BUDAPEST, Hungary -- Euronet Services revenues grew to $11.9 million in 1998, more than double the revenues in the previous year. Revenues in the fourth quarter were $4.1 million, an increase of 32 percent over third quarter revenue of $3.1 million.
The operating loss for 1998 was $22.6 million, compared with $8.5 million in 1997. The net loss for the year was $28.3 million, compared with a net loss of $8.0 million in 1997. The losses were in line with management's expectations for market development and revenue growth.
Euronet had total assets at Dec. 31, 1998 of $133.4 million, an increase of $63 million over total ssets of $70 million a year earlier. Cash, restricted cash and investments totaled $71.7 million at Dec. 31, 1998, an increase of $31.4 million over the total of $40.3 million one year earlier.
A major component of this growth was the issue by Euronet in June 1998 of approximately $83.1 million in Deutsche Mark denominated notes payable to fund expansion of its ATM network, retire certain liabilities, and for general corporate purposes including possible expansion through acquisitions.
In December of 1998, Euronet acquired ARKSYS, a U.S. electronic
payments systems software company and Euronet's major software supplier. The acquisition has been accounted for under the purchase method of accounting, with the balance sheets of ARKSYS and Euronet consolidated as of Dec. 31, 1998.
Although ARKSYS had total revenues of $11.5 million in 1998, only December revenues of $356,000 are consolidated with the fourth quarter income statements of Euronet. ARKSYS's December revenues were less than the monthly average for the year due to the fact that at the end of the year, banks typically put a hold on new software installations until after Jan. 1. ARKSYS completed the year with $2.3 million in backlog orders (defined as fees specified in contracts which have been executed and for which revenue will be recognized within one year).
The majority of Euronet's consolidated net loss was due to the continued development of its ATM network. The number of ATMs increased from 693 at the end of 1997 to 1,271 at the end of 1998. Also, ARKSYS contributed $2.3 million to the net loss for the month of December, $1 million of which was due to the write-off of in-process research and development. Euronet also incurred certain one-time charges in 1998 for expenses related to the acquisition of ARKSYS.
As of Feb. 28, Euronet was operating 534 ATMs in Hungary, 425 in Poland, 199 in Germany, 69 in Croatia, 52 in the Czech Republic, six in the U.K. and two in France. Of the total 1,287 ATMs, 85 percent were part of Euronet's proprietary network and 15 percent were operated for client banks under outsourcing agreements.
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