What changed in this filing

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Item 1. Financial Statements

2020-11-02 compared with 2020-08-06 · 162 added, 110 removed, 573 unchanged (32% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

Cash and cash equivalents

Cash an d cas h equivalents

Restricted cash

Settlement assets

Trade accounts receivable, net of credit losses of $ 4,524 at June 30, 2020 and $ 3,892 at December 31, 2019

Trade accounts receivable, net of credit losses of $ 4,364 at September 30, 2020 and $ 3,892 at December 31, 2019

Prepaid expenses and other current assets

1 unchanged sentence

Operating right of use lease assets

Property and equipment, net of accumulated depreciation of $ 428,909 at June 30, 2020 and $ 410,243 at December 31, 2019

Acquired intangible assets, net of accumulated amortization of $ 161,861 at June 30, 2020 and $ 204,853 at December 31, 2019

Other assets, net of accumulated amortization of $ 50,136 at June 30, 2020 and $ 46,788 at December 31, 2019

Property and equipment, net of accumulated depreciation of $ 460,963 at September 30, 2020 and $ 410,243 at December 31, 2019

Acquired intangible assets, net of accumulated amortization of $ 161,371 at September 30, 2020 and $ 204,853 at December 31, 2019

Other assets, net of accumulated amortization of $ 52,458 at September 30, 2020 and $ 46,788 at December 31, 2019

LIABILITIES AND EQUITY

19 unchanged sentences

90,000,000 shares authorized;

62,934,954 issued at June 30, 2020 and 62,775,762 issued at December 31, 2019

62,955,214 issued at September 30, 2020 and 62,775,762 issued at December 31, 2019

Additional paid-in-capital

Treasury stock, at cost, 10,646,423 shares at June 30, 2020 and 8,554,908 shares at December 31, 2019

Treasury stock, at cost, 10,645,079 shares at September 30, 2020 and 8,554,908 shares at December 31, 2019

Retained earnings

10 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating expenses:

2 unchanged sentences

Selling, general and administrative

Goodwill impairmen t

Goodwill and acquired intangible assets impairmen t

Depreciation and amortization

Total operating expenses

Operating (loss) income

Operating income (loss)

Other income (expense):

2 unchanged sentences

Loss on early retirement of debt

Foreign currency exchange gain (loss), net

Foreign currency exchange loss, net

Other gain (loss)

Other expense, net

(Loss) income before income taxes

Income (loss) before income taxes

Income tax expense

Net (loss) income

Net loss (income) attributable to noncontrolling interests

Net (loss) income attributable to Euronet Worldwide, Inc.

(Loss) earnings per share attributable to Euronet Worldwide, Inc.

Net income (loss)

Net (income) loss attributable to noncontrolling interests

Net income (loss) attributable to Euronet Worldwide, Inc.

Earnings (loss) per share attributable to Euronet Worldwide, Inc.

stockholders:

3 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)

Three Months Ended

Six Months Ended

Net (loss) income

September 30,

Nine Months Ended

September 30,

Net income (loss)

Translation adjustment

Comprehensive (loss) income

Comprehensive income (loss)

Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive (loss) income attributable to Euronet Worldwide, Inc.

Comprehensive income (loss) attributable to Euronet Worldwide, Inc.

See accompanying notes to the unaudited consolidated financial statements.

3 unchanged sentences

(Unaudited, in thousands, except share data)

Shares Outstanding

Paid-in Capital

Balance as of December 31, 2018

11 unchanged sentences

Balan ce as of June 30, 2019

Net income (loss)

Other comprehensive income

Stock issued under employee stock plans

Share-based compensation

Repurchase of shares

Balance as of September 30, 2019

Shares Outstanding

Paid-in Capital

Balance as of December 31, 2019

10 unchanged sentences

Balance as of June 30, 2020

Other comprehensive income

Stock issued under employee stock plans

Share-based compensation

Balance as of September 30, 2020

See accompanying notes to the unaudited consolidated financial statements.

20 unchanged sentences

Balance as of June 30, 2019

Net income (loss)

Other comprehensive loss

Stock issued under employee stock plans

Share-based compensation

Repurchase of shares

Balance as of September 30, 2019

Retained Earnings

14 unchanged sentences

Balance as of June 30, 2020

Other comprehensive income

Stock issued under employee stock plans

Share-based compensation

Balance as of September 30, 2020

See accompanying notes to the unaudited consolidated financial statements.

3 unchanged sentences

(Unaudited, in thousands)

Six Months Ended

Nine Months Ended

September 30,

Net (loss) income

2 unchanged sentences

Share-based compensation

Unrealized foreign exchange loss (gain), net

Unrealized foreign exchange loss, net

Deferred income taxes

Goodwill impairment

Goodwill and acquired intangible assets impairment

Loss on early retirement of debt

19 unchanged sentences

Repayments of revolving credit agreements

( 1,425,100 )

Proceeds from long-term debt obligations

Repayments of long-term debt obligations

Net borrowing from short-term debt obligations

Net repayments from short-term debt obligations

Debt issuance costs

34 unchanged sentences

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.

The EFT Segment has experienced declines in certain transaction volumes due to these restrictions, especially high-margin cross-border transactions.

The epay Segment has experienced the impacts of consumer movement restrictions in certain markets, while other markets have been positively impacted where the Company has a higher mix of digital distribution or a higher concentration of retailers that are deemed essential and have remained open during the pandemic.

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.

(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.

In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital.

Under this ASU, certain debt instruments with embedded conversion features will be accounted for as a single liability measured at its amortized cost.

Additionally, this ASU eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments.

The new guidance is effective for annual periods beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating the impact the adoption of ASU 2020-06 will have on the consolidated financial statements.

In March 2020, the 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.

15 unchanged sentences

(in thousands)

September 30,

Settlement assets:

1 unchanged sentence

Settlement restricted cash

Accounts receivable

Accounts receivable, net of credit losses

Prepaid expenses and other current assets

5 unchanged sentences

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.

The balance of credit losses related to accounts receivable within settlement assets was $ 29.9 million and $ 24.0 million as of September 30, 2020 and December 31, 2019, respectively.

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.

(in thousands)

September 30,

Cash and cash equivalents

6 unchanged sentences

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

Six Months Ended

September 30,

Nine Months Ended

September 30,

Computation of diluted weighted average shares outstanding:

3 unchanged sentences

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 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 1,122,000 and 1,887,000 for the three and nine months ended September 30, 2020 , respectively, and approximately 751,000 and 841,000 for the three and nine months ended September 30, 2019 , respectively.

The Company issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019.

4 unchanged sentences

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.

The market price per share per share of common stock was $ 91.10 on September 30, 2020 and $ 146.30 on September 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 nine months ended September 30, 2020 and 2019.

See Note 8, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes.

3 unchanged sentences

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.

For the three months ended September 30, 2020, there were no repurchases of stock under the repurchase programs and for the nine months ended September 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.

1 unchanged sentence

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 .

The Company recorded a foreign currency translation gain of $ 47.0 million and $ 19.4 million for the three and nine months ended September 30, 2020 , respectively, and a loss of $ 56.9 million and $ 60.9 million for the three and nine months ended September 30, 2019, respectively.

There were no reclassifications of foreign currency translation into the consolidated statements of income for the three and nine months ended September 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:

A summary of acquired intangible assets and goodwill activity for the nine months ended September 30, 2020 is presented below:

(in thousands)

Balance as of December 31, 2019

Increases (decreases):

Other (primarily changes in foreign currency exchange rates)

Balance as of June 30, 2020

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.

Balance as of September 30, 2020

Of the total goodwill balance of $ 641.9 million as of September 30, 2020 , $ 388.5 million relates to the Money Transfer Segment, $ 131.9 million relates to the epay Segment and the remaining $ 121.5 million relates to the EFT Processing Segment.

Estimated amortization expense on intangible assets with finite lives as of September 30, 2020, is expected to total $ 5.6 million for the remainder of 2020, $ 22.0 million for 2021, $ 20.9 million for 2022, $ 16.1 million for 2023, $ 9.6 million for 2024 and $ 6.5 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 .

The COVID- 19 pandemic and subsequent mitigation efforts, which include global business shutdowns, the closing of borders and the implementation of mandatory social distancing requirements, has created an unprecedented disruption to our business that began in March 2020 .

These mitigation efforts coupled with the negative economic impacts to the tourism industry caused a decline in revenues and changes to our forecasts.

10 unchanged sentences

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.

The Company completed its interim goodwill impairment test during the second quarter of 2020.

The Company completed an 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.

2 unchanged sentences

$ 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.

We have and 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.

As additional 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.

During the third quarter of 2020, the Company recorded a $ 1.5 million non-cash impairment charge for acquired intangible assets, specifically related to customer lists in the xe reporting unit.

( 6 ) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

1 unchanged sentence

(in thousands)

June 30, 2020

September 30, 2020

December 31, 2019

5 unchanged sentences

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.

The decrease in the deferred revenue balance for the nine months ended September 30, 2020 is primarily driven by $ 31.5 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, offset by $ 34.3 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2019.

(8) DEBT OBLIGATIONS

1 unchanged sentence

(in thousands)

June 30, 2020

September 30, 2020

December 31, 2019

17 unchanged sentences

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 .

The Company was in compliance with all debt covenants, as of September 30, 2020 .

Convertible Debt

6 unchanged sentences

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.

Contractual interest expense for the Convertible Notes was $ 1.0 million and $ 3.0 million for the three and nine months ended September 30, 2020, respectively and $ 1.0 million and $ 2.1 million for the three and nine months ended September 30, 2019, respectively .

Accretion expense for the Convertible Notes was $ 3.8 million and $ 11.4 million for the three and nine months ended September 30, 2020, respectively and $ 3.7 million and $ 7.9 million for the three and nine months ended September 30, 2019, respectively .

Contractual interest expense for the Retired Convertible Notes was $ 1.5 million for the nine months ended September 30, 2019.

A ccretion expense for the Retired Convertible Notes was $ 4.6 million for the nine months ended September 30, 2019 .

The effective interest rate was 4.4 % for the three and nine months ended September 30, 2020 .

As of September 30, 2020 , the unamortized discount was $ 76.7 million and will be amortized through March 2025.

1.375% Senior Notes due 2026

1 unchanged sentence

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.

As of September 30, 2020 , the Company has outstanding € 600 million ( $ 703.2 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.

1 unchanged sentence

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.

As of September 30, 2020 and December 31, 2019 , borrowings under these arrangements were $ 0.9 million and $ 6.2 million , respectively.

Uncommitted Line of Credit

13 unchanged sentences

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.

As of September 30, 2020 , the Company had foreign currency forward contracts outstanding in the U.S.

with a notional value of $ 180 million .

1 unchanged sentence

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.

As of September 30, 2020 , the Company had foreign currency forward contracts outstanding with a notional value of $ 213 million , primarily in euro.

Foreign currency exchange contracts - xe Operations

1 unchanged sentence

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.

Foreign exchange revenues from xe's total portfolio of positions were $ 14.4 million and $ 45.7 million for the three and nine months ended September 30, 2020 , respectively, and $ 17.5 million and $ 52.2 million for the three and nine months ended September 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 .

5 unchanged sentences

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 .

dollar notional amount of foreign currency derivative customer contracts held by the Company in its xe operations as of September 30, 2020 was approximately $ 1.3 billion .

The significant majority of customer contracts are written in major currencies such as the euro, U.S.

6 unchanged sentences

Balance Sheet Location

June 30, 2020

September 30, 2020

December 31, 2019

Balance Sheet Location

June 30, 2020

September 30, 2020

December 31, 2019

3 unchanged sentences

Accrued expenses and other current liabilities

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):

The following tables summarize the gross and net fair value of derivative assets and liabilities as of September 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

As of September 30, 2020

Gross Amounts of Recognized Assets

8 unchanged sentences

Gross Amounts Not Offset in the Consolidated Balance Sheet

As of June 30, 2020

As of September 30, 2020

Gross Amounts of Recognized Liabilities

8 unchanged sentences

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 :

The following table summarizes the location and amount of gains and losses on derivatives in the Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019 :

Amount of Gain Recognized in Income on Derivative Contracts (a)

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

13 unchanged sentences

The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis:

As of June 30, 2020

As of September 30, 2020

(in thousands)

15 unchanged sentences

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.

As of September 30, 2020 , the fair values of the Convertible Notes and Senior Notes were $ 642.6 million and $ 687.8 million , respectively, with carrying values of $ 448.3 million and $ 703.2 million , respectively.

(11) SEGMENT INFORMATION

13 unchanged sentences

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

The following tables present the Company’s reportable segment results for the three and nine months ended September 30, 2020 and 2019 :

For the Three Months Ended September 30, 2020

(in thousands)

4 unchanged sentences

Selling, general and administrative

Goodwill impairment

Goodwill and acquired intangible assets impairment

Depreciation and amortization

1 unchanged sentence

Operating income (expense)

For the Three Months Ended June 30, 2019

For the Three Months Ended September 30, 2019

(in thousands)

7 unchanged sentences

Operating income (expense)

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

(in thousands)

EFT Processing

Money Transfer

Corporate Services,

Eliminations and Other

Total revenues

3 unchanged sentences

Selling, general and administrative

Goodwill impairment

Goodwill and acquired intangible assets impairment

Depreciation and amortization

1 unchanged sentence

Operating income (expense)

For the Six Months Ended June 30, 2019

For the Nine Months Ended September 30, 2019

(in thousands)

EFT Processing

Money Transfer

Corporate Services,

Eliminations and Other

Total revenues

9 unchanged sentences

(in thousands)

June 30, 2020

September 30, 2020

December 31, 2019

7 unchanged sentences

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

For the Three Months Ended September 30, 2020

For the Nine Months Ended September 30, 2020

(in thousands)

North America

For the Three Months Ended June 30, 2019

For the Six Months Ended June 30, 2019

For the Three Months Ended September 30, 2019

For the Nine Months Ended September 30, 2019

(in thousands)

1 unchanged sentence

( 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.

The Company's effective income tax rate was 27.2 % and ( 55.9 ) % for the three and nine months ended September 30, 2020 , respectively, compared to 21.2 % and 26.0 % for the three and nine months ended September 30, 2019 , respectively .

The Company's effective income tax rate for the three and nine months ended September 30, 2020 was higher 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 and second 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 nine months ended September 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.

As of September 30, 2020 , the Company had $ 71.7 million of stand-by letters of credit/bank guarantees issued on its behalf, of which $ 46.9 million are outstanding under the Credit Facility.

The remaining stand-by letters of credit/bank guarantees are collateralized by $ 4.1 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.

As of September 30, 2020 , the Company had granted off balance sheet guarantees for cash in various ATM networks amounting to $ 12.1 million over the terms of the cash supply agreements and performance guarantees amounting to approximately $ 36.3 million over the terms of agreements with the customers.

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.

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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 .

As of September 30, 2020 , the balance of such cash used in the Company's ATM networks for which the Company was responsible was approximately $ 506 million .

The Company maintains insurance policies to mitigate this exposure;

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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

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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.

D uring 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.

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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.

New, amended, and modified ATM site leases with termination options exercisable within 12 months will be excluded from the right of use lease asset and lease liability balances in the future.

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.

The short-term lease expense for the three months ended September 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.

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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

Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) as of September 30, 2020 are:

As of September 30, 2020

Maturity of Lease Liabilities (in thousands)

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Lease expense recognized in the Consolidated Statements of Income is summarized as follows:

Lease Expense (in thousands)

Lease Expense

(in thousands)

Income Statement Classification

Three Months Ended

June 30, 2020

September 30, 2020

Three Months Ended

June 30, 2019

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

September 30, 2019

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

Operating lease expense

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Lease Term and Discount Rate of Operating Leases

As of June 30, 2020

As of September 30, 2020

Weighted- average remaining lease term (years)

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Other Information (in thousands)

Six Months Ended

June 30, 2020

Six Months Ended

June 30, 2019

Nine Months Ended

September 30, 2020

Nine Months Ended

September 30, 2019

Cash paid for amounts included in the measurement of lease liabilities (a)

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements