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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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to
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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þ
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Accelerated filer
|
o
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Non-accelerated filer
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o
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||
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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
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As of
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September 30,
2020 |
December 31,
2019 |
||||||
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(unaudited)
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ASSETS
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|||||
Current assets:
|
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|||||
Cash and cash equivalents
|
$
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$
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|
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ATM cash
|
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|
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|||
Restricted cash
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|||
Settlement assets
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Trade accounts receivable, net of credit losses of $
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Prepaid expenses and other current assets
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Total current assets
|
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|
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Operating right of use lease assets
|
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Property and equipment, net of accumulated depreciation of $
|
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|
|||
Goodwill
|
|
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|
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Acquired intangible assets, net of accumulated amortization of $
|
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Other assets, net of accumulated amortization of $
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Total assets
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$
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$
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LIABILITIES AND EQUITY
|
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|||||
Current liabilities:
|
|
|
|||||
Settlement obligations
|
$
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|
|
$
|
|
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|
Trade accounts payable
|
|
|
|
|
|||
Accrued expenses and other current liabilities
|
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Current portion of operating lease liabilities
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Short-term debt obligations and current maturities of long-term debt obligations
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Income taxes payable
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Deferred revenue
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Total current liabilities
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Debt obligations, net of current portion
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Operating lease obligations, net of current portion
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Deferred income taxes
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Other long-term liabilities
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Total liabilities
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Equity:
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|||||
Euronet Worldwide, Inc. stockholders’ equity:
|
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|||||
Preferred Stock, $
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|||
Common Stock, $
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|||
Additional paid-in-capital
|
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|
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Treasury stock, at cost,
|
(
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) |
(
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)
|
|||
Retained earnings
|
|
|
|
|
|||
Accumulated other comprehensive loss
|
(
|
) |
(
|
)
|
|||
Total Euronet Worldwide, Inc. stockholders’ equity
|
|
|
|
|
|||
Noncontrolling interests
|
|
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|
||||
Total equity
|
|
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|||
Total liabilities and equity
|
$
|
|
|
$
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|||||||||||||
|
2020
|
2019
|
|
|
2020
|
|
|
|
2019
|
|
|||||
Revenues
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
Operating expenses:
|
|||||||||||||||
Direct operating costs
|
|
|
|
|
|
|
|
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|
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|
|||
Salaries and benefits
|
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|
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|
|||
Selling, general and administrative
|
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|
|||
Goodwill and acquired intangible assets impairment
|
|
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|
|||
Depreciation and amortization
|
|
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|
|||
Total operating expenses
|
|
|
|
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|
|||
Operating income (loss)
|
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(
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|
|
|||
Other income (expense):
|
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|
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|
|||||
Interest income
|
|
|
|
|
|
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|
|||
Interest expense
|
(
|
) |
(
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)
|
|
|
(
|
) |
|
|
(
|
) | |||
Loss on early retirement of debt
|
|
|
|
|
|
|
|
|
|
(
|
) | ||||
Foreign currency exchange loss, net
|
(
|
) |
(
|
) |
|
|
(
|
) |
|
|
(
|
) | |||
Other gain (loss)
|
|
|
|
|
|
|
|
|
|
(
|
) | ||||
Other expense, net
|
(
|
) |
(
|
)
|
|
|
(
|
) |
|
|
(
|
) | |||
Income (loss) before income taxes
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|||
Income tax expense
|
(
|
) |
(
|
)
|
|
|
(
|
) |
|
|
(
|
) | |||
Net income (loss)
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|||
Net (income) loss attributable to noncontrolling interests
|
(
|
) |
|
||||||||||||
Net income (loss) attributable to Euronet Worldwide, Inc.
|
$
|
|
|
$
|
|
|
|
$
|
(
|
) |
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share attributable to Euronet Worldwide, Inc. stockholders:
|
|||||||||||||||
Basic
|
$
|
|
|
$
|
|
|
|
$
|
(
|
) |
|
$
|
|
|
|
Diluted
|
$
|
|
|
$
|
|
|
|
$
|
(
|
) |
|
$
|
|
|
|
Weighted average shares outstanding:
|
|||||||||||||||
Basic
|
|
|
|
|
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|
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|
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|
|||
Diluted
|
|
|
|
|
|
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|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|||||||||||||
|
2020
|
2019
|
|
|
2020
|
|
|
|
2019
|
|
|||||
Net income (loss)
|
$
|
|
|
$
|
|
|
|
$
|
(
|
) |
|
$
|
|
|
|
Translation adjustment
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) | |||
Comprehensive income (loss)
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|||
Comprehensive (income) loss attributable to noncontrolling interests
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|||
Comprehensive income (loss) attributable to Euronet Worldwide, Inc.
|
$
|
|
|
$
|
|
|
|
$
|
(
|
) |
|
$
|
|
|
Number of
Shares Outstanding
|
|
Common
Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
|||||||||||
Balance as of December 31, 2018
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
||||
Net income
|
|||||||||||||||
Other comprehensive loss
|
|||||||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
(
|
)
|
|||||
Share-based compensation
|
|
|
|
||||||||||||
Issuance of convertible notes, net of tax
|
|
|
|
||||||||||||
Repurchase and conversions of convertible notes, net of tax
|
|
|
|
(
|
) | ||||||||||
Balance as of March 31, 2019
|
|
|
|
|
|
|
(
|
)
|
|||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
(
|
) | ||||
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|||||
Redemptions and conversions of convertible notes, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of June 30, 2019
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
) | ||||
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
(
|
) | ||||
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|||||
Repurchase of shares
|
(
|
) |
|
|
|
|
|
|
|
(
|
) | ||||
Other
|
|
|
|
|
|
|
(
|
) |
|
|
|||||
Balance as of September 30, 2019
|
|
|
|
|
|
|
|
|
|
(
|
) |
Number of
Shares Outstanding
|
Common
Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
||||||||||||
Balance as of December 31, 2019
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
||||
Net income (loss)
|
|||||||||||||||
Other comprehensive loss
|
|||||||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
(
|
)
|
||||
Share-based compensation
|
|
|
|
||||||||||||
Repurchase of shares
|
(
|
)
|
|
(
|
)
|
||||||||||
Balance as of March 31, 2020
|
|
|
|
|
|
|
(
|
)
|
|||||||
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of June 30, 2020
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
) | ||||
Net income
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
||||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
|
|||||
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance as of September 30, 2020
|
|
|
|
|
|
|
|
|
|
(
|
Retained Earnings
|
Accumulated Other
Comprehensive Loss
|
Noncontrolling
Interests
|
Total
|
|||||||||||||
Balance as of December 31, 2018
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
||||
Net income
|
|
|
|
|
|
|
|
|
|
|||||||
Other comprehensive loss
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||
Stock issued under employee stock plans
|
|
|
|
|||||||||||||
Share-based compensation
|
|
|
|
|||||||||||||
Issuance of convertible notes, net of tax
|
|
|
|
|||||||||||||
Repurchases and conversions of convertible notes
|
|
(
|
)
|
|||||||||||||
Balance as of March 31, 2019
|
|
|
(
|
)
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Redemptions and conversions of convertible notes
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of June 30, 2019
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
||||
Net income (loss)
|
|
|
|
|
|
|
(
|
|
|
|
|
|||||
Other comprehensive loss
|
|
|
|
|
(
|
|
(
|
|
|
(
|
|
|||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Repurchase of shares
|
|
|
|
|
|
|
|
|
|
(
|
|
|||||
Other
|
|
|
|
|
|
|
|
|
|
(
|
|
|||||
Balance as of September 30, 2019
|
$
|
|
|
$
|
(
|
$
|
(
|
|
$
|
|
|
Retained Earnings
|
Accumulated Other
Comprehensive Loss
|
Noncontrolling
Interests
|
Total
|
|||||||||||||
Balance as of December 31, 2019
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
||||
Net income (loss)
|
|
|
|
|
(
|
)
|
|
|
||||||||
Other comprehensive loss
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||
Stock issued under employee stock plans
|
|
|
||||||||||||||
Share-based compensation
|
|
|
||||||||||||||
Repurchase of shares
|
(
|
)
|
||||||||||||||
Balance as of March 31, 2020
|
|
|
(
|
)
|
(
|
)
|
|
|
||||||||
Net (loss) income
|
|
(
|
|
|
|
|
|
|
|
|
(
|
|
||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of June 30, 2020
|
|
|
|
|
(
|
) |
|
(
|
) |
|
|
|
||||
Net income
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock issued under employee stock plans
|
|
|
|
|
|
|
|
|
|
|
||||||
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance as of September 30, 2020
|
$
|
|
|
$
|
(
|
$
|
|
$
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
2020
|
2019
|
|||||
Net (loss) income
|
$
|
(
|
) |
$
|
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|||||||
Depreciation and amortization
|
|
|
|
|
|||
Share-based compensation
|
|
|
|
|
|||
Unrealized foreign exchange loss, net
|
|
|
|
||||
Deferred income taxes
|
(
|
) |
|
|
|||
Goodwill and acquired intangible assets impairment
|
|
|
|
|
|||
Loss on early retirement of debt
|
|
|
|
|
|||
Accretion of convertible debt discount and amortization of debt issuance costs
|
|
|
|
|
|||
Changes in working capital, net of amounts acquired:
|
|
|
|||||
Income taxes payable, net
|
(
|
) |
|
|
|||
Trade accounts receivable
|
|
|
|
||||
Prepaid expenses and other current assets
|
(
|
) |
(
|
) | |||
Trade accounts payable
|
(
|
) |
(
|
)
|
|||
Deferred revenue
|
(
|
) |
|
|
|||
Accrued expenses and other current liabilities
|
|
|
|
|
|||
Changes in noncurrent assets and liabilities
|
(
|
) |
(
|
) | |||
Net cash provided by operating activities
|
|
|
|
|
|||
Cash flows from investing activities:
|
|
||||||
Acquisitions, net of cash acquired
|
(
|
) |
|
|
|||
Purchases of property and equipment
|
(
|
) |
(
|
)
|
|||
Purchases of other long-term assets
|
(
|
) |
(
|
)
|
|||
Other, net
|
|
|
|
|
|||
Net cash used in investing activities
|
(
|
) |
(
|
)
|
|||
Cash flows from financing activities:
|
|||||||
Proceeds from issuance of shares
|
|
|
|
|
|||
Repurchase of shares
|
(
|
) |
(
|
)
|
|||
Borrowings from revolving credit agreements
|
|
|
|
|
|||
Repayments of revolving credit agreements
|
(
|
) |
(
|
)
|
|||
Proceeds from long-term debt obligations
|
|
|
|
|
|||
Repayments of long-term debt obligations
|
|
|
(
|
)
|
|||
Net repayments from short-term debt obligations
|
(
|
) |
(
|
)
|
|||
Debt issuance costs
|
|
|
(
|
)
|
|||
Other, net
|
(
|
) |
(
|
)
|
|||
Net cash (used in) provided by financing activities
|
(
|
) |
|
|
|||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
|
|
(
|
) | |||
(Decrease) increase in cash and cash equivalents and restricted cash
|
(
|
) |
|
|
|||
Cash and cash equivalents and restricted cash at beginning of period
|
|
|
|
|
|||
Cash and cash equivalents and restricted cash at end of period
|
$
|
|
|
$
|
|
|
|
Supplemental disclosure of cash flow information:
|
|||||||
Interest paid during the period
|
$
|
|
|
$
|
|
|
|
Income taxes paid during the period
|
$
|
|
|
$
|
|
|
As of
|
||||||||
(in thousands)
|
September 30,
2020
|
December 31,
2019
|
||||||
Settlement assets:
|
||||||||
Settlement cash and cash equivalents
|
$
|
|
|
$
|
|
|
||
Settlement restricted cash
|
|
|
|
|
||||
Accounts receivable, net of credit losses
|
|
|
|
|
||||
Prepaid expenses and other current assets
|
|
|
|
|
||||
Total settlement assets
|
$
|
|
|
$
|
|
|
||
Settlement obligations:
|
||||||||
Trade account payables
|
$
|
|
|
$
|
|
|
||
Accrued expenses and other current liabilities
|
|
|
|
|
||||
Total settlement obligations
|
$
|
|
|
$
|
|
|
As of
|
||||||||||||||||
(in thousands)
|
September 30,
2020
|
December 31,
2019
|
September 30,
2019
|
December 31,
2018
|
||||||||||||
Cash and cash equivalents
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||
Restricted cash
|
|
|
|
|
|
|
|
|
||||||||
ATM cash
|
|
|
|
|
|
|
|
|
||||||||
Settlement cash and cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Settlement restricted cash
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Earnings (Loss) Per Share
|
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
|
|
|
|
|
|
|
|
|
|
|
|
Incremental shares from assumed exercise of stock options and vesting of restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Acquired
Intangible
Assets
|
Goodwill
|
Total
Intangible
Assets
|
|||||||||
Balance as of December 31, 2019
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Increases (decreases):
|
|
|
|
|||||||||
Acquisition
|
|
|
(
|
) |
|
|
||||||
Amortization
|
(
|
) |
|
|
(
|
) | ||||||
Impairment
|
(
|
) |
(
|
) |
(
|
) | ||||||
Other (primarily changes in foreign currency exchange rates)
|
(
|
) |
|
|
|
|
||||||
Balance as of September 30, 2020
|
$
|
|
|
$
|
|
|
$
|
|
|
Of the total goodwill balance of $
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 $
As of
|
||||||||
(in thousands)
|
September 30, 2020
|
December 31, 2019
|
||||||
Accrued expenses
|
$
|
|
|
$
|
|
|
||
Derivative liabilities
|
|
|
|
|
||||
Current portion of capital lease obligations
|
|
|
|
|
||||
Deferred income taxes
|
|
|
|
|
||||
Total
|
$
|
|
|
$
|
|
|
As of
|
||||||||
(in thousands)
|
September 30, 2020
|
December 31, 2019
|
||||||
Credit Facility:
|
||||||||
Revolving credit agreement
|
$
|
|
|
$
|
|
|
||
Convertible Debt:
|
||||||||
0.75% convertible notes, unsecured, due 2049
|
|
|
|
|
||||
1.375% Senior Notes, due 2026
|
|
|
|
|
||||
Other obligations
|
|
|
|
|
||||
Total debt obligations
|
|
|
|
|
||||
Unamortized debt issuance costs
|
(
|
) |
(
|
)
|
||||
Carrying value of debt
|
|
|
|
|
||||
Short-term debt obligations and current maturities of long-term debt obligations
|
(
|
) |
(
|
)
|
||||
Long-term debt obligations
|
$
|
|
|
$
|
|
|