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EURONET WORLDWIDE INC10Q
11/10/2008NO TITLE Delaware
742806888$
(State or other jurisdiction
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!4601 COLLEGE BOULEVARD, SUITE 300
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EURONET WORLDWIDE INC10Q
11/10/2008NO TITLE$ PART I?FINANCIAL INFORMATION ~
$
ITEM 1. FINANCIAL STATEMENTS
~
4,ITEM 2. MANAGEMENT?S DISCUSSION AND ANALYSIS~
F80OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS8
0ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
~
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!PART II?OTHER INFORMATION~
!ITEM 1. LEGAL PROCEEDINGS~
ITEM 1A. RISK FACTORS~
7/ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES~
AND USE OF PROCEEDSITEM 6. EXHIBITS~
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EURONET WORLDWIDE INC10Q
11/10/2008NO TITLE
As of
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11/10/2008IAConsolidated Statements of Income and Comprehensive Income (Loss)
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EURONET WORLDWIDE INC10Q
11/10/2008IAConsolidated Statements of Income and Comprehensive Income (Loss) ' Nine Months Ended September 30,
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities (in thousands) September 30, 2008 December 31, 2007
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities~
/'Through the EFT Processing Segment, the 4 ,Company processes transactions for a network
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities
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11/10/2008D<Accounting for derivative instruments and hedging activities
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities Total Assets as of
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities % Fair Value Measurements as of
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EURONET WORLDWIDE INC10Q
11/10/2008D<Accounting for derivative instruments and hedging activities ?3+In connection with contracts with financial 3 +institutions in the EFT Processing Segment,
.
&the Company is responsible for damages3+to ATMs and theft of ATM network cash that,3+generally, is not recorded on the Company?s
7
/Consolidated Balance Sheet. As of September 30,1)2008, the balance of ATM network cash for;3which the Company was responsible was approximately5$310 million. The Company maintains insurance+#policies to mitigate this exposure; ?5In connection with the license of proprietary.&systems to customers, Euronet provides7/certain warranties and infringement indemnities0(to the licensee, which generally warrant91that such systems do not infringe on intellectual0(property owned by third parties and that.&the systems will perform in accordance"with their specifications; ?5Euronet has entered into purchase and service.&agreements with vendors and consulting/'agreements with providers of consulting/'services, pursuant to which the CompanyDleYMA4~cI<y# !"#$%&'()*+,./0123456789:;<=>? / 'has agreed to indemnify certain of such!!!.!&vendors and consultants, respectively,"""/"'against thirdparty claims arising from###1#)the Company?s use of the vendor?s product$$$4$,or the services of the vendor or consultant;%& &?&8&0In connection with acquisitions and dispositions''','$of subsidiaries, operating units and(((0((business assets, the Company has entered)))2)*into agreements containing indemnification***4*,provisions, which can be generally described+++7+/as follows: (i) in connection with acquisitions,,,/,'made by Euronet, the Company has agreed3+to indemnify the seller against thirdparty.../.'claims made against the seller relating///,/$to the subject subsidiary, operating00030+unit or asset and arising after the closing11121*of the transaction, and (ii) in connection22222*with dispositions made by Euronet, Euronet33313)has agreed to indemnify the buyer against44404(damages incurred by the buyer due to the555/5'buyer?s reliance on representations and66666.warranties relating to the subject subsidiary,77707(operating unit or business assets in the88858disposition agreement if such representations999,9$or warranties were untrue when made;:; ;?;0;(Euronet has entered into agreements with<<<.<&certain third parties, including banks===1=)that provide fiduciary and other services>>>5>to Euronet or to the Company?s benefit plans.???.?&Under such agreements, the Company hasD
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EURONET WORLDWIDE INC10Q
11/10/2008RJCOMPANY OVERVIEW, GEOGRAPHIC LOCATIONS AND PRINCIPAL PRODUCTS AND SERVICES ?2*An EFT Processing Segment, which processes 1 )transactions for a network of 10,384 ATMs
.
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2solutions consisting of ATM network participation,4,outsourced ATM and POS management solutions,%credit and debit card outsourcing and0(electronic recharge services for prepaid6.mobile airtime via ATMs. Through this segment,80we also offer a suite of integrated EFT software,$solutions for electronic payment and%transaction delivery systems. ?4,A Prepaid Processing Segment, which provides.&distribution of prepaid mobile airtime1)and other prepaid products and collection.&services for various prepaid products,/'cards and services in the U.S., Europe,1)Africa, Asia Pacific and the Middle East.6.Including terminals operated by unconsolidated;3subsidiaries, we operate a network of approximately2*409,000 POS terminals providing electronic3+processing of prepaid mobile airtime topupDhlWK?3)vcMC>0 !"#$%&'()*+,./01234 7 /services in the U.S., Europe, and Asia Pacific.!" "?"0"(A Money Transfer Segment, which provides###.#&global money transfer and bill payment$$$4$,services through a sending network of agents%%%%%and Companyowned stores primarily in&&&0&(North America, the Caribbean, Europe and'''0'(Asia Pacific, disbursing money transfers(((/('through a worldwide payer network. Bill))).)&payment services are offered primarily***9*1in the U.S. The Money Transfer Segment originates++++%and terminates transactions through a,,,2,*network of approximately 73,000 locations,6.which include sending agents and Companyowned.....&stores, and an extensive payer network////across 100 countries.01$2____________________________13)Created by Morningstar Document Research.04(http://documentresearch.morningstar.com/.~<5.w"j=PF0*8X>
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NO TITLENO TITLE (1)NO TITLE (2)!Consolidated Statements of Inco!Consolidated Statements of (1)!Accounting for derivative instr!Accounting for derivative i (1)!Accounting for derivative i (2)!Accounting for derivative i (3)!Accounting for derivative i (4)!Accounting for derivative i (5)!Accounting for derivative i (6)!Accounting for derivative i (7)!Accounting for derivative i (8)!Accounting for derivative i (9)!Accounting for derivative (10)!Accounting for derivative (11)!Accounting for derivative (12)!COMPANY OVERVIEW GEOGRAPHIC LOCOPPORTUNITIES AND CHALLE (1)Money Transfer Segment 151 Money Transfer Segment 151 (1)!SEGMENT SUMMARY RESULTS OF OPER!SEGMENT SUMMARY RESULTS OF (1)EFT PROCESSING SEGMENTPREPAID PROCESSING SEGMENTMONEY TRANSFER SEGMENTMONEY TRANSFER SEGMENT (1)CORPORATE SERVICESCorporate operating expenses!Inflation and functional curren!A prolonged economic slowdown o!A prolonged economic slowdo (1)NO TITLE (3)U }$ }$}$ }8
4
EURONET WORLDWIDE INC10Q
11/10/2008$OPPORTUNITIES AND CHALLENGES ?4,the impact of competition by banks and other . &ATM operators and service providers in
#
our current target markets; ?3+the demand for our ATM outsourcing services
&
in our current target markets; ?3+the ability to develop products or services+#to drive increases in transactions; ?3+the expansion of our various business lines7/in markets where we operate and in new markets; ?4,the entrance into additional card acceptance1)and ATM management agreements with banks; ?/'the ability to obtain required licenses/'in markets we intend to enter or expand services; ?4,the availability of financing for expansion; ?/'the ability to efficiently install ATMs2*contracted under newly awarded outsourcingD2 lymacWE+i]ui !"#$%&'()*+,./0123 agreements;!" "?"/"'the ability to renew existing contracts####at profitable rates;$% %?%1%)the ability to expand and sign additional&&&/&'customers for the crossborder merchant'''*'"processing and acquiring business;() )?)2)*the successful entry into the card issuing***%*and outsourcing business; and+, ,?,4,,the continued development and implementation2*of our software products and their ability...0.(to interact with other leading products./0$1____________________________12)Created by Morningstar Document Research.03(http://documentresearch.morningstar.com/,a`ZN?3'=PF0*8X>
@332211
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7
EURONET WORLDWIDE INC10Q
11/10/2008$OPPORTUNITIES AND CHALLENGES ?/'the ability to negotiate new agreements / 'in additional markets with mobile phone
/
'operators, agent financial institutionsand retailers;
?
1
)the ability to use existing expertise and/'relationships with mobile operators and#retailers to our advantage; ?80the continuation of the trend towards conversion1)from scratch card solutions to electronic/'processing solutions for prepaid mobile0(airtime among mobile phone users and the.&continued use of thirdparty providers1)such as ourselves to supply this service; ?0(the development of mobile phone networks0(in these markets and the increase in the%number of mobile phone users; ?1)the overall pace of growth in the prepaidmobile phone market; ?3+our market share of the retail distributionD lyma [` OJ4= !"#$%&'()*+,./0123456 capacity;!" "?"3"+the level of commission that is paid to the####%various intermediaries in the prepaid$$$*$"mobile airtime distribution chain;%& &?&1&)our ability to add new and differentiated'''5'prepaid products in addition to those offered((((by mobile operators;)* *?*6*.the ability to take advantage of crossselling++++%opportunities with the Money Transfer,,,3,+Segment, including providing money transfer/'services through our prepaid locations;....and/0 0?010)the availability of financing for further1111
expansion.23$4____________________________15)Created by Morningstar Document Research.06(http://documentresearch.morningstar.com/2 _
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EURONET WORLDWIDE INC10Q
11/10/2008$Money Transfer Segment #151; ?0(the continued growth in worker migration % and employment opportunities;
?0(the mitigation of economic and political/'factors that have had an adverse impact
2
*on money transfer volumes, such as changes3+in the economic sectors in which immigrants0(work and the developments in immigrationpolicies in the U.S.; ?2*the continuation of the trend of increased1)use of electronic money transfer and bill0(payment services among immigrant workers3+and the unbanked population in our markets; ?;3the ability to maintain our agent and correspondent networks; ?6.the ability to offer our products and services/'or develop new products and services at%competitive prices to drive increasesin transactions; ?0(the expansion of our services in marketsD lymaVJF:.&z: !"#$%&'() , $where we operate and in new markets;!" "?""%the ability to strengthen our brands;#$ $?$9$1our ability to fund working capital requirements;%&$'____________________________1()Created by Morningstar Document Research.0)(http://documentresearch.morningstar.com/J>=PF0*8X>
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EURONET WORLDWIDE INC10Q
11/10/2008$Money Transfer Segment #151; ?/'our ability to maintain compliance with 8 0the regulatory requirements of the jurisdictions
/
'in which we operate or plan to operate; ?6.the ability to take advantage of crossselling
1
)opportunities with the Prepaid Processing,$Segment, including providing prepaid0(services through RIA?s stores and agents
worldwide; ?/'the ability to leverage our banking and1)merchant/retailer relationships to expand.&money transfer corridors to Europe and%Asia, including high growth corridors2*to Central and Eastern European countries; ?1)the availability of financing for furtherexpansion; and ?/'our ability to continue to successfully0(integrate RIA with our other operations.$____________________________D: lyma RF:D@B6z !1 )Created by Morningstar Document Research.0!(http://documentresearch.morningstar.com/=PF0*8X>
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EURONET WORLDWIDE INC10Q
11/10/2008%SEGMENT SUMMARY RESULTS OF OPERATIONS
Revenues for the Three
Revenues for the Nine
Months Ended September
Months Ended September
~
z
YearoverYear Change~
zYearoverYear Change
Increase
IncreaseIncreaseIncrease%
(dollar amounts in thousands)
~
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~
^
Amount
Percent
~
b
~
^
Amount
PercentEFT Processing~
"R~
~
25%~
u ~
ʔ~
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.
~
~
&Z
15%~
jL~
K~
12%Money Transfer~
ޡ~
E
~
\
11%~
t
~
vR~
"65%
Total~
!~
~
a
16%~
60~
2'~
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EURONET WORLDWIDE INC10Q
11/10/2008%SEGMENT SUMMARY RESULTS OF OPERATIONS
Operating Income (Loss)
Operating Income (Loss)
for the Three Months
!
for the Nine Months Ended
Ended September 30,
YearoverYear Change
September 30,YearoverYear Change
Increase
IncreaseIncrease
(Decrease)
(Decrease)
(Decrease)
Increase%(dollar amounts in thousands)~
b~
^
Amount
Percent~
b~
^AmountPercentEFT Processing~
~
2 ~
(12%)~
¬~
~
&10%Prepaid Processing~
~
~
"
21%~
~
~
:J16%Money Transfer~
B1~
J5
~
(8%)~
w~
N=~
j:95%
Total~
^w~
j
~
Z
4%~
z=~
ڒ~
19%
Corporate services~
~
Z
~
(6%)~
~
'~
46%
Total~
B%~
^ ~
7%~
F~
~
G10%
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EURONET WORLDWIDE INC10Q
11/10/2008EFT PROCESSING SEGMENT
Three Months Ended
Nine Months Ended
September 30,
YearoverYear Change
September 30,
YearoverYear Change
Increase
IncreaseIncreaseIncrease
(Decrease)
(Decrease)
(Decrease)
(Decrease)%
(dollar amounts in thousands)
~
b
~
^
Amount
Percent
~
b
~
^
Amount
PercentTotal revenues~
"R~
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25%~
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Operating expenses:
Direct operating costs~
B~
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~
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j~
<~
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:
4%~
~
n~
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e~
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~
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99%~
~
~
:?37%%Depreciation and amortization~
P~
*A
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23%~
~
~
*24%
Total operating expenses~
"~
~
N
35%~
6~
~
.29%
Operating income~
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(12%)~
¬~
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&10%
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B~
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EURONET WORLDWIDE INC10Q
11/10/2008"PREPAID PROCESSING SEGMENT
Three Months Ended
Nine Months Ended
September 30,
YearoverYear Change
September 30,
YearoverYear Change
Increase
IncreaseIncreaseIncrease%(dollar amounts in thousands)~
b~
^
Amount
Percent~
b~
^AmountPercent
Total revenues
~
.
~
~
&Z
15%
~
jL
~
K
~
12%
Operating expenses:
Direct operating costs~
jT~
Z4
~
16%~
~
~
*12%Salaries and benefits~
x~
n
~
2
9%~
K~
@~
n
4%+#Selling, general and administrative~
X~
>L
~
17%~
~
~
11%%Depreciation and amortization~
B~
B
~
1%~
n~
"~
N
6%
Total operating expenses~
h ~
R1
~
7
15%~
f3~
~
12%
Operating income~
~
~
"
21%~
~
~
:J16%
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EURONET WORLDWIDE INC10Q
11/10/2008MONEY TRANSFER SEGMENT
As Reported
Yearover
Three Months Ended
Nine Months EndedYear
September 30,
YearoverYear Change
September 30,Change
Increase
Increase
(Decrease)
(Decrease)Increase%(dollar amounts in thousands)~
b~
^
Amount
Percent~
b~
^AmountTotal revenues~
ޡ~
E ~
\
11%~
t
~
vR~
"
Operating expenses:
Direct operating costs~
V~
~
4%~
@~
`~
Salaries and benefits~
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~
R%
22%~
2Q~
^K~
+#Selling, general and administrative~
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i
~
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~
~~
%Depreciation and amortization~
J~
A
~
14%~
~
6~
W
Total operating expenses~
p~
~
`
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~
*~
Operating income~
B1~
J5 ~
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w~
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EURONET WORLDWIDE INC10Q
11/10/2008MONEY TRANSFER SEGMENT
Nine Months Ended
September 30,
YearoverYear Change
Increase
Increase%(dollar amounts in thousands)~
b~
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Amount
Percent
(Pro Forma)Total revenues~
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Operating expenses:
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EURONET WORLDWIDE INC10Q
11/10/2008CORPORATE SERVICES
Three Months Ended
Nine Months Ended
September 30,
YearoverYear Change
September 30,
YearoverYear Change
Increase
Increase
(Decrease)
(Decrease)IncreaseIncrease%
(dollar amounts in thousands)
~
b
~
^
Amount
Percent
~
b
~
^
Amount
PercentSalaries and benefits~
7~
= ~
(10%)~
ƻ~
Μ~
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~
&
11%~
q~
>3~
=121%%Depreciation and amortization~
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J
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(23%)~
^~
.~
276%
Total operating expenses~
R~
W ~
v
(6%)~
6;~
6~
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EURONET WORLDWIDE INC10Q
11/10/2008$Corporate operating expenses
Three Months Ended
Nine Months Ended
September 30,
YearoverYear Change
September 30,
YearoverYear Change%(dollar amounts in thousands)~
b~
^
Amount
Percent~
b~
^AmountPercentInterest income~
)~
:? ~
(35%)~
N~
~
(32%)
Interest expense
~
ޠ
~
n
~
r
(18%)
~
j
~
~
1%4,Income (loss) from unconsolidated affiliates~
~
~
n/m~
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