eeft-20210331.htm
no false DE false true 0001029199 --12-31 Large Accelerated Filer 2021 Q1 false KS NASDAQ NASDAQ false false Included in Net cash provided by operating activities on the Company's Consolidated Statements of Cash Flows. 0001029199 srt:ConsolidationEliminationsMember 2020-01-01 2020-03-31 0001029199 srt:ConsolidationEliminationsMember 2021-01-01 2021-03-31 0001029199 eeft:OtherGeographicLocationsMember 2020-01-01 2020-03-31 0001029199 eeft:OtherGeographicLocationsMember 2021-01-01 2021-03-31 0001029199 srt:AsiaPacificMember 2020-01-01 2020-03-31 0001029199 srt:AsiaPacificMember 2021-01-01 2021-03-31 0001029199 srt:NorthAmericaMember 2020-01-01 2020-03-31 0001029199 srt:EuropeMember 2020-01-01 2020-03-31 0001029199 srt:NorthAmericaMember 2021-01-01 2021-03-31 0001029199 srt:EuropeMember 2021-01-01 2021-03-31 0001029199 eeft:RiaOperationsAndCorporateOperationsMember us-gaap:ForeignExchangeContractMember 2021-01-01 2021-03-31 0001029199 eeft:Due2049Member 2020-01-01 2020-03-31 0001029199 eeft:Due2049Member 2021-01-01 2021-03-31 0001029199 eeft:Due2049Member 2019-03-18 0001029199 us-gaap:UnsecuredDebtMember 2018-10-17 0001029199 srt:MaximumMember us-gaap:BaseRateMember 2021-01-01 2021-03-31 0001029199 srt:MinimumMember us-gaap:BaseRateMember 2021-01-01 2021-03-31 0001029199 srt:MaximumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2021-01-01 2021-03-31 0001029199 srt:MinimumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2021-01-01 2021-03-31 0001029199 eeft:RiaOperationsAndCorporateOperationsMember us-gaap:ForeignExchangeContractMember 2020-01-01 2020-03-31 0001029199 eeft:UnallocatedAmountToSegmentIntersegmentEliminationsAndOtherMember 2020-01-01 2020-03-31 0001029199 eeft:MoneyTransferSegmentMember eeft:OtherGeographicLocationsMember 2020-01-01 2020-03-31 0001029199 eeft:EpaySegmentMember eeft:OtherGeographicLocationsMember 2020-01-01 2020-03-31 0001029199 eeft:EftProcessingSegmentMember eeft:OtherGeographicLocationsMember 2020-01-01 2020-03-31 0001029199 eeft:MoneyTransferSegmentMember srt:AsiaPacificMember 2020-01-01 2020-03-31 0001029199 eeft:EpaySegmentMember srt:AsiaPacificMember 2020-01-01 2020-03-31 0001029199 eeft:MoneyTransferSegmentMember 2020-01-01 2020-03-31 0001029199 eeft:EpaySegmentMember 2020-01-01 2020-03-31 0001029199 eeft:EftProcessingSegmentMember srt:AsiaPacificMember 2020-01-01 2020-03-31 0001029199 eeft:MoneyTransferSegmentMember srt:NorthAmericaMember 2020-01-01 2020-03-31 0001029199 eeft:EpaySegmentMember srt:NorthAmericaMember 2020-01-01 2020-03-31 0001029199 eeft:EftProcessingSegmentMember srt:NorthAmericaMember 2020-01-01 2020-03-31 0001029199 eeft:MoneyTransferSegmentMember srt:EuropeMember 2020-01-01 2020-03-31 0001029199 eeft:EpaySegmentMember srt:EuropeMember 2020-01-01 2020-03-31 0001029199 eeft:EftProcessingSegmentMember 2020-01-01 2020-03-31 0001029199 eeft:EftProcessingSegmentMember srt:EuropeMember 2020-01-01 2020-03-31 0001029199 eeft:MoneyTransferSegmentMember eeft:OtherGeographicLocationsMember 2021-01-01 2021-03-31 0001029199 eeft:EpaySegmentMember eeft:OtherGeographicLocationsMember 2021-01-01 2021-03-31 0001029199 eeft:EftProcessingSegmentMember eeft:OtherGeographicLocationsMember 2021-01-01 2021-03-31 0001029199 eeft:UnallocatedAmountToSegmentIntersegmentEliminationsAndOtherMember 2021-01-01 2021-03-31 0001029199 2021-01-01 2021-03-31 0001029199 eeft:MoneyTransferSegmentMember 2021-01-01 2021-03-31 0001029199 eeft:EpaySegmentMember 2021-01-01 2021-03-31 0001029199 eeft:EftProcessingSegmentMember 2021-01-01 2021-03-31 0001029199 2020-01-01 2020-03-31 0001029199 eeft:ShareRepurchasePlanMember 2020-02-26 0001029199 eeft:ShareRepurchasePlanMember 2019-03-11 0001029199 eeft:A1.375SeniorNotesdue2026Member 2021-01-01 2021-03-31 0001029199 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001029199 2019-12-31 0001029199 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001029199 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-03-31 0001029199 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001029199 us-gaap:TreasuryStockMember 2020-01-01 2020-03-31 0001029199 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001029199 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001029199 us-gaap:NoncontrollingInterestMember 2021-01-01 2021-03-31 0001029199 us-gaap:NoncontrollingInterestMember 2019-12-31 0001029199 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001029199 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001029199 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001029199 us-gaap:RetainedEarningsMember 2019-12-31 0001029199 us-gaap:TreasuryStockMember 2021-01-01 2021-03-31 0001029199 us-gaap:TreasuryStockMember 2019-12-31 0001029199 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001029199 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001029199 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001029199 us-gaap:CommonStockMember 2019-12-31 0001029199 eeft:MoneyTransferSegmentMember srt:AsiaPacificMember 2021-01-01 2021-03-31 0001029199 eeft:EpaySegmentMember srt:AsiaPacificMember 2021-01-01 2021-03-31 0001029199 eeft:EftProcessingSegmentMember srt:AsiaPacificMember 2021-01-01 2021-03-31 0001029199 eeft:MoneyTransferSegmentMember srt:NorthAmericaMember 2021-01-01 2021-03-31 0001029199 eeft:EpaySegmentMember srt:NorthAmericaMember 2021-01-01 2021-03-31 0001029199 eeft:EftProcessingSegmentMember srt:NorthAmericaMember 2021-01-01 2021-03-31 0001029199 eeft:MoneyTransferSegmentMember srt:EuropeMember 2021-01-01 2021-03-31 0001029199 eeft:EpaySegmentMember srt:EuropeMember 2021-01-01 2021-03-31 0001029199 eeft:EftProcessingSegmentMember srt:EuropeMember 2021-01-01 2021-03-31 0001029199 eeft:EftProcessingSegmentMember srt:ConsolidationEliminationsMember 2021-01-01 2021-03-31 0001029199 eeft:EpaySegmentMember srt:ConsolidationEliminationsMember 2021-01-01 2021-03-31 0001029199 eeft:MoneyTransferSegmentMember srt:ConsolidationEliminationsMember 2021-01-01 2021-03-31 0001029199 eeft:EftProcessingSegmentMember srt:ConsolidationEliminationsMember 2020-01-01 2020-03-31 0001029199 eeft:EpaySegmentMember srt:ConsolidationEliminationsMember 2020-01-01 2020-03-31 0001029199 eeft:MoneyTransferSegmentMember srt:ConsolidationEliminationsMember 2020-01-01 2020-03-31 0001029199 srt:MaximumMember eeft:RiaOperationsAndCorporateOperationsMember us-gaap:ForeignExchangeContractMember 2021-01-01 2021-03-31 0001029199 2019-03-18 0001029199 us-gaap:TradingRevenueMember eeft:XeOperationsMember us-gaap:ForeignExchangeContractMember 2021-01-01 2021-03-31 0001029199 us-gaap:TradingRevenueMember eeft:XeOperationsMember us-gaap:ForeignExchangeContractMember 2020-01-01 2020-03-31 0001029199 currency:EUR eeft:SeniorNotes1.375PercentDue2026Member 2019-05-22 0001029199 eeft:SeniorNotes1.375PercentDue2026Member 2019-05-22 0001029199 2018-10-14 2018-10-17 0001029199 2019-03-05 2019-03-18 0001029199 us-gaap:CommonStockMember 2020-03-31 0001029199 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001029199 us-gaap:TreasuryStockMember 2020-03-31 0001029199 2021-03-31 0001029199 us-gaap:CommonStockMember 2021-03-31 0001029199 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001029199 us-gaap:TreasuryStockMember 2021-03-31 0001029199 2020-12-31 0001029199 us-gaap:RetainedEarningsMember 2021-03-31 0001029199 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001029199 us-gaap:NoncontrollingInterestMember 2021-03-31 0001029199 us-gaap:RetainedEarningsMember 2020-12-31 0001029199 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001029199 us-gaap:NoncontrollingInterestMember 2020-12-31 0001029199 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001029199 us-gaap:NoncontrollingInterestMember 2020-03-31 0001029199 2020-03-31 0001029199 us-gaap:RetainedEarningsMember 2020-03-31 0001029199 us-gaap:CommonStockMember 2020-12-31 0001029199 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001029199 us-gaap:TreasuryStockMember 2020-12-31 0001029199 us-gaap:GoodwillMember 2021-03-31 0001029199 eeft:MoneyTransferSegmentMember 2021-03-31 0001029199 eeft:EpaySegmentMember 2021-03-31 0001029199 eeft:EftProcessingSegmentMember 2021-03-31 0001029199 2020-01-01 2020-12-31 0001029199 us-gaap:LineOfCreditMember 2021-03-31 0001029199 eeft:SwinglineLoansMember 2021-03-31 0001029199 eeft:ForeignSwinglineLoansMember 2021-03-31 0001029199 eeft:Due2049Member 2021-03-31 0001029199 eeft:Due2026Member 2021-03-31 0001029199 eeft:XeOperationsMember us-gaap:ForeignExchangeContractMember 2021-03-31 0001029199 us-gaap:ConvertibleNotesPayableMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0001029199 us-gaap:SeniorNotesMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0001029199 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-03-31 0001029199 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0001029199 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-03-31 0001029199 us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001029199 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001029199 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0001029199 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001029199 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001029199 currency:EUR 2021-03-31 0001029199 eeft:Due2049Member 2020-12-31 0001029199 eeft:Due2026Member 2020-12-31 0001029199 eeft:EftProcessingSegmentMember 2021-03-31 0001029199 eeft:EpaySegmentMember 2021-03-31 0001029199 eeft:MoneyTransferSegmentMember 2021-03-31 0001029199 eeft:UnallocatedAmountToSegmentIntersegmentEliminationsAndOtherMember 2021-03-31 0001029199 eeft:EftProcessingSegmentMember 2020-12-31 0001029199 eeft:EpaySegmentMember 2020-12-31 0001029199 eeft:MoneyTransferSegmentMember 2020-12-31 0001029199 eeft:UnallocatedAmountToSegmentIntersegmentEliminationsAndOtherMember 2020-12-31 0001029199 us-gaap:CreditFacilityDomain 2021-03-31 0001029199 us-gaap:GuaranteeTypeOtherMember 2021-03-31 0001029199 us-gaap:PerformanceGuaranteeMember 2021-03-31 0001029199 us-gaap:IndemnificationGuaranteeMember 2021-03-31 0001029199 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2021-03-31 0001029199 eeft:AccruedExpensesAndOtherCurrentLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2021-03-31 0001029199 eeft:RiaOperationsAndCorporateOperationsMember us-gaap:ForeignExchangeContractMember currency:USD 2021-03-31 0001029199 eeft:RiaOperationsAndCorporateOperationsMember us-gaap:ForeignExchangeContractMember currency:EUR 2021-03-31 0001029199 eeft:SeniorNotes1.375PercentDue2026Member 2021-03-31 0001029199 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-12-31 0001029199 eeft:AccruedExpensesAndOtherCurrentLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-12-31 0001029199 currency:USD eeft:RiaOperationsAndCorporateOperationsMember us-gaap:ForeignExchangeContractMember 2020-12-31 0001029199 currency:EUR eeft:RiaOperationsAndCorporateOperationsMember us-gaap:ForeignExchangeContractMember 2020-12-31 0001029199 eeft:XeOperationsMember us-gaap:ForeignExchangeContractMember 2020-12-31 0001029199 eeft:PiraeusBankMerchantAcquiringMember 2021-03-01 2021-03-31 0001029199 2021-05-03 xbrli:shares xbrli:pure iso4217:EUR iso4217:USD iso4217:USD xbrli:shares eeft:segment
 

 

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 March 31, 2021
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 May 3, 2021, Euronet Worldwide, Inc. had 52,797,354 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 March 31, 2021 and December 31, 2020 1

Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 2

Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020 3

Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2021 and 2020 4

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 6

Notes to the Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 21
Item 3. Quantitative and Qualitative Disclosures About Market Risk 39
Item 4.
Controls and Procedures 40
PART II—OTHER INFORMATION

Item 1. Legal Proceedings 40
Item 1A. Risk Factors 41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41
Item 6. Exhibits 42

Signatures 43

 

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(In thousands, except share and per share data)
 
As of
 
March 31,
2021
 
December 31,
2020
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,145,406

 
$
1,420,255

ATM cash
339,883

 
411,054

Restricted cash
2,897

 
3,334

Settlement assets
960,313

 
1,140,875

Trade accounts receivable, net of credit losses of $4,717 and $5,926
111,384

 
117,517

Prepaid expenses and other current assets
253,308

 
272,900

Total current assets
2,813,191

 
3,365,935

Operating right of use lease assets
171,852

 
162,074

Property and equipment, net of accumulated depreciation of $485,467 and $490,429
357,272

 
378,441

Goodwill
653,128

 
665,821

Acquired intangible assets, net of accumulated amortization of $178,219 and $175,210
114,768

 
121,883

Other assets, net of accumulated amortization of $57,118 and $55,710
240,623

 
232,557

Total assets
$
4,350,834

 
$
4,926,711

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Settlement obligations
$
960,313

 
$
1,140,875

Trade accounts payable
125,007

 
147,593

Accrued expenses and other current liabilities
361,139

 
404,021

Current portion of operating lease liabilities
51,461

 
52,436

Short-term debt obligations and current maturities of long-term debt obligations
743

 
797

Income taxes payable
29,323

 
36,359

Deferred revenue
74,737

 
73,360

Total current liabilities
1,602,723

 
1,855,441

Debt obligations, net of current portion
1,143,026

 
1,437,589

Operating lease obligations, net of current portion
120,260

 
106,502

Deferred income taxes
39,708

 
37,875

Other long-term liabilities
39,390

 
43,401

Total liabilities
2,945,107

 
3,480,808

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;  shares issued 63,429,190 and 63,366,010
1,268

 
1,267

Additional paid-in-capital
1,240,273

 
1,228,446

Treasury stock, at cost, shares issued 10,632,705 and 10,631,961
(703,514
)
 
(703,032
)
Retained earnings
1,004,490

 
1,013,155

Accumulated other comprehensive loss
(137,059
)
 
(94,214
)
Total Euronet Worldwide, Inc. stockholders’ equity
1,405,458

 
1,445,622

Noncontrolling interests
269
 
281

Total equity
1,405,727

 
1,445,903

Total liabilities and equity
$
4,350,834

 
$
4,926,711

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
March 31,

 
2021
 
2020

Revenues 
$
652,670

 
$
583,907


Operating expenses:
 
 
 

Direct operating costs
434,516

 
359,456


Salaries and benefits
115,668

 
101,240


Selling, general and administrative
58,776

 
60,793


Depreciation and amortization
33,261

 
30,816


Total operating expenses
642,221

 
552,305


Operating income
10,449

 
31,602


Other income (expense):
 
 
 

Interest income
182

 
567


Interest expense
(9,189
)
 
(9,233
)

Foreign currency exchange loss, net
(4,032
)
 
(18,806
)

Other gains, net
31

 
31

Other expense, net
(13,008
)
 
(27,441
)

(Loss) income before income taxes
(2,559
)
 
4,161


Income tax expense
(6,062
)
 
(2,441
)

Net (loss) income
(8,621
)
 
1,720


Net (income) loss attributable to noncontrolling interests
(44
)
 
201

Net (loss) income attributable to Euronet Worldwide, Inc.
$
(8,665
)
 
$
1,921


 
 
 
 

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

Basic
$
(0.16
)
 
$
0.04


Diluted
$
(0.16
)
 
$
0.04


 
 
 
 

Weighted average shares outstanding:
 
 
 

Basic
52,762,845

 
53,607,104


Diluted
52,762,845

 
54,779,321



See accompanying notes to the unaudited consolidated financial statements.


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

 
Three Months Ended
March 31,

 
2021
 
2020

Net (loss) income
$
(8,621
)
 
$
1,720


Translation adjustment
(42,901
)
 
(59,818
)

Comprehensive loss
(51,522
)
 
(58,098
)

Comprehensive loss attributable to noncontrolling interests
12
 
242


Comprehensive loss attributable to Euronet Worldwide, Inc.
$
(51,510
)
 
$
(57,856
)

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, 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
)

 
 
Number of
Shares Outstanding
 
Common
Stock
 
Additional
Paid-in Capital
 
Treasury
Stock
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
 
62,436

 

1

 

3,335

 

(482
)
Share-based compensation
 
 

 
 


 

8,492

 
 


Balance as of March 31, 2021
 
52,796,485

 

1,268

 

1,240,273

 

(703,514
)

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, 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


 
 
 Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
Noncontrolling
Interests
 
Total
Balance as of December 31, 2020
 
$
1,013,155

 
$
(94,214
)
 
$
281

 
$
1,445,903

Net (loss) income
 

(8,665
)
 
 


 

44
 
(8,621
)
Other comprehensive loss
 
 


 

(42,845
)
 

(56
)
 
(42,901
)
Stock issued under employee stock plans
 
 


 
 


 
 


 
2,854

Share-based compensation
 
 


 
 


 
 


 
8,492

 Balance as of March 31, 2021
 

1,004,490

 

(137,059
)
 

269
 

1,405,727


See accompanying notes to the unaudited consolidated financial statements.


EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in thousands)
 
Three Months Ended
March 31,
 
2021
 
2020
Net (loss) income
$
(8,621
)
 
$
1,720

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
33,261

 
30,816

Share-based compensation
8,492

 
6,338

Unrealized foreign exchange loss, net
4,032

 
18,806
Deferred income taxes
2,374
 
(2,043
)
Accretion of convertible debt discount and amortization of debt issuance costs
4,979

 
4,616

Changes in working capital, net of amounts acquired:

 

Income taxes payable, net
(5,534
)
 
(10,454
)
Trade accounts receivable
148,697

 
300,063
Prepaid expenses and other current assets
29,551
 
(119,648
)
Trade accounts payable
(220,439
)
 
(126,242
)
Deferred revenue
3,738
 
4,119

Accrued expenses and other current liabilities
11,234

 
14,811

Changes in noncurrent assets and liabilities
(14,409)
 
(17,018
)
Net cash (used in) provided by operating activities
(2,645
)
 
105,884

Cash flows from investing activities:
 
 

Acquisitions, net of cash acquired
 
475

Purchases of property and equipment
(16,393
)
 
(30,392
)
Purchases of other long-term assets
(2,212
)
 
(2,046
)
Other, net
380

 
357

Net cash used in investing activities
(18,225
)
 
(31,606
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of shares
3,670

 
1,700

Repurchase of shares
(808
)
 
(240,530
)
Borrowings from revolving credit agreements
707,100

 
805,500

Repayments of revolving credit agreements
(977,500
)
 
(805,500
)
Net repayments from short-term debt obligations
(32
)
 
(2,163
)
Other, net
(1,641
)
 
(1,651
)
Net cash used in financing activities
(269,211
)
 
(242,644
)
Effect of exchange rate changes on cash and cash equivalents and restricted cash
(53,188
)
 
(59,260
)
Decrease in cash and cash equivalents and restricted cash
(343,269
)
 
(227,626
)
Cash and cash equivalents and restricted cash at beginning of period
2,099,508

 
1,817,379

 
 
 
 
Cash and cash equivalents and restricted cash at end of period
$
1,756,239

 
$
1,589,753

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Interest paid during the period
$
2,703

 
$
3,678

Income taxes paid during the period
$
11,160

 
$
16,064

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, 2020, including the notes thereto, set forth in the Company’s 2020 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, 2021.

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.

7



(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.

(3) PENDING ACQUISITION


In March 2021, the Company entered into an agreement to purchase the Piraeus Bank Merchant Acquiring business of Piraeus Bank for 300 million, or approximately $360 million. The proposed arrangement will include separate commercial agreements for a long-term strategic partnership with Piraeus Bank for collaborative product distribution, processing and customer referrals. The acquisition will expand the Company’s omnichannel payments strategy and position the Company in Greece’s growing market for merchant acquiring services. The closing is targeted for late 2021 and is subject to regulatory approvals, finalization of the commercial agreements, and customary closing conditions. The Company expects to finance the purchase price using cash on hand.


(4) SETTLEMENT ASSETS AND OBLIGATIONS

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)

March 31,
2021

December 31,
2020
Settlement assets:

 

 
Settlement cash and cash equivalents

$
209,853


$
188,191

Settlement restricted cash

58,200


76,674

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

478,209


641,955

Prepaid expenses and other current assets

214,051


234,055

Total settlement assets

$
960,313


$
1,140,875

Settlement obligations:

 

 
Trade account payables

$
356,612


$
571,175

Accrued expenses and other current liabilities

603,701


569,700

Total settlement obligations

$
960,313


$
1,140,875



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)
 
March 31,
2021
 
December 31,
2020
 
March 31,
2020
 
December 31,
2019
Cash and cash equivalents
 
$
1,145,406

 
$
1,420,255

 
$
709,521

 
$
786,081

Restricted cash
 
2,897

 
3,334

 
28,953

 
34,301

ATM cash
 
339,883

 
411,054

 
558,580

 
665,641

Settlement cash and cash equivalents
 
209,853

 
188,191

 
256,456

 
282,188

Settlement restricted cash
 
58,200

 
76,674

 
36,243

 
49,168

Cash and cash equivalents and restricted cash at end of period
 
$
1,756,239

 
$
2,099,508

 
$
1,589,753

 
$
1,817,379


(5) STOCKHOLDERS' EQUITY

(Loss) Earnings Per Share

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

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


Three Months Ended
March 31,

 
2021


2020

Computation of diluted weighted average shares outstanding:





Basic weighted average shares outstanding
52,762,845


53,607,104

Incremental shares from assumed exercise of stock options and vesting of restricted stock


1,172,217

Diluted weighted average shares outstanding
52,762,845


54,779,321


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 (loss) earnings per share excludes stock options or shares of restricted stock that are anti-dilutive to the Company’s weighted average common shares outstanding of approximately 2,437,000 and 886,000 for the three months ended March 31, 2021 and 2020, respectively.

The Company issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. 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 (loss) earnings per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price. The Convertible Notes would only have a dilutive effect if the market price per share of common stock exceeds the conversion price of $188.73 per share. The market price per share of common stock was $138.30 on March 31, 2021 and $85.72 on March 31, 2020, 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 months ended March 31, 2021 and 2020. See Note 9, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes. 


9


Share repurchases

On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized a repurchase program of $120 million in value of the Company's common stock through March 11, 2021. On February 26, 2020, the Company put a repurchase program in place to repurchase up to $250 million in value, but not more than 5.0 million shares of common stock through February 28, 2022. For the three months ended March 31, 2021, there were no repurchases of stock under the repurchase programs. Repurchases under the current program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded foreign currency translation losses of $42.9 million and $59.8 million for the three months ended March 31, 2021 and 2020, respectively. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three months ended March 31, 2021 and 2020.

(6) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

A summary of acquired intangible assets and goodwill activity for the three months ended March 31, 2021 is presented below:
(in thousands)
 
Acquired
Intangible
Assets
 
Goodwill
 
Total
Intangible
Assets
Balance as of December 31, 2020
 
$
121,883

 
$
665,821

 
$
787,704

Decreases:
 
 
 
 
 
 
Acquisition
 

 
 

Amortization
 
(5,789
)
 

 
(5,789
)
Foreign currency exchange rate changes
 
(1,326
)
 
(12,693
)
 
(14,019
)
Balance as of March 31, 2021
 
$
114,768

 
$
653,128

 
$
767,896

Of the total goodwill balance of $653.1 million as of March 31, 2021$398.0 million relates to the Money Transfer Segment, $132.3 million relates to the epay Segment and the remaining $122.8 million relates to the EFT Processing Segment. Estimated amortization expense on acquired intangible assets with finite lives as of March 31, 2021, is expected to total $17.0 million for the remainder of 2021, $21.5 million for 2022, $16.6 million for 2023, $9.8 million for 2024, $6.4 million for 2025 and $6.2 million for 2026.


(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:
 
 
As of
(in thousands)
 
March 31, 2021
 
December 31, 2020
Accrued expenses 
 
$
314,103

 
$
331,713

Derivative liabilities
 
41,219

 
65,905

Current portion of finance lease obligations
 
5,817

 
6,403

Total
 
$
361,139

 
$
404,021


(8) UNEARNED REVENUES

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

10



(9) DEBT OBLIGATIONS


Debt obligations consist of the following: 

 
 
As of
(in thousands)
 
March 31, 2021
 
December 31, 2020
Credit Facility:
 
 
 
 
Revolving credit agreement
 
$

 
$
270,400

Convertible Debt:
 
 
 
 
0.75% convertible notes, unsecured, due 2049
 
456,159

 
452,228

 
 
 
 
 
1.375% Senior Notes, due 2026
 
703,680

 
732,840

 
 
 
 
 
Other obligations
 
813

 
850

 
 
 
 
 
Total debt obligations
 
1,160,652

 
1,456,318

Unamortized debt issuance costs
 
(16,883
)
 
(17,932
)
Carrying value of debt
 
1,143,769

 
1,438,386

Short-term debt obligations and current maturities of long-term debt obligations
 
(743
)
 
(797
)
Long-term debt obligations
 
$
1,143,026

 
$
1,437,589


Credit Facility

On October 17, 2018, the Company entered into an unsecured revolving credit agreement (the "Credit Facility") for $1.0 billion that expires on October 17, 2023. Fees and interest on borrowings are based upon the Company's corporate credit rating and are based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over London Inter-Bank Offered Rate (“LIBOR”) or a margin over the base rate, as selected by the Company, with the applicable margin ranging from 1.125% to 2.0% (or 0.175% to 1.0% for base rate loans). The Credit Facility allows for borrowings in Australian dollars, British pounds sterling, Canadian dollars, Czech koruna, Danish krone, euro, Hungarian forints, Japanese yen, New Zealand dollars, Norwegian krone, Polish zlotys, Swedish krona, Swiss francs and U.S. dollars. The Credit Facility contains a $200 million sublimit for the issuance of letters of credit, a $50 million sublimit for U.S. dollar swingline loans, and a $90 million sublimit for certain foreign currencies swingline loans. The Credit Facility contains customary affirmative and negative covenants, events of default and financial covenants. The Company was in compliance with all debt covenants as of March 31, 2021.

Convertible Debt

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 accordance with ASC 470-20-30-27, proceeds from the issuance of convertible debt is allocated between debt and equity components so that debt is discounted to reflect the Company's nonconvertible debt borrowing rate. ASC 470-20-35-13 requires the debt discount to be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. The allocation resulted in an increase to additional paid-in capital of $99.7 million for the Convertible Notes.

Contractual interest expense for the Convertible Notes was $1.0 million for the three months ended March 31, 2021 and 2020. Accretion expense for the Convertible Notes was $3.9 million and $3.7 million for the three months ended March 31, 2021 and 2020, respectively. The effective interest rate was 4.4% for the three months ended March 31, 2021. As of March 31, 2021, the unamortized discount was $68.8 million and will be amortized through March 2025. 

1.375% Senior Notes due 2026

On May 22, 2019, the Company completed the sale of 600 million ($669.9 million) aggregate principal amount of Senior Notes that expire in 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 March 31, 2021, the Company has outstanding 600 million ($703.7 million) principal amount of the Senior Notes. In addition, the Company may redeem some or all of these notes on or after February 22, 2026 at their principal amount plus any accrued and unpaid interest.

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

(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
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 815primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates are 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. The Company had foreign currency forward contracts outstanding in the U.S. with a notional value of $120 million and $246 million as of March 31, 2021 and December 31, 2020, respectively. The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds sterling, euro and Mexican pesos.

12



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

Foreign currency exchange contracts - xe Operations

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 $18.5 million and $18.1 million for the three months ended March 31, 2021 and 2020, respectively. All of the derivative contracts used in the Company' s xe operations are economic hedges and are not designated as hedges under ASC 815The 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 amount of foreign currency derivative customer contracts held by the Company in its xe operations as of March 31, 2021 and December 31, 2020 was approximately $1.4 billion and $1.3 billion, respectively. The significant majority of customer contracts are written in major currencies such as the euro, U.S. dollar, British pounds sterling, Australian dollar and New Zealand dollar.

Balance Sheet Presentation

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
 
March 31, 2021
 
December 31, 2020
 
Balance Sheet Location
 
March 31, 2021
 
December 31, 2020
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current assets
 
$
49,390

 
$
80,879

 
Other current liabilities
 
$
(41,219
)
 
$
(65,905
)

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

Offsetting of Derivative Assets
 
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Consolidated Balance Sheet
 
 
As of March 31, 2021
 
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
 
$
49,390

 
$

 
$
49,390

 
$
(26,069
)
 
$
(4,243
)
 
$
19,078

 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives subject to a master netting arrangement or similar agreement
 
$
80,879

 
$

 
$
80,879

 
$
(44,893
)
 
$
(2,778
)
 
$
33,208


13



Offsetting of Derivative Liabilities

 
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Consolidated Balance Sheet
 
 
As of March 31, 2021
 
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
 
$
(41,219
)
 
$

 
$
(41,219
)
 
$
26,069

 
$
2,307

 
$
(12,843
)
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives subject to a master netting arrangement or similar agreement
 
$
(65,905
)
 
$

 
$
(65,905
)
 
$
44,893

 
$
12,272

 
$
(8,740
)

See Note 11, Fair Value Measurements, for the determination of the fair values of derivatives.

Income Statement Presentation

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

 
 
 
 
Amount of (Loss) Gain Recognized in Income on Derivative Contracts (a)
 
 
Location of (Loss) Gain Recognized in Income on Derivative Contracts
 
Three Months Ended
March 31,
(in thousands)
 
 
2021
 
2020
Foreign currency exchange contracts - Ria Operations
 
Foreign currency exchange (loss) gain, net
 
$
(2,468
)
 
$
1,019
(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 11, Fair Value Measurements, for the determination of the fair values of derivatives. 

(11) FAIR VALUE MEASUREMENTS


Fair value measurements used in the unaudited 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 transaction 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:
 
  • Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. 

  • Level 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.
14



The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis:
 
 
 
 
As of March 31, 2021
(in thousands)
 
Balance Sheet Classification
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current assets
 
$

 
$
49,390

 
$

 
$
49,390

Liabilities
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current liabilities
 
$

 
$
(41,219
)
 
$

 
$
(41,219
)
 
 
 
 
As of December 31, 2020
(in thousands)
 
Balance Sheet Classification
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current assets
 
$

 
$
80,879

 
$

 
$
80,879

Liabilities
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current liabilities
 
$

 
$
(65,905
)
 
$

 
$
(65,905
)

Other Fair Value Disclosures

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 LIBOR that resets at various 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 March 31, 2021the fair values of the Convertible Notes and Senior Notes were $631.4 million and $712.0 million, respectively, with carrying values of $456.2 million and $703.7 million, respectively.

(12) SEGMENT INFORMATION

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, Asia Pacific, the United States and Africa. The Company provides comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, dynamic currency conversion, domestic and international surcharges and other value added services. Through this segment, the Company also offers a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.
  2. Through 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. 
15



In addition, the Company accounts for non-operating activity, share-based compensation expense, certain intersegment eliminations and the costs of providing corporate and other administrative services in its administrative division, “Corporate Services, Eliminations and Other.” These services are not directly identifiable with the Company’s reportable operating segments.

The following tables present the Company’s reportable segment results for the three months ended March 31, 2021 and 2020:
 
 
For the Three Months Ended March 31, 2021
(in thousands)
 
EFT
Processing
 
epay
 
Money
Transfer
 
Corporate Services,
Eliminations
and Other
 
Consolidated
Total revenues
 
$
87,076

 
$
242,303

 
$
324,900

 
$
(1,609
)
 
$
652,670

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Direct operating costs
 
69,612

 
182,633

 
183,878

 
(1,607
)
 
434,516

Salaries and benefits
 
23,571

 
19,369

 
60,540

 
12,188

 
115,668

Selling, general and administrative
 
11,962

 
9,020

 
36,116

 
1,678

 
58,776

Depreciation and amortization
 
22,027

 
2,124

 
8,963

 
147

 
33,261

Total operating expenses
 
127,172

 
213,146

 
289,497

 
12,406

 
642,221

Operating (loss) income
 
$
(40,096
)
 
$
29,157

 
$
35,403

 
$
(14,015
)
 
$
10,449


 
 
For the Three Months Ended March 31, 2020
(in thousands)
 
EFT
Processing
 
epay
 
Money
Transfer
 
Corporate Services,
Eliminations
and Other
 
Consolidated
Total revenues
 
$
145,825

 
$
172,911

 
$
266,234

 
$
(1,063
)
 
$
583,907

Operating expenses:
 
 
 
 
 
 
 
 
 
 
Direct operating costs
 
87,536

 
130,074

 
142,909

 
(1,063
)
 
359,456

Salaries and benefits
 
22,091

 
15,697

 
53,864

 
9,588

 
101,240

Selling, general and administrative
 
10,941

 
8,838

 
38,582

 
2,432

 
60,793

Depreciation and amortization
 
20,322

 
1,844

 
8,571

 
79

 
30,816

Total operating expenses
 
140,890

 
156,453

 
243,926

 
11,036

 
552,305

Operating income (expense)
 
$
4,935

 
$
16,458

 
$
22,308

 
$
(12,099
)
 
$
31,602


16



The following table presents the Company’s total assets by reportable segment:
 
Total Assets as of
(in thousands)
March 31, 2021
 
December 31, 2020
EFT Processing
$
1,400,396

 
$
1,541,610

epay
915,875

 
1,135,204

Money Transfer
1,764,127

 
1,755,651

Corporate Services, Eliminations and Other
270,436

 
494,246

   Total  
$
4,350,834

 
$
4,926,711


The following table presents the Company's revenues disaggregated by segment and region. Sales and usage-based taxes are excluded from revenues. 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. 
















 
 
For the Three Months Ended March 31, 2021

For the Three Months Ended March 31, 2020
(in thousands)
 
EFT
Processing
 
epay
 
Money
Transfer
 
Total


EFT
Processing



epay



Money
Transfer



Total

Europe
 
$
46,862

 
$
164,908

 
$
132,839

 
$
344,609


$
99,474


$
115,277


$
91,058


$
305,809

North America
 
14,466

 
33,841

 
152,302

 
200,609



15,019



33,852



137,895



186,766

Asia Pacific
 
25,694

 
34,318

 
28,469

 
88,481



31,328



19,274



30,848



81,450

Other
 
54

 
9,236

 
11,290

 
20,580



4



4,508



6,433



10,945

Eliminations
 

 

 

 
(