segment reporting by adding a third segment, the Prepaid Processing Segment, as a result of our acquisition of e-pay. In addition, due to ~~Euronet Worldwide, Inc. in August 2001.~~

~~We currently operate in two business segments:~~ the ~~“Processing Services Segment” provides secure processing of electronic financial transactions,~~e-pay acquisition and the ~~“Software Solutions Segment” produces application software for~~sale of our U.K. subsidiary, the ~~processing~~we will no longer provide geographic sub-segment information because we believe this information is not material to EFT Processing Segment disclosure.

As of ~~secure electronic financial transactions. The~~March 31, 2003, we operated in three principal business segments:

the EFT Processing ~~Services~~ Segment, ~~comprises~~which includes our proprietary ATM network and outsourced management of ATMs for banks and includes various new processing services ~~that~~ we provide for banks and mobile phone companies through our ~~ATM~~ network of owned and managed ATMs, such as mobile phone recharge services. ~~Our~~

the Prepaid Processing Segment, which consists of our e-pay subsidiary purchased in February 2003 and provides electronic top-up transaction services for retail stores and mobile and other telecommunication operators through POS terminals.

the Software Solutions Segment, which provides transaction processing software solutions to banks that ~~permit~~enable them to operate ATMs and ~~point-of-sale~~POS terminals and process financial transactions from those devices ~~interactive voice response systems,~~and the ~~Internet, and mobile phones.~~Internet.

~~Our management divides the Processing Services Segment into three geographic sub-segments:~~

•

~~Central European Sub-segment (including Hungary, Poland, the Czech Republic, Croatia, Greece and Romania)~~

•

~~Western European Sub-segment (including Germany and the United Kingdom)~~

•

~~Other Operations Sub-segment (including Indonesia, Egypt and unallocated processing center costs)~~

We also operate a “Corporate Services Segment” that provides ~~the Company’s two~~our three business segments with corporate and other administrative services that are not directly identifiable with them. The accounting policies of each segment are the same as those ~~described~~referenced in the summary of significant accounting policies. We evaluate performance based on ~~profit~~income or loss from continuing operations before income taxes ~~not including nonrecurring gains~~ and ~~losses.~~

On January 4, 2002, we sold substantially all of the assets of our ATM processing business in the United States, known as DASH, to ALLTEL Information Services, Inc. (“AIS”) for $6.8 million in cash. AIS is a wholly owned subsidiary of ALLTEL Corporation. Approximately $0.7 million of the proceeds is being held in escrow for a period of one year under the terms of a separate escrow agreement to cover certain post-closing adjustments and any damages that might arise from breach of the representations and warranties contained in the purchase agreement with AIS. We recorded a pre-tax gain of approximately $4.8 million related to this transaction.

On July 15, 2002, we sold substantially all of the non-current assets and capital lease obligations of our processing business in France to Atos. Non-current assets and capital lease obligations related to the France

minority interest.

~~business have been removed from continuing operations and classified under discontinued operations. We incurred a loss on disposal of the France business of $0.1 million.~~

In previous filings, we reported France under the Western European Sub-segment and DASH under the Other Operations Sub-segment. All operating amounts, ATM counts, transaction numbers and statistics reported in this filing exclude France and DASH.

SEGMENT SUMMARY RESULTS OF OPERATIONS

Revenues

Operating Income (Loss)


2002

2001

2002

2001

(unaudited)
(in thousands)

Three months ended September 30,

Processing Services:
Central European    $ 6,671    $ 6,121    $ 738    $ 352
Western European    6,996    5,057    1,102    75
Other    86    3    (756 )    (28 )




Total Processing Services    13,753    11,181    1,084    399
Software Solutions    4,181    3,757    (434 )    (249 )
Corporate Services    —      —      (1,273 )    (1,233 )
Inter-segment eliminations    (45 )    (45 )    (53 )    (45 )




Total    $ 17,889    $ 14,893    $ (676 )    $ (1,128 )

Revenues

Operating Income (Loss)


2002

2001

2002

2001

(unaudited)
(in thousands)

Nine months ended September 30,

Processing Services:
Central European    $ 19,341    $ 17,544    $ 2,029    $ 240
Western European    18,883    14,751    2,611    1,298
Other    640    3    (1,274 )    (1,251 )




Total Processing Services    38,864    32,298    3,366    287
Software Solutions    13,850    11,971    838    (1,842 )
Corporate Services    —      —      (3,670 )    (4,452 )
Inter-segment eliminations    (260 )    (135 )    (210 )    (135 )




Total    $ 52,454    $ 44,134    $ 324    $ (6,142 )

	Three months ended March 31, (unaudited, in thousands)
	Revenues						Operating Income/(loss)
	2003			2002			2003			2002
EFT Processing	$	11,961		$	12,177		$	831		$	237
Prepaid Processing		17,372			—			1,524			—
Software Solutions		3,894			4,908			242			1,222
Corporate Services		—			—			(1,451	)		(1,313	)

Total		33,227			17,085			1,146			146
Inter segment eliminations		(127	)		(45	)		5			—

Total	$	33,100		$	17,040		$	1,151		$	146

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2003 AND MARCH 31, 2002 ~~AND SEPTEMBER 30, 2001 AND THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001~~

EFT PROCESSING ~~SERVICES~~ SEGMENT

	Three months ended March 31, (unaudited, in thousands)
	2003		2002
Total revenues	$	11,961	$	12,177

Direct operating cost		5,765		6,614
Salaries and benefits		3,067		3,056
Selling, general and administrative		452		235
Depreciation and amortization		1,846		2,035

Total operating expenses		11,130		11,940

Operating income	$	831	$	237

Sale of U.K. ATM Network

In January 2003, we sold our U.K. ATM network and simultaneously signed an ATM outsourcing agreement with the buyer. We will operate the ATMs in that network under a five-year outsourcing agreement. With this transaction, we sold our U.K subsidiary, and all employees working in that subsidiary were transferred to the buyer. The results of operations of the U.K. ATM network operations continue to be included in continuing operations due to the ongoing revenues to be generated by the

outsourcing agreement. This transaction is more fully described in Note 5 to the unaudited consolidated financial statements. See the discussion below where the effects of this transaction on revenues and operating income are more fully described.

Revenues

Total segment revenues ~~increased 23%~~decreased 2% or ~~$2.6~~$0.2 million to ~~$13.8~~$12.0 million for the three months ended ~~September 30, 2002~~March 31, 2003 from ~~$11.2~~$12.2 million for the three months ended ~~September 30, 2001, and increased 20% or $6.6 million to $38.9 million for the nine months ended September 30, 2002 from $32.3 million for the nine months ended September 30, 2001.~~March 31, 2002. The ~~increase~~decrease in revenues is due primarily to the ~~significant~~sale of our U.K. subsidiary, substantially offset by a one-time contract termination fee on a signed but not implemented contract, an increase in transaction volumes from new ATMs and ~~an increase in the number of ATMs that we operated during these periods.~~network sharing agreements and foreign exchange fluctuations. We operated ~~2,351~~2,548 ATMs as of ~~September 30, 2001~~March 31 2002 and processed ~~15.1~~15.6 million transactions for the three months ended ~~September 30, 2001 and 41.6 million transactions for the nine months ended September 30, 2001.~~March 31, 2002. As of ~~September 30, 2002,~~March 31, 2003, we increased ~~our ATM network~~the number of ATMs we operate by ~~600~~446 ATMs, or ~~26%~~18%, from ~~September 30, 2001~~March 31, 2002 to a total of ~~2,951~~2,994 ATMs. WeAt March 31, 2003, we own ~~82%~~37% of ~~this total number of~~these ATMs (excluding those leased by us in connection with outsourcing agreements), while ~~banks and other financial institutions own~~ the remaining ~~18%, which we operate through~~63% are operated under management outsourcing agreements. Transactions on machines owned or operated by us totaled ~~22.3~~23.4 million

transactions for the three months ended ~~September 30, 2002,~~March 31, 2003, an increase of ~~7.2~~7.8 million, ~~transactions,~~ or ~~48%~~50% over the three months ended September 30, 2001. Transactions on machines owned or operated by us totaled 56.5 million transactions for the nine months ended September 30, 2002, an increase of 14.9 million transactions, or 36%, over the nine months ended September 30, 2001.March 31, 2002. The increase in transaction growth is greater than the increase in ATM growth and revenue growth. ~~During this period, there was~~This is the result of an increase in ATMs that we operate under ATM management outsourcing agreements relative to ATMs we ~~own.~~own during this period. The revenues generated from ATM management agreements often have a substantial monthly recurring fee as compared to a per transaction fee for our owned ATMs. This recurring fee generates both fixed and variable revenue components. As a result, transactions on these machines ~~can~~ increase faster than the revenues.

~~Revenues for the Central European Sub-segment increased 9% or $0.6 million to $6.7 million~~

Of total segment revenue, approximately 57% is from ATMs we owned (excluding those leased by us in connection with outsourcing agreements) for the three months ended ~~September 30, 2002 from $6.1 million~~March 31, 2003 and 66% for the three months ended September 30, 2001. The increase in revenues is largely the result of an increase in the number of ATMs operated by us from 1,481 at September 30, 2001 to 1,744 at September 30, 2002, and increased transaction volumes. Our ability to continue to increase revenues at this rate depends on our ability to sign new contracts to operate more ATMs for banks and financial institutions.

Revenues for the Central European Sub-segment increased 10% or $1.8 million to $19.3 million for the nine months ended September 30, 2002 from $17.5 million for the nine months ended September 30, 2001. The increase in revenues is largely the result of an increase in the number of ATMs operated by us from 1,481 at September 30, 2001 to 1,744 at September 30, 2002, and increased transaction volumes.

In the Czech Republic, beginning November 1, 2002 a new, single intra–regional interchange fee for ATM cash withdrawals was imposed. For VISA cards the new fee is $1.00 and for Europay cards the new fee is 1.20 euro. Prior to this change, we were averaging fees of approximately $1.40 per cash withdrawal in the Czech Republic.March 31, 2002. This intra-regional interchange fee reduction is expected to reduce revenues for our deployed machines in the Czech Republic by approximately $0.8 million in 2003 based upon forecasted 2003 transaction levels. Additionally, the transactions per ATM in the Czech Republic have trended downward during 2002 by approximately 15%movement results from the ~~first as compared to~~sale of the third quarter, partially due to the increase in the interchange fee in late 2001 as well as certain competitive and other economic conditions. We are actively monitoring this trend and will take appropriate action, including deinstallation of any under-performing ATMs, as conditions and further trends warrant in order to protect deployment margins.

Revenues for the Western European Sub-segment increased 38% or $1.9 million to $7.0 million for the three months ended September 30, 2002 from $5.1 million for the three months ended September 30, 2001. The increase in revenues is largely the result of an increase in the number of ATMs we operate in this region from 870 at September 30, 2001 to 1,121 at September 30, 2002, and increased transaction volumes. During this period we also increased transaction fees in certain markets.

Revenues for the Western European Sub-segment increased 28% or $4.1 million to $18.9 million for the nine months ended September 30, 2002 from $14.8 million for the nine months ended September 30, 2001. The increase in revenues is largely the result of an increase in the number of ATMs we operate in this region from 870 at September 30, 2001 to 1,121 at September 30, 2002, and increased transaction volumes. During this period we also increased transaction fees in certain markets.

~~Of the net 251 ATMs added from September 30, 2001 to September 30, 2002, to the~~U.K. ATM network in Western Europe 240 ATMs were located in the United Kingdom. Our increase in rollout of ATMs in the United Kingdom during 2001 and 2002 was based on the ability to charge a transaction fee directly to the person using the ATMs in this market. We have stopped the further rollout of ATMs in 2002 in the United Kingdom after reaching a level of 745 ATMs. Future ATM deployment in the United Kingdom depends on our ability to find additional sites for ATMs that are capable of highly profitable transaction levels. Some machines we have installed recently in the United Kingdom had transaction levels that are lower than those of machines installed earlier.

Although these ATMs are profitable, they are generating returns that are lower than we expected. We have implemented a number of responses to this situation, including using lower cost machines at these sites, reducing our rollout of new machines and relocating machines with low transaction volumes in the United Kingdom. The

~~decision to reduce our rate of rollout of ATMs~~ and the ~~continuing weakness~~simultaneous signing of ~~performance of certain ATMs is expected to result~~the outsourcing agreement, offset by increases in ~~a decrease~~revenue generated from our proprietary networks in ~~growth in our revenues~~Poland and ~~operating profits in this market.~~

~~Revenues for the Other Operations Sub-segment were $0.1 million for the three months ended September 30, 2002 as compared to nil for the three months ended September 30, 2001~~Germany through network participation agreements and $0.6 million for the nine months ended September 30, 2002 as compared to nil for the nine months ended September 30, 2001. The increase in revenues in the nine-month periods is mainly a result of one time set up revenues associated with contracts in Egypt and Indonesia, where we are just beginning operations. We previously reported our revenue from the DASH network under this segment but we sold this network in January 2002 (see Note 9 to the unaudited consolidated financial statements). Therefore, no further revenues will be realized in continuing operations from the DASH business for the year 2002.

Of total segment revenue, approximately 80% is from ATMs we own for the nine months ended September 30, 2002 and 83% for the nine months ended September 30, 2001. Of total transactions processed, approximately 82% is attributable to ATMs we own for the three months ended September 30, 2002 and 80% for the three months ended September 30, 2001.rate increases. We believe the shift from a largely proprietary, Euronet-owned ATM network to a more balanced mix between proprietary ATMs and ~~customer-owned~~ ATMs operated under outsourcing agreement, is a positive development and will provide higher marginal returns on investments.

Customer owned ATMs operated under service agreements require a nominal up front capital investment because the ATMs are not purchased by us. Additionally, in many instances operating costs are the responsibility of the owner and, therefore, recurring operating expenses per ATM are lower.

We generally charge fees for four types of ATM transactions that are currently processed on our ATMs:

cash withdrawals

balance inquiries

•

~~cash withdrawals~~

•

~~balance inquiries~~

•

~~transactions not completed because the relevant card issuer does not give authorization~~

•

~~prepaid telecommunication recharges~~

transactions not completed because the relevant card issuer does not give authorization

prepaid telecommunication recharges

Transaction fees for cash withdrawals vary from market to market but generally range from $0.60 to ~~$2.15~~$2.50 per transaction. Transaction fees for the other three types of transactions are generally substantially less. We include in EFT Processing ~~Services~~ Segment revenues transaction fees payable under the electronic recharge solutions that we ~~sell.~~distribute through our ATMs. Fees for recharge transactions vary substantially from market to market and are based on the specific prepaid solution and the denomination of prepaid hours purchased. Generally, transaction fees vary from $0.40 to $1.80 per prepaid mobile recharge purchase and are shared with the financial institution and the mobile operator. ~~These~~Any or all of these fees may come under pricing pressure in the future.

We have entered into four new outsourcing and/or network participation agreements in the third quarter that have not yet been implemented. We expect these agreements to generate between $4.5 million and $5 million of incremental revenues in 2003. Revenues from these agreements on an annualized basis, once the agreements are fully implemented, are expected to be approximately $6.5 million.

Operating Expenses

Total segment operating expenses ~~increased 18%~~decreased 7%, or ~~$1.9~~$0.8 million to ~~$12.7~~$11.1 million for the three months ended ~~September 30, 2002~~March 31, 2003 from ~~$10.8~~$11.9 million for the three months ended ~~September 30, 2001.~~March 31, 2002. The ~~increase~~decrease is primarily due to ~~increased~~the sale of our U.K. network, offset by an increase in direct operating costs supporting revenue increases, in salaries to support our operational growth during the ~~period.~~

Total segment operating expenses increased 11%, or $3.5 million to $35.5 million for the nine months ended September 30, 2002 from $32.0 million for the nine months ended September 30, 2001. The increase is primarily due to increased salaries to support our operational growth during the period.

Operating expenses for the Central European Sub-segment increased 3% or $0.1 million to $5.9 million for the three months ended September 30, 2002 from $5.8 million for the three months ended September 30, 2001period and ~~remained unchanged at $17.3 million for the nine months ended September 30, 2002 as compared to the nine~~

~~months ended September 30, 2001. The increase in operating expenses for the three-month period ended September 30, 2002 is primarily the result of increased salary expenses of $0.1 million.~~

Operating expenses for the Western European Sub-segment increased 18% or $0.9 million to $5.9 million for the three months ended September 30, 2002 from $5.0 million for the three months ended September 30, 2001 and increased 21% or $2.8 million to $16.3 million for the nine months ended September 30, 2002 from $13.5 million for the nine months ended September 30, 2001. The increase in operating expenses was largely the result of increased salary expense of $0.5 million due to increased ATM deploymentdevelopment cost in the ~~U.K.~~

We have not included France in this segment because we sold substantially all of the non-current assets and capital lease obligations of its processing business in France on July 15, 2002, as further described in Note 9 to the unaudited consolidated financial statements.

Operating expenses for the Other Operations Sub-segment increased to $0.8 million for the three months ended September 30, 2002 from nil for the three months ended September 30, 2001. Operating expenses increased 53% or $0.7 million to $1.9 million for the nine months ended September 30, 2002 from $1.2 million for the nine months ended September 30, 2001. This is due to an increase in operating expenses in new markets and the European processing center partially offset by increased allocation of switching fees to direct operating expenses in the Central and Western Sub-segments.

~~We have not included the DASH network expenses in this segment because we sold DASH in January 2002 as further described in Note 9 to the unaudited consolidated financial statements.~~

Asia-Pacific markets.

Direct operating costs in the EFT Processing ~~Services~~ Segment represent costs of goods and services related to processing revenues and consist primarily of:

ATM installation costs

ATM site rentals

•

~~ATM installation costs~~

•

~~ATM site rentals~~

•

~~Costs associated with maintaining ATMs~~

•

~~ATM telecommunications~~

•

~~Interest on network cash and cash delivery~~

•

~~Security services to ATMs~~

Costs associated with maintaining ATMs

ATM telecommunications

Interest on network cash and cash delivery

Security services to ATMs

These costs ~~increased 11% or $0.8 million~~decreased 13% from the first quarter 2002 to ~~$7.6 million for~~ the three months ended September 30, 2002 from $6.8 million for the three months ended September 30, 2001 and increased 7% or $1.5 million to $20.9 million for the nine months ended September 30, 2002 from $19.5 million for the nine months ended September 30, 2001.first quarter 2003. This ~~increase~~decrease is primarily attributable to the sale of our U.K. network, offset by the increased cost of operating the increased number of ATMs mentioned above. Also, allocations within the Euronet operating companies were made to charge the ATM network operations for transaction switching fees and bank connection fees incurred by our central processing center in ~~Budapest. These~~Budapest; these direct operating costs included allocations ~~totaled $1.4~~of $1.1 million and ~~$1.5~~$1.2 million for the three months ended ~~September 30,~~March 31, 2003 and March 31, 2002, ~~and September 30, 2001,~~ respectively. ~~These allocations totaled $4.0 million and $3.5 million for the nine months ended September 30, 2002 and September 30, 2001, respectively.~~

The components of direct operating costs for the three months ended March 31, 2003 and ~~nine months ended September 30,~~ 2002 ~~and 2001~~ were:

Three months ended Sept. 30,

Nine months ended Sept. 30,

2002

2001

2002

2001
(unaudited)

(in thousands)

ATM communication      $ 1,057    $ 1,125    $ 3,013    $ 3,300
ATM cash filling and interest on network cash      1,877    1,778    5,340    5,270
ATM maintenance      1,269    1,003    3,264    3,076
ATM site rental      1,005    609    2,664    1,814
ATM installation      193    81    487    195
Transaction processing and ATM monitoring      1,697    1,855    4,739    4,658
Other      524    399    1,428    1,169




Total direct operating expenses      $ 7,622    $ 6,850    $ 20,935    $ 19,482

	Three months ended March 31, (unaudited, in thousands)
	2003		2002
ATM communication	$	810	$	1,001
ATM cash filling and interest on network cash		1,255		1,711
ATM maintenance		927		1,015
ATM site rental		692		783
ATM installation		163		152
Transaction processing and ATM monitoring		1,484		1,310
All other		434		642

Total direct operating costs	$	5,765	$	6,614

As a percentage of this segment’s revenue, direct operating costs fell from ~~61%~~54% for the three months ended ~~September 30, 2001~~March 31, 2002 to ~~55%~~48% for the three months ended ~~September 30, 2002 and decreased from 60%~~March 31, 2003. Excluding the one-time $0.8 million contract termination fee, direct operating costs for the ~~nine months~~quarter ended ~~September 30, 2001 to 54% for the nine months ended September 30, 2002.~~March 31, 2003 were 52% of this segment’s revenue. On a per-ATM basis, the direct operating costs fell ~~11%~~26% from ~~$2,914~~$2,596 per ATM for the three months ended ~~September 30, 2001~~March 31, 2002 to ~~$2,583~~$1,926 per ATM for the three months ended September 30, 2002 and decreased from $8,287 per ATM for the nine months ended September 30, 2001 to $7,097 per ATM for the nine months ended September 30, 2002. On a per-transaction basis, the direct operating costs fell 24% from $0.45 per transaction for the three months ended September 30, 2001 to $0.34 per transaction for the three months ended September 30, 2002 and decreased from $0.47 per transaction for the nine months ended September 30, 2001 to $0.37 per transaction for the nine months ended September 30, 2002. March 31, 2003.

Costs per transaction have decreased because of the combination of increasing transaction volumes on existing sites ~~and having~~with a large fixed direct operating cost structure on these sites. On a per-transaction basis, the direct operating costs fell 42% from $0.42 per transaction for the three months ended March 31, 2002 to $0.25 per transaction for the three months ended March 31, 2003. Increasing transaction volumes on existing sites that have fixed direct operating expenses decreases our costs per ATM and per transaction. In addition, there was an increase in the number of ATMs that we operate under ATM management agreements ~~and these~~including those in the U.K. ATM network that were previously owned by us. These ATMs generally have lower direct operating expenses (telecommunications, cash delivery, security, maintenance and site rental).

because, depending on the customer, our ATM management agreements cause us to bear some but not necessarily all expenses required to operate the ATM. For example, in the U.K. ATM network there were approximately $1.9 million in direct operating expenses in the first quarter of 2002 that were no longer incurred in the first quarter of 2003 as a result of the sale of the UK business and the simultaneous signing of the ATM outsourcing agreement. Finally, segment operating costs increased during the quarter ended March 31, 2003 over the quarter ended March 31, 2002 due to foreign currency fluctuations.

Segment salaries and benefits ~~increased 37% to $2.9~~were $3.1 million for the ~~three months~~three-month periods ended ~~September 30, 2002 from $2.1~~March 31, 2003 and March 31, 2002. Segment salaries and benefits decreased $0.4 million ~~for~~due to the ~~three months ended September 30, 2001~~sale of our U.K. subsidiary and ~~increased 29% to $8.1 million for~~ the ~~nine months ended September 30, 2002 from $6.2 million for the nine months ended September 30, 2001. This increase reflects the continued expansion~~transfer of the ~~operations~~employees to ~~Western European markets with significantly higher labor costs than Central Europe, as well as increases in~~the buyer, offset by the increase of staff levels in our Asia markets and at the Budapest processing center which were required to maintain quality service in line with rising transaction volumes. As a percentage of this segment’s revenue, salaries and benefits increased from ~~19%~~25% for the three months ended ~~September 30, 2001~~March 31, 2002 to ~~21%~~26% for the three months ended ~~September 30, 2002~~March 31, 2003. Excluding the one-time $0.8 million contract termination fee, segment salary and ~~increased from 19%~~benefits for the ~~nine months~~quarter ended ~~September 30, 2001 to 21% for the nine months ended September 30, 2002.~~

March 31, 2003 were 28% of this segment’s revenue.

Selling, general and administrative costs ~~allocated~~of the EFT Processing Segment of $0.4 million increased $0.2 million from the three months ended March 31, 2002. This

increase is largely the result of market development in our Asia-Pacific business and general and administrative expense at the Budapest processing center required to maintain quality of service in line with rising transaction volumes, offset by $0.3 million due to the ~~Processing Services Segment increased by $0.1~~sale of our U.K. ATM network.

Depreciation and amortization decreased $0.2 million ~~from a negative $0.2~~to $1.8 million for the three months ended ~~September 30, 2001 to negative $0.1 million for the three months ended September 30, 2002.~~March 31, 2003. This ~~negative balance~~decrease is due to the ~~allocation~~sale of ~~switching fees from selling, general and administrative costs to direct costs for each~~our U.K. network, offset by the increase in deprecation of the ~~other sub segments. Selling, general~~computer and ~~administrative costs decreased 50% to $0.2 million for the nine months ended September 30, 2002 from $0.4 million for the nine months ended September 30, 2001.~~

Depreciation and amortization increased 10% to $2.2 million for the three months ended September 30, 2002 from $2.0 million for the three months ended September 30, 2001 and increased 7% to $6.2 million for the nine months ended September 30, 2002 from $5.8 million for the nine months ended September 30, 2001. These increases are due to the newsystem facilities at our European operations center in Budapest which was placed in service in third quarter 2002 and increased ATMs in service as compared to the previous periods.

Operating ~~Income/(Loss)~~

Income

As a result of the factors discussed above and including the $0.8 million contract termination fee, the EFT Processing ~~Services~~ Segment as a whole improved operating income by ~~$0.7~~$0.6 million as compared to the same three-month period last year, reporting operating income of ~~$1.1~~$0.8 million for the three months ended September 30, 2002 as compared to operating income of $0.4 million for the three months ended September 30, 2001. The Processing Services Segment improved operating income by $3.1 million as compared to the same nine-month period last year reporting operating income of $3.4 million for the nine months ended September 30, 2002 as compared to operating income of $0.3 million for the nine months ended September 30, 2001. The Central European Sub-segment improved operating income by $0.3 million, reporting operating income of $0.7 million for the three months ended September 30, 2002 compared to operating income of $0.4 million for the three months ended September 30, 2001 and operating income of $2.0 million for the nine months ended September 30, 2002March 31, 2003 as compared to operating income of $0.2 million for the ~~nine months ended September 30, 2001. The Western European Sub-segment reported operating income of $1.1 million for the~~ three months ended ~~September 30, 2002 up from~~March 31, 2002. Foreign currency fluctuations had a minimal effect on the change in operating income ~~of $0.1 million for~~between the three months ended September 30, 2001 and operating income increased 101% to $2.6 million for the nine months ended September 30, 2002 from $1.3 million for the nine months ended September 30, 2001. The Other Operations Sub-segment increased its operating loss $0.8 million for the three months ended September 30, 2002 from nil for the three months ended September 30, 2001 and operating losses remained unchanged at $1.3 million for the nine months ended September 30, 2002 from the nine months ended September 30, 2001.

periods.

We are pursuing new business opportunities in Asia. If we are successful, as we expect to be, in securing required regulatory and other approvals to provide our services there, we will incur start-up expenses in 2003 that will exceed the amount of revenues we generate there for several quarters. Operating expenses are expected to exceed revenues by approximately ~~$1.2~~$2.0 million over the next 12 to 15 months as we commence and expand operations in Asia. Capital expenditures over the same period are expected to be approximately $0.6 million related to these operations. ~~We are exploring methods for limiting losses and capital investments arising from commencement of operations in Asia, including seeking participation in our Asian operations by outside investors.~~

As part of an overall change in our financial budgeting procedures, commencing ~~for~~in the year 2003, we will establish the level of our expenditures for the EFT Processing ~~Services~~ Segment based on “base line” revenue assumptions that take into account only revenues from contracted business, without consideration of any new potential business. We expect that this approach will improve our ability to keep costs in line with revenues.

~~SOFTWARE SOLUTIONS~~PREPAID PROCESSING SEGMENT

~~Revenues~~

Purchase of e-pay

In February 2003, the Company purchased 100% of the ~~Software Solutions Segment were $4.2 million before inter-segment eliminations~~share capital of e-pay, an electronic payments processor of prepaid mobile phone airtime “top-up” services in the U.K. and Australia. This transaction is more fully described in Note 4 to the unaudited consolidated financial statements.

The following table presents the results of operations for the two months ended March 31, 2003 as included in our consolidated results of operations (unaudited, in thousands):

		Two months ended March 31, 2003
Total revenues		$17,372

Direct operating cost		14,007
Salaries and benefits		812
Selling, general and administrative		411
Depreciation and amortization		618

Total operating expenses		15,848

Operating income		$ 1,524

The following table presents the pro forma condensed results of operations for the three months ended ~~September 30,~~March 31, 2003 and 2002 as ~~compared~~if e-pay had been included in our consolidated results of operations, including the effect of amortization of amortizable intangible assets acquired (unaudited, in thousands):

	Pro forma Three months ended March 31,
	2003		2002
Total revenues	$	26,772	$	7,314
Total operating expenses		24,299		7,508

Operating income	$	2,473	$	(194	)

Revenues

e-pay was formed in 1999 and initiated its first transaction in the U.K. in 2000 and in Australia in 2001. The significant growth in the pro forma revenue and operating income for the quarter ended March 31, 2003 over March 31, 2002 is the result of the start-up of e-pay business complemented by the conversion of mobile operators from prepaid “top-up” using scratch card solutions to ~~$3.8 million~~electronic processing solutions such as those provided by e-pay. Transactions processed for the months of February and March 2003 (the period included in our consolidated operating results for the three months ended ~~September 30, 2001. Segment revenues~~March 31, 2003) were ~~$13.8~~12.0 million ~~before inter-segment eliminations for the nine months ended September 30, 2002 as compared to $12.0~~and, on a pro forma basis, 18.7 million for the ~~nine~~full three month period. We do not expect these levels of growth rates to continue.

We recognize revenues in our Prepaid Processing Segment based on commission received from mobile and other telecommunication operators for the distribution and processing of prepaid mobile airtime and other telecommunication products.

Direct Costs

Direct operating costs in the Prepaid Processing Segment represent the commissions we pay to retail merchants for the POS distribution and sale of prepaid mobile airtime and other telecommunications products. These expenditures vary directly with processing revenues.

Operating Expenses other than Direct Costs

The Prepaid Processing Segment salary and selling, general and administrative expenses include sales, marketing, technical and other business support expenses. We do not expect these expenses to increase at the same rate as transactions and related processing revenues.

Depreciation and amortization includes $0.3 million for the two months ended ~~September 30, 2001.~~ March 31, 2003. This amortization relates to assigned amortizable intangible assets as described above.

SOFTWARE SOLUTIONS SEGMENT

	Three months ended March 31, (unaudited, in thousands)
	2003		2002
Total revenues	$	3,894	$	4,908

Direct operating cost		307		437
Salaries and benefits		2,375		2,447
Selling, general and administrative		695		570
Depreciation and amortization		275		232

Total operating expenses		3,652		3,686

Operating income/(loss)	$	242	$	1,222

Revenues

Software revenues are grouped into four broad categories:

Software license fees

Professional service fees

•

~~Software license fees~~

•

~~Professional service fees~~

•

~~Maintenance fees~~

•

~~Hardware sales~~

Maintenance fees

Hardware sales

Software license fees are the initial fees we charge to license our proprietary application software to customers. We charge professional service fees for providing customization, installation and consulting services to our customers. Software maintenance fees are the ongoing fees we charge for maintenance of our customers’ software products. Hardware sales revenues are derived from the sale of computer products. Total software revenues decreased $1.0 million from $4.9 million for the three months ended March 31, 2002 to $3.9 million for the three months ended March 31, 2003.

The components of ~~software solutions~~Software Solutions revenue for the three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2003 and 2002 ~~and 2001~~ were:

Three months ended
September 30,

Nine months ended September 30,

2002

2001

2002

2001
(unaudited)
(in thousands)

Software license fees    $ 1,001    $ 675    $ 5,516    $ 2,706
Professional service fees    1,522    1,281    3,568    4,686
Maintenance fees    1,630    1,365    4,221    3,777
Hardware sales    28    436    545    802




Total    $ 4,181    $ 3,757    $ 13,850    $ 11,971

	Three months ended March 31, (unaudited, in thousands)
	2003		2002
Software license fees	$	684	$	2,188
Professional service fees		1,496		841
Maintenance fees		1,555		1,409
Hardware sales		159		469

Total	$	3,894	$	4,907

Software license fees ~~increased $0.3~~decreased $1.5 million to ~~$1.0~~$0.7 million for the three-month period ended ~~September 30, 2002~~March 31, 2003 from ~~the same period in 2001, and increased $2.8 million to $5.5~~$2.2 million for the ~~nine-month~~three-month period ended ~~September 30, 2002 from the same period in 2001. These increases are~~March 31, 2002. This decrease is due primarily to license fees that we obtained as part of the software license agreement with ~~AIS~~FNF during 2002 (see Note 1011 to the unaudited consolidated financial statements). We recognized ~~$0.6 million and $3.5 million of~~nil revenues related to the ~~AIS~~FNF software license agreement during the three-month ended March 31, 2003 and ~~nine-month periods~~$1.3 million during the three months ended ~~September 30, 2002, respectively.~~March 31, 2002. Approximately $0.4 million of license fees remain to be earned and recognized related to the ~~AIS~~FNF software license ~~agreement. We believe that~~agreement; there is no specific date by which the ~~revenues of the Software Solutions Segment will increasingly~~services related to these fees must be ~~derived from our upgraded and new set of software solutions, including our wireless banking solutions.~~

utilized.

The increase in professional service fees of ~~$0.2~~$0.7 million is due to more billable hours, service and consulting contract work that we performed in connection with the sale and installation of software during the three months ended ~~September 30, 2002~~March 31, 2003 compared to the three months ended September 30, 2001. The decrease in professional service fees of $1.1 million is due to fewer billable hours, service and consulting contract work that we performed in connection with the sale and installation of software during the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001.March 31, 2002. Certain professional service fees are bundled in software license contracts and reported as license fees using the percentage of completion method.

~~The increase in maintenance~~

Maintenance fees ~~of $0.4~~increased $0.1 million from the ~~nine~~three months ended ~~September 30, 2001~~March 31, 2002 to the same period in 2003. First quarter 2002 ~~is due~~included approximately $0.2 million in mandate fees. Mandates are required changes to ~~the completion of several large contracts since June 2001, thereby initiating the maintenance aspect~~our software products as mandated by card associations. The timing of these ~~contracts, partially offset~~mandated changes varies, as does the revenue recognition. No such changes were required by ~~termination~~the relevant card associations during the first quarter of ~~maintenance contracts by existing customers. Additionally, almost~~2003. The FNF software license agreement resulted in an increase of approximately $0.2 million ~~of the increase is~~ due to recognition of the maintenance revenues ofrelated to the ~~software license~~ agreement with ~~AIS~~FNF as described in Note 1011 to the unaudited consolidated financial statements. Approximately ~~$0.8~~$0.5 million of maintenance revenues remain to be earned and recognized related to the ~~AIS~~FNF software license agreement through 2003. The remaining quarterly increase is due to the completion of contracts since March 2002, thereby initiating the maintenance aspect of those contracts, partially offset by termination of maintenance contracts by existing customers. We intend to ~~secure~~continue securing long-term revenue streams through multiyear maintenance agreements with existing and new customers.

The decrease in hardware sales in ~~2002~~2003 from ~~2001~~2002 is mainly attributed to the ~~timing of~~$0.3 million hardware ~~sales.~~sale in 2002 related to software license agreement with FNF. Hardware sales are generally sporadic as they are ~~generally~~ an incidental component to our software license and professional services offerings. ~~Hardware sales for the nine months ended September 30, 2002 includes one significant hardware sale of $0.3 million related to the AIS software license agreement.~~ The cost for this item is included in direct costs as described below.

Software Sales Backlog

We define “software sales backlog” as fees specified in contracts which we have executed and for which we expect recognition of the related revenue within one year. At ~~September 30, 2002,~~March 31, 2003, the revenue backlog was ~~$3.5~~$4.3 million as compared to ~~$1.5~~$4.7 million at ~~September 30, 2001. This increase resulted principally from increased sales during the three months ended September 30, 2002 and from the AIS~~March 31, 2002. The FNF software license agreement ~~which comprises approximately $0.4~~represented $2.7 million of the ~~balance. There can be no assurance~~March 31, 2002 backlog as compared to $0.4 million as of March 31, 2003. Strong sales in 2002 and 2003 have enabled us to replace the FNF license agreement within our backlog. We cannot assure you that the contracts included in backlog will actually generate the specified revenues or that the revenues will be generated within the one-year period.

Operating Expenses

Software Solutions Segment operating expenses consist primarily of:

•

Direct ~~operating costs~~

•

~~Salaries and benefits~~

•

~~Selling, general and administrative expenses~~

•

~~Depreciation and amortization~~

~~Total segment~~ operating expenses increased $0.6 million for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001. Total segment operating expenses decreased $0.8 million for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001. The components of Software Solutions Segment operating costs ~~for the three~~

Salaries and ~~nine month periods ended September 30, 2002~~benefits

Selling, general and ~~the same periods in 2001 were:~~administrative

Depreciation and amortization

Three months ended
September 30,

Nine months ended September 30,

2002

2001

2002

2001
(unaudited)
(in thousands)

Direct operating costs    $ 181    $ 57    $ 732    $ 584
Salaries and benefits    3,058    2,984    9,117    10,239
Selling, general and administrative    1,128    827    2,432    2,615
Depreciation and amortization    248    138    731    375




Total operating expenses    $ 4,615    $ 4,006    $ 13,012    $ 13,813

Direct operating costs consist of hardware costs and distributor commissions. The ~~marginal increase~~decrease in direct operating costs of $0.1 million for the three months ended ~~September 30, 2002~~March 31, 2003 from the three months ended ~~September 30, 2001~~March 31, 2002 is primarily due ~~to an increase~~a decrease in ~~distributor commissions. The increase in direct operating~~hardware costs ~~of $0.1 million for the nine months ended September 30, 2002 from the nine months ended September 30, 2001 is due~~related to the ~~cost of the one computer hardware sale as discussed above,~~FNF software license agreement in 2002 partially offset by ~~generally lower~~increased distributor ~~commissions.~~

commissions in 2003. We continue to pursue strategic distributor relationships for the sale of our software products. These relationships provide an avenue for efficient sales of our products to customers or geographic regions that may otherwise be restrictive.

Salary and benefits decreased marginally ~~increased $0.1 million~~ for the three-month period ended ~~September 30, 2002~~March 31, 2003 from the three-month period ended ~~September 30, 2001, and decreased $1.1 million for the nine-month period ended September 30,~~March 31, 2002 ~~from the nine-month period ended September 30, 2001. During the first quarter~~due to a slight increase in staff offset by capitalization of ~~2001 we reduced our workforce significantly with the primary objective of reducing costs in our Software Solutions Segment to bring them more in line with the anticipated revenue.~~

software development costs.

Selling, general and administrative expenses increased ~~$0.3 million~~marginally to ~~$1.1~~$0.7 million for the three months ended ~~September 30, 2002~~March 31, 2003 from ~~$0.8~~$0.6 million for the three months ended ~~September 30, 2001.~~March 31, 2002. This increase is primarily due to increased expenses related to expansion into the Asia Pacific region. Costs decreased $0.2 million to $2.4 million for the nine months ended September 30, 2002 from $2.6 million for the nine months ended September 30, 2001. This decrease was primarily due to our efforts at controlling expenses. Some of the cost reductions in the nine months ended September 30, 2002 were one-time credits and incentives received in 2002 related to the renegotiation of certain telecommunication contracts that ~~are~~did not ~~expected to continue~~recur in ~~the future.~~

2003.

Depreciation and amortization expense marginally increased ~~$0.1~~to $0.3 million for the three months ended ~~September 30, 2002~~March 31, 2003 from $0.2 million for the three months ended ~~September 30, 2001 and $0.4 million for the nine months ended September 30,~~March 31, 2002 ~~from the nine months ended September 30, 2001~~ due to the addition of ~~$0.4 million in leasehold improvements in late 2001 and the first quarter of 2002, as well as the addition of $1.0~~$0.6 million in capitalized software development costs during ~~2001. Depreciation of improvements and amortization~~2002. Amortization of capitalized software development costs was $0.2 million for the three months ended ~~September 30, 2002,~~March 31, 2003 and ~~$0.5~~$0.1 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2002.

We have made an ongoing commitment to the development, maintenance and enhancement of our products and services. In particular, we invested and will continue to invest in new software products that permit additional features and transactions on our ATM network. In addition, we continue to invest in the ongoing development of products that were recently introduced to the market. Our research and development costs for ~~computer~~software products to be sold, leased or otherwise marketed were ~~$1.0~~$0.9 million for both the three months ended ~~September 30, 2002 as compared to $1.6 million for the three months ended September 30, 2001. Our research~~March 31, 2003 and development costs for computer products to be sold, leased or otherwise marketed were $2.7 million for the nine months ended September 30, 2002 as compared to $4.1 million for the nine months ended September 30, 2001.

March 31, 2002.

We capitalize software development costs in accordance with our accounting policy of capitalizing development costs on a product-by-product basis once technological feasibility is established. We capitalized $0.1 million in the three months ended September 30, 2002, as compared to $0.1 million capitalized during the three months ended September 30, 2001. We capitalized $0.3 million in the nine months ended September 30, 2002, as compared to $0.3 million capitalized during the nine months ended September 30, 2001. We establish technological feasibility of computer software products when we complete all planning, designing, coding, and testing activities

necessary to establish that the product can be produced to meet its design specifications, including functions, features, and technical performance requirements.

~~Of the total~~ We capitalized ~~research and development costs, $0.2~~$0.3 million ~~and $0.1 million were amortized~~ in the three months ended ~~September 30, 2002 and 2001, respectively. In~~March 31, 2003, as compared to $0.1 million capitalized during the ~~nine~~three months ended ~~September 30, 2002 and 2001, $0.5 million and $0.2 million were amortized.~~

March 31, 2002.

Operating ~~Income/(Loss)~~

Income

The Software Solutions Segment generated operating income of $0.2 million for the three months ended March 31, 2003 as compared to operating income of $1.2 million for the three months ended March 31, 2002. Excluding the impact of the FNF software license agreement revenue and related hardware revenue from both periods’ results, Software Solutions would have generated operating income of $0.2 million for the three months ended March 31, 2003 and an operating loss of $0.4 million for the three months ended ~~September 30, 2002 as compared~~March 31, 2002.

CORPORATE SERVICES

	Three months ended March 31, (unaudited, in thousands)
	2003		2002
Salaries and benefits	$	620	$	575
Selling, general and administrative		809		696
Depreciation and amortization		22		42

Total operating expenses	$	1,451	$	1,313

Operating Expenses

Operating expenses for Corporate Services marginally increased to ~~an operating loss of $0.2~~$1.4 million for the three months ended September 30, 2001 and earned operating income of $0.8 million for the nine months ended September 30, 2002 as compared to an operating loss of $1.8 million for the nine months ended September 30, 2001 as a result of the factors discussed above.

~~CORPORATE SERVICES~~

~~Operating Expenses~~

~~Operating expenses for Corporate Services increased to~~March 31, 2003 from $1.3 million for the three months ended ~~September 30, 2002 from $1.2~~March 31, 2002.

NON-OPERATING RESULTS

Interest Income

Interest income was $0.4 million for the three months ended ~~September 30, 2001. The components of this segment’s operating costs for the three-month and nine-month periods ended September 30, 2002 and the same periods in 2001 were:~~

Three months ended
Sept. 30,

Nine months ended Sept. 30,

2002

2001

2002

2001
(unaudited)
(in thousands)

Salaries and benefits    $ 396    $ 577    $ 1,386    $ 2,239
Selling, general and administrative    793    619    2,244    2,195
Depreciation and amortization    84    37    40    108




Total operating expenses    $ 1,273    $ 1,233    $ 3,670    $ 4,542

The reduction of $0.9 million in salaries and benefits for the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001 is due to workforce reductions during the three months ended March 31, 2001. Because the workforce reductions involved payment of severance equal to several weeks’ salary to most employees, the financial impact of these reductions was greater in the second and subsequent quarters of 2001. Additionally, certain salary incentives are included in 2001.

~~NON-OPERATING RESULTS~~

~~Interest Income~~

~~Interest income was $0.1 million for the three months ended September 30, 2002~~2003 as compared to $0.1 million for the three months ended ~~September 30, 2001 and $0.2 million for~~March 31, 2002 reflecting primarily the ~~nine months ended September 30, 2002 compared to $0.2 million for the nine months ended September 30, 2001.~~

interest e-pay earns on temporary cash investments.

Interest Expense

Interest expense decreased marginally to ~~$1.4~~$1.6 million for the three months ended ~~September 30, 2002~~March 31, 2003 from ~~$2.0~~$1.7 million for the three months ended ~~September 30, 2001 and decreased to $4.8 million for the nine months ended September 30, 2002 compared to $7.1 million for the nine months ended September 30, 2001.~~March 31, 2002. The decrease ~~from 2001 to 2002~~ was primarily due to ~~a reduction~~the partial cash redemption of the euro-denominated Senior Discount Notes in July 2002, which was substantially offset by an increase of $0.2 million in interest related to the Senior Discount Notes due to a weakening of the U.S dollar relative to the euro during 2002 as ~~a result~~well as $0.2 million of ~~significant debt/equity swaps during 2001 and~~interest on indebtedness incurred with the ~~partial cash redemption~~acquisition of e-pay.

Gain on Sale of Subsidiary

The gain on subsidiary of $18.0 million for the three months ended March 31, 2003 relates to the sale of our U.K. subsidiary in ~~July 2002, which are~~January 2003. This sale is more fully described in Note 75 to the unaudited consolidated financial statements.

Foreign Exchange Gain/(Loss)

We had a net foreign exchange ~~gain~~loss of ~~$0.2~~$1.8 million for the three months ended September 30, 2002, compared to a net foreign exchange loss of $3.8 million for the three months ended September 30, 2001 and a net foreign exchange loss of $3.2 million for the nine months ended September 30, 2002March 31, 2003, compared to a net foreign exchange gain of ~~$3.9~~$0.4 million for the ~~nine~~three months ended ~~September 30, 2001.~~March 31, 2002. This loss is primarily due to the weakening of the U.S dollar, particularly relative to the euro, during 2002. Exchange gains and losses that result from re-measurement of some of our assets and liabilities are recorded in determining net loss. A portion of the assets and liabilities isare denominated in euros, including capital lease obligations, ~~notes payable (including~~ the ~~notes issued in our public bond offering),~~Senior Discount Notes, and cash and cash equivalents. It is our policy to attempt to match local currency receivables and payables. The foreign currency denominated assets and liabilities give rise to foreign exchange gains and losses as a result of U.S. dollar to local currency exchange movements.

~~Gain/(Loss)~~

Income Tax (Expense)/Benefit

Tax expense on ~~Early Retirement of Debt~~

~~We had a loss on early retirement of debt of $0.8~~income from continuing operations was $0.7 million for the ~~three months~~quarter ended ~~September 30, 2002,~~March 31, 2003 as compared to a ~~gain~~tax benefit on ~~early retirement~~income from continuing operations of ~~debt of $1.1~~$1.7 million for the ~~three months~~quarter ended ~~September 30, 2001. We had a loss on early retirement of debt of $1.0~~March 31, 2002. The first quarter 2003 tax expenses is due to $0.4 million in tax expense related to the Prepaid Processing Segment and $0.3 million in tax expense related to the EFT Processing Segment resulting from taxable income now being generated in several companies within these business segments. The income tax benefit for the ~~nine months~~quarter ended ~~September 30,~~March 31, 2002 ~~compared to a gain on early retirement~~ of ~~debt of $9.5~~$1.7 million ~~for the nine months ended September 30, 2001. The 2001 gains were the result of significant notes payable early retirement transactions as described in Note 7~~was primarily due to the ~~unaudited consolidated financial statements. Additionally, the notes payable retired in 2001 had significantly lower market value than the note payables retired in 2002.~~

~~The Senior Discount Notes that we re-acquired in the above exchanges have been retired. We will consider additional repurchases~~recognition of ~~our senior discount notes if opportunities arise to complete these transactions on favorable terms.~~

~~Minority Interest~~

~~We recorded the minority interest in losses from P. T. Euronet Sigma Nusantara, an Indonesia company. We own 80% of P. T. Sigma Nusantara’s shares.~~

tax benefits for net operating losses.

Discontinued Operations

On January 4, 2002, we sold substantially all of the DASH assets to ~~AIS~~FNF for $6.8 million in cash. Of this amount, $0.7 million is being held in escrow for a period of one year under the terms of a separate escrow agreement to cover certain post-closing adjustments and any damages that might arise from breach of the representations and warranties contained in the purchase agreement with AIS. We recorded a pre-tax gain of approximately $4.8

million related to this transaction. We reported net income from the discontinued operations of DASH of nil for the ~~nine~~three months ended ~~September 30, 2002, and $0.1 million~~March 31, 2003, and $3.1 million for the three ~~and nine~~ months ended ~~September 30, 2001, respectively.~~

March 31, 2002.

On July 15, 2002, we sold substantially all of the non-current assets and capital lease obligations of its processing business in France to Atos for ~~1 euro~~€1 plus reimbursement of certain operating expenses. A loss on disposal of the France business of $0.1 million was recorded in 2002. The net income from France operations reported as discontinued operations was nil for the three-month periods ended ~~September 30, 2002~~March 31, 2003 and ~~2001. The income from France operations reported as discontinued operations for the nine months ended September 30, 2002 was nil as compared to~~ a net loss of ~~$0.9~~$0.2 million for the ~~nine~~three months ended ~~September 30, 2001.~~

March 31, 2002.

As a result of the above, we have removed the operating results of France and DASH from continuing operations for all reported periods in accordance with SFAS 144. We previously reported France ~~under the Western European Sub-segment~~ and DASH under the ~~Other Operations Sub-segment.~~

EFT Processing Segment.

Net ~~Income/(Loss)~~

~~We recorded a~~Income

In summary, net ~~loss of $2.5~~income was $15.4 million during the three months ended ~~September 30, 2002 from a~~March 31, 2003 compared to net ~~loss~~income of ~~$5.4~~$3.6 million for the three months ended ~~September 30, 2001, as explained above.~~March 31, 2002. This increase results primarily from:

the gain on the sale of Euronet U.K. of $18.0 million

income from continuing operations from the Prepaid Processing Segment of $1.5 million, offset by

an increase in net foreign exchange loss of $2.2 million

an excess of income tax expense over income tax benefit of $2.3 million and

a decrease in income from discontinued operations of $2.9 million

LIQUIDITY AND CAPITAL RESOURCES

Prior to 2002, we had negative cash flow from operations. We ~~financed our historical~~funded operations and capital expenditures ~~primarily~~ through ~~the~~ proceeds from debt and equity offerings as well as through capital lease financing. As more fully described above, the ~~1998 issue~~Company funded the recent acquisition of ~~euro denominated 12 3/8% notes payable,~~e-pay with cash, debt and equity.

As of March 31, 2003, the 1997 public equity offering, equipment lease financing and private placements of equity securities. We have used the net proceeds of these transactions, together with revenues from operations and interest income, to fund aggregate net losses of approximately $127 million, investments in property, plant and equipment of approximately $65.9 million and acquisitions of approximately $24.6 million.

~~At September 30, 2002, we~~Company had unrestricted cash and cash equivalents of ~~$15.3 million.~~$13.9 million, an increase of $1.9 million from $12.0 million as of December 31, 2002. We ~~had $3.9~~have restricted cash of $38.0 million as of March 31, 2003, including $33.2 million of ~~restricted~~ cash held ~~as security~~in trust and/or cash held on behalf of others in connection with ~~respect~~the receipt and disbursement activities in the Prepaid Processing Segment. Cash flow increased by approximately $28.9 million during the quarter due to ~~cash provided by banks participating in our~~proceeds from the sale of the U.K. ATM network ~~to cover guarantees on financial instruments~~ and ~~as deposits with customs officials.~~

~~On June 28, 2000 we entered into an unsecured revolving credit agreement providing a facility of up to $4.0~~decreased by $28.0 million ~~from three shareholders, one of which was Michael J. Brown, Euronet’s CEO and a director. This credit facility was renewed twice and was~~ due and payable on June 28, 2002. We issued 300,000 warrants in conjunction with the issuance and extensions to this facility. On May 29, 2001, we drew $2.0 million and issued an additional 160,000 warrants based on the terms of the credit agreement. The warrant strike price was set at the average share price, as quoted on Nasdaq for 10 trading days prior to the warrant issue date, less 10%. The exercise price for Michael J. Brown was originally the same as for the other lenders. It was revised by an amendment to the Credit Agreement on January 27, 2002 to be no less than the full trading pricepurchase of ~~our stock on Nasdaq as~~e-pay, net of ~~the date of the agreement providing for grant of the warrants, with~~cash acquired.

We reduced the amount of ~~the discount that would have resulted~~our long term Senior Discount Notes outstanding from ~~the original terms of the Credit Agreement~~$38.7 million at March 31, 2002 to ~~be paid to Michael J. Brown in cash.~~

The exercise prices for the warrants for the other two shareholders were $7.00 per share for the 100,000 warrants issued as of June 28, 2000, $4.12 per share for the 100,000 warrants issued as of December 29, 2000, $5.92 per share for the 160,000 warrants issued as of May 29, 2001 and $6.70 per share for the 100,000 warrants issued as of June 28, 2001. The exercise prices for the warrants for Michael J. Brown were $8.25 per share for the 100,000 warrants issued as of June 28, 2000, $4.12 per share for the 100,000 warrants issued as of December 29, 2000, $7.05 per share for the 160,000 warrants issued as of May 29, 2001 and $9.00 per share for the 100,000 warrants issued as of June 28, 2001.

~~In 2001, two participants in the revolving credit agreement elected to exercise a total of 361,000 warrants for an equal number of shares. We received a total amount of $2.1~~$37.4 million ~~in cash from these transactions.~~

In May 2002, two participants in the revolving credit agreement elected to exercise a total of 99,000 warrants for an equal number of shares. We received a total amount of $0.7 million in cash from these transactions.

~~We elected not to renew the credit agreement in December 2001 and, on~~at March 21, 2002, we repaid the outstanding credit facility debt in full. Payment consisted of $2.0 million in principal and interest. As of September 30, 2002, no warrants remain outstanding with respect to this credit facility.

In January 2001, we entered into an unsecured credit facility loan agreement under which we borrowed $0.5 million from Michael J. Brown in order to fund transactions on our Czech Republic ATM network. Amounts advanced under this loan agreement mature six months from the date an advance is made, but the amounts were extended for a second six-month period. Amounts advanced bear interest of 10% per annum. In January 2002, we paid in full the loan principal and related interest totaling $0.5 million.

In 2000, Michael J. Brown pledged approximately $4.0 million of marketable securities that he owns (not including any of our common stock) in order to obtain the release of cash collateral of $4.8 million held by a bank providing cash to our ATM network in Hungary.31, 2003. We did ~~not have to pay any consideration for~~ this ~~security pledge. On March 14, 2002, we obtained~~primarily through a ~~letter~~partial redemption of ~~credit supported by a certificate of deposit for $5.0~~$9.0 million that replaced Michael J. Brown’s security pledge, as well as a related $0.8 million letter of credit and certificate of deposit. The original $5.0 million letter of credit was subsequently reduced to $2.0 million letter of credit as more fully described in Note 611 to our consolidated financial statements for the year ended December 31, 2002. However, the weakening of the U.S. dollar relative to the ~~unaudited financial statements.~~euro during 2002 has significantly offset the impact of the partial redemption. We commenced cash payments of interest on Senior Discount Notes on January 1, 2003, and are required to continue to make such payments on a semi-annual basis on January 1 and July 1 through 2006. At current debt levels, we will be required to make approximately $2.3 million (€2.2 million) in interest payments on a semi annual basis through 2006 on January 1 and July 1 of each year. The remaining principal balance of Senior Discount Notes of approximately $37.4 million carrying value (approximately €35 million) will be due and payable on July 2006.

Since July 1, 2002, we may at any time exercise our right to partially or fully redeem the Senior Discount Notes for cash without restriction. Any redemption is subject to an early redemption premium as defined in the Senior Discount Notes indenture. The early redemption premium decreases throughout the term of the Senior Discount Notes. As of March 31, 2003, the early redemption premium is 6% of the face value of the Senior Discount Notes redeemed. Starting July 1, 2003, the early redemption premium decreases to 4%, then to 2% July 1, 2004 and no premium from July 1, 2005 and thereafter.

In January 2003, we received net proceeds from the sale of our UK subsidiary of $28.9 million. We used all of those funds to pay the cash portion of the purchase price of e-pay, which we acquired in February 2003. In connection with the acquisition of e-pay, we incurred indebtedness to the former e-pay shareholders of $26.9 million (payable in British pounds sterling), which is composed of three separate elements:

Deferred purchase price in the amount of $8.5 million, bearing interest at an annual rate of 6% and payable quarterly in an amount equal to 90% of contractually defined excess cash flows generated by e-pay. Based upon current expected results of e-pay, we expect to be able to repay this amount by approximately February 2004.

Indebtedness of $7.4 million under promissory notes bearing interest at an annual rate of 7%, with accrued interest payable on March 31 and September 30 of each year, beginning on September 30, 2003, until maturity on February 18, 2005. The amount outstanding under these notes is convertible in the aggregate into 647,282 shares of our Common Stock at the option of the holders, based upon an initial conversion price (subject to adjustment) of $11.43 per share. We may compel conversion of the entire amount of this indebtedness (effectively repaying it through the issuance of our Common Stock) when the average market price on the Nasdaq National Market of our Common Stock for 30 consecutive trading days exceeds $15.72 (subject to adjustment based on adjustments to the initial conversion price). We expect to repay this indebtedness through conversion or by compelling conversion if this benchmark is reached. If the debt does not convert or we are unable to compel conversion, we will either seek to repay it through available cash flows, if any, from our business or to refinance this debt.

Indebtedness of $11.0 million under promissory notes bearing interest at an annual rate of 8%, with accrued interest payable on March 31 and September 30 of each year, beginning on September 30, 2003, until maturity on February 18, 2005. Our current cash flow levels would be sufficient to make the semi-annual interest payments but would not be sufficient to repay this debt at maturity. We expect our cash flows to increase sufficiently to permit full repayment of this debt when it falls due. If our cash flows are insufficient for this purpose, we will seek to refinance this debt.

We intend to reduce our indebtedness under our Senior Discount Notes through repurchase of notes from time to time in exchange for equity as we have done in the past and/or through repayments as our cash flows permit. In the event we are not able to exchange debt for equity or repay the debt through cash flows, we will attempt to refinance this debt to decrease interest costs and, if possible, extend its repayment period if reasonable terms are available.

We offer no assurances that we will be able to obtain favorable terms for refinancing of any of our debt as described above.

In the EFT Processing Segment, we lease many of our ATMs under capital lease arrangements that expire between ~~2002~~2003 and 2008. The leases bear interest between 8% and 12% per ~~annum.~~year. As of ~~September 30, 2002,~~March 31, 2003, we owed ~~$10.3~~$6.4 million under these capital lease arrangements. We expect that our capital requirements will continue in the future, although ~~strategies that promote~~our strategy to focus on ATM outsourcing opportunities rather than ATM ownership and deployment as well as redeployment of under-performing ATMs will reduce ~~some~~capital requirements.

In the Prepaid Processing Segment, we own approximately 25% of ~~these requirements. Acquisitions~~the 50,000 POS devices that we operate. The remaining 75% represent integrated cash register devices of ~~related ATM businesses and investments~~our major retail customers. As the prepaid processing business expands, we will continue to add terminals in ~~new markets will require additional capital expenditures.~~ certain independent retail locations at a price of approximately $300 per terminal. We expect the proportion of owned terminals to remain at a similar percent of total terminals operated.

Fixed asset purchases for ~~2002~~2003 are currently estimated to be in the range of $9$5.0 to ~~$10~~$7.0 million.

We are required to maintain ATM hardware and software in accordance with certain regulations and mandates established by local country regulatory and administrative bodies as well as Europay, VISA and Mastercard. Accordingly, we expect additional capital expenditures over the next few years to maintain compliance with these regulations. Upgrades to the ATM software and hardware will also be required on or before 2005 to enable certain “micro–chip” card technology for “Smart Cards.” Our ATM hardware and software will need to be modified to enable the use of “Smart Cards.” We are currently developing a project plan for implementation and delivery and estimating the costs associated with the hardware and software modifications.

Effective July 1, 2001, we implemented our Employee Stock Purchase Plan, or ESPP, under which employees have the opportunity to purchase ~~common stock~~Common Stock through payroll deductions according to specific eligibility and participation requirements. This plan qualifies as an “employee stock purchase plan” under section 423 of the Internal Revenue Code of 1986. We completed a series of offerings of three months duration with new offerings commencing on January 1, April 1, July 1, and October 1 of each year. Under the plan, participating employees are granted options, which immediately vest and are automatically exercised on the final date of the respective offering period. The exercise price of ~~common stock~~Common Stock options purchased is the lesser of 85% of the “fair market value” (as defined in the ESPP) of the shares on the first day of each offering or the last date of each offering. The options are funded by participating employees’ payroll deductions or cash payments.

Under the provisions of the ESPP, we reserved 500,000 shares of ~~common stock~~Common Stock all of which we had issued ~~260,871 shares~~ as of ~~September 30,~~December 31, 2002. ~~This plan qualifies as an “employee stock purchase plan”~~In February 2003, we adopted a new ESPP and reserved 500,000 shares of Common Stock for issuance under ~~section 423 of the Internal Revenue Code of 1986.~~that plan. During the three months ended ~~September 30, 2002,~~March 31, 2003, we issued ~~23,396~~11,994 shares at a price of ~~$4.28~~$6.53 per share, resulting in proceeds to us of approximately $0.1 million. ~~During the nine months ended September 30, 2002, we issued 86,301 shares at an average price of $11.60 per share, resulting in proceeds to us of $1.0 million.~~

In ~~March 2002,~~February 2003, we made matching contributions of ~~9,647~~28,015 shares of stock in conjunction with our 401(k) employee benefits plan for the plan year ~~2001.~~2002. Under the terms of this plan, employer-matching contributions consist

of two parts, referred to as “basic” and “discretionary.” The basic matching contribution is equal to 50% of eligible employee elective salary deferrals between 4% and 6% of participating employee salaries for the plan year. The discretionary matching contribution is determined by our ~~board~~Board of ~~directors~~Directors for a plan year and is allocated in proportion to employee elective deferrals. As of ~~September 30, 2002,~~March 31, 2003, total employer matching contributions since inception of the plan has consisted of ~~25,922~~53,937 shares under the basic match and ~~16,275~~16,274 shares under the discretionary matching contribution.

~~We reduced~~

CONTRACTUAL OBLIGATIONS AND OFF BALANCE SHEET ITEMS

The following table summarizes our contractual obligations as of March 31, 2003 (unaudited, in thousands):

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Notes payable (including interest)	$	84,427	$	6,091	$	38,334	$	40,002	$	—
Capital leases (including interest)		7,370		3,771		3,049		462		88
Operating leases		9,020		2,053		3,210		2,710		1,047
Purchase obligations		15,054		6,453		8,112		489		—
Other long-term liabilities		—		—		—		—		—

Total	$	115,871	$	18,368	$	52,705	$	43,663	$	1,135

Purchase obligations include contractual amounts for ATM maintenance, cleaning, telecommunication and cash replenishment operating expenses. While contractual payments may be greater or less based on the ~~total book value~~number of ~~our long term Senior Discount Notes from $46.2 million at September 30, 2001 to $34.0 million at September 30, 2002. We did this through a series of debt-for-debt exchanges, debt-for-equity exchanges,~~ATMs and a partial redemption as more fully described in Note 7 to our September 30, 2002 unaudited consolidated financial statements and in Note 11 to our consolidated financial statements for the year ended December 31, 2001. Due to market and other factors, we may not be able to continue to successfully implement these exchanges in the future. We are required to commence cash payments of interest on these notes on January 1, 2003. At current debttransaction levels, we will be required to make approximately $2.1 million in interest payments on a semi-annual basis beginning January 1, 2003. The full principal balance of these notes will be due and payable on July 1, 2006.

We have noncancelable operating rental leases for office space which expire over the next 2 to 8 years. Future minimum lease payments under these noncancelable operating leases are approximately $2.1 million for 2003, $1.9 million for 2004, $1.6 million for 2005, $1.5 million for 2006, $1.4 million for 2007 and $1.7 million thereafter.

~~We have noncancelable~~ purchase obligations ~~for certain computer equipment. This computer equipment has not been received and therefore no liability has been recorded~~listed above are estimated based on ~~the balance sheet as~~current levels of ~~September 30, 2002. The total purchase obligation is approximately $0.6 million.~~

such business activity. We have no other significant off-balance sheet items.

Based on our current business plan and financial projections, we expect to improve operating income and generate net cash inflows from our operating activities in 2003. In our Processing Services Segment, we anticipate that increased transaction levels in our ATM network will result in additional revenues without an increase in expenses at the same rate. In addition, we expect to further expand our ATM outsourcing services and offer new value-added services, which will provide continued revenue growth without significantly increasing direct operating expenses or capital investments. In the Software Solutions Segment, we believe our operating costs are now more in line with anticipated revenues. We believe that certain asset sales and cash and cash equivalents will provide us with sufficient capital to meet current and future cash requirements. We will continue our policy of assessing opportunities for additional debt and equity financing as they arise, and will pursue any such opportunities if we think they can contribute to fulfilling our financial and strategic business objectives, particularly if attractive acquisition opportunities present themselves.

BALANCE SHEET ITEMS

The Company’s March 31, 2003 balance sheet has changed significantly compared to December 31, 2002, due to the acquisition of e-pay.

e-pay is responsible for the collection of cash receipts from the retailer for remittance to the telecommunication provider. Cash is collected into designated trust accounts classified as restricted cash balances that are not available for our operating business activities. This results in significant current assets held in restricted cash and trade accounts receivable due from retailers, and a corresponding liability to the telecommunications provider classified as accounts payable/accrued expense that substantially offsets this amount. Additionally, the acquisition of e-pay was made at a significant premium to the underlying historical cost basis of the e-pay assets, resulting in significant goodwill and other intangible assets as further described below.

Cash and cash equivalents

Cash and cash equivalents increased to ~~$15.3~~$13.9 million at ~~September 30, 2002~~March 31, 2003 from ~~$8.8~~$12.0 million at December 31, ~~2001~~2002 primarily due to the following activity:

cash flow from operations of $6.3 million

net proceeds from exercise of stock options, warrants and employee share purchases of $0.6 million

net proceeds from the sale of our U.K. ATM network of $24.4 million, offset by

the purchase of e-pay of $28.0 million

•

~~cash flow from operations of $8.5 million~~

•

~~net proceeds from the sale of DASH of $5.8 million as described in Note 9 to our unaudited consolidated financial statements~~

•

~~net proceeds from the private placement of equity in February 2002 of $11.7 million as described in Note 11 to our unaudited consolidated financial statements~~

•

~~net proceeds from exercise of stock options, warrants and employee share purchases of $5.1 million~~

•

~~offset by~~ the cash purchase of ~~$6.4~~$0.5 million of fixed assets and other long-term assets

•

~~offset by the purchase of CDs to secure standby letters of credit of $2.0 million~~

•

~~offset by debt and lease repayments of $16.0 million~~

32lease repayments of $1.1 million

Restricted cash

Restricted cash increased to ~~$3.9~~$38.0 million at ~~September 30, 2002~~March 31, 2003 from ~~$1.9~~$4.4 million at December 31, ~~2001.~~2002 primarily due to the acquisition of e-pay. Approximately $33.2 million of the restricted cash is held in trust accounts by our Prepaid Processing Segment on behalf of the mobile operators for which we process transactions. These balances are used in connection with the administration of customer collection and vendor remittance activities in the Prepaid Processing Segment. The ~~majority of restricted cash~~remainder is held as security with respect to cash provided by banks participating in our ATM network. The increase is due to the pledge of cash to purchase a $2.0 million surety bond as cash collateral for the Hungarian ATM network, to replace Michael J. Brown’s $4.0 million security pledge and a related $0.8 million certificate of deposit previously obtained for the same purpose.

Trade accounts receivable

Trade accounts receivable ~~decreased~~increased to ~~$7.7~~$36.2 million at ~~September 30, 2002~~March 31, 2003 from ~~$8.9~~$8.4 million at December 31, ~~2001~~2002 primarily due to ~~improved collections.~~

the acquisition of e-pay in February 2003. Approximately $27.6 million represents the trade accounts receivable of our Prepaid Processing Segment which related to the administration of customer collection and vendor remittance activities in the Prepaid Processing Segment.

Assets ~~from discontinued operations~~

held for sale

Assets ~~from discontinued operations~~held for sale as of December 31, 2002 represent the net assets for ~~France and DASH as of December 31, 2001. The decrease to nil as of September 30, 2002 results from the sale of substantially all of France’s and DASH’s assets~~our U.K. ATM network subsidiary which was sold in January 2003 as discussed in Note 95 to our unaudited consolidated financial statements.

Property, plant and equipment

Net property, plant and equipment ~~increased~~decreased to ~~$30.1~~$21.3 million ~~at September 30, 2002~~as of March 31, 2003 from ~~$29.1~~$21.4 million at December 31, ~~2001.~~2002. This ~~increase~~decrease results from ~~fixed asset purchases~~depreciation and amortization in excess of ~~depreciation.~~

fixed asset purchases. This is a result of our strategy to operate ATMs under outsourcing service arrangements rather own and deploy ATMs, thus reducing the required less capital expenditures for ATMs.

Intangible assets

Net intangible assets increased to ~~$1.7~~$80.2 million at ~~September 30, 2002~~March 31, 2003 from ~~$1.6~~$1.8 million at December 31, ~~2001. The intangible asset is goodwill related to the 1999 acquisition of SBK, a German ATM company.~~2002. The increase from December 31, ~~2001~~2002 to ~~September 30, 2002~~March 31, 2003 is primarily due to ~~remeasurement~~the purchase of e-pay in February 2003. Of the total purchase price, $13.9 million has been allocated to amortizable intangible assets ~~due~~acquired and $64.7 million has been allocated to ~~foreign exchange rate movement.~~

goodwill and other intangibles with indefinite useful lives. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets.

Other assets

Other assets ~~marginally decreased~~remained unchanged at $2.9 million from December 31, 2002 to ~~$3.0~~March 31, 2003.

Current liabilities

Current liabilities increased to $87.2 million at ~~September 30, 2002~~March 31, 2003 from ~~$3.3~~$19.8 million at December 31, ~~2001~~2002 due to the following activity:

an increase in trade accounts payable of $47.6 million due primarily to the ~~capitalization~~purchase of ~~certain financing~~e-pay. Of this increase, $46.1 million is related to the administration of customer collection and vendor remittance activities in the Prepaid Processing Segment.

an increase in other ~~deferred costs~~accrued expenses of ~~$0.5~~$25.1 million due primarily to the purchase of e-pay. Of this increase, $17.5 million is primarily related to the administration of customer collection and vendor remittance activities in the Prepaid Processing Segment.

an increase in accrued interest on notes payable of $1.4 million related to the Senior Discount Notes and the indebtedness incurred with the purchase of e-pay

offset by a decrease in the ~~amortization~~current portion of ~~capitalized software development costs~~capital lease obligations of ~~$0.4 million.~~$0.6 million

~~Current liabilities~~

~~Current liabilities decreased to $20.4 million at September 30, 2002 from $23.6 million at~~

Liabilities held for sale

Liabilities held for sale as of December 31, ~~2001 due to the following activity:~~

•

~~the $2.0 million repayment of the shareholder credit facility discussed in Note 6 to our unaudited consolidated financial statements~~

•

~~decreases in trade accounts payable and other accrued expenses of $1.6 million~~

•

~~offset by an increase in the current portion of capital lease obligations of $0.4 million~~

~~Liabilities from discontinued operations~~

~~Liabilities from discontinued operations~~2002 represent the net liabilities for ~~France and DASH as of December 31, 2001. The decrease to nil as of September 30, 2002 results from the sale of substantially all of France’s and DASH’s liabilities~~our U.K. subsidiary which was sold in January 2003 as discussed in Note 95 to our unaudited consolidated financial statements.

Capital leases

Total capital lease obligations including current installments decreased to ~~$10.3~~$6.4 million at ~~September 30, 2002~~March 31, 2003 from ~~$12.0~~$7.7 million at December 31, ~~2001.~~2002. This results from the excess of lease payments of ~~$4.1~~$1.1 million over new capital lease obligations of ~~$2.4 million.~~$0.1 million, and $0.4 million of leases paid on our behalf in connection with the sale of the U.K. ATM network. The new capital leases are generally for a term of 3 to 5 years.

Our strategic business focus to operate ATM’s through outsourcing contracts rather than through ownership and deployment should continue to allow for further reductions in capital leases as current lease obligations continue to be paid off.

Notes payable

Notes payable ~~decreased~~increased to ~~$34.0~~$64.0 million at ~~September 30, 2002~~March 31, 2003 from ~~$38.1~~$36.3 million at December 31, ~~2001.~~2002 primarily due to the indebtedness incurred with the purchase of e-pay. A summary of the activity for the three months ended March 31, 2003 is as follows (unaudited, in thousands):

	e-pay Notes			Senior Discount Notes		Total
	payable in pounds sterling			payable in euros
Balance at December 31, 2002	$	—		$	36,318	$	36,318
Indebtedness incurred		26,867			—		26,867
Accretion of discount		—			11		11
Unrealized foreign exchange (gain)/loss		(270	)		1,090		820

Balance at March 31, 2003	$	26,597		$	37,419	$	64,016

Total Stockholders’ Equity

Total stockholders’ equity increased to $40.1 million at March 31, 2003 from $6.2 million at December 31, 2002. This results from the following ~~activity (in thousands):~~activity:

$15.4 million in net income for the three months ended March 31, 2003, including a gain on the sale of our U.K. subsidiary of $18.0 million

Balance at December 31, 2001    $ 38,146
Unrealized foreign exchange loss (euro vs. U.S. dollar)    4,413
Accretion of notes payable interest    2,482
Early retirement of debt (see Note 7 to the unaudited consolidated financial statements)    (11,061 )

Balance at September 30, 2002    $ 33,980

~~Total Stockholders’ Equity/(Deficit)~~

~~Total stockholders’ equity increased~~$18.0 million in Common Stock issued to ~~$7.4~~the former shareholders of e-pay in connection with the purchase of e-pay

$0.4 million ~~at September 30, 2002 from a deficit of $7.7 million at December 31, 2001. This results~~in proceeds from the ~~following activity:~~exercise of options and warrants and employee stock purchases

$0.2 million in Common Stock issued as the employer-matching portion of employees’ 401(k) contributions

•

~~$3.7 million in net losses for the nine months ended September 30, 2002~~

•

~~$18.6 million in proceeds from the private placement of equity, the exercise of options and warrants, and employee stock purchases~~

•

~~$0.2 million decrease in the accumulated comprehensive loss~~

CRITICAL ACCOUNTING POLICIES

For details of critical accounting policies please refer to the audited consolidated financial statements of Euronet Worldwide, Inc. and subsidiaries for the year ended December 31, ~~2001,~~2002, including the notes thereto, set forth in the Company’s Form 10-K.

IMPACT OF ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

EITF 00-21

In November 2002, the Emerging Issues Task Force (EITF) of the FASB reached a consensus on EITF No. 00-21, “Accounting for Revenue Arrangements with Multiple Element Deliverables” (EITF 00-21). The issue addresses how to account for arrangements that may involve multiple revenue-generating activities, i.e., the delivery or performance of multiple products, services, and/or rights to use assets. In applying this guidance, separate contracts with the same party, entered into at or near the same time, will be presumed to be a package, and the consideration will be measured and allocated to the separate units based on their relative fair values. This consensus guidance will be applicable to agreements entered into in quarters beginning after June 15, 2003. We will adopt this new accounting effective July ~~2002,~~1, 2003. We are currently evaluating the potential impact, if any, the adoption of EITF 00-21 will have on our financial position and results of operations.

On April 30, 2003, the FASB issued Statement of Financial Accounting Standards No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (SFAS ~~146)~~149), which amends Statement of Financial Accounting Standards No. 133, “Accounting for ~~Exit or Disposal Activities.”~~Derivative Instruments and Hedging Activities” (SFAS 133), to address (1) decisions reached by the Derivatives Implementation Group, (2) developments in other Board projects that address financial instruments, and (3) implementation issues related to the definition of a derivative. SFAS ~~146 addresses significant issues regarding~~149 has multiple effective date provisions depending on the ~~recognition, measurement and reporting~~nature of ~~costs that are associated with exit and disposal activities, including restructuring activities that~~the amendment to SFAS 133. We are currently ~~accounted for pursuant to~~evaluating the ~~guidance that~~potential impact, if any, the adoption of SFAS 149 will have on our financial position and results of operations.

At the January 23, 2003 meeting, the Emerging Issues Task Force (EITF) ~~has set forth~~reached consensuses on EITF 02-18 “Accounting for Subsequent Investments in an Investee after Suspension of Equity Method Loss Recognition.” Issues 1 and 2 of EITF 02-18 which considered whether, (i) an investor should recognize any previously suspended losses when accounting for a subsequent investment in an investee that does not result in the ownership interest increasing from one of significant influence to one of control, and (ii), if the additional investment represents the funding of prior losses, whether all previously suspended losses should be recognized or whether only the previously suspended losses equal to the portion of the investment determined to be funding prior losses should be recognized. The EITF ~~Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs~~concluded that if the additional investment, represents, in substance, the funding of prior losses, the investor should recognize previously suspended losses only up to ~~Exit an Activity (including Certain Costs Incurred~~the amount of the additional investment determined to represent the funding of prior losses. At its February 5, 2003 meeting, the FASB ratified the consensuses reached by the Task Force in ~~a Restructuring).” The scope~~this Issue. We have discontinued recording losses on the equity method investment in our subsidiary in Indonesia. If we make additional investments in this subsidiary, we would be required to recognize additional losses to the extent these additional investments are considered funding of ~~SFAS 146 also includes (1) costs related to terminating a contract that is not a capital lease and (2) termination benefits that employees who are involuntarily terminated receive under~~unrecognized prior losses of the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred compensation contract. SFAS 146 will be effective for financial statements issued for fiscal years beginning after December 31, 2002. The Company has not yet determined the impact of SFAS 146 on results of operations and financial position.

subsidiary.

FORWARD-LOOKING STATEMENTS

This document contains statements that constitute forward-looking statements within the meaning of section 27A of the Securities Act and section 21E of the U.S. Securities Exchange Act of 1934. All statements other than statements of historical facts included in this document are forward-looking statements, including statements regarding the following:

Trends affecting our business plans and financing plans and requirements

34Trends affecting our business

The adequacy of capital to meet our capital requirements and expansion plans

The assumptions underlying our business plans

Business strategy

Government regulatory action

Technological advances

Projected costs and revenues

•

~~Our business plans and financing plans and requirements~~

•

~~Trends affecting our business plans and financing plans and requirements~~

•

~~Trends affecting our business~~

•

~~The adequacy of capital to meet our capital requirements and expansion plans~~

•

~~The assumptions underlying our business plans~~

•

~~Business strategy~~

•

~~Government regulatory action~~

•

~~Technological advances~~

•

~~Projected costs and revenues~~

Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct. Forward-looking statements are typically identified by the words believe, expect, anticipated, intend, estimate and similar expressions.

Investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may materially differ from those in the forward-looking statements as a result of various factors, including the following:

Technological and business developments in the local card, electronic and mobile banking and mobile phone markets affecting transaction and other fees that we are able to charge for our services

Foreign exchange fluctuations

•

~~Technological and business developments in the local card, electronic and mobile banking and mobile phone markets affecting transaction and other fees that we are able to charge for our services~~

•

~~Foreign exchange fluctuations~~

•

~~Competition from bank-owned ATM networks, outsource providers of ATM services, software providers and providers of outsourced mobile phone services~~

•

~~Our relationships with our major customers, sponsor banks in various markets and international card organizations~~

•

~~Changes in laws and regulations affecting our business~~

Competition from bank-owned ATM networks, outsource providers of ATM services, software providers and providers of outsourced mobile phone services

Our relationships with our major customers, sponsor banks in various markets and international card organizations, including the risk of contract terminations with major customers

Changes in laws and regulations affecting our business

These risks and other risks are described ~~elsewhere~~ in Exhibit 99.1 to this ~~document~~Form 10-Q and our other filings with the Securities and Exchange Commission.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Operational Risk; Security~~

Our business involves the operation and maintenance of a sophisticated computer network and telecommunications connections with banks, financial institutions and mobile operators. This, in turn, requires the maintenance of computer equipment and infrastructure, including telecommunications and electrical systems, and the integration and enhancement of complex software applications. There are certain operational risks inherent in this type of business that can require temporary shut-down of part or all of our processing systems, including failure of electrical supply, failure of computer hardware and software errors. All of our ATMs other than the ones in Germany are operated through our processing center in Budapest, so any operational problem there may have a significant adverse impact on the operation of our network generally.

We have experienced operations and computer development staff and have created redundancies and procedures, particularly in our Budapest processing center, to mitigate these risks. However, they cannot be eliminated entirely. Any technical failure that prevents operation of our systems for a significant period of time will prevent us from processing transactions during that period of time and will directly and adversely affect our revenues and financial results.

Our ATM network systems process electronic financial transactions using information that is read by ATMs or point-of-sale terminals from bank debit and credit cards, or that our customers input into our systems for mobile

phone recharge services. We capture, transmit, handle and store this sensitive bank card information in performing services for our customers. In addition, our software is designed to permit our customers to operate electronic financial transaction networks similar to our network, so our software is used in handling this type of sensitive information.

These businesses involve certain inherent security risks, in particular the risk of electronic interception and theft of the information for use in fraudulent card transactions. We have incorporated industry standard encryption technology and processing methodology into our systems and software to maintain high levels of security. Although this technology and methodology mitigates security risks, they cannot be eliminated entirely as criminal elements apply increasingly sophisticated technology to attempt to obtain unauthorized access to the information handled by ATM and electronic financial transaction networks.

Any breach in our security systems could result in the perpetration of fraudulent financial transactions for which we may be found liable. We are insured against various risks, including theft and negligence, but our insurance coverage is subject to deductibles, exclusions and limitations that may leave us bearing some or all of any losses arising from security breaches.

In addition to electronic fraud issues, theft and vandalism of ATMs presents risks for our ATM business. We install ATMs at sites that are high flow traffic sites and are exposed to theft and vandalism. Vandalism during the year 2001 increased in some of our markets, particularly in Hungary where a series of incidents were attributed to an organized gang that we believe has been apprehended. Although we are insured against these risks, deductibles, exclusions or limitations in our insurance coverage may leave us bearing some or all of any losses arising from theft or vandalism of ATMs. In addition, we have experienced increases in claims under our insurance, which has increased our insurance premiums.

Foreign Exchange Exposure

In the three months ended ~~September 30, 2002, 67%~~March 31, 2003, 78% of our revenues were generated in Poland, Hungary, Australia, the United Kingdom and Germany as compared to ~~67%~~61% in the three months ended September 30, 2001. In the nine months ended September 30, 2002, 64% of our revenues were generated in Poland, Hungary, the United Kingdom and Germany as compared to 66% in the nine months ended September 30, 2001.March 31, 2002. This ~~decrease~~increase is due to the overall increase in revenues for our operations, including in these ~~four countries.~~five countries and particulary due to the acquisition of e-pay in the U.K. and Australia which accounted for 52% of the revenues for the three months ended March 31, 2003. In Hungary and Poland, the majority of revenues received are denominated in the Hungarian forint and Polish zloty, respectively. However, the majority of our foreign currency denominated contracts in both countries are linked to either inflation or the retail price index. In the United Kingdom and Germany, 100% of the revenues received are denominated in the British pound and the euro, respectively. Although a significant portion of our expenditures in these countries are still made in or denominated in U.S. dollars, we are striving to achieve more of our expenses in local currencies to match our revenues.

We estimate that a 10% depreciation in foreign exchange rates of the euro, Australian dollar, Hungarian forint, Polish zloty and the British pound sterling against the U.S. dollar would have the combined effect of a ~~$1.5~~$3.1 million ~~decrease~~increase in the reported net ~~loss.~~income. This effect was estimated by segregating revenues and expenses by the U.S. dollar, Hungarian forint, Polish zloty, British pounds, and euro and then applying a 10% currency devaluation to the non-U.S. dollar amounts. We believe this quantitative measure has inherent limitations. It does not take into account any governmental actions or changes in either customer purchasing patterns or our financing or operating strategies.

As a result of continued European economic convergence, including the increased influence of the euro as opposed to the U.S. dollar on the Central European currencies, we expect that the currencies of the markets where we invest will fluctuate less against the euro than against the dollar. Accordingly, we believe that our ~~euro denominated~~euro-denominated debt provides, in the medium to long term, for a closer matching of assets and liabilities than would dollar-denominated debt.

~~Inflation and Functional Currencies~~

Generally, the countries we operate in have experienced low and stable inflation in recent years. Therefore, the local currency in each of these markets is the functional currency. Although Croatia has maintained relatively stable inflation and exchange rates, the functional currency of our Croatian subsidiary is the U.S. dollar due to the significant level of U.S. dollar denominated revenues and expenses. Due to these factors, we do not believe that inflation will have a significant effect on our results of operations or financial position. We continually review inflation and the functional currency in each of the countries where we operate.

Interest ~~Rate Risk~~

The fair market value of our long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. The estimated fair value of our notes payable at September 30, 2002 was estimated to be $36.3 million compared to a carrying value of $34.0 million. A 1% increase from prevailing interest rates at September 30, 2002 would result in a decrease in fair value of notes payable by approximately $1.1 million. Fair values were determined based on the current early redemption premium of approximately 6% of face value as defined in the note agreement and as evidenced by the recent redemption in July 2002.

~~First Interest Repayment~~

Payments

Beginning January 1, 2003, interest payments of approximately ~~2.2~~€2.2 million ~~euro~~ (estimated ~~$2.1~~$2.3 million as of ~~September 30, 2002) will be~~March 31, 2003) are payable semi-annually on our outstanding 12 3/8% senior debt. Payment dates ~~will be~~are January 1 and July 1, with the final interest payment due on July 1, 2006. The first payment due January 1, 2003 was made on December 30, 2002. Because the bond interest is payable in euro, foreign currency fluctuations between the U.S. dollar and the euro may result in gains or losses which, in turn, may increase or decrease the amount of U.S. dollar equivalent interest paid.

In April 2003, we made our first interest payment on our debt incurred with the purchase of e-pay. Annual interest payments total approximately £1.2 million (estimated $1.9 million as of March 31, 2003) with the final interest payment due on February 19, 2005. Approximately $0.5 million of these interest payments are payable quarterly from the cash flows from the Prepaid Processing Segment, with the remainder payable semi-annually.

We currently anticipate making these interest payments largely from earnings denominated in local currencies in our European markets. As a result, it may not be necessary to hedge these expected cash payments in U.S. dollars, since the source of funds used for payments would already be in pounds sterling or euro or euro-linked denominations. ~~Throughout 2002, we~~We will actively monitor our potential need to hedge future bond interest payments, and if required, we will initiate hedging strategies to minimize foreign currency losses resulting from payments made from U.S. dollars.

ITEM 4. CONTROLS AND PROCEDURES

Within the 90 days prior to the filing date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934. Based upon that

evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.

Since the date of the evaluation, there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls.

PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

In February 2003 we issued 2,497,504 shares of our common stock (“Euronet Stock”)to the shareholders of e-pay, Limited. We also executed promissory notes totaling $26.9 million of which $7.4 million are convertible (the “Convertible Notes”) into Euronet Stock at the option of the holders at a conversion price of $11.43 per share, or 647,282 shares. The Euronet securities issued in this transaction were issued in reliance on the exemption from registration under Regulation S. This transaction is described more fully in Note 4 to the unaudited consolidated financial statements.

The Convertible Notes may be redeemed by Euronet, in whole but not in part, under certain conditions, including if the average market price of the Euronet Stock over a thirty consecutive trading day period exceeds $15.72, for Euronet Stock at a redemption price of $11.43 per share. The conversion price and the redemption price are subject to customary anti-dilution provisions.

We agreed to file with the SEC a registration statement to enable the public resale of the Euronet Stock received by the former shareholders of e-pay and to use its commercially reasonable efforts to cause such registration statement to be declared effective by the SEC (i) as promptly as practicable with respect to any Euronet Stock issued upon the redemption of the Convertible Notes and (ii) not later than 12 months following the closing of the acquisition with respect to the Euronet Stock issued at the time of closing or upon conversion of the Convertible Notes.

The shares of common stock issued at the closing of the transaction and issuable upon conversion of the Convertible Notes may not be transferred by the holders thereof prior to February 18, 2004. Euronet Stock issuable upon the redemption of the Convertible Notes may be transferred prior to February 18, 2004 pursuant to the registration statement as soon as it is declared effective by the SEC.

ITEM 6. EXHIBITS AND REPORT ON FORM 8-K

(a) Exhibits –


Exhibit 3.1		—Amendment No. 2 to the Bylaws of Euronet Worldwide, Inc. (filed as Exhibit 3.1 to Euronet Worldwide, Inc.’s current report on Form 8-K filed with the SEC on March 24, 2003, and incorporated by reference herein)

Exhibit 10.1 ~~– Euronet Long Term Incentive Stock Plan (as amended effective September 13, 2002)~~

~~Exhibit 10.2 –~~	—Euronet Worldwide, Inc. Employee Stock Purchase Plan (as ~~amended~~adopted effective ~~June 30, 2001)~~February 25, 2003) (filed as Exhibit A to Euronet Worldwide, Inc.’s Definitive Proxy Statement filed with the SEC on April 23, 2003, and incorporated by reference herein)

Exhibit ~~10.3 – Euronet Worldwide, Inc. Rules and Procedures for Euronet Matching Stock Option Grant Program~~99.1		—Risk Factors

Exhibit 99.2		—Certification by Chief Executive Officer

Exhibit 99.3		—Certification by Chief Financial Officer

(b) Reports on Form 8-K

On ~~July 29, 2002,~~February 3, 2003, the Company filed a current report on Form 8-K reporting events and information under Item 52 (“~~Other Events”~~Acquisition or Disposition of Assets”) and Item 7 (“Financial Statements, Pro Forma Financial Information and Exhibits”).

On ~~August 15, 2002,~~February 19, 2003, the Company filed a current report on Form 8-K reporting events and information under Item 7 (“Financial Statements, Pro Forma Financial Information and Exhibits”) and Item 9 (“Regulation FD Disclosure”).

On ~~September 24, 2002,~~March 6, 2003, the Company filed a current report on Form 8-K reporting events and information under Item 52 (“~~Other Events”~~Acquisition or Disposition of Assets”) and Item 7 (“Financial Statements, Pro Forma Financial Information and Exhibits”).

On ~~November 1, 2002,~~March 12, 2003, the Company filed a current report on Form 8-K reporting events under Item 5 (“Other Events”) and Item 97 (“~~Regulation FD Disclosure”~~Financial Statements, Pro Forma Financial Information and Exhibits”).

On March 24, 2003, the Company filed a current report on Form 8-K reporting events under Item 5 (“Other Events”) and Item 7 (“Financial Statements, Pro Forma Financial Information and Exhibits”).

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.

~~November 14, 2002~~

May 15, 2003

By:
	~~By: /s/~~/s/ MICHAEL J. BROWN
		Michael J. Brown
		Chief Executive Officer

By:
	~~By: /s/ K~~/s/ R~~ENDALL~~ICK ~~D. C~~L. W~~OYNE~~ELLER
~~Kendall D. Coyne~~		Rick L. Weller
		Chief Financial Officer

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

I, Michael J. Brown, Chairman and Chief Executive Officer, ~~of Euronet Worldwide, Inc.,~~ certify that:

I have reviewed this quarterly report on Form 10-Q of Euronet Worldwide, Inc.;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

~~Date:~~ ~~November 14, 2002~~

~~/S/ Michael J. Brown~~

~~Chief Executive Officer~~

Date: May 15, 2003

/s/ MICHAEL J. BROWN

Michael J. Brown

Chairman and Chief Executive Officer

CERTIFICATIONS OF PRINCIPAL ACCOUNTING OFFICER

I, ~~Kendall D. Coyne,~~Rick L. Weller, Chief Financial Officer ~~of Euronet Worldwide, Inc.,~~and Chief Accounting Officer, certify that:

I have reviewed this quarterly report on Form 10-Q of Euronet Worldwide, Inc.;

evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

~~Date:~~ ~~November 14, 2002~~

~~/s/ Kendall D. Coyne~~

~~Chief Financial Officer~~

~~Exhibit Index~~

~~Exhibit~~		~~Document~~ Date: May 15, 2003

~~10.1~~ /s/ RICK L. WELLER
Rick L. Weller
Chief Financial Officer and Chief Accounting Officer

EXHIBIT INDEX

Exhibit Number		~~Euronet Long Term Incentive Stock Plan (as amended effective September 13, 2002)~~ Description

~~10.2~~ Exhibit 3.1		Amendment No. 2 to the Bylaws of Euronet Worldwide, Inc. (filed as Exhibit 3.1 to Euronet Worldwide, Inc.’s current report on Form 8-K filed with the SEC on March 24, 2003, and incorporated by reference herein)

Exhibit 10.1		Euronet Worldwide, Inc. Employee Stock Purchase Plan (as ~~amended~~adopted effective ~~June 30, 2001)~~February 25, 2003) (filed as Exhibit A to Euronet Worldwide, Inc.’s Definitive Proxy Statement filed with the SEC on April 23, 2003, and incorporated by reference herein)

~~10.3~~ Exhibit 99.1		~~Euronet Worldwide, Inc. Rules and Procedures for Euronet Matching Stock Option Grant Program~~ Risk Factors

Exhibit 99.2		Certification by Chief Executive Officer

Exhibit 99.3		Certification by Chief Financial Officer

	Three months ended March 31,
	2003			2002
Net income	$	15,421		$	3,580
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,756			2,309
Unrealized foreign exchange loss/(gain)		904			(792	)
(Gain)/loss on disposal of fixed assets		(54	)		18
Gain on sale of subsidiary		(18,001	)		—
Gain on sale of discontinued operations, net of tax		—			(2,988	)
Expense/(benefit) from deferred income tax		501			(1,857	)
Loss from discontinued operations		—			83
Increase in assets and liabilities held for sale		—			3,052
Amortization of deferred financing costs		43			—
Accretion of discount on notes payable		11			1,177
Change in operating assets and liabilities, net of effects of acquisition:
Increase in income tax payable, net		1,024			—
(Increase)/decrease in restricted cash		(8,049	)		13
Decrease in trade accounts receivable		19,497			648
(Increase)/decrease in costs and estimated earnings in excess of billings on software installation contracts		(429	)		85
(Increase)/decrease in prepaid expenses and other current assets		(2,646	)		577
Decrease in trade accounts payable		(12,185	)		(2,020	)
Increase in advance payments on contracts		884			406
Increase/(decrease) in accrued expenses and other liabilities		6,297			(1,772	)
Increase in billings in excess of costs and estimated earnings on software installation costs		316			815
Other		—			55

Net cash provided by operating activities		6,290			3,389

Cash flows from investing activities:
Fixed asset purchases		(236	)		(484	)
Proceeds from sale of fixed assets		178			69
Purchase of intangible and other long term assets		(396	)		—
Acquisition, net of cash acquired		(27,967	)		—
Proceeds from sale of subsidiary		24,418			—
Purchase of restricted certificates of deposits		—			(4,250	)

Net cash used in investing activities		(4,003	)		(4,665	)

Cash flows from financing activities:
Proceeds from issuance of shares and other capital contributions		611			14,412
Repayment of credit facility		—			(2,000	)
Repayment of obligations under capital leases		(1,096	)		(3,269	)
Proceeds from/(repayment of) other borrowings		122			(513	)
Increase in subscriptions receivable		(77	)		(30	)
Cash repaid by employees for purchase of common stock		—			17

Net cash (used in)/provided by financing activities		(440	)		8,617

Effect of exchange differences on cash		62			175
Proceeds from sale of discontinued operations		—			5,872
Cash used in discontinued operations		—			(83	)

Net increase in cash and cash equivalents		1,909			13,305
Cash and cash equivalents at beginning of period		12,021			8,631

Cash and cash equivalents at end of period	$	13,930		$	21,936

	September 30, 2002			December 31, 2001
ASSETS
Current assets:
Cash and cash equivalents	$	15,338		$	8,818
Restricted cash		3,872			1,877
Trade accounts receivable, net of allowances for doubtful accounts of $647 at September 30, 2002 and $675 at December 31, 2001		7,739			8,908
Earnings in excess of billings on software installation contracts		264			331
Assets from discontinued operations		—			1,273
Prepaid expenses and other current assets		4,598			5,799

Total current assets		31,811			27,006
Property, plant and equipment, net		30,074			29,086
Intangible assets, net		1,718			1,551
Deposits		41			41
Deferred income taxes		467			429
Other assets, net		3,046			3,278

Total assets	$	67,157		$	61,391

LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)
Current liabilities:
Trade accounts payable	$	4,337		$	4,762
Current installments of obligations under capital leases		5,001			4,627
Accrued expenses and other current liabilities		5,955			7,366
Short-term borrowings		—			513
Advance payments on contracts		2,149			2,266
Accrued interest on notes payable		1,059			—
Income taxes payable		26			90
Liabilities from discontinued operations		—			498
Billings in excess of earnings on software installation contracts		1,769			1,457
Credit facility		—			2,000

Total current liabilities		20,296			23,579
Obligations under capital leases, excluding current installments		5,339			7,353
Notes payable		33,980			38,146
Other long term liabilities		172			—

Total liabilities		59,787			69,078

Stockholders’ equity/(deficit):
Common stock, $0.02 par value. Authorized 60,000,000 shares; issued and outstanding 23,636,104 shares at September 30, 2002 and 22,038,073 at December 31, 2001		473			441
Additional paid in capital		136,345			117,940
Treasury stock		(145	)		(145	)
Employee loans for stock		(446	)		(463	)
Subscription receivable		61			—
Accumulated deficit		(126,809	)		(123,141	)
Restricted reserve		784			784
Accumulated other comprehensive loss		(2,893	)		(3,103	)

Total stockholders’ equity/(deficit)		7,370			(7,687	)

Total liabilities and stockholders’ equity/(deficit)	$	67,157		$	61,391

	Nine Months Ended September 30,						Three Months Ended September 30,
	2002			2001			2002			2001
Revenues:
ATM network and related revenue	$	38,839		$	32,297		$	13,753		$	11,181
Software, maintenance and related revenue		13,615			11,837			4,136			3,712

Total revenues		52,454			44,134			17,889			14,893

Operating expenses:
Direct operating costs		21,597			19,931			7,848			6,862
Salaries and benefits		18,608			18,753			6,368			5,681
Selling, general and administrative		4,835			5,250			1,769			1,269
Depreciation and amortization		6,930			6,297			2,519			2,164

Total operating expenses		51,970			50,231			18,504			15,976

Operating income/(loss)		484			(6,097	)		(615	)		(1,083	)

Other (expense)/income:
Interest income		227			214			63			70
Interest expense		(4,807	)		(7,052	)		(1,446	)		(2,041	)
Loss on facility sublease		(249	)		—			(249	)		—
Equity in losses from investee companies		(159	)		—			(159	)		—
(Loss)/gain on early retirement of debt		(955	)		9,682			(791	)		1,053
Foreign exchange (loss)/gain, net		(3,179	)		3,878			222			(3,757	)

Total other (expense)/income		(9,122	)		6,722			(2,360	)		(4,675	)

(Loss)/income from continuing operations before income taxes and minority interest		(8,638	)		625			(2,975	)		(5,758	)
Income tax benefit		1,852			845			449			154

(Loss)/income from continuing operations before minority interest		(6,786	)		1,470			(2,526	)		(5,604	)
Minority interest		77			—			30			—
Discontinued operations:
Income/(loss) from operations of discontinued US and France components (including gain on disposal of $4,726 for the nine months ended September 30, 2002 and nil for the three months ended September 30, 2002)		4,976			(225	)		(12	)		321
Income tax expense		(1,935	)		—			—			(125	)

Income/(loss) from discontinued operations		3,041			(225	)		(12	)		196

Net (loss)/income		(3,668	)		1,245			(2,508	)		(5,408	)
Translation adjustment		210			(209	)		(220	)		(3	)

Comprehensive (loss)/income	$	(3,458	)	$	1,036		$	(2,728	)	$	(5,411	)

(Loss)/earnings per share—basic
(Loss)/income from continuing operations before minority interest per share	$	(0.29	)	$	0.08		$	(0.11	)	$	(0.27	)
Income/(loss) from discontinued operations per share		0.13			(0.01	)		—			0.01

Net (loss)/income per share	$	(0.16	)	$	0.07		$	(0.11	)	$	(0.26	)
Basic weighted average number of shares outstanding		22,982,394			18,553,471			23,394,036			20,426,648

(Loss)/earnings per share—diluted
Diluted (loss)/income from continuing operations before minority interest per share	$	(0.29	)	$	0.07		$	(0.11	)	$	(0.27	)
Diluted income/(loss) from discontinued operations per share		0.13			(0.01	)		—			0.01

Diluted net (loss)/income per share	$	(0.16	)	$	0.06		$	(0.11	)	$	(0.26	)
Diluted weighted average number of shares outstanding		22,982,394			19,860,882			23,394,036			20,426,648

	Nine Months Ended
	September 30, 2002			September 30, 2001
Cash flows from operating activities:
Net (loss)/income	$	(3,668	)	$	1,245
Adjustments to reconcile net (loss)/income to net cash provided by/(used in) operating activities:
Depreciation and amortization		6,930			6,550
Unrealized foreign exchange loss/(gain), net		4,477			(1,868	)
Accretion of discount on notes		2,482			5,465
Decrease in costs and estimated earnings in excess of billings on software installation contracts		67			—
Loss on facility sub-lease		219			—
Equity in losses from investee companies		159			—
Gain on sale of discontinued operations, net of tax		(2,988	)		—
Benefit from deferred income tax		(1,857	)		—
Loss/(gain) on early retirements of debt		955			(9,680	)
(Income)/loss from discontinued operations, net of tax		(250	)		225
Decrease in restricted cash		—			203
Decrease in trade accounts receivable		1,185			1,280
Increase in tax receivable		(184	)		(909	)
Decrease/(increase) in prepaid expenses and other current assets		1,228			(1,782	)
(Decrease)/increase in trade accounts payable		(424	)		6
Increase/(decrease) in billings in excess of costs and estimated earnings on software installation contracts, net		312			(893	)
Decrease in accrued expenses and other liabilities		(411	)		(606	)
Decrease in advance payments on contracts		(117	)		—
Other		415			673

Net cash provided by/(used in) operating activities		8,530			(91	)

Cash flows from investing activities:
Fixed asset purchases		(5,560	)		(2,272	)
Purchase of restricted certificate of deposit		(1,995	)		—
Purchase of intangibles and other long-term assets		(807	)		—
Proceeds from sale of fixed assets		546			492

Net cash used in investing activities		(7,816	)		(1,780	)

Cash flows from financing activities:
Proceeds from issuance of shares and other capital contributions		16,830			662
Repayments of credit facility		(2,000	)		—
Repayments of obligations under capital leases		(4,151	)		(3,018	)
(Repayments of)/proceeds from other borrowings		(10,923	)		2,417
Other		78			157

Net cash provided by financing activities		(166	)		218

Effects of exchange rate differences on cash		(150	)		31
Proceeds from sale of discontinued operations		5,872			—
Cash provided by/(used in) discontinued operations		250			(225	)

Net increase/(decrease) in cash and cash equivalents		6,520			(1,847	)
Cash and cash equivalents at beginning of period		8,818			7,151

Cash and cash equivalents at end of period	$	15,338		$	5,304

	Processing Services
	Central Europe			Western Europe			Other			Processing Services Total				Software Solutions			Corporate Services			Total
(unaudited)
(in thousands)
For the three months ended September 30, 2002
Total revenues	$	6,671		$	6,996		$	86		$	13,753			$	4,181		$	—		$	17,934

Direct operating costs		3,563			3,932			127			7,622				181			—			7,803
Salaries and benefits		926			722			1,266			2,914				3,058			396			6,368
Selling, general and administrative		415			345			(822	)		(62	)			1,128			793			1,859
Depreciation and amortization		1,029			895			271			2,195				248			84			2,527

Total operating expenses		5,933			5,894			842			12,669				4,615			1,273			18,557

Operating income/(loss)		738			1,102			(756	)		1,084				(434	)		(1,273	)		(623	)
Interest income		8			4			2			14				7			42			63
Interest expense		(183	)		(98	)		—			(281	)			—			(1,165	)		(1,446	)
Loss on facility sublease		—			—			—			—				(249	)		—			(249	)
Equity in losses from investee companies		—			—			(159	)		(159	)	��		—			—			(159	)
Loss on early retirement of debt		—			—			—			—				—			(791	)		(791	)
Foreign exchange (loss)/gain, net		(254	)		142			(44	)		(156	)			—			378			222

Income/(loss) from continuing operations before income taxes	$	309		$	1,150		$	(957	)	$	502			$	(676	)	$	(2,809	)	$	(2,983	)

Minority interest	$	—		$	—		$	30		$	30			$	—		$	—		$	30
Loss from discontinued operations before income taxes	$	—		$	(12	)	$	—		$	(12	)		$	—		$	—		$	(12	)
Assets as of September 30, 2002
Segment assets	$	25,577		$	18,587		$	5,084		$	49,248			$	6,552		$	11,357		$	67,157
Fixed assets	$	14,056		$	12,113		$	2,938		$	29,107			$	924		$	43		$	30,074

	For the three months ended						For the nine months ended
	Sept. 30, 2002			Sept. 30, 2001			Sept. 30, 2002			Sept. 30, 2001
(unaudited) (in thousands)
Revenues:
Total revenues for reportable segments	$	17,934		$	14,938		$	52,714		$	44,269
Elimination of inter-segment revenues		(45	)		(45	)		(260	)		(135	)

Total consolidated revenues	$	17,889		$	14,893		$	52,454		$	44,134

	Total Revenues for the nine months ended				Long-Lived Assets as of
	Sept. 30, 2002		Sept. 30, 2001		Sept. 30, 2002		Dec. 31, 2001
(unaudited) (in thousands)
United States	$	13,850	$	11,971	$	924	$	1,243
Germany		8,546		7,365		2,934		3,705
Poland		9,212		9,014		7,919		9,275
Hungary		5,434		5,449		6,658		5,391
UK		10,337		7,386		8,997		7,688
Other		5,075		2,949		2,642		1,784

Total	$	52,454	$	44,134	$	30,074	$	29,086

	As of September 30, 2002						As of December 31, 2001
	DASH		France		Total		DASH		France		Total
(unaudited) (in thousands)
Current assets	$	—	$	—	$	—	$	384	$	—	$	384
Fixed assets		—		—		—		—		434		434
Long term assets		—		—		—		455		—		455

Total assets from discontinued operations	$	—	$	—	$	—	$	839	$	434	$	1,273

Current liabilities	$	—	$	—	$	—	$	70	$	138	$	208
Long term liabilities		—		—		—		—		290		290

Total liabilities from discontinued operations	$	—	$	—	$	—	$	70	$	428	$	498

	Three months ended September 30, 2002								Three months ended September 30, 2001
	DASH		France			Total			DASH			France			Total
(unaudited) (in thousands)
Revenues	$	—	$	128		$	128		$	557		$	231		$	788
Operating expenses		—		105			105			262			381			643

Operating income/(loss)		—		23			23			295			(150	)		145
Other (expense)/income		—		(35	)		(35	)		(11	)		187			176
Gain on disposal		—		—			—			—			—			—

(Loss)/income before taxes		—		(12	)		(12	)		284			37			321
Income tax expense		—		—			—			(111	)		(14	)		(125	)

Net (loss)/income of discontinued operations	$	—	$	(12	)	$	(12	)	$	173		$	23		$	196

	Nine months ended September 30, 2002									Nine months ended September 30, 2001
	DASH			France			Total			DASH			France			Total
(unaudited) (in thousands)
Revenues	$	101		$	563		$	664		$	1,690		$	619		$	2,309
Operating expenses		3			708			711			990			1,438			2,428

Operating income/(loss)		98			(145	)		(47	)		700			(819	)		(119	)
Other income/(loss)		—			297			297			(15	)		(91	)		(106	)
Gain/(loss) on disposal		4,845			(119	)		4,726			—			—			—

Income/(loss) before taxes		4,943			33			4,976			685			(910	)		(225	)
Income tax expense		(1,857	)		(78	)		(1,935	)		—			—			—

Net income/(loss) of discontinued operations	$	3,086		$	(45	)	$	3,041		$	685		$	(910	)	$	(225	)

	Revenues						Operating Income (Loss)
	2002			2001			2002			2001
(unaudited) (in thousands)
Three months ended September 30,
Processing Services:
Central European	$	6,671		$	6,121		$	738		$	352
Western European		6,996			5,057			1,102			75
Other		86			3			(756	)		(28	)

Total Processing Services		13,753			11,181			1,084			399
Software Solutions		4,181			3,757			(434	)		(249	)
Corporate Services		—			—			(1,273	)		(1,233	)
Inter-segment eliminations		(45	)		(45	)		(53	)		(45	)

Total	$	17,889		$	14,893		$	(676	)	$	(1,128	)

	Three months ended Sept. 30,				Nine months ended Sept. 30,
	2002		2001		2002		2001
(unaudited)
(in thousands)
ATM communication	$	1,057	$	1,125	$	3,013	$	3,300
ATM cash filling and interest on network cash		1,877		1,778		5,340		5,270
ATM maintenance		1,269		1,003		3,264		3,076
ATM site rental		1,005		609		2,664		1,814
ATM installation		193		81		487		195
Transaction processing and ATM monitoring		1,697		1,855		4,739		4,658
Other		524		399		1,428		1,169

Total direct operating expenses	$	7,622	$	6,850	$	20,935	$	19,482

	Three months ended September 30,				Nine months ended September 30,
	2002		2001		2002		2001
(unaudited) (in thousands)
Software license fees	$	1,001	$	675	$	5,516	$	2,706
Professional service fees		1,522		1,281		3,568		4,686
Maintenance fees		1,630		1,365		4,221		3,777
Hardware sales		28		436		545		802

Total	$	4,181	$	3,757	$	13,850	$	11,971

	Three months ended Sept. 30,				Nine months ended Sept. 30,
	2002		2001		2002		2001
(unaudited) (in thousands)
Salaries and benefits	$	396	$	577	$	1,386	$	2,239
Selling, general and administrative		793		619		2,244		2,195
Depreciation and amortization		84		37		40		108

Total operating expenses	$	1,273	$	1,233	$	3,670	$	4,542

Balance at December 31, 2001	$	38,146
Unrealized foreign exchange loss (euro vs. U.S. dollar)		4,413
Accretion of notes payable interest		2,482
Early retirement of debt (see Note 7 to the unaudited consolidated financial statements)		(11,061	)

Balance at September 30, 2002	$	33,980