EURONET WORLDWIDE, INC. 10-K

Item 8. Financial Statements and Supplementary Data Page Report of Independent Registered Public Accounting Firm 56 CONSOLIDATED FINANCIAL STATEMENTS 59 CONSOLIDATED BALANCE SHEETS 60 CONSOLIDATED STATEMENTS OF OPERATIONS 61 CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME 62 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 63 CONSOLIDATED STATEMENTS OF CASH FLOWS 64 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 66 (1) Organization 66 (2) Basis of Preparation 66 (3) Summary of Significant Accounting Policies and Practices 66 (4) Settlement Assets and Obligations 72 (5) Stockholders' Equity 73 (6) Acquisitions 74 (7) Restricted Cash 76 (8) Property and Equipment, Net 76 (9) Goodwill and Acquired Intangible Assets, Net 77 (10) Accrued Expenses and Other Current Liabilities 78 (11) Debt Obligations 79 (12) Derivative Instruments and Hedging Activities 81 (13) Leases 84 (14) Income Taxes 86 (15) Valuation and Qualifying Accounts 90 (16) Stock Plans 91 (17) Business Segment Information 93 (18) Financial Instruments and Fair Value Measurements 97 (19) Litigation and Contingencies 98 (20) Commitments 99 (21) Related Party Transactions 99 56 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Euronet Worldwide, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Euronet Worldwide, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. I n o ur opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company acquired the Euronet Merchant Services Payment Institution S.M.S.A (formerly the Merchant Acquiring Business of Piraeus Bank) during 2022 and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2022, Euronet Merchant Services Payment Institution S.M.S.A. internal control over financial reporting associated with total assets of $520.8 million and total revenues of $88.8 million included in the consolidated financial statements of the company as of and for the year ended December 31, 2022. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Euronet Merchant Services Payment Institution S.M.S.A. Change in Accounting Principle As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for convertible instruments as of January 1, 2022 due to the adoption of ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report On Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 57 Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates. Sufficiency of audit evidence over revenue As discussed in Note 3 to the consolidated financial statements, the Company earned $3.4 billion of revenue in 2022. The Company earned revenue by payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers (collectively services). The services were provided to customers in approximately 200 countries through 66 different business offices in 43 countries within 3 different reportable operating segments. We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. The company’s geographical dispersion of services worldwide, amongst various business lines required especially subjective auditor judgment in evaluating the sufficiency of audit evidence over revenue. Further, our audit team consisted of auditors located in various countries worldwide. This required especially challenging auditor judgment in the level of audit procedures and supervision applied at each country. The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue, including the determination of locations at which those procedures were to be performed. At each Company location selected, we: — evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s revenue process, including controls over the accurate recording of revenue amounts — assessed the training and experience of the auditors on our audit team that were in countries other than the United States — tested a sample of individual revenue transactions by comparing amounts recognized by the Company to relevant contracts and or payment and transaction support. We evaluated the sufficiency of audit evidence obtained over revenue by assessing the results of procedures performed, including the appropriateness of such evidence. /s/ KPMG LLP We have served as the Company's auditor since 2003. Kansas City, Missouri February 22, 2023 58 CONSOLIDATED FINANCIAL STATEMENTS EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 1,131,207 $ 1,260,466 ATM cash 515,643 543,422 Restricted cash 7,374 3,693 Settlement assets 1,442,692 1,102,389 Trade accounts receivable, net of credit loss allowance of $ 4,021 and $ 4,469 270,828 203,010 Prepaid expenses and other current assets 358,929 195,443 Total current assets 3,726,673 3,308,423 Operating right of use lease assets 149,667 161,494 Property and equipment, net of accumulated depreciation of $ 576,433 and $ 532,631 336,601 345,381 Goodwill 828,344 641,605 Acquired intangible assets, net of accumulated amortization of $ 199,237 and $ 185,054 188,275 97,793 Other assets, net of accumulated amortization of $ 68,015 and $ 62,349 174,073 189,580 Total assets $ 5,403,633 $ 4,744,276 LIABILITIES AND EQUITY Current liabilities: Settlement obligations $ 1,442,692 $ 1,102,389 Trade accounts payable 222,448 193,529 Accrued expenses and other current liabilities 505,685 367,692 Current portion of operating lease obligations 50,183 52,136 Short-term debt obligations and current maturities of long-term debt obligations 149 821 Income taxes payable 67,534 59,037 Deferred revenue 65,380 77,037 Total current liabilities 2,354,071 1,852,641 Debt obligations, net of current portion 1,609,098 1,420,085 Operating lease obligations, net of current portion 102,649 111,355 Deferred income taxes 28,372 46,505 Other long-term liabilities 65,037 58,166 Total liabilities 4,159,227 3,488,752 Equity: Euronet Worldwide, Inc. stockholders' equity: Preferred Stock, $ 0.02 par value. 10,000,000 shares authorized; 0 issued — — Common Stock, $ 0.02 par value. 90,000,000 shares authorized; shares issued 64,091,387 and 63,779,009 1,282 1,275 Additional paid-in capital 1,251,837 1,274,118 Treasury stock, at cost, shares issued 14,269,645 and 12,631,125 ( 1,105,813 ) ( 931,212 ) Retained earnings 1,348,266 1,083,882 Accumulated other comprehensive loss ( 250,989 ) ( 172,582 ) Total Euronet Worldwide, Inc. stockholders' equity 1,244,583 1,255,481 Noncontrolling interests ( 177 ) 43 Total equity 1,244,406 1,255,524 Total liabilities and equity $ 5,403,633 $ 4,744,276 See accompanying notes to the Consolidated Financial Statements. 59 EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Year Ended December 31, 2022 2021 2020 Reve nues $ 3,358,741 $ 2,995,443 $ 2,482,700 Operating expenses: Direct operating costs 2,018,127 1,900,267 1,576,699 Acquired contract cost impairment — 38,634 — Salaries and benefits 534,238 484,839 404,142 Selling, general and administrative 285,173 251,933 221,614 Goodwill and acquired intangible assets impairment — — 106,602 Depreciation and amortization 135,864 135,754 127,021 Total operating expenses 2,973,402 2,811,427 2,436,078 Operating income 385,339 184,016 46,622 Other income (expense): Interest income 2,066 664 1,040 Interest expense ( 37,585 ) ( 38,198 ) ( 36,604 ) Foreign currency exchange (loss) gain, net ( 28,175 ) ( 10,866 ) ( 3,756 ) Other gains (losses), net 950 59 869 Other expense, net ( 62,744 ) ( 48,341 ) ( 38,451 ) Income before income taxes 322,595 135,675 8,171 Income tax expense ( 91,853 ) ( 65,088 ) ( 11,475 ) Net income (loss) 230,742 70,587 ( 3,304 ) Less: Net loss (income) attributable to noncontrolling interests 252 140 ( 95 ) Net income (loss) attributable to Euronet Worldwide, Inc. $ 230,994 $ 70,727 $ ( 3,399 ) Earnings (loss) per share attributable to Euronet Worldwide, Inc. stockholders: Basic $ 4.60 $ 1.34 $ ( 0.06 ) Diluted $ 4.41 $ 1.32 $ ( 0.06 ) Weighted average shares outstanding: Basic 50,175,614 52,585,674 52,659,551 Diluted 53,463,308 53,529,576 52,659,551 See accompanying notes to the Consolidated Financial Statements. 60 EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (in thousands) Year Ended December 31, 2022 2021 2020 Net incom e (loss) $ 230,742 $ 70,587 $ ( 3,304 ) Other comprehensive (loss) income Translation adjustment ( 78,375 ) ( 78,466 ) 70,794 Comprehensive (loss) income 152,367 ( 7,879 ) 67,490 Comprehensive loss (income) attributable to noncontrolling interests ( 220 ) 238 ( 213 ) Comprehensive (loss) income attributable to Euronet Worldwide, Inc. $ 152,147 $ ( 7,641 ) $ 67,277 See accompanying notes to the Consolidated Financial Statements. 61 EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands, except share data) Number of Shares Outstanding (Common and Treasury) Common Stock Additional Paid-in Capital Treasury Stock Balance as of December 31, 2019 54,220,854 $ 1,256 $ 1,190,058 $ ( 463,704 ) Net income (loss) — — — — Other comprehensive income — — — — Stock issued under employee stock plans 608,878 11 16,437 435 Share-based compensation — — 21,951 — Repurchase of shares ( 2,095,683 ) — — ( 239,763 ) Balance as of December 31, 2020 52,734,049 1,267 1,228,446 ( 703,032 ) Net (loss) income — — — — Other comprehensive loss — — — — Stock issued under employee stock plans 413,835 8 9,132 ( 416 ) Share-based compensation — — 36,540 — Repurchase of shares ( 2,000,000 ) — — ( 227,764 ) Balance as of December 31, 2021 51,147,884 1,275 1,274,118 ( 931,212 ) Net income (loss) — — — — Other comprehensive loss — — — — Adoption of ASU-2020-60 on Convertible bond — — ( 74,080 ) — Stock issued under employee stock plans 314,358 7 7,699 350 Share-based compensation — — 44,100 — Repurchase of shares ( 1,639,535 ) — — ( 174,951 ) Balance as of December 31, 2022 49,822,707 $ 1,282 $ 1,251,837 $ ( 1,105,813 ) See accompanying notes to the Consolidated Financial Statements. 62 EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) (in thousands) Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interests Total Balance as of December 31, 2019 $ 1,016,554 $ ( 164,890 ) $ 68 $ 1,579,342 Net income (loss) ( 3,399 ) — 95 ( 3,304 ) Other comprehensive income — 70,676 118 70,794 Stock issued under employee s toc k plans — — — 16,883 Share-based compensation — — — 21,951 Repurchase of shares — — — ( 239,763 ) Balance as of December 31, 2020 1,013,155 ( 94,214 ) 281 1,445,903 Net (loss) income 70,727 — ( 140 ) 70,587 Other comprehensive loss — ( 78,368 ) ( 98 ) ( 78,466 ) Stock issued under employee stock plans — — — 8,724 Share-based compensation — — — 36,540 Repurchase of shares — — — ( 227,764 ) Balance as of December 31, 2021 1,083,882 ( 172,582 ) 43 1,255,524 Net income (loss) 230,994 — ( 252 ) 230,742 Other comprehensive loss — ( 78,407 ) 32 ( 78,375 ) Adoption of ASU-2020-06 on Convertible bond 33,390 — — ( 40,690 ) Stock issued under employee stock plans — — — 8,056 Share-based compensation — — — 44,100 Repurchase of shares — — — ( 174,951 ) Balance as of December 31, 2022 $ 1,348,266 $ ( 250,989 ) $ ( 177 ) $ 1,244,406 See accompanying notes to the Consolidated Financial Statements. 63 EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2022 2021 2020 Net income (loss) $ 230,742 $ 70,587 $ ( 3,304 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 135,864 135,754 127,021 Share-based compensation 44,100 36,540 21,951 Unrealized foreign exchange loss (gain), net 28,175 10,866 3,756 Non-cash impairment of goodwill and acquired intangible assets — — 106,602 Deferred income taxes 7,885 ( 2,255 ) ( 23,946 ) Accretion of convertible debt discount and amortization of debt issuance costs 3,741 20,239 18,924 Changes in working capital, net of amounts acquired: Income taxes payable, net 10,805 23,912 ( 16,823 ) Trade accounts receivable, including amounts in settlement assets ( 299,409 ) ( 107,478 ) 63,629 Prepaid expenses and other current assets, including amounts in settlement assets ( 192,591 ) 93,475 ( 168,256 ) Trade accounts payable, including amounts in settlement obligations 178,052 ( 33,218 ) 88,687 Deferred revenue ( 8,389 ) 7,472 10,945 Accrued expenses and other current liabilities, including amounts in settlement obligations 608,252 93,040 118,618 Changes in non-current assets and liabilities 1,063 57,642 ( 94,299 ) Net cash provided by operating activities 748,290 406,576 253,505 Cash flows from investing activities: Acquisitions, net of cash acquired ( 342,951 ) — ( 1,100 ) Purchases of property and equipment and proceeds of sale property and equipment ( 104,257 ) ( 92,207 ) ( 97,628 ) Purchases of other long-term assets ( 7,728 ) ( 7,752 ) ( 7,770 ) Other, net 1,160 1,850 967 Net cash used in investing activities ( 453,776 ) ( 98,109 ) ( 105,531 ) Cash flows from financing activities: Proceeds from issuance of shares 9,081 10,848 18,101 Repurchase of shares ( 175,965 ) ( 229,877 ) ( 241,518 ) Borrowings from revolving credit agreements 7,904,600 5,074,000 3,113,800 Repayments of revolving credit agreements ( 7,733,200 ) ( 5,061,000 ) ( 2,843,400 ) Net borrowings (repayments) from short-term debt obligations 1,193 52 ( 5,157 ) Debt issuance costs ( 3,014 ) — — Other, net ( 3,849 ) ( 6,259 ) ( 6,428 ) Net cash (used in) provided by financing activities ( 1,154 ) ( 212,236 ) 35,398 Effect of exchange rate changes on cash and cash equivalents and restricted cash ( 388,602 ) ( 109,637 ) 98,757 (Decrease) increase in cash and cash equivalents and restricted cash ( 95,242 ) ( 13,406 ) 282,129 Cash and cash equivalents and restricted cash at beginning of period 2,086,102 2,099,508 1,817,379 Cash and cash equivalents and restricted cash at end of period $ 1,990,860 $ 2,086,102 $ 2,099,508 Supplemental Cash Flow Disclosures: Interest paid during the period $ 29,067 $ 18,503 $ 17,319 Income taxes paid during the period $ 86,208 $ 48,688 $ 60,170 See accompanying notes to the Consolidated Financial Statements. 64 EURONET WORLDWIDE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( 1) Organization Euronet Worldwide, Inc. (the "Company" or "Euronet") was established as a Delaware corporation on December 13, 1996 and succeeded Euronet Holding N.V. as the group holding company, which was founded and established in 1994. Euronet is a leading financial technology solutions and payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive ATM, POS, card outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment products, and international payment services. (2) Basis of Preparation The Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Consolidated Financial Statements include the accounts of Euronet and its wholly owned and majority owned subsidiaries and all significant intercompany balances and transactions have been eliminated. Euronet's investments in companies that it does not control, but has the ability to significantly influence, are accounted for under the equity method. Euronet has no variable interest entities. Results from operations related to entities acquired during the periods covered by the Consolidated Financial Statements are reflected from the effective date of acquisition. The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires that management make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant items subject to such estimates and assumptions include computing income taxes, contingent purchase price consideration, estimating the useful lives and potential impairment of long-lived assets and goodwill, as well as allocating the purchase price to assets acquired and liabilities assumed in acquisitions and revenue recognition. Actual results could differ from those estimates. Seasonality Euronet’s EFT Processing Segment normally experiences its heaviest demand for DCC services during the third quarter of the fiscal year, normally coinciding with the tourism season. Additionally, the EFT Processing and epay Segments are normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year. (3) Summary of Significant Accounting Policies and Practices Foreign currencies Assets and liabilities denominated in currencies other than the functional currency of a subsidiary are remeasured at rates of exchange on the balance sheet date. Resulting gains and losses on foreign currency transactions are included in the Consolidated Statements of Operations. The majority of our foreign currency exchange gains or losses are due to the remeasurement of intercompany loans which are not considered a long-term investment in nature and are in a currency other than the functional currency of one of the parties to the loan. The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated to U.S. dollars using (i) exchange rates in effect at period end for assets and liabilities, and (ii) weighted average exchange rates during the period for revenues and expenses. Adjustments resulting from translation of such financial statements are reflected in accumulated other comprehensive (loss) income as a separate component of consolidated equity. 65 Cash equivalents The Company considers all highly liquid investments, with an original maturity of three months or less, and certificates of deposit, which may be withdrawn at any time at the discretion of the Company without penalty, to be cash equivalents. ATM cash ATM cash represents cash within the ATM network either included within ATMs, within dedicated accounts, or in-transit to ATMs. Settlement assets and obligations Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled prepaid transactions. See Note 4 , Settlement Assets and Obligations, to the Consolidated Financial Statements for further discussion on settlement assets and obligations. Property and equipment Property and equipment are stated at cost, less accumulated depreciation. Property and equipment acquired in acquisitions have been recorded at estimated fair values as of the acquisition date. Depreciation is generally calculated using the straight-line method over the estimated useful lives of the respective assets. Depreciation and amortization rates are generally as follows: ATMs or ATM upgrades 5 - 8 years Computers and software 3 - 5 years POS terminals 3 - 5 years Vehicles and office equipment 3 - 10 years Leasehold improvements Over the lesser of the lease term or estimated useful life Goodwill and ot her intangible assets Goodwill - The Company accounts for goodwill and other intangible assets in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 350, Intangibles - Goodwill and Other ("ASC 350"). In accordance with the requirements of ASC 350 the Company tests for impairment on an annual basis in the fourth quarter and whenever events or circumstances dictate. Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. ASC 350 provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50 %) that the estimated fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the existing quantitative impairment test (described below), otherwise no further analysis is required. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. The Company has a policy for its annual review of goodwill to perform the qualitative assessment for all reporting units not subjected directly to the quantitative impairment test. Under the qualitative assessment, various events and circumstances (or factors) that would affect the estimated fair value of a reporting unit are identified (similar to impairment indicators). These factors are then classified by the type of impact they would have on the estimated fair value using positive, neutral, and adverse categories based on current business conditions. Furthermore, the Company considers the results of the most recent quantitative impairment test completed for a reporting unit and compares, among other factors, the weighted average cost of capital ("WACC") between the current and prior years for each reporting unit. 66 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 income approach or 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, 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 projected EBITDA, selected market multiple, and the estimated control premium. If the carrying value of goodwill exceeds its fair value, an 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. Other Intangible Assets - In accordance with ASC 350, intangible assets with finite lives are amortized over their estimated useful lives. Unless otherwise noted, amortization is calculated using the straight-line method over the estimated useful lives of the assets as follows: Non-compete agreements 2 - 5 years Trademarks and trade names 2 - 20 years Software 3 - 10 years Customer relationships 6 - 20 years The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such events or changes in circumstances are present, a loss is recognized if the carrying value of the asset is in excess of the sum of the undiscounted cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. See Note 9, Goodwill and Acquired Intangible Assets, Net, to the Consolidated Financial Statements for additional information regarding the impairment of goodwill and other intangible assets. Other assets Other assets include capitalized software development costs and capitalized payments for new or renewed contracts. Euronet capitalizes initial payments for new or renewed contracts to the extent recoverable through future operations, contractual minimums and/or penalties in the case of early termination. The Company's accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated ongoing net future cash flows related to the contract or the termination fees the Company would receive in the event of early termination of the contract by the customer. ASC Topic 340, Other Assets and Deferred Costs ("ASC 340") requires the deferral of incremental costs to fulfill customer contracts, known as contract assets, which are then amortized to expense as part of direct operating costs over the respective periods of expected benefit. D eferred contract costs are reported on our balance sheet within current or non-current other assets based on the expected life of the related contract. At December 31, 2022 and 2021 , we had $ 78.9 million and $ 96.4 million, respectively, of deferred contract costs. For the years ended December 31, 2022, 2021 and 2020, we had $ 22.1 million, $ 33.3 million and $ 17.2 million of amortization related to these costs, respectively. On a quarterly basis we evaluate the carrying amount of contract assets recognized to determine if there are contracts that may have a carrying amount in excess of the remaining future consideration to be received from the contract. During the fourth quarter of 2021, we identified certain contract assets that had carrying balances greater than the estimated remaining cash flows in the contracts and recorded a corresponding $ 38.6 million non -cash impairment. The impairment charge is the result of lower-than-expected customer transaction volume related to these specific contracts, stemming primarily from COVID-19 related disruptions. This non-cash impairment charge is included in the Money Transfer Segment. 67 Convertible notes 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. We adopted this standard on January 1, 2022 using the modified retrospective approach, which resulted in our Convertible Senior Notes due 2049 being recognized as a single liability. As a result of the adoption of this standard we recorded a $ 99.7 million decrease to additional paid-in capital, a $ 56.8 million decrease in debt discounts and a $ 42.9 million increase in retained earnings. The adoption of this standard also impacted our deferred tax liability by decreasing our deferred tax liability by $ 15.0 million, decreasing retained earnings by $ 10.6 million, and increasing additional paid-in capital by $ 25.6 million. Additionally, the elimination of the treasury stock method will increase the number of dilutive shares used in the diluted earnings per share calculation, if dilutive, by 2.8 million shares. Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In accordance with ASC Topic 740, Income Taxes ("ASC 740"), the Company's policy is to record estimated interest and penalties related to the underpayment of income taxes as income tax expense in the Consolidated Statements of Operations. See Note 14, Income Taxes, to the Consolidated Financial Statements for further discussion regarding these provisions. Presentation of taxes collected and remitted to governmental authorities The Company presents taxes collected and remitted to governmental authorities on a net basis in the accompanying Consolidated Statements of Operations. Fair value measurements The Company applies the provisions of ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), regarding fair value measurements for assets and liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value and requires certain disclosures about fair value measurements. The provisions apply whenever other accounting pronouncements require or permit fair value measurements. See Note 18, Financial Instruments and Fair Value Measurements, to the Consolidated Financial Statements for the required fair value disclosures. Accounting for derivative instruments and hedging activities The Company accounts for derivative instruments and hedging activities in accordance with ASC Topic 815, Derivatives and Hedging ("ASC 815"), which requires that all derivative instruments be recognized as either assets or liabilities on the balance sheet at fair value. Primarily in the Money Transfer Segment, the Company enters into foreign currency derivative contracts, mainly forward contracts, to offset foreign currency exposure related to money transfer settlement assets and liabilities in currencies other than the U.S. dollar, derivative contracts written to its customers arising from its cross-currency money transfer services and certain assets and liability positions denominated in currencies other than the U.S. dollar. These contracts are considered derivative instruments under the provisions of ASC 815; however, the Company does not designate such instruments as hedges for accounting purposes. Accordingly, changes in the value of these contracts are recognized immediately as a component of foreign currency exchange gain (loss), net in the Consolidated Statements of Operations. Cash flows resulting from derivative instruments are included in operating activities in the Company's Consolidated Statements of Cash Flows. The Company enters into derivative instruments with highly credit-worthy financial institutions and does not use derivative instruments for trading or speculative purposes. See Note 12, Derivative Instruments and Hedging Activities, to the Consolidated Financial Statements for further discussion of derivative instruments . 68 Share-based compensation The Company follows the provisions of ASC Topic 718, Compensation - Stock Compensation ("ASC 718"), for equity classified awards, which requires the determination of the fair value of the share-based compensation at the grant date and subsequent recognition of the related expense over the period in which the share-based compensation is earned ("requisite service period"). The amount of future compensation expense related to awards of nonvested shares or nonvested share units ("restricted stock") is based on the market price for Euronet Common Stock at the grant date. The grant dat e is the date at which all key terms and conditions of the grant have been determined and the Company becomes contingently obligated to transfer equity to the employee who renders the requisite service, generally the date at which grants are approved by the Company's Board of Directors or Compensation Committee thereof. Share-based compensation expense for awards with only service conditions is generally recognized as expense on a "straight-line" basis over the requisite service period. For awards that vest based on achieving periodic performance conditions, expense is recognized on a "graded attribution method." The graded attribution method results in expense recognition on a straight-line basis over the requisite service period for each separately vesting portion of an award. The Company has elected to use the "with and without method" when calculating the income tax benefit associated with its share-based payment arrangements. See Note 16 , Stock Plans, for further disclosure. Revenue recogni tion The Company recognizes revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Sales and usage-based taxes are excluded from revenues. A description of the major components of revenue by business segment is as follows: EFT Processing - Revenues in the EFT Processing Segment are primarily derived from transaction and management fees and foreign currency exchange margin from owned and outsourced ATM, POS and card processing networks and from the sale of EFT software solutions for electronic payment and transaction delivery systems, and fees or margin earned from value added services, including dynamic currency conversion and domestic and international surcharge. Transaction-based fees include charges for cash withdrawals, debit or credit card transactions, balance inquiries, transactions not completed because the relevant card issuer does not give authorization and prepaid mobile airtime recharges. Outsourcing services are generally billed on the basis of a fixed monthly fee per ATM, plus a transaction-based fee. Transaction-based fees are recognized at the time the transactions are processed and outsourcing management fees are recognized ratably over the contract period. C ertain of the Company's non-cancelable customer contracts provide for the receipt of up-front fees from the customer and/or decreasing or increasing fee schedules over the agreement term for substantially the same level of services to be provided by the Company. The Company recognizes revenue under these contracts based on proportional performance of services over the term of the contract. This generally results in "straight-line" (i.e., consistent value per period) revenue recognition of the contracts' total cash flows, including any up-front payment received from the customer, which is recorded as deferred revenue upon receipt. epay - Revenue generated in the epay Segment is primarily derived from commis sions or processing fees associated with distribution and/or processing of prepaid mobile airtime and digital media products. These fees and commissions are received from mobile operators, content vendors or distributors or from retailers. Commissions are recognized as revenue during the period in which the Company provides the service. The portion of the commission that is paid to retailers is generally recorded as a direct operating cost. In selling certain products, the Company is the p rinciple obligor in th e arrangements; accordingly, the gross sales value of the products is recorded as revenue and the purchase cost as direct operating cost. Transactions are processed through a network of POS terminals and direct connections to the electronic payment systems of retailers. Transaction processing fees are recognized at the time the transactions are processed. Money Transfer - R evenues for money transfer and other services represent a transaction fee in addition to a margin earned from purchasing currency at wholesale exchange rates and selling the currency to customers at retail exchange rates. Revenues and the associated direct operating cost are recognized at the time the transaction is processed. The Company has origination and distribution agents in place, which ea ch earn a fee for the respective service. These fees are reflected as direct operating costs. 69 Revenues Deferred 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 year ended December 31, 2022 was primarily driven by $ 44.3 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, partially offset by $ 55.5 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2021. Disaggregation of Revenues - The following table presents the Company's revenues disaggregated by segment and region. The Company believes disaggregation by segment and region best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The disaggregation of revenues by segment and region is based on management's assessment of segment performance together with allocation of financial resources, both capital and operating support costs, on a segment and regional level. Both segments and regions benefit from synergies achieved through concentration of operations and are influenced by macro-economic, regulatory and political factors in the respective segment and region. The Company recognizes foreign exchange revenues from derivative instruments in its xe operations in accordance with ASC Topic 815 and not ASC Topic 606 . These revenues are not significant to the Company's consolidated revenues and are included in the following tables. For the Year Ended December 31, 2022 (in thousands) EFT Processing epay Money Transfer Total Europe $ 716,348 $ 658,292 $ 581,851 $ 1,956,491 North America 69,276 133,356 700,113 902,745 Asia Pacific 133,908 154,993 107,511 396,412 Other 4,676 51,368 54,829 110,873 Eliminations — — — ( 7,780 ) Total $ 924,208 $ 998,009 $ 1,444,304 $ 3,358,741 For the Year Ended December 31, 2021 (in thousands) EFT Processing epay Money Transfer Total Europe $ 420,181 $ 669,297 $ 576,640 $ 1,666,118 North America 63,368 139,759 667,738 870,865 Asia Pacific 107,020 158,122 105,086 370,228 Other 569 44,304 51,493 96,366 Eliminations — — — ( 8,134 ) Total $ 591,138 $ 1,011,482 $ 1,400,957 $ 2,995,443 For the Year Ended December 31, 2020 (in thousands) EFT Processing epay Money Transfer Total Europe $ 313,953 $ 561,514 $ 449,299 $ 1,324,766 North America 56,447 144,613 577,845 778,905 Asia Pacific 98,313 100,917 124,413 323,643 Other 13 28,473 32,292 60,778 Eliminations — — — ( 5,392 ) Total $ 468,726 $ 835,517 $ 1,183,849 $ 2,482,700 70 (4) Settlement Assets and Obligations Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled prepaid transactions. The Company records corresponding settlement obligations relating to accounts payable. Settlement assets consist of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. The settlement cash held at the Company is primarily generated from the monies remitted by consumers through Company agents and financial institutions in payment of the face value of the payment service or foreign currency purchased and the related fees charged to purchase the currency. The Company uses its cash and cash equivalents to pay the face value of the payment service product upon presentation by the recipient. Cash received by Company agents and merchants generally becomes available to the Company within two weeks after initial receipt by the business partner. Receivables from business partners represent funds collected by such business partners that are in transit to the Company. Settlement obligations consist of accrued expenses for money transfers, content providers, and EFT customer deposits and accounts payable to agents and content providers. Money transfer accrued expenses represent amounts to be paid to transferees when they request funds. Most agents typically settle with transferees first then obtain reimbursement from the Company. Money order accrued expenses represent amounts not yet presented for payment. Due to the agent funding and settlement process, accrued expenses to agents represent amounts due to agents for money transfers that have not been settled with transferees. (in thousands) As of December 31, 2022 As of December 31, 2021 Settlement assets: Settlement cash and cash equivalents $ 242,621 $ 203,624 Settlement restricted cash 94,015 74,897 Account receivables, net of credit loss allowance of $ 32,989 and $ 27,341 887,616 619,738 Prepaid expenses and other current assets 218,440 204,130 Total settlement assets $ 1,442,692 $ 1,102,389 Settlement obligations: Trade account payables $ 655,124 $ 461,135 Accrued expenses and other current liabilities 787,568 641,254 Total settlement obligations $ 1,442,692 $ 1,102,389 71 The table below reconciles cash and cash equivalents, restricted cash, ATM cash, settlement cash and cash equivalents, and settlement restricted cash as presented within "Cash and cash equivalents and restricted cash" in the Consolidated Statement of Cash Flows. As of (in thousands) December 31, 2022 December 31, 2021 December 31, 2020 Cash and cash equivalents $ 1,131,207 $ 1,260,466 $ 1,420,255 Restricted cash 7,374 3,693 3,334 ATM cash 515,643 543,422 411,054 Settlement cash and cash equivalents 242,621 203,624 188,191 Settlement restricted cash 94,015 74,897 76,674 Cash and cash equivalents and restricted cash at end of period $ 1,990,860 $ 2,086,102 $ 2,099,508 (5) Stockholders' Equity Earnings Per Share Basic earnings per share has been computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings per share has been computed by dividing diluted earnings 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: Year Ended December 31, 2022 2021 2020 Computation of diluted earnings: Net income (loss) $ 230,994 $ 70,727 $ ( 3,399 ) Add: Interest expense from assumed conversion of convertible n otes, n et of tax 4,704 — — Net income (loss) for diluted earnings per share calculation $ 235,698 $ 70,727 $ ( 3,399 ) Computation of diluted weighted average shares outstanding: Basic weighted average shares outstanding 50,175,614 52,585,674 52,659,551 Incremental shares from assumed exercise of stock options and vesting of restricted stock 505,876 943,902 — Incremental shares from assumed conversion of convertible debt 2,781,818 — — Diluted weighted average shares outstanding 53,463,308 53,529,576 52,659,551 The table incl udes 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 per share excludes stock options or shares of restricted stock that are anti-dilutive to the C ompany's weighted average common shares outstanding for the yea rs end ed December 31, 2022 , 2021 and 2020 of approximate ly 1,975,000 , 1,668,000 and 2,073,000 , respectively. We issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. Our Convertible Notes currently have a settlement feature requiring us upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of our common stock or a combination thereof, at our option. We have stated our intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium; however, after adopting ASU 2020-06, 2.8 million incremental shares assumed for conversion of convertible notes shall be included in the dilutive earnings per share calculation, if dilutive, regardless of whether the market price trigger has been met. Therefore, our Convertible Notes were included in the calculation of diluted earnings (loss) per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price of $ 188.73 per share. See Note 9, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes. 72 Share repurchases On December 8, 2021, the Company put a repurchase program in place to repurchase up to $ 300 million in value, but not more than 5.0 million shares of common stock through December 8, 2023. For the year ended December 31, 2022 , t he Company repurchased 1.6 million shares under the repurchase program at a weighted average purchase price of $ 106.71 for a total value of $ 175.0 million. Repurchases under the program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10 b 5 - 1 plan. On September 13, 2022, the Company put a repurchase program in place to repurchase up to $ 350 million in value, but not more than 7.0 million shares of common stock through September 13, 2024. Repurchases under the program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10 b 5 - 1 plan. Preferred Stock The Company has the authority t o iss u e up to 10 million shares of preferred stock, of whi ch no share s are currently issued or outstanding. Accumulated other comprehensive loss As of December 31, 2022 and 2021 , accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded a foreign currency translation loss of $ 78.4 million, a loss of $ 78.5 million and a gain of $ 70.8 million for the years ended December 31, 2022 , 2021 , and 2020 , respectively. There were no reclassifications of foreign currency translation into the Consolidated Statements of Operations for the years ended December 31, 2022 , 2021 , and 2020 . Dividends No dividends were paid on any class of the Company's stock during 2022 , 2021 , and 2020 . (6) Acquisitions In accordance with ASC 805, the Company allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired based on fair values. Any excess purchase price over those fair values is recorded as goodwill. The fair value assigned to intangible assets acquired is supported by valuations using estimates and assumptions provided by management. For certain large acquisitions, management engages an appraiser to assist in the valuation process. On March 15, 2022 we completed the acquisition of the Merchant Acquiring Business of Piraeus Bank ("PBMA"). The acquisition includes 205,000 POS terminals at 170,000 merchants throughout Greece, as well as Piraeus Bank’s online merchant acquiring business and expands our omnichannel payments strategy where we use our proprietary technology to provide cash, card-based acquiring solutions, alternative payment acquiring, online acquiring, tokenized payment services and other payment products. Additionally, the acquisition includes a long-term commercial framework agreement between Piraeus Bank and Euronet which includes collaborative product distribution, processing and customer referrals. The purchase price was € 317.8 million, or approximately $ 350.6 million, which includes $ 331 million cash paid at closing, $ 4.4 million cash paid for surplus working capital and $ 15.2 million of estimated contingent consideration for a ten -year earn out contingent on performance targets outlined in the commercial framework agreement. The contingent consideration is related to a percentage of the net fee income received during the ten -year period of the commercial framework agreement and there is no contractual maximum amount of consideration under this agreement. The acquisition has been accounted for as a business combination in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment. 73 The following table presents the final fair value that was allocated to PBMA's Euronet Merchant Services' (EMS) assets and liabilities based upon fair values as determined by the Company. The valuation process to determine the fair values is complete. For the year ended December 31, 2022, the Company made measurement period adjustments to reflect facts and circumstances in existence as of the effective time of the acquisition. These adjustments primarily included an adjustment to the accrued expenses and other current liabilities related to the surplus working capital of $ 4.4 million and some other immaterial adjustments. (in thousands) As of March 15, 2022 Other current assets $ 1,754 Settlement assets 77,643 Property and equipment 5,735 Intangible assets 122,455 Total assets acquired $ 207,587 Trade accounts payable $ ( 2,155 ) Settlement liabilities ( 65,851 ) Accrued expenses and other current liabilities ( 1,313 ) Deferred revenue ( 332 ) Other long-term liabilities ( 100 ) Total liabilities assumed $ ( 69,751 ) Goodwill 212,736 Net assets acquired $ 350,572 The fair value measurements of intangible assets were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy. Level 3 inputs include discount rates that would be used by a market participant in valuing these assets, projections of revenues and cash flows, and customer attrition rates, among others. We acquired a customer relationship intangible asset with a fair value of $ 112.2 million that is being amortized on a straight-line basis over 15 years and a contract related intangible asset of $ 10.3 million that is being amortized on a straight-line basis over 10 years. Goodwill, with a value of $ 212.7 million, arising from the acquisition was included in the EFT Processing Segment. The factors that make up goodwill include synergies from combining PBMA operations and intangible assets that do not qualify for separate recognition. Goodwill and intangible assets associated with this acquisition are deductible for tax purposes. The results of PBMA operations are included in our consolidated results of operation, as part of our EFT Processing business segment, beginning on March 16, 2022. For the period beginning on the acquisition date through December 31, 2022, PBMA had $ 88.8 million in revenue. The PBMA business is impacted by higher transaction volumes during the tourism season in the second and third quarters. Other The Company completed one additional acquisition in 2022 for immaterial amounts. 74 (7) Restricted Cash The restricted cash balances as of December 31, 2022 and 2021 were as follows: As of December 31, (in thousands) 2022 2021 Cash held in trust and/or cash held on behalf of others $ 7,374 $ 3,693 Restricted cash $ 7,374 $ 3,693 Cash held in trust and/or cash held on behalf of others $ 80,563 $ 62,077 Collateral on bank credit arrangements and other 13,452 12,820 Restricted cash included within settlement assets $ 94,015 $ 74,897 Total Restricted Cash $ 101,389 $ 78,590 Cash held in trust and/or cash held on behalf of others is in connection with the administration of the customer collection and vendor remittance activities by certain subsidiaries within the Company's epay and EFT Processing Segments. Amounts collected on behalf of certain mobile phone operators and/or merchants are deposited into a restricted cash account. The bank credit arrangements primarily represent cash collateral on deposit with commercial banks to cover guarantees. (8) Property and Equipment, Net The components of property and equipment, net of accumulated depreciation and amortization as of December 31, 2022 and 2021 are as follows: As of December 31, (in thousands) 2022 2021 ATMs $ 578,130 $ 560,310 POS terminals 41,486 31,321 Vehicles and office equipment 76,317 75,331 Computers and software 216,450 210,363 Land and buildings 651 687 913,034 878,012 Less accumulated depreciation ( 576,433 ) ( 532,631 ) Total $ 336,601 $ 345,381 Depreciation expense related to property and equipment, including property and equipment recorded under finance leases, for the years ended December 31, 2022, 2021 and 2020 was $ 101.5 million, $ 104.7 million and $ 96.1 million, respectively. 75 (9) Goodwill and Acquired Intangible Assets, Net The following table summarizes intangible assets as of December 31, 2022 and 2021: As of December 31, 2022 As of December 31, 2021 (in thousands) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Customer relationships $ 279,055 $ ( 116,986 ) $ 176,024 $ ( 103,713 ) Trademarks and trade names 43,942 ( 33,733 ) 45,445 ( 32,596 ) Software 54,584 ( 48,394 ) 60,118 ( 47,485 ) Non-compete agreements 9,931 ( 124 ) 1,260 ( 1,260 ) Total $ 387,512 $ ( 199,237 ) $ 282,847 $ ( 185,054 ) The following table summarizes the goodwill and amortizable intangible assets activity for the years ended December 31, 2022 and 2021: (in thousands) Acquired Intangible Assets Goodwill Total Intangible Assets Balance as of January 1, 2021 $ 121,883 $ 665,821 $ 787,704 Increases (decreases): Amortization ( 23,059 ) — ( 23,059 ) Other (primarily changes in foreign currency exchange rates) ( 1,031 ) ( 24,216 ) ( 25,247 ) Balance as of December 31, 2021 97,793 641,605 739,398 Increases (decreases): Acquisitions (see footnote 6 ) 124,755 224,296 349,051 Amortization ( 26,990 ) — ( 26,990 ) Other (primarily changes in foreign currency exchange rates) ( 7,283 ) ( 37,557 ) ( 44,840 ) Balance as of December 31, 2022 $ 188,275 $ 828,344 $ 1,016,619 Of the total goodwill balance of $ 828.3 million as of December 31, 2022 , $ 383.7 million relates to the Money Transfer Segment, $ 123.1 million relates to the epay Segment and the remaining $ 321.5 million relates to the EFT Processing Segment. Amortization expense for intangible assets with finite lives was $ 27.0 million , $ 23.1 million and $ 22.9 million for the years ended December 31, 2022 , 2021 and 2020 , respectively. Estimated annual amortization expense on intangible assets with finite lives as of December 31, 2022 , is expected to total $ 24.1 million for 2023 , $ 17.8 million for 2024, $ 14.6 million for 2025, $ 14.3 million for 2026, and $ 13.0 million for 2027 . 76 (10) Accrued Expenses and Other Current Liabilities The balances as of December 31, 2022 and 2021 were as follows: As of December 31, (in thou san ds) 2022 2021 Accrued expenses $ 311,807 $ 267,638 Other tax payables 80,580 17,460 Derivative liabilities 42,320 23,285 Accrued payroll expenses 67,982 55,162 Current portion of finance lease obligations 2,996 4,147 Total $ 505,685 $ 367,692 (11) Debt Obligations Debt obligations consist of the following as of December 31, 2022 and 2021 : As of December 31, (in thousands) 2022 2021 Credit Facility: Revolving credit agreement $ 454,800 $ 283,400 Convertible Debt: 0.75 % convertible notes, unsecured, due 2049 525,000 468,235 1.375 % Senior Notes, due 2026 642,120 682,080 Other obligations 207 920 Total debt obligations $ 1,622,127 $ 1,434,635 Unamortized debt issuance costs ( 12,880 ) ( 13,729 ) Carrying value of debt $ 1,609,247 $ 1,420,906 Short-term debt obligations and current maturities of long-term debt obligations ( 149 ) ( 821 ) Long-term debt obligations $ 1,609,098 $ 1,420,085 77 As of December 31, 2022 , aggregate annual maturities of long-term debt are $ 0.1 million in 2023, no maturities in 2024 , $ 525 million due in 2025, $ 642.1 million due in 2026, and $ 454.8 million thereafter. This maturity schedule reflects the revolving credit facility maturing in 2024 and the Convertible Notes maturing in 2025, coinciding with the terms of the initial put option by holders of the Convertible Notes. It also reflects the maturing of the 1.375 % Senior Notes of € 600 million ($ 642.1 million) due in 2026. Credit Facility On October 24, 2022, the Company amended its revolving credit agreement (the “Credit Facility”) to increase the facility from $ 1.03 billion to $ 1.25 billion and to extend the expiration to October 24, 2027 . The revolving credit facility contains a sublimit of up to $ 250 million , with $ 150 million committed, for the issuance of letters of credit, a $ 75 million sublimit for U.S. dollar swingline loans and a $ 75 million sublimit for swingline loans in euros or British pounds sterling. The Credit Facility allows for borrowings in British pounds sterling, euro and U.S. dollars. Subject to certain conditions, the Company has the option to increase the Credit Facility by up to an additional $ 500 million by requesting additional commitments from existing or new lenders. Fees and interest on borrowings vary based upon the Company's corporate credit rating and will be based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over a secured overnight financing rate, as defined in the agreement, with a margin, including the facility fee, ranging from 1.00 % to 1.625 % or the base rate, as selected by the Company. The applicable margin for borrowings under the credit facility, based on the Company's current credit rating is initially 1.25 % including the facility fee. The agreement contains customary affirmative and negative covenants, events of default and financial covenants, including (all as defined in the Credit Facility): (i) a Consolidated Total Leverage Ratio, depending on certain circumstances defined in the Credit Facility, not to exceed a range between 3.5 to 1.0 and 4.5 to 1.0; and (ii) a Consolidated Interest Coverage Ratio of not less than 3.0 to 1.0. Subject to meeting certain customary covenants (as defined in the Credit Facility), the Company is permitted to repurchase common stock and debt. The Company was in compliance with all debt covenants as of December 31, 2022. The interest rate of the Company's borrowings under the Credit Facility wa s 5.5 % as of December 31, 2022 . As of December 31, 2022 and 2021, the Company had stand-by letters of credit/bank guarantees outstanding under the Credit Facility of $ 54.6 million and $ 57.3 million , respectively. Stand-by letters of credit/bank guarantees reduce the Company's borrowing capacity under the Credit Facility and are generally used to secure trade credit and performance obligations. As of December 31, 2022 and 2021, the stand-by letters of credit interest charges were each 1.1 % per annum . Borrowing capacity under the Credit Facility as of December 31, 2022 was $ 740.6 million. 78 Uncommitted Line of Credit On May 25, 2022, the Company entered into an Uncommitted Credit Agreement for $ 300 million, for the sole purpose of providing vault cash for ATMs , that expired on November 30, 2022. The loan was fully repaid and there was no balance at December 31, 2022. The loan bears interest at the rate per annum equal to the secured overnight financing rate (“SOFR”) plus 1.00 %. The weighted-average interest rate from the loan inception date to December 31, 2022 was 3.14 %. On June 24, 2022, the Company entered into an Uncommitted Loan Agreement for $ 150 million, for the sole purpose of providing vault cash for ATMs, that expires no later than June 23, 2023. The loan was fully repaid and there was no balance at December 31, 2022. The loan was either a Prime rate loan, a Bloomberg Short-term Bank Yield rate loan or bears interest at the rate agreed to by the bank and the Company at the time such loan is made. The weighted average interest rate from the loan inception date to December 31, 2022 was 2.76 %. Convertible Debt On March 18, 2019, the Company completed the sale of $ 525.0 million of Convertible Senior Notes ("Convertible Notes"). The Convertible Notes mature in March 2049 unless redeemed or converted prior to such date, and are convertible into shares of Euronet Common Stock at a conversion price of approximately $ 188.73 per share if certain conditions are met (relating to the closing price of Euronet Common Stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require the Company to purchase their notes on each of March 15, 2025, March 15, 2029, March 15, 2034, March 15, 2039 and March 15, 2044 at a repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In connection with the issuance of the Convertible Notes, the Company recorded $ 12.8 million in debt issuance costs, which are being amortized through March 1, 2025. The Company may redeem for cash all or any portion of the Convertible Notes, at its option, (i) if the closing sale price of the Company's Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption and (ii) on or after March 20, 2025 and prior to the maturity date, regardless of the foregoing sale price condition, in each case at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes. In addition, if a fundamental change, as defined in the Indenture, occurs prior to the maturity date, holders may require the Company to repurchase for cash all or part of their Convertible Notes 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 fundamental change repurchase date. As of December 31, 2022 the conversion threshold was not met. On January 1, 2022, the Company adopted 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. ASU 2020-06 amended the accounting for convertible instruments with ASC Topic 470 Debt (See Footnote 3 for the accounting impact of adopting ASU 220-06). 79 Contractual interest expense for the Convertible Notes was $ 3.9 million, $ 3.9 million, and $ 3.9 million for the years ended December 31, 2022, 2021 and 2020. Accretion expense was $ 16.0 million and $ 15.3 million for the years ended December 31, 2021 and 2020. Accretion expense is no longer applicable for 2022 due to adoption of standard 2020-06. The effective interest rate was 4.4 % for the year ended December 31, 2022. 1.375 % Senior Notes due 2026 On May 22, 2019, the Company completed the sale of € 600 million ($ 669.9 million) aggregate principal amount of Senior Notes that mature on May 2026 (the "Senior Notes"). The Senior Notes accrue interest at a rate of 1.375 % per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of December 31, 2022, the Company has outstanding € 600 millio n ($ 642.1 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. As of December 31, 2022, the Company had $ 4.1 million of unamortized debt issuance costs related to the Senior Notes. Other obligations Certain of the Company's subsidiaries have available lines of credit and overdraft credit facilities that generally provide for short-term borrowings that are used from time to time for working capital purposes. As of December 31, 2022 and 2021 , borrowings under these arrangements were $ 0.2 million and $ 0.9 million, respectively. As of December 31, 2022, there was $ 0.1 million due in 2023 under these other obligation arrangements. (12) Derivative Instruments and Hedging Activities The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) certain foreign currency denominated other asset and liability positions. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC 815 , primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates being reflected concurrently in earnings for both the derivative instrument and the transaction and have an offsetting effect. Foreign currency exchange contracts - Ria Operations and Corporate In the United States, the Company uses short-duration foreign currency forward contracts, generally with maturities up to 14 days, to offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction and its settlement. Due to the short duration of these contracts and the Company's credit profile, the Company is generally not required to post collateral with respect to these foreign currency forward contracts. Most derivative contracts executed with counterparties in the U.S. are governed by an International Swaps and Derivatives Association agreement that includes standard netting arrangements; therefore, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity. As of December 31, 2022 and 2021, the Company had foreign currency forward contracts outstanding in the U.S. with a notional value of $ 398.6 million and $ 222.1 million, respectively. The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds, euros and Mexican pesos. 80 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 December 31, 2022 and 2021 , the Company had foreign currency forward contracts outstanding with a notional value of $ 228.4 million and $ 216.1 million, respectively, primarily in euros. Foreign currency exchange contracts - xe Operations xe, writes derivative instruments, primarily foreign currency forward contracts and cross-currency swaps, mostly with counterparties comprised of individuals and small-to-medium size businesses and derives a currency margin from this activity as part of its operations. xe aggregates its foreign currency exposures arising from customer contracts and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from xe's total portfolio of positions were $ 86.6 million , $ 79.5 million and $ 68.2 million for the years ended December 31, 2022 , 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 . The duration of these derivative contracts is generally less than one year . The fair value of xe's total portfolio of positions can change significantly from period to period based on, among other factors, market movements and changes in customer contract positions. xe manages counterparty credit risk (the risk that counterparties will default and not make payments according to the terms of the agreements) on an individual counterparty basis. It mitigates this risk by entering into contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. xe does not expect any significant losses from counterparty defaults. The aggregate equivalent U.S. dollar notional amounts of foreign currency derivative customer contracts held by the Company in its xe operations as of December 31, 2022 and 2021, was approximately $ 1.0 billion. The significant majority of customer contracts are written in major currencies such as the euro, U.S. dollar, British pound, Australian dollar and New Zealand dollar. The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the dates below: Asset Derivatives Liability Derivatives Fair Value Fair Value (in thousands) Balance Sheet Location December 31, 2022 December 31, 2021 Balance Sheet Location December 31, 2022 December 31, 2021 Derivatives not designated as hedging instruments Foreign currency exchange contracts Other current assets $ 50,248 $ 27,582 Other current liabilities $ ( 42,320 ) $ ( 23,285 ) 81 Balance Sheet Presentation The following tables summarize the gross and net fair value of derivative assets and liabilities as of December 31, 2022 and 2021 (in thousands): Offsetting of Derivative Assets Gross Amounts Not Offset in the Consolidated Balance Sheet As of December 31, 2022 Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts Presented in the Consolidated Balance Sheet Financial Instruments Cash Collateral Received Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 50,248 $ — $ 50,248 $ ( 27,851 ) $ ( 4,056 ) $ 18,341 As of December 31, 2021 Derivatives subject to a master netting arrangement or similar agreement $ 27,582 $ — $ 27,582 $ ( 14,875 ) $ ( 2,284 ) $ 10,423 Offsetting of Derivative Liabilities Gross Amounts Not Offset in the Consolidated Balance Sheet As of December 31, 2022 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts Presented in the Consolidated Balance Sheet Financial Instruments Cash Collateral Paid Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ ( 42,320 ) $ — $ ( 42,320 ) $ 27,851 $ 4,257 $ ( 10,212 ) As of December 31, 2021 Derivatives subject to a master netting arrangement or similar agreement $ ( 23,285 ) $ — $ ( 23,285 ) $ 14,875 $ 640 $ ( 7,770 ) 82 Income Statement Presentation The following tables summarize the location and amount of gains on derivatives in the Consolidated Statements of Operations for the years ended December 31, 2022 , 2021 and 2020: Amount of Gain (Loss) Recognized in Income on Derivative Contracts (a) Location of Gain (Loss) Recognized in Income on Derivative Contracts Year Ended December 31, (in thousands) 2022 2021 2020 Foreign currency exchange contracts - Ria Operations Foreign currency exchange gain (loss), net $ 2,083 $ 1,618 $ ( 1,499 ) (a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its xe operations. These derivative contracts are excluded from this table as they are part of the broader disclosure of foreign currency exchange revenues for this business discussed above. See Note 18, Financial Instruments and Fair Value Measurements, for the determination of the fair values of derivatives. (13) Leases The Company enters into operating leases for ATM sites, office spaces, retail stores and equipment. The Company's finance leases are immaterial. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease terms. The present value of lease payments is determined using the incremental borrowing rate based on information available at the lease commencement date. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. 83 Most leases include an option to renew, with renewal terms that can extend the lease terms. The exercise of lease renewal options is at the Company’s sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease terms. The Company also has a unilateral termination right for most of the ATM site leases. The Company evaluated the likelihood of exercising the renewal and termination options beginning with the adoption of the new accounting lease standard on January 1, 2019, concluding: 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 termination options were reasonably certain not to be exercised and therefore the stated lease payment schedule of the lease was used to determine the lease term. During the second quarter of 2020 , the impact of the COVID- 19 pandemic was a significant event that caused a significant change in circumstances and business plans to manage our portfolio of ATM leases. Specifically, the Company downsized, through the exercise of termination clauses and the reduction of monthly costs by renegotiating payment terms of its 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 was no longer able to conclude that termination options are reasonably certain not to be exercised. This reassessment conclusion impacted the lease term evaluation, instead of determining the lease term based on the stated lease payment schedule of the lease, the lease term was 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), which impacted the amounts recorded as right of use assets and lease liability balances. New, amended, and modified ATM site leases with termination options exercisable within 12 months will be excluded from th e right of use lease asset and lease liability balances under the short-term lease exemption. 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 2022 reasonably reflects the Company’s short-term lease commitments. Certain of the Company's lease agreements include variable rental payments based on revenues generated from the use of the leased location and certain leases include rental payments adjusted periodically for inflation. Variable lease payments are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs and are excluded from the right of use assets and lease liabilities balances. The lease agreements do not contain any material residual value guarantees or material restrictive covenants. Future minimum lease payments Future minimum lease payments under the operating leases (with initial lease terms in excess of one year) as of December 31, 2022 are: As of December 31, 2022 Maturity of Lease Liabilities (in thousands) Operating Leases (1) 2023 $ 47,004 2024 36,508 2025 26,519 2026 18,331 2027 11,510 Thereafter 17,015 Total lease payments 156,887 Less: imputed interest ( 4,055 ) Present value of lease liabilities $ 152,832 ( 1 ) Operating lease payments reflect the Com pany' s current fixed obligations under the operating lease agreements. 84 Lease expense recognized in the Consolidated Statements of Operations is summarized as follows: Lease Expense (in thousands) Income Statement Classification Year ended December 31,2022 Year ended December 31,2021 Year e nde d December 31,2020 Operating lease expense Selling, general and administrative and Direct operating costs $ 51,031 $ 55,613 $ 83,102 Short-term and variable lease expense Selling, general and administrative and Direct operating costs 142,613 115,963 69,711 Total lease expense $ 193,644 $ 171,576 $ 152,813 Other information about lease amounts recognized in the consolidated financial statements is summarized as follows: Lease Term and Discount Rate of Operating Leases As of December 31,2022 As of December 31,2021 Weighted- average remaining lease term (years) 4.6 4.9 Weighted- average discount rate 2.27 2.24 The following table presents supplemental cash flow and non-cash information related to leases: Other Information (in thousands) Year ended December 31, 2022 Year ended December 31, 2021 Year ended December 31, 2020 Cash paid for amounts included in the measurement of lease liabilities (a) $ 49,739 $ 51,464 $ 79,447 Supplemental non-cash information on lease liabilities arising from obtaining ROU assets: ROU assets obtained in exchange for new operating lease liabilities $ 50,032 $ 69,073 $ 77,728 (a) Included in Net cash provided by operating activities on the Company's Consolidated Statements of Cash Flows. (14) Income Taxes The sources of income before income taxes for the years ended December 31, 2022, 2021 and 2020 are presented as follows: Year Ended December 31, (in thousands) 2022 2021 2020 Income before taxes: United States $ ( 12,526 ) $ ( 4,775 ) $ 40,323 Foreign 335,121 140,450 ( 32,152 ) Total income before income taxes $ 322,595 $ 135,675 $ 8,171 85 The Company's income tax expense for the years ended December 31, 2022, 2021 and 2020 consisted of the following: Year Ended December 31, (in thousands) 2022 2021 2020 Current tax expense (benefit): U.S. $ 3,878 $ 2,810 $ 2,605 Foreign 80,296 59,874 39,270 Total current 84,174 62,684 41,875 Deferred tax expense (benefit): U.S. ( 7,270 ) 12,269 ( 16,100 ) Foreign 14,949 ( 9,865 ) ( 14,300 ) Total deferred 7,679 2,404 ( 30,400 ) Total tax expense $ 91,853 $ 65,088 $ 11,475 The following is a reconciliation of the federal statutory income tax rates of 21 % to the effective income tax rate for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, (dollar amounts in thousands) 2022 2021 2020 U.S. federal income tax expense at applicable statutory rate $ 67,745 $ 28,492 $ 1,716 Tax effect of: State income tax expense at statutory rates, net of U.S. federal income tax 3,666 1,516 347 Non-deductible expenses 1,698 538 1,887 Share-based compensation 1,930 ( 3,524 ) ( 6,446 ) Other permanent differences ( 219 ) ( 2,047 ) 3,828 Difference between U.S. federal and foreign tax rates 13,859 7,438 7,002 Provision in excess of statutory rates 3,592 2,879 ( 6,491 ) Change in federal and foreign valuation allowance ( 7,704 ) 26,673 ( 4,238 ) Impairment of goodwill and acquired intangibles assets — — 22,053 GILTI, net of tax credits 9,807 3,900 — Tax credits ( 697 ) ( 1,122 ) ( 3,518 ) Other ( 1,824 ) 345 ( 4,665 ) Total income tax expense $ 91,853 $ 65,088 $ 11,475 Effective tax rate 28.47 % 48.0 % 140.4 % We calculate our provision for federal, state and foreign income taxes based on current tax law. 86 The tax effect of temporary differences and carryforwards that give rise to deferred tax assets and liabilities from continuing operations are as follows: As of December 31, (in thousands) 2022 2021 Deferred tax assets: Tax loss carryforwards $ 64,889 $ 65,862 Share-based compensation 12,620 9,743 Accrued expenses 23,192 19,907 Property and equipment 10,787 11,949 Goodwill and intangible amortization 8,999 9,353 Contract costs 7,034 9,921 Intercompany notes 17,352 6,077 Accrued revenue 5,073 7,541 Tax credits 64,384 65,267 Lease accounting 40,194 42,381 Foreign exchange 2,704 8,283 Other 7,755 14,616 Total deferred tax assets 264,983 270,900 Valuation allowance ( 90,369 ) ( 100,489 ) Total deferred tax assets, net of valuation allowance 174,614 170,411 Deferred tax liabilities: Intangible assets related to purchase accounting ( 12,067 ) ( 11,763 ) Goodwill and intangible amortization ( 31,716 ) ( 30,339 ) Accrued expenses ( 22,661 ) ( 21,495 ) Intercompany notes ( 14,544 ) ( 10,388 ) Accrued interest ( 26,583 ) ( 34,175 ) Capitalized research and development ( 1,229 ) ( 6,376 ) Property and equipment ( 14,630 ) ( 15,597 ) Accrued revenue ( 2,074 ) ( 2,073 ) Lease accounting ( 40,194 ) ( 42,381 ) Foreign exchange ( 9,773 ) ( 1,211 ) Other ( 3,533 ) ( 3,971 ) Total deferred tax liabilities ( 179,004 ) ( 179,769 ) Net deferred tax liabilities $ ( 4,390 ) $ ( 9,358 ) Net deferred tax assets of $ 24.0 million and $ 36.8 million as of December 31, 2022 and 2021, respectively, are recorded within "Other assets" on the Consolidated Balance Sheet. 87 Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2022 are expected to be allocated to income taxes in the Consolidated Statements of Operations. As of December 31, 2022, and 2021, the Company's foreign tax loss carryforwards were $ 260.6 million and $ 267.3 million, respectively, and U.S. state tax loss carryforwards were $ 97.7 million and $ 73.7 million, respectively. As of December 31, 2022, the Company had U.S. foreign tax credit carryforwards of $ 59.8 million which are largely not expected to be utilized in future periods. As of December 31, 2021, the Company had 100 U.S. foreign tax credit carryforwards of $ 61.6 million which are largely not expected to be utilized in future periods. In assessing the Company's ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances, as of December 31, 2022. As of December 31, 2022, the Company had foreign tax net operating loss carryforwards of $ 260.6 million, which will expire as follows: (in thousands) Gross Tax Effected Year ending December 31, 2023 $ 2,244 $ 516 2024 2,247 503 2025 16,533 3,872 2026 17,655 4,106 2027 4,781 1,151 Thereafter 18,904 4,941 Unlimited 198,253 46,293 Total $ 260,617 $ 61,382 In addition, the Company's state tax net operating loss carryforwards of $97.7 million will expire periodically from 2023 through 2042 , U.S. foreign tax credit carryforwards of $59.8 million will expire periodically from 2023 through 2032 and U.S. federal research and expenditure credit carryforwards of $3.8 million will expire periodically from 2034 through 2041. The Company has not provided additional deferred taxes with respect to items such as certain foreign exchange gains or losses, foreign withholding taxes or additional state taxes, if any, on undistributed earnings attributable to foreign subsidiaries and it is not practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely. Gross undistributed earnings reinvested indefinitely in foreign subsidiaries aggregated approximately $ 2,063.1 million as of December 31, 2022. 88 Accounting for uncertainty in income taxes A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2022 and 2021 is as follows: Year Ended December 31, (in thousands) 2022 2021 Beginning balance $ 40,990 $ 39,785 Additions based on tax positions related to the current year 6,125 3,815 Additions for tax positions of prior years 258 — Reductions for tax positions of prior years ( 3,971 ) ( 1,998 ) Settlements ( 586 ) — Statute of limitations expiration — ( 612 ) Ending balance $ 42,816 $ 40,990 As of December 31, 2022 and 2021 , approximately $ 30.8 million and $ 29.1 million, respectively, of the unrecognized tax benefits would impact the Company's provision for income taxes and effective income tax rate, if recognized. Total estimated accrued interest and penalties related to the underpayment of income taxes was $ 8.3 million and $ 7.2 million as of December 31, 2022 and 2021 , respectively. The following income tax years remain open in the Company's major jurisdictions as of December 31, 2022: Jurisdictions Periods U.S. (Federal) 2014 through 2022 Germany 2016 through 2022 Greece 2013 through 2022 Spain 2015 through 2022 U.K. 2018 through 2022 It is reasonably possible that the balance of gross unrecognized tax benefits could significantly change within the next twelve months as a result of the resolution of audit examinations and expirations of certain statutes of limitations and, accordingly, materially affect the Company's operating results. At this time, it is not possible to estimate the range of change due to the uncertainty of potential outcomes. (15) Valuation and Qualifying Accounts Trade accounts receivable and accounts receivable balances included within the settlement assets are stated net of credit losses. Historically, the Company has not experienced significant write-offs. The Company records credit losses when it is probable that the accounts receivable balance will not be collected. 89 The following table provides a summary of the credit loss balances and activity for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, (in thousands) 2022 2021 2020 Beginning balance-credit losses $ 31,810 $ 41,727 $ 27,938 Additions-charged to expense 16,276 9,721 19,469 Amounts written off ( 12,865 ) ( 21,662 ) ( 7,842 ) Other (primarily changes in foreign currency exchange rates) 1,789 2,024 2,162 Ending balance-credit losses $ 37,010 $ 31,810 $ 41,727 (16) Stock Plans The Company has share-based compensation plans ("SCP") that allow it to grant restricted shares, or options to purchase shares, of common stock to certain current and prospective key employees, directors and consultants of the Company. These awards gen erally vest over periods ranging from three to five years from the date of grant. Stock options are generally exercisable during the shorter of a ten -year term or the term of employment with the Company. With the exception of certain awards made to the Company's employees in Germany, Singapore and Malaysia, awards under the SCP are settled through the issuance of new shares under the provisions of the SCP. For Company employees in Germany, Singapore and Malaysia, certain awards are settled through the issuance of treasury shares, which also reduces the number of shares available for future issuance under the SCP. As of December 31, 2022, the Company has approximately 4.9 million in total shares remaining available for issuance under the SCP. Share-based compensation expense was $ 44.1 million, $ 36.5 million and $ 22.0 million for the years ended December 31, 2022, 2021 and 2020, respectively, and was recorded in salaries and benefits expense in the accompanying Consolidated Statements of Operations. The Company recorded a tax benefit of $ 3.4 million, $ 4.1 million and $ 2.1 million during the years ended December 31, 2022, 2021 and 2020, respectively, for the portion of this expense that relates to foreign tax jurisdictions in which an income tax benefit is expected to be derived. Stock options Summary stock options activity is presented in the table below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (thousands) Balance at December 31, 2021 ( 1,466,983 shares exercisable) 4,309,201 $ 102.19 Granted 622,722 $ 90.31 Exercised ( 197,184 ) $ 30.11 Forfeited/Canceled ( 30,316 ) $ 125.52 Expired ( 1,018 ) $ 23.63 Balance at December 31, 2022 4,703,405 $ 103.51 6.9 $ 26,045 Exercisable at December 31, 2022 1,514,504 $ 91.88 4.4 $ 23,497 Vested and expected to vest at December 31, 2022 4,207,661 $ 95.72 6.0 $ 25,584 90 Options outstanding that are expected to vest are net of estimated future forfeitures. The Company received cash of $ 5.9 million, $ 7.8 million and $ 15.8 million in connection with stock options exercised in the years ended December 31, 2022 , 2021 and 2020 , respectively. The intrinsic value of these options exercised was $ 12.8 million, $ 27.7 million and $ 41.1 million in the years ended December 31, 2022 , 2021 and 2020 , respectively. As of December 31, 2022 , unrecognized compensation expense related to nonvested stock options that are expected to vest totaled $ 68.1 million and wi ll be recognized over the next 4 years, with an overall weighted-average period of 3.2 years. The following table provides the fair value of options granted under the SCP during 2022 , 2021 and 2020 , together with a description of the assumptions used to calculate the fair value using the Black-Scholes-Merton option-pricing model: Year ended December 31, 2022 2021 2020 Volatility 42.4 % 39.3 % 35.6 % Risk-free interest rate - weighted average 3.97 % 1.2 % 0.6 % Risk-free interest rate - range 3.45 % to 3.97 % 0.50 % to 1.21 % 0.31 % to 1.17 % Dividend yield — % — % — % Assumed forfeitures 8.0 % 8.0 % 8.0 % Expected lives 4.6 years 4.6 years 7.1 years Weighted-average fair value (per option) $ 37.15 $ 39.99 $ 48.21 During 2022, the Company granted approximately 411,648 options, which vest evenly over a four year term upon the achievement of a 10 % increase over the share price on the date of grant for 30 consecutive days. Options were valued using a Monte Carlo simulation (not included in the table above). The Monte Carlo simulation calculated a fair value per option of $ 36.70 using the following assumptions: volatility of 42.5 %, risk-free interest rate of 3.8 %, and a term of 4.6 years. During 2021, the Company granted approximately 331,000 options, which vest evenly over a four year term upon the achievement of a 10 % increase over the share price on the date of grant for 30 consecutive days. Options were valued using a Monte Carlo simulation (not included in the table above). The Monte Carlo simulation calculated a fair value per option of $ 40.30 using the following assumptions: volatility of 40.0 %, risk-free interest rate of 1.19 %, and a term of 4.5 years. During 2020, the Company granted 1,350,000 options, which vests each year starting in February 2023 upon the achievement of a 15 % increase in the share price on the date of the grant for 30 consecutive days and a 10 % increase in adjusted earnings per share Options were valued using a Monte Carlo simulation (not included in the table above). The Monte Carlo simulation calculated a fair value per option of $ 26.90 using the following assumptions: volatility of 37.0 %, risk-free interest rate of 0.33 %, and a term of 5.0 years. 91 Restricted stock Restricted stock awards vest based on the achievement of time-based service conditions and/or performance-based conditions. For certain awards, vesting is based on the achievement of more than one condition of an award with multiple time-based and/or performance-based conditions. The Company records related expense for these awards that have performance-based conditions over the vesting period when the achievement of the award is probable of occurrence. Summary restricted stock activity is presented in the table below: Number of Shares Weighted Average Grant Date Fair Value Per Share Nonvested at December 31, 2021 535,104 $ 127.96 Granted 270,124 $ 91.47 Vested ( 90,986 ) $ 39.99 Forfeited ( 37,807 ) $ 117.01 Nonvested at December 31, 2022 676,435 $ 115.36 T he fair value of shares vested in the y ears ended December 31, 2022, 2021 and 2020 was $ 9.3 million, $ 13.8 million and $ 15.4 million, respectively. As o f December 31, 2022, there was $ 16.8 million of total unrecognized compensation cost related to unvested time-based restrict ed stock, which is expected to be recognized over a weighted-average period of 2.87 years. As of December 31, 2022, there was $ 26.3 million of total unrecognized compensation costs related to unvested performance-based restricted stock, which is expected to be recognized based on Company performance over a weighted-average period of 2.0 years. The weighted average grant date fair value of restricted stock granted during the years ended December 31, 2022, 2021 and 2020 was $ 91.47 , 115.85 and $ 117.97 per share, respectively. 92 (17) Business Segment Information Euronet's reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting ("ASC 280") . The Company currently operates in the following three reportable operating segments: 1) Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East, Africa, Asia Pacific and the United States. The Company provides comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit, debit and prepaid card outsourcing, dynamic currency conversion, domestic and international surcharges and other value added services. Through this segment, the Company also offers a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems. 2) T hrough the epay Segment, the Company provides distribution, processing and collection services for prepaid mobile airtime and other electronic payment products in Europe, the Middle East, Asia Pacific, the U.S. and South America. 3) Through the Money Transfer Segment, the Company provides global money transfer services under the brand names Ria, AFEX, 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. xe is also a provider of foreign currency exchange information. The Company also offers customers bill payment services, payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services, foreign currency exchange services and mobile top-up. Furthermore, xe provides cash management solutions and foreign currency risk management services to small-to-medium sized businesses. 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. 93 The following tables present the Company's results for the years ended December 31, 2022, 2021 and 2020: For the Year Ended December 31, 2022 (in thousands) EFT Processing epay Money Transfer Corporate Services, Eliminations and Other Consolidated Total revenues $ 924,208 $ 998,009 $ 1,444,304 $ ( 7,780 ) $ 3,358,741 Operating expenses: Direct operat ing cos ts 475,785 753,149 796,951 ( 7,758 ) 2,018,127 Salaries and benefits 111,997 81,680 277,012 63,549 534,238 Selling, general and administrative 57,049 36,006 182,360 9,758 285,173 Depreciation and amortization 95,486 6,224 33,727 427 135,864 Total operating expenses 740,317 877,059 1,290,050 65,976 2,973,402 Operating income (expense) $ 183,891 $ 120,950 $ 154,254 $ ( 73,756 ) $ 385,339 Other income (expense) Interest income 2,066 Interest expense ( 37,585 ) Foreign currency exchange loss, net ( 28,175 ) Other gains, net 950 Total other expense, net ( 62,744 ) Income before income taxes $ 322,595 Segment assets as of December 31, 2022 $ 2,150,685 $ 1,173,330 $ 1,795,799 $ 283,819 $ 5,403,633 94 For the Year Ended December 31, 2021 (in thousands) EFT Processing epay Money Transfer Corporate Services, Eliminations and Other Consolidated Total revenues $ 591,138 $ 1,011,482 $ 1,400,957 $ ( 8,134 ) $ 2,995,443 Operating expenses: Direct operating costs 354,254 760,891 793,218 ( 8,096 ) 1,900,267 Acquired contract cost impairment — — 38,634 — 38,634 Salaries and benefits 98,584 79,451 255,816 50,988 484,839 Selling, general and admin istrative 47,832 39,602 157,955 6,544 251,933 Depreciation and amortization 90,969 8,501 35,739 545 135,754 Total operating expenses 591,639 888,445 1,281,362 49,981 2,811,427 Operating income (expense) $ ( 501 ) $ 123,037 $ 119,595 $ ( 58,115 ) $ 184,016 Other income (expense) Interest income 664 Interest expense ( 38,198 ) Foreign currency exchange gain, net ( 10,866 ) Other gains, net 59 Total other expense, net ( 48,341 ) Income before income taxes $ 135,675 Segment assets as of December 31, 2021 $ 1,682,680 $ 1,234,074 $ 1,621,726 $ 205,796 $ 4,744,276 95 For the Year Ended December 31, 2020 (in thousands) EFT Processing epay Money Transfer Corporate Services, Eliminations and Other Consolidated Total revenues $ 468,726 $ 835,517 $ 1,183,849 $ ( 5,392 ) $ 2,482,700 Operating expenses: Direct operating costs 302,637 630,391 649,033 ( 5,362 ) 1,576,699 Salaries and benefits 91,526 64,769 213,511 34,336 404,142 Selling, general and administrative 35,388 35,789 142,161 8,276 221,614 Goodwill and acquired intangible assets impairment 21,861 — 84,741 — 106,602 Depreciation and amortization 84,025 7,890 34,694 412 127,021 Total operating expenses 535,437 738,839 1,124,140 37,662 2,436,078 Operating income (expense) $ ( 66,711 ) $ 96,678 $ 59,709 $ ( 43,054 ) $ 46,622 Other income (expense) Interest income 1,040 Interest expense ( 36,604 ) Foreign currency exchange loss, net ( 3,756 ) Other gains, net 869 Total other expense, net ( 38,451 ) Income before income taxes $ 8,171 Segment assets as of December 31, 2020 $ 1,541,610 $ 1,135,204 $ 1,755,651 $ 494,246 $ 4,926,711 96 Total revenues for the years ended December 31, 2022, 2021 and 2020, and property and equipment and total assets as of December 31, 2022 and 2021, summarized by geographic location, were as follows: Revenues Property and Equipment, net Total Assets For the year ended December 31, as of December 31, as of December 31, (in thousands) 2022 2021 2020 2022 2021 2022 2021 United States $ 830,846 $ 805,028 $ 725,135 $ 59,925 $ 59,469 $ 1,051,433 $ 1,040,190 Germany 644,488 631,550 533,999 30,222 32,126 772,575 901,724 Spain 211,658 157,766 118,934 46,392 50,321 322,652 317,199 United Kingdom 144,737 143,914 118,024 10,453 13,783 403,874 371,090 Italy 160,676 130,095 92,006 16,670 18,279 207,744 207,347 Poland 98,069 93,654 89,688 23,013 24,091 220,686 201,506 India 188,539 173,154 123,343 30,476 32,705 241,630 206,378 France 173,825 166,655 119,265 8,514 7,038 140,396 134,981 Greece 160,971 61,627 39,705 18,032 10,815 597,206 80,778 Malaysia 47,597 50,039 73,541 2,167 1,998 77,569 91,813 Australia 42,424 46,851 46,062 2,880 2,791 58,400 56,275 New Zealand 61,550 56,480 47,368 3,537 3,949 234,836 231,468 Netherlands 54,634 49,442 39,630 5,302 6,280 196,667 217,521 Canada 66,439 46,851 49,487 744 847 106,419 103,056 Brazil 51,367 44,304 28,473 258 268 46,695 34,115 Other 420,921 338,033 238,040 78,016 80,621 724,851 548,835 Total foreign 2,527,895 2,190,415 1,757,565 276,676 285,912 4,352,200 3,704,086 Total $ 3,358,741 $ 2,995,443 $ 2,482,700 $ 336,601 $ 345,381 $ 5,403,633 $ 4,744,276 Revenues are attributed to countries based on location of the customer, with the exception of software sales made by the Company's software subsidiary, which are attributed to the U.S. (18) Financial Instruments and Fair Value Measurements Concentrations of credit risk The Company's credit risk primarily relates to trade accounts receivable and cash and cash equivalents. The EFT Processing Segment's customer base includes the most significant international card organizations and certain banks in its markets. The epay Segment's customer base is diverse and includes several major retailers and/or distributors in markets that they operate. The Money Transfer Segment trade accounts receivable are primarily due from independent agents that collect cash from customers on the Company's behalf and generally remit the cash within one week. The Company performs ongoing evaluations of its customers' financial condition and limits the amount of credit extended, or purchases credit enhancement protection, when deemed necessary, but generally requires no collateral. See Note 15, Valuation and Qualifying Accounts, for further disclosure. The Company invests excess cash not required for use in operations primarily in high credit quality, short-term duration securities that the Company believes bear minimal risk. 97 Fair value measurements Fair value measurements used in the consolidated financial statements are based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transac tion between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: L evel 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. L evel 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the inputs that market participants would use in pricing. The following table details financial assets measured and recorded at fair value on a recurring basis: As of December 31, 2022 (in thousands) Balance Sheet Classification Level 1 Level 2 Level 3 Total Assets Foreign currency exchange contracts Other current assets $ — $ 50,248 $ — $ 50,248 Liabilities Foreign currency exchange contracts Other current liabilities $ — $ ( 42,320 ) $ — $ ( 42,320 ) As of December 31, 2021 (in thousands) Balance Sheet Classification Level 1 Level 2 Level 3 Total Assets Foreign currency exchange contracts Other current assets $ — $ 27,582 $ — $ 27,582 Liabilities Foreign currency exchange contracts Other current liabilities $ — $ ( 23,285 ) $ — $ ( 23,285 ) The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term debt obligations approximate fair values due to their short maturities. The carrying values of the Company's revolving credit agreements approximate fair values because interest is based on SOFR that resets at va rious intervals of less than one year. 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 December 31, 2022 , the fair values of the Convertible Notes and Senior Notes were $ 520.8 million and $ 568.9 million , respectively, with carrying values of $ 525.0 million and $ 642.1 million, respectively. (19) Litigation and Contingencies From time to time, the Company is a party to legal and regulatory proceedings arising in the ordinary course of its business. Currently, there are no legal proceedings or regulatory findings that management believes, either individually or in the aggregate, would have a material adverse effect upon the Consolidated Financial Statements of the Company. In accordance with U.S. GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. 98 (20) Commitments As of December 31, 2022 , the Company had $ 83.4 million of stand-by letters of credit/bank guarantees issued on its behalf, of which $ 3.3 million are collateralized by cash deposits held by the respective issuing banks. Under certain circumstances, the Company grants guarantees in support of obligations of subsidiaries. As of December 31, 2022 , the Company granted off balance sheet guarantees for cash in various ATM networks amounting to $ 11.1 million over the terms of the cash supply agreements and performance guarantees amounting to approximately $ 51.9 million over the terms of the 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. The amount of such potential obligations is generally not stated in the agreements. Euronet's liability under such indemnification provisions may be mitigated by relevant insurance coverage and may be subject to time and materiality limitations, monetary caps and other conditions and defenses. Such indemnification obligations include the following: • In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for damage to ATMs and theft of ATM network cash that, generally, is not recorded on the Company's Consolidated Balance Sheets. As of December 31, 2022 , the balance of such cash used in the Company's ATM networks for which the Company was responsible was approximately $ 319.8 million. The Company maintains insurance policies to mitigate this exposure; • In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for losses suffered by its customers and other parties as a result of the breach of its computer systems, including in particular, losses arising from fraudulent transactions made using information stolen through its processing systems. The Company maintains insurance policies to mitigate this exposure; • In connection with the license of proprietary systems to customers, the Company provides certain warranties and infringement indemnities to the licensee, which generally warrant that such systems do not infringe on intellectual property owned by third parties and that the systems will perform in accordance with their specifications; • Euronet has entered into purchase and service agreements with vendors and consulting agreements with providers of consulting services, pursuant to which the Company has agreed to indemnify certain of such vendors and consultants, respectively, against third-party claims arising from the Company's use of the vendor's product or the services of the vendor or consultant; • In connection with acquisitions and dispositions of subsidiaries, operating units and business assets, the Company has entered into agreements containing indemnification provisions, which can be generally described as follows: (i) in connection with acquisitions of operating units or assets made by Euronet, the Company has agreed to indemnify the seller against third party claims made against the seller relating to the operating unit or asset and arising after the closing of the transaction, and (ii) in connection with dispositions made by Euronet, Euronet has agreed to indemnify the buyer against damages incurred by the buyer due to the buyer's reliance on representations and warranties relating to the subject subsidiary, operating unit or business assets in the disposition agreement if such representations or warranties were untrue when made; and • Euronet has entered into agreements with certain third parties, including banks that provide fiduciary and other services to Euronet or to the Company's benefit plans. Under such agreements, the Company has agreed to indemnify such service providers for third-party claims relating to carrying out their respective duties under such agreements. The Company is also required to meet minimum capitalization and cash requirements of various regulatory authorities in the jurisdictions in which the Company has money transfer operations. The Company has obtained surety bonds in compliance with money transfer licensing requirements of the applicable governmental authorities. To date, the Company is not aware of any significant claims made by the indemnified parties or third parties to guarantee agreements with the Company and, accordingly, no liabilities were recorded as of December 31, 2022 or 2021 . 99 (21) Related Party Transactions The Company leases an airplane from a company owned by Mr. Michael J. Brown, Euronet's Chief Executive Officer, President and Chairman of the Board of Directors. The airplane is leased for business use on a per flight hour basis at competitive commercial rates with no minimum usage requirement. Euronet incurred expenses of $ 0.2 million, $ 0.1 million and $ 0.1 million during the years ended December 31, 2022 , 2021 and 2020, respectively, for the use of this airplane. 100 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.