What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-05 compared with 2020-11-02 · 110 added, 260 removed, 475 unchanged (44% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

2 unchanged sentences

Settlement assets

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

Trade accounts receivable, net of credit losses of $ 4,717 and $ 5,926

Prepaid expenses and other current assets

1 unchanged sentence

Operating right of use lease assets

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

Property and equipment, net of accumulated depreciation of $ 485,467 and $ 490,429

Acquired intangible assets, net of accumulated amortization of $ 178,219 and $ 175,210

Other assets, net of accumulated amortization of $ 57,118 and $ 55,710

LIABILITIES AND EQUITY

19 unchanged sentences

90,000,000 shares authorized;

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

shares issued 63,429,190 and 63,366,010

Additional paid-in-capital

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

Treasury stock, at cost, shares issued 10,632,705 and 10,631,961

Retained earnings

10 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating expenses:

2 unchanged sentences

Selling, general and administrative

Goodwill and acquired intangible assets impairmen t

Depreciation and amortization

Total operating expenses

Operating income (loss)

Operating income

Other income (expense):

1 unchanged sentence

Interest expense

Loss on early retirement of debt

Foreign currency exchange loss, net

Other gain (loss)

Other gains, net

Other expense, net

Income (loss) before income taxes

(Loss) income before income taxes

Income tax expense

Net income (loss)

Net (loss) income

Net (income) loss attributable to noncontrolling interests

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

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

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

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

stockholders:

3 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Net (loss) income

Translation adjustment

Comprehensive income (loss)

Comprehensive (income) loss attributable to noncontrolling interests

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

Comprehensive loss

Comprehensive loss attributable to noncontrolling interests

Comprehensive loss attributable to Euronet Worldwide, Inc.

See accompanying notes to the unaudited consolidated financial statements.

6 unchanged sentences

Balance as of December 31, 2019

Other comprehensive loss

Stock issued under employee stock plans

Share-based compensation

Issuance of convertible notes, net of tax

Repurchase and conversions of convertible notes, net of tax

Balan ce as of March 31, 2019

Net income (loss)

Other comprehensive income

Stock issued under employee stock plans

Share-based compensation

Redemptions and conversions of convertible notes, net of tax

Balan ce as of June 30, 2019

Net income (loss)

Other comprehensive income

Other comprehensive loss

Stock issued under employee stock plans

1 unchanged sentence

Repurchase of shares

Balance as of September 30, 2019

Balan ce as of March 31, 2020

Shares Outstanding

1 unchanged sentence

Balance as of December 31, 2020

Net income (loss)

Net (loss) income

Other comprehensive loss

1 unchanged sentence

Share-based compensation

Repurchase of shares

Balance as of March 31, 2021

Net (loss) income

Other comprehensive income

Stock issued under employee stock plans

Share-based compensation

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.

8 unchanged sentences

Balance as of December 31, 2019

Other comprehensive loss

Stock issued under employee stock plans

Share-based compensation

Issuance of convertible notes, net of tax

Repurchases and conversions of convertible notes

Balance as of March 31, 2019

Net income (loss)

Other comprehensive income

Stock issued under employee stock plans

Share-based compensation

Redemptions and conversions of convertible notes

Balance as of June 30, 2019

Net income (loss)

Other comprehensive loss

2 unchanged sentences

Repurchase of shares

Balance as of September 30, 2019

Balance as of March 31, 2020

Retained Earnings

3 unchanged sentences

Balance as of December 31, 2020

Net income (loss)

Net (loss) income

Other comprehensive loss

1 unchanged sentence

Share-based compensation

Repurchase of shares

Balance as of March 31, 2021

Net (loss) income

Other comprehensive income

Stock issued under employee stock plans

Share-based compensation

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)

Nine Months Ended

September 30,

Three Months Ended

Net (loss) income

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

2 unchanged sentences

Deferred income taxes

Goodwill and acquired intangible assets impairment

Loss on early retirement of debt

Accretion of convertible debt discount and amortization of debt issuance costs

7 unchanged sentences

Changes in noncurrent assets and liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

8 unchanged sentences

Repayments of revolving credit agreements

Proceeds from long-term debt obligations

Repayments of long-term debt obligations

Net repayments from short-term debt obligations

Debt issuance costs

Net cash (used in) provided by financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents and restricted cash

(Decrease) increase in cash and cash equivalents and restricted cash

Decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

29 unchanged sentences

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 and nine months ended September 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 globe and there is a resurgence of infections.

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

8 unchanged sentences

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 ) PENDING ACQUISITION

In March 2021, the Company entered into an agreement to purchase the Piraeus Bank Merchant Acquiring business of Piraeus Bank for € 300 million, or approximately $ 360 millio n.

The proposed arrangement will include separate commercial agreements for a long-term strategic partnership with Piraeus Bank for collaborative product distribution, processing and customer referrals.

The acquisition will expand the Company’s omnichannel payments strategy and position the Company in Greece’s growing market for merchant acquiring services.

The closing is targeted for late 2021 and is subject to regulatory approvals, finalization of the commercial agreements, and customary closing conditions.

The Company expects to finance the purchase price using cash on hand.

(4) SETTLEMENT ASSETS AND OBLIGATIONS

10 unchanged sentences

(in thousands)

September 30,

Settlement assets:

1 unchanged sentence

Settlement restricted cash

Accounts receivable, net of credit losses

Accounts receivable, net of credit allowance of $ 33,980 and $ 35,800

Prepaid expenses and other current assets

4 unchanged sentences

Total settlement obligations

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 $ 29.9 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

4 unchanged sentences

(5) 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, if such conversion would be dilutive.

(Loss) Earnings Per Share

Basic (loss) earnings per share has been computed by dividing (loss) earnings available to common stockholders by the weighted average number of common shares outstanding during the respective period.

Diluted (loss) earnings per share has been computed by dividing (loss) earnings 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, if such conversion would be dilutive.

The following table provides the computation of diluted weighted average number of common shares outstanding:

Three 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 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 calculation of diluted (loss) earnings 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 2,437,000 and 886,000 for the three months ended March 31, 2021 and 2020 , respectively.

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

1 unchanged sentence

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.

Accordingly, the Convertible Notes were included in the calculation of diluted (loss) earnings 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 $ 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.

The market price per share of common stock was $ 138.30 on March 31, 2021 and $ 85.72 on March 31, 2020 , 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 months ended March 31, 2021 and 2020.

See Note 9, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes.

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 March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized a 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 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.

For the three months ended March 31, 2021, there were no repurchases of stock under the repurchase programs .

Repurchases under the 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 $ 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 .

The Company recorded foreign currency translation losses of $ 42.9 million and $ 59.8 million for the three months ended March 31, 2021 and 2020, respectively.

There were no reclassifications of foreign currency translation into the consolidated statements of income for the three months ended March 31, 2021 and 2020 .

( 6 ) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

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

A summary of acquired intangible assets and goodwill activity for the three months ended March 31, 2021 is presented below:

(in thousands)

Balance as of December 31, 2020

Increases (decreases):

Other (primarily changes in foreign currency exchange rates)

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 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.

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.

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.

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 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 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.

Foreign currency exchange rate changes

Balance as of March 31, 2021

Of the total goodwill balance of $ 653.1 million as of March 31, 2021 , $ 398.0 million relates to the Money Transfer Segment, $ 132.3 million relates to the epay Segment and the remaining $ 122.8 million relates to the EFT Processing Segment.

Estimated amortization expense on acquired intangible assets with finite lives as of March 31, 2021, is expected to total $ 17.0 million for the remainder of 2021, $ 21.5 million for 2022, $ 16.6 million for 2023, $ 9.8 million for 2024, $ 6.4 million for 2025 and $ 6.2 million for 2026.

( 7 ) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

1 unchanged sentence

(in thousands)

September 30, 2020

March 31, 2021

December 31, 2020

1 unchanged sentence

Derivative liabilities

Current portion of capital lease obligations

Deferred income taxes

Current portion of finance lease obligations

(8) 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 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.

The increase in the deferred revenue balance for the three months ended March 31, 2021 is primarily driven by $ 22.9 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, offset by $ 21.6 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2020.

(9) DEBT OBLIGATIONS

1 unchanged sentence

(in thousands)

September 30, 2020

March 31, 2021

December 31, 2020

13 unchanged sentences

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.

The revolving credit facility contains a $ 200 million sublimit for the issuance of letters of credit, a $ 50 million sublimit for U.S.

The Credit Facility 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.

The 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 September 30, 2020 .

The Credit Facility contains customary affirmative and negative covenants, events of default and financial covenants.

The Company was in compliance with all debt covenants as of March 31, 2021 .

Convertible Debt

2 unchanged sentences

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.

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.

1 unchanged sentence

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 $ 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.

Contractual interest expense for the Convertible Notes was $ 1.0 million for the three months ended March 31, 2021 and 2020 .

Accretion expense for the Convertible Notes was $ 3.9 million and $ 3.7 million for the three months ended March 31, 2021 and 2020, respectively .

The effective interest rate was 4.4 % for the three months ended March 31, 2021 .

As of March 31, 2021 , the unamortized discount was $ 68.8 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 September 30, 2020 , the Company has outstanding € 600 million ( $ 703.2 million ) principal amount of the Senior Notes.

As of March 31, 2021 , the Company has outstanding € 600 million ( $ 703.7 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 September 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.

As of March 31, 2021 and December 31, 2020 , borrowings under these arrangements were $ 0.8 million and $ 0.9 million , respectively.

(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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

with a notional value of $ 180 million .

T he Company had foreign currency forward contracts outstanding in the U.S.

with a notional value of $ 120 million and $ 246 million as of March 31, 2021 and December 31, 2020, respectively .

The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds sterling, euro and Mexican pesos.

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

T he Company had foreign currency forward contracts outstanding with a notional value of $ 593 million and $ 454 million as of March 31, 2021 and December 31, 2020, respectively , 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 $ 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.

Foreign exchange revenues from xe's total portfolio of positions were $ 18.5 million and $ 18.1 million for the three months ended March 31, 2021 and 2020 , 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 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 .

dollar notional amount of foreign currency derivative customer contracts held by the Company in its xe operations as of March 31, 2021 and December 31, 2020 was approximately $ 1.4 billion and $ 1.3 billion , respectively.

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

6 unchanged sentences

Balance Sheet Location

September 30, 2020

March 31, 2021

December 31, 2020

Balance Sheet Location

September 30, 2020

March 31, 2021

December 31, 2020

1 unchanged sentence

Foreign currency exchange contracts

Prepaid expenses and other current assets

Accrued expenses and other current liabilities

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):

Other current assets

Other current liabilities

The following tables summarize the gross and net fair value of derivative assets and liabilities as of March 31, 2021 and December 31, 2020 (in thousands):

Offsetting of Derivative Assets

Gross Amounts Not Offset in the Consolidated Balance Sheet

As of September 30, 2020

As of March 31, 2021

Gross Amounts of Recognized Assets

8 unchanged sentences

Gross Amounts Not Offset in the Consolidated Balance Sheet

As of September 30, 2020

As of March 31, 2021

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 nine months ended September 30, 2020 and 2019 :

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

Location of Gain Recognized in Income on Derivative Contracts

The following table summarizes the location and amount of gains and losses on derivatives in the Consolidated Statements of Income for the three months ended March 31, 2021 and 2020 :

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

Location of (Loss) Gain Recognized in Income on Derivative Contracts

Three 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 September 30, 2020

As of March 31, 2021

(in thousands)

14 unchanged sentences

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 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.

The Company estimates the fair value of the Convertible Notes and Senior Notes using quoted prices in inactive markets for identical liabilities (Level 2).

As of March 31, 2021 , the fair values of the Convertible Notes and Senior Notes were $ 631.4 million and $ 712.0 million , respectively, with carrying values of $ 456.2 million and $ 703.7 million , respectively.

(12) SEGMENT INFORMATION

1 unchanged sentence

The Company currently operates in the following three reportable operating segments:

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.

Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East, Asia Pacific, the United States and Africa.

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.

2 unchanged sentences

and South America.

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.

Through the Money Transfer Segment, the Company provides global money transfer services under the brand names Ria, AFEX, IME, and xe.

Ria, AFEX 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.

3 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 nine months ended September 30, 2020 and 2019 :

For the Three Months Ended September 30, 2020

(in thousands)

Total revenues

Operating expenses:

Direct operating costs

Salaries and benefits

Selling, general and administrative

Goodwill and acquired intangible assets impairment

Depreciation and amortization

Total operating expenses

Operating income (expense)

For the Three Months Ended September 30, 2019

(in thousands)

Total revenues

Operating expenses:

Direct operating costs

Salaries and benefits

Selling, general and administrative

Depreciation and amortization

Total operating expenses

Operating income (expense)

For the Nine Months Ended September 30, 2020

The following tables present the Company’s reportable segment results for the three months ended March 31, 2021 and 2020 :

For the Three Months Ended March 31, 2021

(in thousands)

EFT Processing

Money Transfer

Corporate Services,

Eliminations and Other

Total revenues

3 unchanged sentences

Selling, general and administrative

Goodwill and acquired intangible assets impairment

Depreciation and amortization

Total operating expenses

Operating income (expense)

For the Nine Months Ended September 30, 2019

Operating (loss) income

For the Three Months Ended March 31, 2020

(in thousands)

EFT Processing

Money Transfer

Corporate Services,

Eliminations and Other

Total revenues

9 unchanged sentences

(in thousands)

September 30, 2020

March 31, 2021

December 31, 2020

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 September 30, 2020

For the Nine Months Ended September 30, 2020

(in thousands)

North America

For the Three Months Ended September 30, 2019

For the Nine Months Ended September 30, 2019

For the Three Months Ended March 31, 2021

For the Three Months Ended March 31, 2020

(in thousands)

1 unchanged sentence

( 13 ) INCOME TAXES

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.

The Company's effective income tax rate was ( 236.9 %) and 58.7 % for the three months ended March 31, 2021 and 2020, respectively .

The Company's effective income tax rate for the three months ended March 31, 2021 was lower than the applicable statutory income tax rate of 21 % as a result of the non-recognition of tax benefits from losses in certain foreign countries where we have a limited history of profitable earnings, certain foreign earnings of the Company being subject to higher local statutory tax rates, and the Company’s U.S.

deferred tax activity on foreign exchange positions.

The Company's effe ctive income tax rate for the three months ended March 31, 2020 was higher than the applicable statutory income tax rate of 21 % primarily as a result of certain foreign earnings of the Company being subject to higher local statutory income tax rates.

(14) COMMITMENTS

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.

As of March 31, 2021 , the Company had $ 87.4 million of stand-by letters of credit/bank guarantees issued on its behalf, of which $ 58.9 million are outstanding under the Credit Facility.

The remaining stand-by letters of credit/bank guarantees are collateralized by $ 3.8 million of cash deposits held by the respective issuing banks.

Under certain circumstances, Euronet grants guarantees in support of obligations of subsidiaries.

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.

As of March 31, 2021 , the Company had granted off balance sheet guarantees for cash in various ATM networks amounting to $ 11.2 million over the terms of the cash supply agreements and performance guarantees amounting to approximately $ 45.4 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.

3 unchanged sentences

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 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 .

As of March 31, 2021 , the balance of such cash used in the Company's ATM networks for which the Company was responsible was approximately $ 486 million .

The Company maintains insurance policies to mitigate this exposure;

9 unchanged sentences

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 September 30, 2020 or December 31, 2019 .

( 15 ) LITIGATION AND CONTINGENCIES

13 unchanged sentences

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.

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.

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).

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 beginning June 30, 2020.

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 September 30, 2020 reasonably reflects the Company’s short-term lease commitments.

Since the Company is not reasonably certain not to exercise termination options, p ayments for ATM site leases with termination options subject to the short-term lease exemption are expensed in the period incurred and corresponding leases are excluded from the right of use lease asset and lease liability balances.

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.

2 unchanged sentences

Future minimum lease payments

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

Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) as of March 31, 2021 are:

As of March 31, 2021

Maturity of Lease Liabilities (in thousands)

12 unchanged sentences

Three Months Ended

September 30, 2020

March 31, 2021

Three Months Ended

September 30, 2019

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

March 31, 2020

Operating lease expense

5 unchanged sentences

Lease Term and Discount Rate of Operating Leases

As of September 30, 2020

As of March 31, 2021

Weighted- average remaining lease term (years)

2 unchanged sentences

Other Information (in thousands)

Nine Months Ended

September 30, 2020

Nine Months Ended

September 30, 2019

Three Months Ended

March 31, 2021

Three Months Ended

March 31, 2020

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

3 unchanged sentences

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