EURONET WORLDWIDE, INC. 10-Q

ITEM 1 . FINANCIAL STATEMENTS (UNAUDITED) EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) As of June 30, 2020 December 31, 2019 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 864,871 $ 786,081 ATM cash 410,459 665,641 Restricted cash 28,050 34,301 Settlement assets 892,676 1,013,067 Trade accounts receivable, net of credit losses of $ 4,524 at June 30, 2020 and $ 3,892 at December 31, 2019 114,755 201,935 Prepaid expenses and other current assets 240,946 217,707 Total current assets 2,551,757 2,918,732 Operating right of use lease assets 158,716 377,543 Property and equipment, net of accumulated depreciation of $ 428,909 at June 30, 2020 and $ 410,243 at December 31, 2019 355,279 359,980 Goodwill 624,253 743,823 Acquired intangible assets, net of accumulated amortization of $ 161,861 at June 30, 2020 and $ 204,853 at December 31, 2019 127,108 141,847 Other assets, net of accumulated amortization of $ 50,136 at June 30, 2020 and $ 46,788 at December 31, 2019 144,422 115,741 Total assets $ 3,961,535 $ 4,657,666 LIABILITIES AND EQUITY Current liabilities: Settlement obligations $ 892,676 $ 1,013,067 Trade accounts payable 90,966 81,743 Accrued expenses and other current liabilities 306,371 294,557 Current portion of operating lease liabilities 53,106 127,353 Short-term debt obligations and current maturities of long-term debt obligations 875 6,089 Income taxes payable 34,472 52,583 Deferred revenue 58,532 58,588 Total current liabilities 1,436,998 1,633,980 Debt obligations, net of current portion 1,100,619 1,090,939 Operating lease obligations, net of current portion 100,542 241,977 Deferred income taxes 55,782 56,067 Other long-term liabilities 54,934 55,361 Total liabilities 2,748,875 3,078,324 Equity: Euronet Worldwide, Inc. stockholders’ equity: Preferred Stock, $ 0.02 par value. 10,000,000 shares authorized; none issued — — Common Stock, $ 0.02 par value. 90,000,000 shares authorized; 62,934,954 issued at June 30, 2020 and 62,775,762 issued at December 31, 2019 1,259 1,256 Additional paid-in-capital 1,204,985 1,190,058 Treasury stock, at cost, 10,646,423 shares at June 30, 2020 and 8,554,908 shares at December 31, 2019 ( 703,657 ) ( 463,704 ) Retained earnings 902,671 1,016,554 Accumulated other comprehensive loss ( 192,522 ) ( 164,890 ) Total Euronet Worldwide, Inc. stockholders’ equity 1,212,736 1,579,274 Noncontrolling interests ( 76 ) 68 Total equity 1,212,660 1,579,342 Total liabilities and equity $ 3,961,535 $ 4,657,666 See accompanying notes to the unaudited consolidated financial statements. 1 Table of Contents EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Revenues $ 527,803 $ 691,867 $ 1,111,710 $ 1,269,376 Operating expenses: Direct operating costs 350,011 393,811 709,467 747,644 Salaries and benefits 90,952 98,550 192,192 191,345 Selling, general and administrative 53,315 53,842 114,108 101,989 Goodwill impairmen t 104,554 — 104,554 — Depreciation and amortization 30,242 27,767 61,058 54,407 Total operating expenses 629,074 573,970 1,181,379 1,095,385 Operating (loss) income ( 101,271 ) 117,897 ( 69,669 ) 173,991 Other income (expense): Interest income 161 513 728 856 Interest expense ( 8,884 ) ( 10,029 ) ( 18,117 ) ( 18,228 ) Loss on early retirement of debt — ( 8,903 ) — ( 9,831 ) Foreign currency exchange gain (loss), net 2,495 ( 121 ) ( 16,311 ) 3,087 Other gain (loss) 697 ( 29 ) 728 ( 4 ) Other expense, net ( 5,531 ) ( 18,569 ) ( 32,972 ) ( 24,120 ) (Loss) income before income taxes ( 106,802 ) 99,328 ( 102,641 ) 149,871 Income tax expense ( 8,931 ) ( 31,323 ) ( 11,372 ) ( 47,287 ) Net (loss) income ( 115,733 ) 68,005 ( 114,013 ) 102,584 Net loss (income) attributable to noncontrolling interests ( 71 ) 148 130 112 Net (loss) income attributable to Euronet Worldwide, Inc. $ ( 115,804 ) $ 68,153 $ ( 113,883 ) $ 102,696 (Loss) earnings per share attributable to Euronet Worldwide, Inc. stockholders: Basic $ ( 2.22 ) $ 1.28 $ ( 2.15 ) $ 1.95 Diluted $ ( 2.22 ) $ 1.25 $ ( 2.15 ) $ 1.90 Weighted average shares outstanding: Basic 52,234,465 53,212,759 52,920,784 52,546,647 Diluted 52,234,465 54,702,459 52,920,784 53,945,770 See accompanying notes to the unaudited consolidated financial statements. 2 Table of Contents EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net (loss) income $ ( 115,733 ) $ 68,005 $ ( 114,013 ) $ 102,584 Translation adjustment 32,172 12,161 ( 27,646 ) ( 4,024 ) Comprehensive (loss) income ( 83,561 ) 80,166 ( 141,659 ) 98,560 Comprehensive (income) loss attributable to noncontrolling interests ( 98 ) 136 144 129 Comprehensive (loss) income attributable to Euronet Worldwide, Inc. $ ( 83,659 ) $ 80,302 $ ( 141,515 ) $ 98,689 See accompanying notes to the unaudited consolidated financial statements. 3 Table of Contents EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited, in thousands, except share data) Number of Shares Outstanding Common Stock Additional Paid-in Capital Treasury Stock Balance as of December 31, 2018 51,819,998 $ 1,198 $ 1,104,264 $ ( 391,551 ) Net income Other comprehensive loss Stock issued under employee stock plans 130,136 3 5,194 ( 1,756 ) Share-based compensation 4,490 Issuance of convertible notes, net of tax 71,660 Repurchase and conversions of convertible notes, net of tax 6 ( 42,917 ) Balan ce as of March 31, 2019 51,950,140 1,201 1,142,691 ( 393,307 ) Net income (loss) Other comprehensive income Stock issued under employee stock plans 41,856 1,740 ( 46 ) Share-based compensation 6,003 Redemptions and conversions of convertible notes, net of tax 2,488,243 50 22,400 Balan ce as of June 30, 2019 54,480,239 $ 1,251 $ 1,172,834 $ ( 393,353 ) Number of Shares Outstanding Common Stock Additional Paid-in Capital Treasury Stock Balance as of December 31, 2019 54,220,854 $ 1,256 $ 1,190,058 $ ( 463,704 ) Net income (loss) Other comprehensive loss Stock issued under employee stock plans 80,519 1 1,701 ( 249 ) Share-based compensation 6,338 Repurchase of shares ( 2,095,683 ) ( 239,763 ) Balance as of March 31, 2020 52,205,690 1,257 1,198,097 ( 703,716 ) Net (loss) income Other comprehensive income Stock issued under employee stock plans 82,841 2 3,763 59 Share-based compensation 3,125 Balance as of June 30, 2020 52,288,531 $ 1,259 $ 1,204,985 $ ( 703,657 ) See accompanying notes to the unaudited consolidated financial statements. 4 Table of Contents EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED) (Unaudited, in thousands) Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interests Total Balance as of December 31, 2018 $ 669,805 $ ( 151,043 ) $ 169 $ 1,232,842 Net income 34,543 36 34,579 Other comprehensive loss ( 16,156 ) ( 29 ) ( 16,185 ) Stock issued under employee stock plans 3,441 Share-based compensation 4,490 Issuance of convertible notes, net of tax 71,660 Repurchases and conversions of convertible notes ( 42,917 ) Balance as of March 31, 2019 704,348 ( 167,199 ) 176 1,287,910 Net income (loss) 68,153 ( 148 ) 68,005 Other comprehensive income 12,149 12 12,161 Stock issued under employee stock plans 1,694 Share-based compensation 6,003 Redemptions and conversions of convertible notes 22,450 Balance as of June 30, 2019 $ 772,501 $ ( 155,050 ) $ 40 $ 1,398,223 Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interests Total Balance as of December 31, 2019 $ 1,016,554 $ ( 164,890 ) $ 68 $ 1,579,342 Net income (loss) 1,921 ( 201 ) 1,720 Other comprehensive loss ( 59,777 ) ( 41 ) ( 59,818 ) Stock issued under employee stock plans 1,453 Share-based compensation 6,338 Repurchase of shares ( 239,763 ) Balance as of March 31, 2020 1,018,475 ( 224,667 ) ( 174 ) 1,289,272 Net (loss) income ( 115,804 ) 71 ( 115,733 ) Other comprehensive income 32,145 27 32,172 Stock issued under employee stock plans 3,824 Share-based compensation 3,125 Balance as of June 30, 2020 $ 902,671 $ ( 192,522 ) $ ( 76 ) $ 1,212,660 See accompanying notes to the unaudited consolidated financial statements. 5 Table of Contents EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Six Months Ended June 30, 2020 2019 Net (loss) income $ ( 114,013 ) $ 102,584 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 61,058 54,407 Share-based compensation 9,463 10,493 Unrealized foreign exchange loss (gain), net 16,311 ( 3,087 ) Deferred income taxes ( 1,427 ) 4,555 Goodwill impairment 104,554 — Loss on early retirement of debt — 9,831 Accretion of convertible debt discount and amortization of debt issuance costs 9,281 9,685 Changes in working capital, net of amounts acquired: Income taxes payable, net ( 16,433 ) 7,302 Trade accounts receivable 229,597 ( 146,441 ) Prepaid expenses and other current assets ( 16,999 ) 25,606 Trade accounts payable ( 135,121 ) ( 95,083 ) Deferred revenue 26 3,457 Accrued expenses and other current liabilities 57,281 85,262 Changes in noncurrent assets and liabilities ( 25,021 ) ( 11,857 ) Net cash provided by operating activities 178,557 56,714 Cash flows from investing activities: Acquisitions, net of cash acquired 475 — Purchases of property and equipment ( 45,500 ) ( 67,727 ) Purchases of other long-term assets ( 4,085 ) ( 3,436 ) Other, net 486 2,403 Net cash used in investing activities ( 48,624 ) ( 68,760 ) Cash flows from financing activities: Proceeds from issuance of shares 5,668 7,037 Repurchase of shares ( 240,684 ) ( 2,448 ) Borrowings from revolving credit agreements 1,425,100 2,043,598 Repayments of revolving credit agreements ( 1,425,100 ) ( 2,253,498 ) Proceeds from long-term debt obligations — 1,194,900 Repayments of long-term debt obligations — ( 446,702 ) Net borrowing from short-term debt obligations ( 4,974 ) ( 14,184 ) Debt issuance costs — ( 19,673 ) Other, net ( 984 ) ( 3,085 ) Net cash (used in) provided by financing activities ( 240,974 ) 505,945 Effect of exchange rate changes on cash and cash equivalents and restricted cash ( 27,787 ) 4,907 (Decrease) increase in cash and cash equivalents and restricted cash ( 138,828 ) 498,806 Cash and cash equivalents and restricted cash at beginning of period 1,817,379 1,130,952 Cash and cash equivalents and restricted cash at end of period $ 1,678,551 $ 1,629,758 Supplemental disclosure of cash flow information: Interest paid during the period $ 13,359 $ 7,107 Income taxes paid during the period $ 29,695 $ 36,543 See accompanying notes to the unaudited consolidated financial statements. 6 Table of Contents EURONET WORLDWIDE, INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ( 1 ) GENERAL Organization Euronet Worldwide, Inc. (the “Company” or “Euronet”) was established as a Delaware corporation on December 13, 1997 and succeeded Euronet Holding N.V. as the group holding company, which was founded and established in 1994. Euronet is a leading electronic payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive automated teller machine (“ATM”), point-of-sale (“POS”), card outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment products, and global money transfer services. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the consolidated financial position and the results of operations, comprehensive income, changes in equity and cash flows for the interim periods. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2019 , including the notes thereto, set forth in the Company’s 2019 Annual Report on Form 10-K. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include computing income taxes, estimating the useful lives and potential impairment of long-lived assets and goodwill, as well as allocating the purchase price to assets acquired and liabilities assumed in acquisitions and revenue recognition. Actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 . Seasonality Euronet’s Electronic Funds Transfer ("EFT") Processing Segment normally experiences its heaviest demand for dynamic currency conversion ("DCC") services during the third quarter of the fiscal year, normally coinciding with the tourism season. Additionally, the EFT Processing and epay Segments are normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year. COVID-19 (coronavirus) T he outbreak of the COVID-19 (coronavirus) pandemic has resulted in varying degrees of travel restrictions and shelter-in-place and other social distancing orders in most of the countries where the Company operates during the three months ended June 30, 2020. Although the majority of these orders went into effect in late February 2020 or early March 2020, new orders are being implemented, or reinstated, as the pandemic spreads around the global and new hot spots flare up. The EFT Segment has experienced declines in transaction volumes due to these restrictions, especially high-margin cross-border transactions. The epay Segment experienced the impacts of consumer movement restrictions in certain markets, while other markets were positively impacted where the Company has a higher mix of digital distribution or a higher concentration of retailers that were deemed essential and remained open during the pandemic. Our Money Transfer Segment has experienced declines in transaction volumes due to the restrictions noted above, which have also led to the temporary closure of many of the locations where our products and services are offered. In response to the COVID-19 driven impacts, the Company has implemented several key measures to offset the impact across the business, including renegotiating certain third party contracts, reducing travel, decreasing planned 2020 capital expenditures, and expanding ATM winterizations (placing them in dormancy status, terminating, or re-negotiating) in more sites and more markets. 7 Table of Contents (2) RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for contracts, hedging relationships, and other transactions affected by reference rate reform due to the anticipated cessation of LIBOR on or before December 31, 2021. This guidance is effective from March 12, 2020 through December 31, 2022 and could impact the accounting for LIBOR provisions in the Company’s unsecured credit agreement. The Company does not expect that the adoption of this guidance will have a significant impact on its consolidated financial statements. The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), as of January 1, 2020, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. The adoption of this standard did not have a significant impact on the Company's consolidated financial statements and related disclosures. (3) SETTLEMENT ASSETS AND OBLIGATIONS Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled prepaid transactions. The Company records corresponding settlement obligations relating to amounts payable. Settlement assets consist of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. Cash received by Euronet agents and merchants generally becomes available to the Company within two weeks after initial receipt by the business partner. Receivables from business partners represent funds collected by such business partners that are in transit to the Company. Settlement obligations consist of money transfers and accounts payable to agents and content providers. Money transfer accounts payable represent amounts to be paid to transferees when they request funds. Most agents typically settle with transferees first then obtain reimbursement from the Company. Money order accounts payable represent amounts not yet presented for payment. Due to the agent funding and settlement process, accounts payable to agents represent amounts due to agents for money transfers that have not been settled with transferees. As of (in thousands) June 30, 2020 December 31, 2019 Settlement assets: Settlement cash and cash equivalents $ 340,915 $ 282,188 Settlement restricted cash 34,256 49,168 Accounts receivable 426,056 574,410 Prepaid expenses and other current assets 91,449 107,301 Total settlement assets $ 892,676 $ 1,013,067 Settlement obligations: Trade account payables $ 349,721 $ 504,667 Accrued expenses and other current liabilities 542,955 508,400 Total settlement obligations $ 892,676 $ 1,013,067 A portion of the Company's credit losses are recorded in the accounts receivable within settlement assets. The balance of credit losses related to accounts receivable within settlement assets was $ 29.0 million and $ 24.0 million as of June 30, 2020 and December 31, 2019, respectively. 8 Table of Contents The table below reconciles cash and cash equivalents, restricted cash, ATM cash, settlement cash and cash equivalents, and settlement restricted cash as presented within "Cash and cash equivalents and restricted cash" in the Consolidated Statement of Cash Flows. As of (in thousands) June 30, 2020 December 31, 2019 June 30, 2019 December 31, 2018 Cash and cash equivalents $ 864,871 $ 786,081 $ 532,615 $ 385,031 Restricted cash 28,050 34,301 31,687 31,237 ATM cash 410,459 665,641 806,420 395,378 Settlement cash and cash equivalents 340,915 282,188 219,426 273,948 Settlement restricted cash 34,256 49,168 39,610 45,358 Cash and cash equivalents and restricted cash at end of period $ 1,678,551 $ 1,817,379 $ 1,629,758 $ 1,130,952 ( 4 ) STOCKHOLDERS' EQUITY Earnings (Loss) Per Share Basic earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for the potential dilution of options to purchase the Company's Common Stock, assumed vesting of restricted stock and the assumed conversion of the Company's convertible debt. The following table provides the computation of diluted weighted average number of common shares outstanding: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Computation of diluted weighted average shares outstanding: Basic weighted average shares outstanding 52,234,465 53,212,759 52,920,784 52,546,647 Incremental shares from assumed exercise of stock options and vesting of restricted stock — 1,489,700 — 1,399,123 Diluted weighted average shares outstanding 52,234,465 54,702,459 52,920,784 53,945,770 The table includes all stock options and restricted stock that are dilutive to the Company's weighted average common shares outstanding during the period. The calculation of diluted earnings (loss) per share excludes stock options or shares of restricted stock that are anti-dilutive to the Company’s weighted average common shares outstanding of approximately 2,533,000 and 1,608,000 for the three and six months ended June 30, 2020 , respectively, and approximately 782,000 and 805,000 for the three and six months ended June 30, 2019 , respectively. The Company issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. The Company's Convertible Notes currently have a settlement feature requiring the Company upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of the Company's common stock or a combination thereof, at the Company's option. The Company has stated its intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium. Accordingly, the Convertible Notes were included in the calculation of diluted earnings (loss) per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price. The Convertible Notes would only have a dilutive effect if the market price per share of common stock exceeds the conversion price of $ 188.73 per share. The market price per share per share of common stock was $ 95.82 on June 30, 2020 and $ 168.24 on June 30, 2019 , t herefore, according to ASC Topic 260, Earnings per Share (“ASC 260”) , there was no dilutive effect of the assumed conversion of the debentures for the three and six months ended June 30, 2020 and 2019. See Note 8, Debt Obligations, to the Consolidated Financial Statements for more information about the convertible notes. 9 Table of Contents Share repurchases The Company's Board of Directors had authorized a stock repurchase program allowing Euronet to repurchase up to $ 375 million in value or 10.0 million shares of stock through March 31, 2020. On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of $ 120 million in value of the Company's common stock through March 11, 2021. On February 26, 2020, the Company put a repurchase program in place to repurchase up to $ 250 million in value, but not more than 5.0 million shares of common stock through February 28, 2022. For the three months ended June 30, 2020, there were no repurchases of stock under the repurchase programs and for the six months ended June 30, 2020 , the Company repurchased $ 239.8 million in value of Euronet common stock under the repurchase programs. Repurchases under either current program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded a foreign currency translation gain of $ 32.2 million and loss of $ 27.6 million for the three and six months ended June 30, 2020 , respectively, and gain of $ 12.2 million and loss of $ 4.0 million for the three and six months ended June 30, 2019, respectively. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three and six months ended June 30, 2020 and 2019 . ( 5 ) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET A summary of acquired intangible assets and goodwill activity for the six months ended June 30, 2020 is presented below: (in thousands) Acquired Intangible Assets Goodwill Total Intangible Assets Balance as of December 31, 2019 $ 141,847 $ 743,823 $ 885,670 Decreases: Acquisition — ( 474 ) ( 474 ) Amortization ( 11,236 ) — ( 11,236 ) Impairment — ( 104,554 ) ( 104,554 ) Other (primarily changes in foreign currency exchange rates) ( 3,503 ) ( 14,542 ) ( 18,045 ) Balance as of June 30, 2020 $ 127,108 $ 624,253 $ 751,361 Of the total goodwill balance of $ 624.3 million as of June 30, 2020 , $ 378.3 million relates to the Money Transfer Segment, $ 127.7 million relates to the epay Segment and the remaining $ 118.3 million relates to the EFT Processing Segment. Estimated amortization expense on intangible assets with finite lives as of June 30, 2020, is expected to total $ 10.9 million for the remainder of 2020, $ 21.3 million for 2021, $ 20.3 million for 2022, $ 15.7 million for 2023, $ 9.4 million for 2024 and $ 6.4 million for 2025. 2020 Impairment Charges The COVID- 19 pandemic and subsequent mitigation efforts, which includes global business shutdowns, the closing of borders and the implementation of mandatory social distancing requirements, created an unprecedented disruption to our business during the second quarter of 2020 . These mitigation efforts coupled with the negative economic impacts to the tourism industry caused a decline in revenues and changes to our forecasts. The Company tests for goodwill impairment on an annual basis in the fourth quarter each year and whenever events or circumstances dictate an interim impairment test is required. The Company determined the totality of these events constituted a triggering event that required us to perform an interim goodwill impairment assessment as of June 1, 2020. The Company concluded a triggering event had occurred for six reporting units, resulting in quantitative impairment tests. Three reporting units are within the EFT segment, two reporting units are within the Money Transfer segment, and one reporting unit is within the epay segment. Under the quantitative impairment test, the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. The Company uses weighted results from the discounted cash flow model ("DCF model") and guideline public company method ("Market Approach model") to estimate the current fair value of its reporting units when testing for impairment, as management believes forecasted cash flows and EBITDA are the best indicators of such fair value. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including sales volumes and gross margins, tax rates, capital spending, discount rates and working capital changes. Most of these assumptions vary significantly among the reporting units. Significant assumptions in the Market Approach model are actual and projected EBITDA, selected market multiple, and the estimated control premium. If the carrying value of the reporting unit exceeds its fair value, a goodwill impairment loss equal to such excess would be recognized. The DCF Model and Market Approach Model utilize Level 3 inputs in the fair value hierarchy as they include unobservable inputs that require significant management assumptions. 10 Table of Contents The Company completed its interim goodwill impairment test during the second quarter of 2020. It determined, after performing a quantitative review of six reporting units, that the fair value of three of the reporting units exceeded the respective carrying amounts. For the remaining three reporting units, the quantitative test indicated that the fair value of each of the reporting units was less than the respective carrying amounts. As a result, the Company recorded a non-cash goodwill impairment charge of $ 104.6 million with respect to the xe, Innova and Pure Commerce reporting units. $ 21.9 million of the impairment charge was included within the EFT Segment, and $ 82.7 million of the impairment charge was included in the Money Transfer Segment. We will continue to evaluate our goodwill and long-lived assets for potential triggering events as conditions warrant. Determining the fair value of reporting units requires significant management judgment in estimating future cash flows and assessing potential market and economic conditions. It is reasonably possible that the Company’s operations will not perform as expected, or that the estimates or assumptions included in the 2019 annual impairment test and 2020 interim impairment test could change, which may result in the Company recording material non-cash impairment charges during the year in which these changes take place. As information regarding the impact of the COVID-19 pandemic on the Company's business, including intangible assets, becomes available, the impacts to cash flows and the related impact on recovery of intangible assets will be evaluated. ( 6 ) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: As of (in thousands) June 30, 2020 December 31, 2019 Accrued expenses $ 247,955 $ 246,699 Derivative liabilities 51,905 41,935 Current portion of capital lease obligations 6,511 5,919 Deferred income taxes — 4 Total $ 306,371 $ 294,557 (7) UNEARNED REVENUES The Company records deferred revenues when cash payments are received or due in advance of its performance. The decrease in the deferred revenue balance for the six months ended June 30, 2020 is primarily driven by $ 26.2 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, offset by $ 26.3 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2019. 11 Table of Contents (8) DEBT OBLIGATIONS Debt obligations consist of the following: As of (in thousands) June 30, 2020 December 31, 2019 Credit Facility: Revolving credit agreement $ — $ — Convertible Debt: 0.75% convertible notes, unsecured, due 2049 444,506 436,965 1.375% Senior Notes, due 2026 673,920 673,440 Other obligations 921 6,215 Total debt obligations 1,119,347 1,116,620 Unamortized debt issuance costs ( 17,853 ) ( 19,592 ) Carrying value of debt 1,101,494 1,097,028 Short-term debt obligations and current maturities of long-term debt obligations ( 875 ) ( 6,089 ) Long-term debt obligations $ 1,100,619 $ 1,090,939 Credit Facility On October 17, 2018, the Company entered into an unsecured revolving credit agreement (the "Credit Facility") for $ 1.0 billion that expires on October 17, 2023 . Fees and interest on borrowings are based upon the Company's corporate credit rating and are based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over London Inter-Bank Offered Rate (“LIBOR”) or a margin over the base rate, as selected by the Company, with the applicable margin ranging from 1.125 % to 2.0 % (or 0.175 % to 1.0 % for base rate loans). The unsecured revolving credit agreement allows for borrowings in Australian dollars, British pounds sterling, Canadian dollars, Czech koruna, Danish krone, euro, Hungarian forints, Japanese yen, New Zealand dollars, Norwegian krone, Polish zlotys, Swedish krona, Swiss francs, and U.S. dollars. The revolving credit facility contains a $ 200 million sublimit for the issuance of letters of credit, a $ 50 million sublimit for U.S. dollar swingline loans, and a $ 90 million sublimit for certain foreign currencies swingline loans. The unsecured revolving credit agreement contains customary affirmative and negative covenants, events of default and financial covenants. The Company was in compliance with all debt covenants, as of June 30, 2020 . Convertible Debt On March 18, 2019, the Company completed the sale of $ 525.0 million of Convertible Senior Notes ("Convertible Notes"). The Convertible Notes mature in March 2049 unless redeemed or converted prior to such date, and are convertible into shares of Euronet Common Stock at a conversion price of approximately $ 188.73 per share if certain conditions are met (relating to the closing price of Euronet Common Stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require the Company to purchase their notes on each of March 15, 2025, March 15, 2029, March 15, 2034, March 15, 2039 and March 15, 2044 at a repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. 12 Table of Contents On May 28, 2019, the Company redeemed all of the remaining principal amount outstanding of the Company's 1.5 % Convertible Senior Notes due 2044 (the "Retired Convertible Notes") for cash at a redemption price equal to 100 % of the principal amount of the Retired Convertible Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, May 28, 2020. In accordance with ASC 470-20-30-27, proceeds from the issuance of convertible debt is allocated between debt and equity components so that debt is discounted to reflect the Company's nonconvertible debt borrowing rate. ASC 470-20-35-13 requires the debt discount to be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. The allocation resulted in an increase to additional paid-in capital of $ 99.7 million for the Convertible Notes. Contractual interest expense for the Convertible Notes was $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2020, respectively and $ 1.0 million and $ 1.1 million for the three and six months ended June 30, 2019, respectively . Accretion expense for the Convertible Notes was $ 3.8 million and $ 7.5 million for the three and six months ended June 30, 2020, respectively and $ 3.6 million and $ 4.2 million for the three and six months ended June 30, 2019, respectively . Contractual interest expense for the Retired Convertible Notes was $ 1.5 million for both the three and six months ended June 30, 2019. A ccretion expense for the Retired Convertible Notes was $ 1.8 million and $ 4.6 million for the three and six months ended June 30, 2019, respectively . The effective interest rate was 4.4 % for the three and six months ended June 30, 2020 . As of June 30, 2020 , the unamortized discount was $ 80.5 million and will be amortized through March 2025. 1.375% Senior Notes due 2026 On May 22, 2019, the Company completed the sale of € 600 million ( $ 669.9 million ) aggregate principal amount of Senior Notes that expire in May 2026 (the “Senior Notes”). The Senior Notes accrue interest at a rate of 1.375 % per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of June 30, 2020 , the Company has outstanding € 600 million ( $ 673.9 million ) principal amount of the Senior Notes. In addition, the Company may redeem some or all of these notes on or after February 22, 2026 at their principal amount plus any accrued and unpaid interest. Other obligations Certain of the Company's subsidiaries have available lines of credit and overdraft credit facilities that generally provide for short-term borrowings that are used from time to time for working capital purposes. As of June 30, 2020 and December 31, 2019 , borrowings under these arrangements were $ 0.9 million and $ 6.2 million , respectively. Uncommitted Line of Credit On September 4, 2019, the Company entered into an Uncommitted Loan Agreement with Bank of America which provided Euronet up to $ 100.0 million under an uncommitted line of credit. Interest on borrowings was equal to LIBOR plus 0.65 % and the agreement was set to expire September 4, 202 0. During the three months ended June 30, 2020, the Company and Bank of America mutually agreed to terminate the Uncommitted Loan Agreement. ( 9 ) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. Dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) certain foreign currency denominated other asset and liability positions. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC 815 , primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates are reflected concurrently in earnings for both the derivative instrument and the transaction and have an offsetting effect. Foreign currency exchange contracts - Ria Operations and Corporate In the United States, the Company uses short-duration foreign currency forward contracts, generally with maturities up to 14 days , to offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction and its settlement. Due to the short duration of these contracts and the Company’s credit profile, the Company is generally not required to post collateral with respect to these foreign currency forward contracts. Most derivative contracts executed with counterparties in the U.S. are governed by an International Swaps and Derivatives Association agreement that includes standard netting arrangements; therefore, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity. As of June 30, 2020 , the Company had foreign currency forward contracts outstanding in the U.S. with a notional value of $ 222 million . The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds sterling, euro and Mexican pesos. 13 Table of Contents In addition, the Company uses forward contracts, typically with maturities from a few days to less than one year, to offset foreign exchange rate fluctuations on certain short-term borrowings that are payable in currencies other than the U.S dollar. As of June 30, 2020 , the Company had foreign currency forward contracts outstanding with a notional value of $ 332 million , primarily in euro. Foreign currency exchange contracts - xe Operations xe writes derivative instruments, primarily foreign currency forward contracts and cross-currency swaps, mostly with counterparties comprised of individuals and small-to-medium size businesses and derives a currency margin from this activity as part of its operations. xe aggregates its foreign currency exposures arising from customer contracts and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from xe's total portfolio of positions were $ 13.2 million and $ 31.3 million for the three and six months ended June 30, 2020 , respectively, and $ 16.1 million and $ 34.7 million for the three and six months ended June 30, 2019 , respectively. All of the derivative contracts used in the Company' s xe operations are economic hedges and are not designated as hedges under ASC 815 . The duration of these derivative contracts is generally less than one year. The fair value of xe's total portfolio of positions can change significantly from period to period based on, among other factors, market movements and changes in customer contract positions. xe manages counterparty credit risk (the risk that counterparties will default and not make payments according to the terms of the agreements) on an individual counterparty basis. It mitigates this risk by entering into contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. xe does not expect any significant losses from counterparty defaults. The aggregate equivalent U.S. dollar notional amounts of foreign currency derivative customer contracts held by the Company in its xe operations as of June 30, 2020 was approximately $ 1.5 billion . The significant majority of customer contracts are written in major currencies such as the euro, U.S. dollar, British pounds sterling, Australian dollar and New Zealand dollar. Balance Sheet Presentation The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the dates below: Asset Derivatives Liability Derivatives Fair Value Fair Value (in thousands) Balance Sheet Location June 30, 2020 December 31, 2019 Balance Sheet Location June 30, 2020 December 31, 2019 Derivatives not designated as hedging instruments Foreign currency exchange contracts Prepaid expenses and other current assets $ 71,590 $ 54,765 Accrued expenses and other current liabilities $ ( 51,905 ) $ ( 41,935 ) The following tables summarize the gross and net fair value of derivative assets and liabilities as of June 30, 2020 and December 31, 2019 (in thousands): Offsetting of Derivative Assets Gross Amounts Not Offset in the Consolidated Balance Sheet As of June 30, 2020 Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts Presented in the Consolidated Balance Sheet Financial Instruments Cash Collateral Received Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 71,590 $ — $ 71,590 $ ( 41,843 ) $ ( 9,737 ) $ 20,010 As of December 31, 2019 Derivatives subject to a master netting arrangement or similar agreement $ 54,765 $ — $ 54,765 $ ( 34,935 ) $ ( 7,362 ) $ 12,468 14 Table of Contents Offsetting of Derivative Liabilities Gross Amounts Not Offset in the Consolidated Balance Sheet As of June 30, 2020 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts Presented in the Consolidated Balance Sheet Financial Instruments Cash Collateral Paid Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ ( 51,905 ) $ — $ ( 51,905 ) $ 41,843 $ 917 $ ( 9,145 ) As of December 31, 2019 Derivatives subject to a master netting arrangement or similar agreement $ ( 41,935 ) $ — $ ( 41,935 ) $ 34,935 $ 827 $ ( 6,173 ) See Note 10, Fair Value Measurements, for the determination of the fair values of derivatives. Income Statement Presentation The following table summarizes the location and amount of gains and losses on derivatives in the Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2019 : Amount of Gain Recognized in Income on Derivative Contracts (a) Location of Gain Recognized in Income on Derivative Contracts Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Foreign currency exchange contracts - Ria Operations Foreign currency exchange (loss) gain, net $ ( 460 ) $ ( 2,126 ) $ ( 223 ) $ 334 (a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its xe operations. These derivative contracts are excluded from this table as they are part of the broader disclosure of foreign currency exchange revenues for this business discussed above. See Note 10, Fair Value Measurements, for the determination of the fair values of derivatives. ( 10 ) FAIR VALUE MEASUREMENTS Fair value measurements used in the unaudited consolidated financial statements are based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. • Level 3 – Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the inputs that market participants would use in pricing. 15 Table of Contents The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis: As of June 30, 2020 (in thousands) Balance Sheet Classification Level 1 Level 2 Level 3 Total Assets Foreign currency exchange contracts Other current assets $ — $ 71,590 $ — $ 71,590 Liabilities Foreign currency exchange contracts Other current liabilities $ — $ ( 51,905 ) $ — $ ( 51,905 ) As of December 31, 2019 (in thousands) Balance Sheet Classification Level 1 Level 2 Level 3 Total Assets Foreign currency exchange contracts Other current assets $ — $ 54,765 $ — $ 54,765 Liabilities Foreign currency exchange contracts Other current liabilities $ — $ ( 41,935 ) $ — $ ( 41,935 ) Other Fair Value Disclosures The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term debt obligations approximate fair values due to their short maturities. The carrying values of the Company’s revolving credit agreements approximate fair values because interest is based on LIBOR that resets at various intervals of less than one year. The Company estimates the fair value of the Convertible Notes using quoted prices in inactive markets for identical liabilities (Level 2). As of June 30, 2020 , the fair values of the Convertible Notes and Senior Notes were $ 647.2 million and $ 632.3 million , respectively, with carrying values of $ 444.5 million and $ 673.9 million , respectively. (11) SEGMENT INFORMATION Euronet’s reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting (“ASC 280”) . The Company currently operates in the following three reportable operating segments: 1) Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East, Asia Pacific and the United States. The Company provides comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, dynamic currency conversion, domestic and international surcharges and other value added services. Through this segment, the Company also offers a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems. 2) Through the epay Segment, the Company provides distribution, processing and collection services for prepaid mobile airtime and other electronic payment products in Europe, the Middle East, Asia Pacific, the U.S. and South America. 3) Through the Money Transfer Segment, the Company provides global money transfer services under the brand names Ria, AFEX Money Express, IME, and xe. Ria, AFEX Money Express and IME provide global consumer-to-consumer money transfer services through a network of sending agents, Company-owned stores and Company-owned websites, disbursing money transfers through a worldwide correspondent network. xe offers account-to-account international payment services to high-income individuals and small-to-medium sized businesses. xe is also a provider of foreign currency exchange information. The Company also offers customers bill payment services, payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services, foreign currency exchange services and mobile top-up. Furthermore, xe provides cash management solutions and foreign currency risk management services to small-to-medium sized businesses. 16 Table of Contents In addition, the Company accounts for non-operating activity, share-based compensation expense, certain intersegment eliminations and the costs of providing corporate and other administrative services in its administrative division, “Corporate Services, Eliminations and Other.” These services are not directly identifiable with the Company’s reportable operating segments. The following tables present the Company’s reportable segment results for the three and six months ended June 30, 2020 and 2019 : For the Three Months Ended June 30, 2020 (in thousands) EFT Processing epay Money Transfer Corporate Services, Eliminations and Other Consolidated Total revenues $ 78,488 $ 187,563 $ 262,863 $ ( 1,111 ) $ 527,803 Operating expenses: Direct operating costs 62,465 144,056 144,589 ( 1,099 ) 350,011 Salaries and benefits 21,289 15,191 49,059 5,413 90,952 Selling, general and administrative 9,515 8,635 33,172 1,993 53,315 Goodwill impairment 21,861 — 82,693 — 104,554 Depreciation and amortization 19,934 1,651 8,577 80 30,242 Total operating expenses 135,064 169,533 318,090 6,387 629,074 Operating income (expense) $ ( 56,576 ) $ 18,030 $ ( 55,227 ) $ ( 7,498 ) $ ( 101,271 ) For the Three Months Ended June 30, 2019 (in thousands) EFT Processing epay Money Transfer Corporate Services, Eliminations and Other Consolidated Total revenues $ 231,946 $ 184,160 $ 276,783 $ ( 1,022 ) $ 691,867 Operating expenses: Direct operating costs 105,568 140,427 148,834 ( 1,018 ) 393,811 Salaries and benefits 21,339 14,998 52,713 9,500 98,550 Selling, general and administrative 10,745 9,424 31,731 1,942 53,842 Depreciation and amortization 17,778 1,756 8,159 74 27,767 Total operating expenses 155,430 166,605 241,437 10,498 573,970 Operating income (expense) $ 76,516 $ 17,555 $ 35,346 $ ( 11,520 ) $ 117,897 17 Table of Contents For the Six Months Ended June 30, 2020 (in thousands) EFT Processing epay Money Transfer Corporate Services, Eliminations and Other Consolidated Total revenues $ 224,313 $ 360,474 $ 529,097 $ ( 2,174 ) $ 1,111,710 Operating expenses: Direct operating costs 150,001 274,130 287,498 ( 2,162 ) 709,467 Salaries and benefits 43,380 30,888 102,923 15,001 192,192 Selling, general and administrative 20,456 17,473 71,754 4,425 114,108 Goodwill impairment 21,861 — 82,693 — 104,554 Depreciation and amortization 40,256 3,495 17,148 159 61,058 Total operating expenses 275,954 325,986 562,016 17,423 1,181,379 Operating income (expense) $ ( 51,641 ) $ 34,488 $ ( 32,919 ) $ ( 19,597 ) $ ( 69,669 ) For the Six Months Ended June 30, 2019 (in thousands) EFT Processing epay Money Transfer Corporate Services, Eliminations and Other Consolidated Total revenues $ 377,649 $ 360,274 $ 533,364 $ ( 1,911 ) $ 1,269,376 Operating expenses: Direct operating costs 189,344 273,952 286,238 ( 1,890 ) 747,644 Salaries and benefits 40,770 29,751 103,869 16,955 191,345 Selling, general and administrative 19,831 17,476 60,840 3,842 101,989 Depreciation and amortization 34,420 3,541 16,297 149 54,407 Total operating expenses 284,365 324,720 467,244 19,056 1,095,385 Operating income (expense) $ 93,284 $ 35,554 $ 66,120 $ ( 20,967 ) $ 173,991 The following table presents the Company’s total assets by reportable segment: Total Assets as of (in thousands) June 30, 2020 December 31, 2019 EFT Processing $ 1,394,600 $ 1,914,144 epay 801,003 962,671 Money Transfer 1,517,809 1,560,136 Corporate Services, Eliminations and Other 248,123 220,715 Total $ 3,961,535 $ 4,657,666 18 Table of Contents The following table presents the Company's revenues disaggregated by segment and region. Sales and usage-based taxes are excluded from revenues. The Company believes disaggregation by segment and region best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The disaggregation of revenues by segment and region is based on management's assessment of segment performance together with allocation of financial resources, both capital and operating support costs, on a segment and regional level. Both segments and regions benefit from synergies achieved through concentration of operations and are influenced by macro-economic, regulatory and political factors in the respective segment and region. For the Three Months Ended June 30, 2020 For the Six Months Ended June 30, 2020 (in thousands) EFT Processing epay Money Transfer Total EFT Processing epay Money Transfer Total Europe $ 44,927 $ 122,675 $ 98,730 $ 266,332 $ 144,401 $ 237,952 $ 189,788 $ 572,141 North America 13,123 36,106 132,891 182,120 28,142 69,958 270,786 368,886 Asia Pacific 20,438 22,782 26,232 69,452 51,766 42,056 57,080 150,902 Other — 6,000 5,010 11,010 4 10,508 11,443 21,955 Eliminations — — — ( 1,111 ) — — — ( 2,174 ) Total $ 78,488 $ 187,563 $ 262,863 $ 527,803 $ 224,313 $ 360,474 $ 529,097 $ 1,111,710 For the Three Months Ended June 30, 2019 For the Six Months Ended June 30, 2019 (in thousands) EFT Processing epay Money Transfer Total EFT Processing epay Money Transfer Total Europe $ 192,696 $ 123,322 $ 93,576 $ 409,594 $ 300,307 $ 238,228 $ 179,135 $ 717,670 North America 7,958 37,732 145,528 191,218 16,163 77,396 280,360 373,919 Asia Pacific 31,287 18,920 31,577 81,784 61,164 36,294 62,290 159,748 Other 5 4,186 6,102 10,293 15 8,356 11,579 19,950 Eliminations — — — ( 1,022 ) — — — ( 1,911 ) Total $ 231,946 $ 184,160 $ 276,783 $ 691,867 $ 377,649 $ 360,274 $ 533,364 $ 1,269,376 ( 12 ) INCOME TAXES The Company's effective income tax rate was ( 8.4 ) % and ( 11.1 ) % for the three and six months ended June 30, 2020 , respectively, compared to 31.5 % and 31.6 % for the three and six months ended June 30, 2019 , respectively . The Company's effective income tax rate for the three and six months ended June 30, 2020 was different than the applicable statutory income tax rate of 21 % primarily due to the non-deductible goodwill impairment charge during the second quarter of 2020 and as a result of an increase in the valuation allowance in certain jurisdictions relating to the reversal of tax benefits recognized in the first quarter of 2020 for net operating losses in those jurisdictions which have a limited history of profitable earnings. The Company's effe ctive income tax rate for the three and six months ended June 30, 2019 was higher than the applicable statutory income tax rate of 21 % largely because of the application to the Company of the global intangible low-taxed income ("GILTI") tax provision and certain foreign earnings of the Company being subject to higher local statutory income tax rates. (13) COMMITMENTS As of June 30, 2020 , the Company had $ 74.6 million of stand-by letters of credit/bank guarantees issued on its behalf, of which $ 52.1 million are outstanding under the Credit Facility. The remaining stand-by letters of credit/bank guarantees are collateralized by $ 4.0 million of cash deposits held by the respective issuing banks. Under certain circumstances, Euronet grants guarantees in support of obligations of subsidiaries. As of June 30, 2020 , the Company had granted off balance sheet guarantees for cash in various ATM networks amounting to $ 11.8 million over the terms of the cash supply agreements and performance guarantees amounting to approximately $ 39.3 million over the terms of agreements with the customers. 19 Table of Contents From time to time, the Company enters into agreements with commercial counterparties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. The amount of such potential obligations is generally not stated in the agreements. Euronet's liability under such indemnification provisions may be mitigated by relevant insurance coverage and may be subject to time and materiality limitations, monetary caps and other conditions and defenses. Such indemnification obligations include the following: • In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for damage to ATMs and theft of ATM network cash. As of June 30, 2020 , the balance of such cash used in the Company's ATM networks for which the Company was responsible was approximately $ 512 million . The Company maintains insurance policies to mitigate this exposure; • In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for losses suffered by its customers and other parties as a result of the breach of its computer systems, including in particular, losses arising from fraudulent transactions made using information stolen through its processing systems. The Company maintains insurance policies to mitigate this exposure; • In connection with the license of proprietary systems to customers, the Company provides certain warranties and infringement indemnities to the licensee, which generally warrant that such systems do not infringe on intellectual property owned by third parties and that the systems will perform in accordance with their specifications; • Euronet has entered into purchase and service agreements with vendors and consulting agreements with providers of consulting services, pursuant to which the Company has agreed to indemnify certain of such vendors and consultants, respectively, against third-party claims arising from the Company’s use of the vendor’s product or the services of the vendor or consultant; • In connection with acquisitions and dispositions of subsidiaries, operating units and business assets, the Company has entered into agreements containing indemnification provisions, which can be generally described as follows: (i) in connection with acquisitions of operating units or assets made by Euronet, the Company has agreed to indemnify the seller against third party claims made against the seller relating to the operating unit or asset and arising after the closing of the transaction, and (ii) in connection with dispositions made by Euronet, Euronet has agreed to indemnify the buyer against damages incurred by the buyer due to the buyer’s reliance on representations and warranties relating to the subject subsidiary, operating unit or business assets in the disposition agreement if such representations or warranties were untrue when made; and • Euronet has entered into agreements with certain third parties, including banks that provide fiduciary and other services to Euronet or to the Company’s benefit plans. Under such agreements, the Company has agreed to indemnify such service providers for third-party claims relating to carrying out their respective duties under such agreements. The Company is also required to meet minimum capitalization and cash requirements of various regulatory authorities in the jurisdictions in which the Company has money transfer operations. The Company has obtained surety bonds in compliance with money transfer licensing requirements of the applicable governmental authorities. To date, the Company is not aware of any significant claims made by the indemnified parties or third parties to guarantee agreements with the Company and, accordingly, no liabilities were recorded as of June 30, 2020 or December 31, 2019 . ( 14 ) LITIGATION AND CONTINGENCIES From time to time, the Company is a party to legal or regulatory proceedings arising in the ordinary course of its business. Currently, there are no legal proceedings or regulatory findings that management believes, either individually or in the aggregate, would have a material adverse effect on the Company's consolidated financial condition or results of operations. In accordance with U.S. GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. 20 Table of Contents (15) LEASES The Company enters into operating leases for ATM sites, office spaces, retail stores and equipment. The Company's finance leases are immaterial. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease terms. The present value of lease payments is determined using the incremental borrowing rate based on information available at the lease commencement date. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include an option to renew, with renewal terms that can extend the lease terms. The exercise of lease renewal options is at the Company’s sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease terms. The Company also has a unilateral termination right for most of the ATM site leases. The Company evaluated the likelihood of exercising the renewal and termination options beginning with the adoption of the new accounting lease standard on January 1, 2019, concluding 1) the options were not reasonably certain to be exercised and thus were not considered in determining the lease terms, and associated payment impacts were excluded from lease payments and 2) termination options were reasonably certain not to be exercised and therefore the stated lease payment schedule of the lease was used to determine the lease term. During the second quarter of 2020, the impact of the COVID-19 pandemic was a significant event that caused a significant change in circumstances and business plans to manage our portfolio of ATM leases. Specifically we downsized, through the exercise of termination clauses and the reduction of monthly costs by renegotiating payment terms of our ATM leases. The Company's execution of the business plan to renegotiate terms and downsize the portfolio of ATM leases constituted a reassessment event during the second quarter of 2020. The reassessment event required the Company to reevaluate the accounting for the portfolio of ATM leases, including lease terms. Due to the recent increased frequency of ATM site lease terminations, modifications, and greater unpredictability whether or not future lease terminations will be exercised, the Company is no longer able to conclude that termination options are reasonably certain not to be exercised. This reassessment conclusion impacts the lease term evaluation, instead of determining the lease term based on the stated lease payment schedule of the lease, now the lease term will be evaluated when the Company has the contractual ability to terminate the lease (most leases allow for a termination upon advance notice of between 30 and 90 days of notice). As a result of the lease term reassessment, $ 211.9 million of right of use assets and $ 211.9 million l ease liabilities were reassessed to have a term shorter than 12 months, thus were subject to the short-term lease exemption and removed from the balance sheet as of June 30, 2020. Future payments for ATM site leases with termination options, exercisable less than 12 months, are excluded from the right of use asset and lease liability balances. Payments for ATM site leases with termination options subject to the short-term lease exemption are expensed in the period incurred. The short-term lease expense for the three months ended June 30, 2020 reasonably reflects the Company’s short-term lease commitments. Certain of the Company's lease agreements include variable rental payments based on revenues generated from the use of the leased location and certain leases include rental payments adjusted periodically for inflation. Variable lease payments are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs and are excluded from the right of use assets and lease liabilities balances. The lease agreements do not contain any material residual value guarantees or material restrictive covenants. Future minimum lease payments Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) as of June 30, 2020 are: As of June 30, 2020 Maturity of Lease Liabilities (in thousands) Operating Leases (1) Remainder of 2020 $ 26,198 2021 42,182 2022 29,304 2023 20,294 2024 13,105 Thereafter 26,319 Total lease payments $ 157,402 Less: imputed interest ( 3,754 ) Present value of lease liabilities $ 153,648 (1) Operating lease payments reflect the Company's current fixed obligations under the operating lease agreements. Certain ATM site leases contain termination options that grant the Company the option to terminate the lease prior to the stated term of the agreement. The Company includes the future minimum lease payments for these ATM site leases only to the extent that the termination option is not reasonably certain to be exercised. 21 Table of Contents Lease expense recognized in the Consolidated Statements of Income is summarized as follows: Lease Expense (in thousands) Income Statement Classification Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Operating lease expense Selling, general and administrative and Direct operating costs $ 21,045 $ 33,113 $ 54,233 $ 63,573 Short-term and variable lease expense Selling, general and administrative and Direct operating costs 12,281 12,320 20,961 18,889 Total lease expense $ 33,326 $ 45,433 $ 75,194 $ 82,462 Other information about lease amounts recognized in the consolidated financial statements is summarized as follows: Lease Term and Discount Rate of Operating Leases As of June 30, 2020 Weighted- average remaining lease term (years) 4.8 W eighted- average discount rate 2.1 % The following table presents supplemental cash flow and non-cash information related to leases. Other Information (in thousands) Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities (a) $ 53,869 $ 62,935 Supplemental non-cash information on lease liabilities arising from obtaining ROU assets ROU assets obtained in exchange for new operating lease liabilities $ 52,764 $ 157,914 (a) Included in Net cash provided by operating activities on the Company's Consolidated Statements of Cash Flows. 22 Table of Contents