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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                                                          For the transition period from

to
Commission File Number: 001-31648
EURONET WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware
74-2806888
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
11400 Tomahawk Creek Parkway, Suite 300
 
Leawood,
Kansas
66211
(Address of principal executive offices)
(Zip Code)
(913) 327-4200
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
EEFT
Nasdaq Global Select Market
1.375% Senior Notes due 2026
EEFT26
Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer 
þ

Accelerated filer 
o
Non-accelerated filer 
o

Smaller reporting company


Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No þ
On October 30, 2020, Euronet Worldwide, Inc. had 52,314,901 shares of Common Stock outstanding.
 

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Table of Contents

 

Page



PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited) 1

Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 1

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 2

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2020 and 2019 3

Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2020 and 2019 4

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 6

Notes to the Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23
Item 3. Quantitative and Qualitative Disclosures About Market Risk 42
Item 4.
Controls and Procedures 43
PART II—OTHER INFORMATION

Item 1. Legal Proceedings 43
Item 1A. Risk Factors 44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 44
Item 6. Exhibits 45

Signatures #

 

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(In thousands, except share and per share data)
 
As of
 
September 30,
2020
 
December 31,
2019
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,008,183

 
$
786,081

ATM cash
409,683

 
665,641

Restricted cash
14,204

 
34,301

Settlement assets
875,783

 
1,013,067

Trade accounts receivable, net of credit losses of $4,364 at September 30, 2020 and $3,892 at December 31, 2019
119,725

 
201,935

Prepaid expenses and other current assets
227,155

 
217,707

Total current assets
2,654,733

 
2,918,732

Operating right of use lease assets
161,629

 
377,543

Property and equipment, net of accumulated depreciation of $460,963 at September 30, 2020 and $410,243 at December 31, 2019
366,276

 
359,980

Goodwill
641,886

 
743,823

Acquired intangible assets, net of accumulated amortization of $161,371 at September 30, 2020 and $204,853 at December 31, 2019
123,577

 
141,847

Other assets, net of accumulated amortization of $52,458 at September 30, 2020 and $46,788 at December 31, 2019
147,255

 
115,741

Total assets
$
4,095,356

 
$
4,657,666

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Settlement obligations
$
875,783

 
$
1,013,067

Trade accounts payable
115,498

 
81,743

Accrued expenses and other current liabilities
312,604

 
294,557

Current portion of operating lease liabilities
52,120

 
127,353

Short-term debt obligations and current maturities of long-term debt obligations
884

 
6,089

Income taxes payable
25,231

 
52,583

Deferred revenue
55,779

 
58,588

Total current liabilities
1,437,899

 
1,633,980

Debt obligations, net of current portion
1,132,626

 
1,090,939

Operating lease obligations, net of current portion
106,475

 
241,977

Deferred income taxes
54,868

 
56,067

Other long-term liabilities
57,730

 
55,361

Total liabilities
2,789,598

 
3,078,324

Equity:
 
 
 
Euronet Worldwide, Inc. stockholders’ equity:
 
 
 
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued

 

Common Stock, $0.02 par value. 90,000,000 shares authorized; 62,955,214 issued at September 30, 2020 and 62,775,762 issued at December 31, 2019
1,259

 
1,256

Additional paid-in-capital
1,210,709

 
1,190,058

Treasury stock, at cost, 10,645,079 shares at September 30, 2020 and 8,554,908 shares at December 31, 2019
(703,604
)
 
(463,704
)
Retained earnings
942,920

 
1,016,554

Accumulated other comprehensive loss
(145,583
)
 
(164,890
)
Total Euronet Worldwide, Inc. stockholders’ equity
1,305,701

 
1,579,274

Noncontrolling interests
57
 
68

Total equity
1,305,758

 
1,579,342

Total liabilities and equity
$
4,095,356

 
$
4,657,666

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in thousands, except share and per share data)








 
Three Months Ended
September 30,

Nine Months Ended
September 30,
 
2020
 
2019


2020



2019

Revenues 
$
664,351

 
$
786,986


$
1,776,061


$
2,056,362

Operating expenses:
 
 
 








Direct operating costs
407,598

 
405,081



1,117,065



1,152,725

Salaries and benefits
101,577

 
101,354



293,769



292,699

Selling, general and administrative
55,225

 
58,715



169,333



160,704

Goodwill and acquired intangible assets impairment
1,467





106,021




Depreciation and amortization
32,412

 
27,846



93,470



82,253

Total operating expenses
598,279

 
592,996



1,779,658



1,688,381

Operating income (loss)
66,072

 
193,990



(3,597)



367,981

Other income (expense):
 
 
 








Interest income
139

 
568



867



1,424

Interest expense
(9,477
)
 
(9,093
)


(27,594
)


(27,321
)
Loss on early retirement of debt

 





(9,831
)
Foreign currency exchange loss, net
(1,368
)
 
(10,967
)


(17,679
)


(7,880
)
Other gain (loss)

 


728



(4
)
Other expense, net
(10,706
)
 
(19,492
)


(43,678
)


(43,612
)
Income (loss) before income taxes
55,366

 
174,498



(47,275
)


324,369

Income tax expense
(15,051
)
 
(36,957
)


(26,423
)


(84,244
)
Net income (loss)
40,315

 
137,541



(73,698
)


240,125

Net (income) loss attributable to noncontrolling interests
(66
)
 
66


64


178
Net income (loss) attributable to Euronet Worldwide, Inc.
$
40,249

 
$
137,607


$
(73,634
)

$
240,303

 
 
 
 








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








Basic
$
0.77

 
$
2.53


$
(1.40
)

$
4.52

Diluted
$
0.76

 
$
2.46


$
(1.40
)

$
4.40

 
 
 
 








Weighted average shares outstanding:
 
 
 








Basic
52,294,522

 
54,449,256



52,712,030



53,180,850

Diluted
53,201,971

 
55,972,061



52,712,030



54,622,219


See accompanying notes to the unaudited consolidated financial statements.


EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in thousands)








 
Three Months Ended
September 30,

Nine Months Ended
September 30,
 
2020
 
2019


2020



2019

Net income (loss)
$
40,315

 
$
137,541


$
(73,698
)

$
240,125

Translation adjustment
47,006

 
(56,863
)


19,360



(60,887
)
Comprehensive income (loss)
87,321

 
80,678



(54,338
)


179,238

Comprehensive (income) loss attributable to noncontrolling interests
(133
)
 
126



11



255

Comprehensive income (loss) attributable to Euronet Worldwide, Inc.
$
87,188

 
$
80,804


$
(54,327
)

$
179,493

See accompanying notes to the unaudited consolidated financial statements.


EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in thousands, except share data)
 
 
Number of
Shares Outstanding
 

Common
Stock
 
Additional
Paid-in Capital
 
Treasury
Stock
Balance as of December 31, 2018
 
51,819,998

 
$
1,198

 
$
1,104,264

 
$
(391,551
)
Net income
 
 

 

 

 
 


 
 


Other comprehensive loss
 
 

 

 

 
 


 
 


Stock issued under employee stock plans
 
130,136

 

3

 
5,194

 

(1,756
)
Share-based compensation
 
 

 

 

 

4,490

 
 


Issuance of convertible notes, net of tax
 
 

 

 

 

71,660

 
 


Repurchase and conversions of convertible notes, net of tax
 
6

 

 

 

(42,917
)
 
 


Balance as of March 31, 2019
 
51,950,140

 

1,201

 

1,142,691

 

(393,307
)
Net income (loss)















Other comprehensive income















Stock issued under employee stock plans

41,856







1,740



(46
)
Share-based compensation









6,003





Redemptions and conversions of convertible notes, net of tax

2,488,243



50



22,400





Balance as of June 30, 2019

54,480,239


$
1,251


$
1,172,834


$
(393,353
)
Net income (loss)















Other comprehensive income















Stock issued under employee stock plans

35,437



1



1,131



(178
)
Share-based compensation









5,456





Repurchase of shares

(275,181
)










(39,751
)
Other









(8
)




Balance as of September 30, 2019

54,240,495



1,252



1,179,413



(433,282
)
 
 
Number of
Shares Outstanding
 
Common
Stock
 
Additional
Paid-in Capital
 
Treasury
Stock
Balance as of December 31, 2019
 
54,220,854

 
$
1,256

 
$
1,190,058

 
$
(463,704
)
Net income (loss)
 
 

 
 


 
 


 
 


Other comprehensive loss
 
 

 
 


 
 


 
 


Stock issued under employee stock plans
 
80,519

 

1

 

1,701

 

(249
)
Share-based compensation
 
 

 
 


 

6,338

 
 


Repurchase of shares
 
(2,095,683
)
 
 


 
 


 

(239,763
)
Balance as of March 31, 2020
 
52,205,690

 

1,257

 

1,198,097

 

(703,716
)
Net (loss) income















Other comprehensive income















Stock issued under employee stock plans

82,841



2



3,763



59

Share-based compensation









3,125





Balance as of June 30, 2020

52,288,531


$
1,259


$
1,204,985


$
(703,657
)
Net income















Other comprehensive income















Stock issued under employee stock plans

21,604







687



53

Share-based compensation









5,037





Balance as of September 30, 2020

52,310,135



1,259



1,210,709



(703,604)


See accompanying notes to the unaudited consolidated financial statements.


EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(Unaudited, in thousands)
 
 
 Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
Noncontrolling
Interests
 
Total
Balance as of December 31, 2018
 
$
669,805

 
$
(151,043
)
 
$
169

 
$
1,232,842

Net income
 

34,543

 
 


 

36

 

34,579

Other comprehensive loss
 
 


 

(16,156
)
 

(29
)
 

(16,185
)
Stock issued under employee stock plans
 
 


 
 


 
 


 

3,441

Share-based compensation
 
 


 
 


 
 


 

4,490

Issuance of convertible notes, net of tax
 
 


 
 


 
 


 

71,660

Repurchases and conversions of convertible notes
 
 


 
 


 
 


 

(42,917
)
Balance as of March 31, 2019
 

704,348

 

(167,199
)
 

176

 

1,287,910

Net income (loss)


68,153







(148
)


68,005

Other comprehensive income






12,149



12



12,161

Stock issued under employee stock plans














1,694

Share-based compensation














6,003

Redemptions and conversions of convertible notes














22,450

Balance as of June 30, 2019


772,501



(155,050
)


40



1,398,223

Net income (loss)


137,607







(66)



137,541

Other comprehensive loss






(56,803)



(60)



(56,863)

Stock issued under employee stock plans














954

Share-based compensation














5,456

Repurchase of shares














(39,751)

Other














(8)

Balance as of September 30, 2019

$
910,108


$
(211,853)


$
(86)


$
1,445,552

 
 
 Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
Noncontrolling
Interests
 
Total
Balance as of December 31, 2019
 
$
1,016,554

 
$
(164,890
)
 
$
68

 
$
1,579,342

Net income (loss)
 

1,921

 
 


 

(201
)
 
1,720

Other comprehensive loss
 
 


 

(59,777
)
 

(41
)
 
(59,818
)
Stock issued under employee stock plans
 
 


 
 


 
 


 
1,453

Share-based compensation
 
 


 
 


 
 


 
6,338

Repurchase of shares
 
 


 
 


 
 


 
(239,763
)
Balance as of March 31, 2020
 

1,018,475

 

(224,667
)
 

(174
)
 

1,289,272

Net (loss) income


(115,804)







71



(115,733)

Other comprehensive income






32,145



27



32,172

Stock issued under employee stock plans














3,824

Share-based compensation














3,125

Balance as of June 30, 2020


902,671



(192,522
)


(76
)


1,212,660

Net income


40,249







66



40,315

Other comprehensive income






46,939



67



47,006

Stock issued under employee stock plans














740

Share-based compensation














5,037

Balance as of September 30, 2020

$
942,920


$
(145,583)


$
57


$
1,305,758


See accompanying notes to the unaudited consolidated financial statements.


EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in thousands)
 
Nine Months Ended
September 30,
 
2020
 
2019
Net (loss) income
$
(73,698
)
 
$
240,125

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
93,470

 
82,253

Share-based compensation
14,500

 
15,949

Unrealized foreign exchange loss, net
17,679

 
7,880
Deferred income taxes
(5,011
)
 
13,313

Goodwill and acquired intangible assets impairment
106,021



Loss on early retirement of debt


9,831

Accretion of convertible debt discount and amortization of debt issuance costs
13,996

 
13,385

Changes in working capital, net of amounts acquired:

 

Income taxes payable, net
(26,625
)
 
15,363

Trade accounts receivable
232,380

 
4,719
Prepaid expenses and other current assets
(25,917
)
 
(26,292
)
Trade accounts payable
(127,291
)
 
(62,078
)
Deferred revenue
(4,540
)
 
5

Accrued expenses and other current liabilities
25,110

 
58,559

Changes in noncurrent assets and liabilities
(19,658
)
 
(8,633
)
Net cash provided by operating activities
220,416

 
364,379

Cash flows from investing activities:
 
 

Acquisitions, net of cash acquired
(451
)
 
1

Purchases of property and equipment
(71,396
)
 
(100,443
)
Purchases of other long-term assets
(5,968
)
 
(7,276
)
Other, net
742

 
3,317

Net cash used in investing activities
(77,073
)
 
(104,401
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of shares
6,564

 
8,297

Repurchase of shares
(240,838
)
 
(37,260
)
Borrowings from revolving credit agreements
2,018,600

 
2,365,698

Repayments of revolving credit agreements
(2,018,600
)
 
(2,580,871
)
Proceeds from long-term debt obligations

 
1,194,900

Repayments of long-term debt obligations

 
(446,702
)
Net repayments from short-term debt obligations
(5,032
)
 
(18,793
)
Debt issuance costs

 
(18,810
)
Other, net
(4,763
)
 
(4,827
)
Net cash (used in) provided by financing activities
(244,069
)
 
461,632

Effect of exchange rate changes on cash and cash equivalents and restricted cash
32,042

 
(57,807
)
(Decrease) increase in cash and cash equivalents and restricted cash
(68,684
)
 
663,803

Cash and cash equivalents and restricted cash at beginning of period
1,817,379

 
1,130,952

 
 
 
 
Cash and cash equivalents and restricted cash at end of period
$
1,748,695

 
$
1,794,755

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Interest paid during the period
$
16,653

 
$
10,614

Income taxes paid during the period
$
50,300

 
$
55,025

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

(1) GENERAL


Organization
Euronet Worldwide, Inc. (the “Company” or “Euronet”) was established as a Delaware corporation on December 13, 1997 and succeeded Euronet Holding N.V. as the group holding company, which was founded and established in 1994. Euronet is a leading electronic payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive automated teller machine (“ATM”), point-of-sale (“POS”), card outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment products, and global money transfer services.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the consolidated financial position and the results of operations, comprehensive income, changes in equity and cash flows for the interim periods. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2019, including the notes thereto, set forth in the Company’s 2019 Annual Report on Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include computing income taxes, estimating the useful lives and potential impairment of long-lived assets and goodwill, as well as allocating the purchase price to assets acquired and liabilities assumed in acquisitions and revenue recognition. Actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2020.
Seasonality
Euronet’s Electronic Funds Transfer ("EFT") Processing Segment normally experiences its heaviest demand for dynamic currency conversion ("DCC") services during the third quarter of the fiscal year, normally coinciding with the tourism season. Additionally, the EFT Processing and epay Segments are normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year.
COVID-19 (coronavirus)
The outbreak of the COVID-19 (coronavirus) pandemic has resulted in varying degrees of travel restrictions and shelter-in-place and other social distancing orders in most of the countries where the Company operates during the three and nine months ended September 30, 2020. Although the majority of these orders went into effect in late February 2020 or early March 2020, new orders are being implemented, or reinstated, as the pandemic spreads around the globe and there is a resurgence of infections. The EFT Segment has experienced declines in certain transaction volumes due to these restrictions, especially high-margin cross-border transactions. The epay Segment has experienced the impacts of consumer movement restrictions in certain markets, while other markets have been positively impacted where the Company has a higher mix of digital distribution or a higher concentration of retailers that are deemed essential and have remained open during the pandemic.
In response to the COVID-19 driven impacts, the Company has implemented several key measures to offset the impact across the business, including renegotiating certain third party contracts, reducing travel, decreasing planned 2020 capital expenditures, and expanding ATM winterizations (placing them in dormancy status, terminating, or re-negotiating) in more sites and more markets.


(2) RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS


In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital. Under this ASU, certain debt instruments with embedded conversion features will be accounted for as a single liability measured at its amortized cost. Additionally, this ASU eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments. The new guidance is effective for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2020-06 will have on the consolidated financial statements.
 
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for contracts, hedging relationships, and other transactions affected by reference rate reform due to the anticipated cessation of LIBOR on or before December 31, 2021. This guidance is effective from March 12, 2020 through December 31, 2022 and could impact the accounting for LIBOR provisions in the Company’s unsecured credit agreement. The Company does not expect that the adoption of this guidance will have a significant impact on its consolidated financial statements.

The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), as of January 1, 2020, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. The adoption of this standard did not have a significant impact on the Company's consolidated financial statements and related disclosures.

(3) SETTLEMENT ASSETS AND OBLIGATIONS

Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled prepaid transactions. The Company records corresponding settlement obligations relating to amounts payable. Settlement assets consist of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. Cash received by Euronet agents and merchants generally becomes available to the Company within two weeks after initial receipt by the business partner. Receivables from business partners represent funds collected by such business partners that are in transit to the Company.

Settlement obligations consist of money transfers and accounts payable to agents and content providers. Money transfer accounts payable represent amounts to be paid to transferees when they request funds. Most agents typically settle with transferees first then obtain reimbursement from the Company. Money order accounts payable represent amounts not yet presented for payment. Due to the agent funding and settlement process, accounts payable to agents represent amounts due to agents for money transfers that have not been settled with transferees.

 
 
As of
(in thousands)
 
September 30,
2020
 
December 31,
2019
Settlement assets:
 
 
 
 
Settlement cash and cash equivalents
 
$
272,467

 
$
282,188

Settlement restricted cash
 
44,158

 
49,168

Accounts receivable, net of credit losses
 
434,828

 
574,410

Prepaid expenses and other current assets
 
124,330

 
107,301

Total settlement assets
 
$
875,783

 
$
1,013,067

Settlement obligations:
 
 
 
 
Trade account payables
 
$
346,391

 
$
504,667

Accrued expenses and other current liabilities
 
529,392

 
508,400

Total settlement obligations
 
$
875,783

 
$
1,013,067


A portion of the Company's credit losses are recorded in the accounts receivable within settlement assets. The balance of credit losses related to accounts receivable within settlement assets was $29.9 million and $24.0 million as of September 30, 2020 and December 31, 2019, respectively.


The table below reconciles cash and cash equivalents, restricted cash, ATM cash, settlement cash and cash equivalents, and settlement restricted cash as presented within "Cash and cash equivalents and restricted cash" in the Consolidated Statement of Cash Flows.
 
 
As of
(in thousands)
 
September 30,
2020
 
December 31,
2019
 
September 30,
2019
 
December 31,
2018
Cash and cash equivalents
 
$
1,008,183

 
$
786,081

 
$
878,492

 
$
385,031

Restricted cash
 
14,204

 
34,301

 
21,844

 
31,237

ATM cash
 
409,683

 
665,641

 
603,176

 
395,378

Settlement cash and cash equivalents
 
272,467

 
282,188

 
249,181

 
273,948

Settlement restricted cash
 
44,158

 
49,168

 
42,062

 
45,358

Cash and cash equivalents and restricted cash at end of period
 
$
1,748,695

 
$
1,817,379

 
$
1,794,755

 
$
1,130,952


(4) STOCKHOLDERS' EQUITY

Earnings (Loss) Per Share

Basic earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for the potential dilution of options to purchase the Company's Common Stock, assumed vesting of restricted stock and the assumed conversion of the Company's convertible debt, if such conversion would be dilutive.

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








Three Months Ended
September 30,

Nine Months Ended
September 30,
 
2020


2019


2020
 
2019
Computation of diluted weighted average shares outstanding:






 
 
 
Basic weighted average shares outstanding
52,294,522


54,449,256


52,712,030

 
53,180,850

Incremental shares from assumed exercise of stock options and vesting of restricted stock
907,449


1,522,805



 
1,441,369

Diluted weighted average shares outstanding
53,201,971


55,972,061


52,712,030

 
54,622,219


The table includes all stock options and restricted stock that are dilutive to the Company's weighted average common shares outstanding during the period. The calculation of diluted earnings (loss) per share excludes stock options or shares of restricted stock that are anti-dilutive to the Company’s weighted average common shares outstanding of approximately 1,122,000 and 1,887,000 for the three and nine months ended September 30, 2020, respectively, and approximately 751,000 and 841,000 for the three and nine months ended September 30, 2019, respectively.
The Company issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. The Company's Convertible Notes currently have a settlement feature requiring the Company upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of the Company's common stock or a combination thereof, at the Company's option. The Company has stated its intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium. Accordingly, the Convertible Notes were included in the calculation of diluted earnings (loss) per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price. The Convertible Notes would only have a dilutive effect if the market price per share of common stock exceeds the conversion price of $188.73 per share. The market price per share per share of common stock was $91.10 on September 30, 2020 and $146.30 on September 30, 2019, therefore, according to ASC Topic 260, Earnings per Share (“ASC 260”), there was no dilutive effect of the assumed conversion of the debentures for the three and nine months ended September 30, 2020 and 2019. See Note 8, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes. 
Share repurchases
The Company's Board of Directors had authorized a stock repurchase program allowing Euronet to repurchase up to $375 million in value or 10.0 million shares of stock through March 31, 2020. On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of $120 million in value of the Company's common stock through March 11, 2021. On February 26, 2020, the Company put a repurchase program in place to repurchase up to $250 million in value, but not more than 5.0 million shares of common stock through February 28, 2022. For the three months ended September 30, 2020, there were no repurchases of stock under the repurchase programs and for the nine months ended September 30, 2020, the Company repurchased $239.8 million in value of Euronet common stock under the repurchase programs. Repurchases under either current program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded a foreign currency translation gain of $47.0 million and $19.4 million for the three and nine months ended September 30, 2020, respectively, and a loss of $56.9 million and $60.9 million for the three and nine months ended September 30, 2019, respectively. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three and nine months ended September 30, 2020 and 2019.

(5) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

A summary of acquired intangible assets and goodwill activity for the nine months ended September 30, 2020 is presented below:
(in thousands)
 
Acquired
Intangible
Assets
 
Goodwill
 
Total
Intangible
Assets
Balance as of December 31, 2019
 
$
141,847

 
$
743,823

 
$
885,670

Increases (decreases):
 
 
 
 
 
 
Acquisition
 
926

 
(474
)
 
452

Amortization
 
(17,020
)
 

 
(17,020
)
Impairment

(1,467
)

(104,554
)

(106,021
)
Other (primarily changes in foreign currency exchange rates)
 
(709
)
 
3,091

 
2,382

Balance as of September 30, 2020
 
$
123,577

 
$
641,886

 
$
765,463

Of the total goodwill balance of $641.9 million as of September 30, 2020$388.5 million relates to the Money Transfer Segment, $131.9 million relates to the epay Segment and the remaining $121.5 million relates to the EFT Processing Segment. Estimated amortization expense on intangible assets with finite lives as of September 30, 2020, is expected to total $5.6 million for the remainder of 2020, $22.0 million for 2021, $20.9 million for 2022, $16.1 million for 2023, $9.6 million for 2024 and $6.5 million for 2025.

2020 Impairment Charges

The COVID-19 pandemic and subsequent mitigation efforts, which include global business shutdowns, the closing of borders and the implementation of mandatory social distancing requirements, has created an unprecedented disruption to our business that began in March 2020. These mitigation efforts coupled with the negative economic impacts to the tourism industry caused a decline in revenues and changes to our forecasts.  The Company tests for goodwill impairment on an annual basis in the fourth quarter each year and whenever events or circumstances dictate an interim impairment test is required. The Company determined the totality of these events constituted a triggering event that required us to perform an interim goodwill impairment assessment as of June 1, 2020. The Company concluded a triggering event had occurred for six reporting units, resulting in quantitative impairment tests. Three reporting units are within the EFT segment, two reporting units are within the Money Transfer segment, and one reporting unit is within the epay segment.

 

Under the quantitative impairment test, the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. The Company uses weighted results from the discounted cash flow model ("DCF model") and guideline public company method ("Market Approach model") to estimate the current fair value of its reporting units when testing for impairment, as management believes forecasted cash flows and EBITDA are the best indicators of such fair value.  A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including sales volumes and gross margins, tax rates, capital spending, discount rates and working capital changes. Most of these assumptions vary significantly among the reporting units. Significant assumptions in the Market Approach model are actual and projected EBITDA, selected market multiple, and the estimated control premium. If the carrying value of the reporting unit exceeds its fair value, a goodwill impairment loss equal to such excess would be recognized. The DCF Model and Market Approach Model utilize Level 3 inputs in the fair value hierarchy as they include unobservable inputs that require significant management assumptions.



The Company completed an interim goodwill impairment test during the second quarter of 2020. It determined, after performing a quantitative review of six reporting units, that the fair value of three of the reporting units exceeded the respective carrying amounts. For the remaining three reporting units, the quantitative test indicated that the fair value of each of the reporting units was less than the respective carrying amounts. As a result, the Company recorded a non-cash goodwill impairment charge of $104.6 million with respect to the xe, Innova and Pure Commerce reporting units. $21.9 million of the impairment charge was included within the EFT Segment, and $82.7 million of the impairment charge was included in the Money Transfer Segment. We have and will continue to evaluate our goodwill and long-lived assets for potential triggering events as conditions warrant.

Determining the fair value of reporting units requires significant management judgment in estimating future cash flows and assessing potential market and economic conditions. It is reasonably possible that the Company’s operations will not perform as expected, or that the estimates or assumptions included in the 2019 annual impairment test and 2020 interim impairment test could change, which may result in the Company recording material non-cash impairment charges during the year in which these changes take place. As additional information regarding the impact of the COVID-19 pandemic on the Company's business, including intangible assets, becomes available, the impacts to cash flows and the related impact on recovery of intangible assets will be evaluated.
During the third quarter of 2020, the Company recorded a $1.5 million non-cash impairment charge for acquired intangible assets, specifically related to customer lists in the xe reporting unit.


(6) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:
 
 
As of
(in thousands)
 
September 30, 2020
 
December 31, 2019
Accrued expenses 
 
$
264,575

 
$
246,699

Derivative liabilities
 
41,563

 
41,935

Current portion of capital lease obligations
 
6,466

 
5,919

Deferred income taxes
 

 
4

Total
 
$
312,604

 
$
294,557


(7) UNEARNED REVENUES

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

(8) DEBT OBLIGATIONS


Debt obligations consist of the following: 
 
 
As of
(in thousands)
 
September 30, 2020
 
December 31, 2019
Credit Facility:
 
 
 
 
Revolving credit agreement
 
$

 
$

Convertible Debt:
 
 
 
 
0.75% convertible notes, unsecured, due 2049
 
448,344

 
436,965

 
 
 
 
 
1.375% Senior Notes, due 2026
 
703,200

 
673,440

 
 
 
 
 
Other obligations
 
942

 
6,215

 
 
 
 
 
Total debt obligations
 
1,152,486

 
1,116,620

Unamortized debt issuance costs
 
(18,976
)
 
(19,592
)
Carrying value of debt
 
1,133,510