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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 June 30, 2022
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  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  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
On August 2, 2022, Euronet Worldwide, Inc. had 49,581,198 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 June 30, 2022 and December 31, 2021 1
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 2
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021 3
Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2022 and 2021 4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 6
Notes to the Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24
Item 3. Quantitative and Qualitative Disclosures About Market Risk 41
Item 4. Controls and Procedures 42
PART II—OTHER INFORMATION
Item 1. Legal Proceedings 42
Item 1A. Risk Factors 43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 43
Item 6. Exhibits 44
Signatures 45

 

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(In thousands, except share and per share data) 
 
As of
 
June 30,
2022
 
December 31,
2021
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents 
$
1,014,859
 
$
1,260,466
ATM cash
890,834
 
543,422
Restricted cash
6,616
 
3,693
Settlement assets
1,057,423
 
1,102,389
Trade accounts receivable, net of credit losses of $4,392 and $4,469
195,355
 
203,010
Prepaid expenses and other current assets
344,219
 
195,443
Total current assets
3,509,306
 
3,308,423
Operating right of use lease assets
150,995
 
161,494
Property and equipment, net of accumulated depreciation of $527,234 and $532,631
332,856
 
345,381
Goodwill
807,848
 
641,605
Acquired intangible assets, net of accumulated amortization of $185,145 and $185,054
197,281
 
97,793
Other assets, net of accumulated amortization of $64,197 and $62,349
197,232
 
189,580
Total assets
$
5,195,518
 
$
4,744,276
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Settlement obligations
$
1,057,423
 
$
1,102,389
Trade accounts payable
184,155
 
193,529
Accrued expenses and other current liabilities
478,820
 
367,692
Current portion of operating lease liabilities
48,899
 
52,136
Short-term debt obligations and current maturities of long-term debt obligations
450,319
 
821
Income taxes payable
46,668
 
59,037
Deferred revenue
63,260
 
77,037
Total current liabilities
2,329,544
 
1,852,641
Debt obligations, net of current portion
1,638,663
 
1,420,085
Operating lease obligations, net of current portion
103,625
 
111,355
Deferred income taxes
33,811
 
46,505
Other long-term liabilities
70,733
 
58,166
Total liabilities
4,176,376
 
3,488,752
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 63,850,934 and 63,779,009
1,277
 
1,275
Additional paid-in-capital
1,223,294
 
1,274,118
Treasury stock, at cost, shares issued 14,271,179 and 12,631,125
(1,106,094
)
 
(931,212
)
Retained earnings
1,182,787
 
1,083,882
Accumulated other comprehensive loss
(281,858
)
 
(172,582
)
Total Euronet Worldwide, Inc. stockholders’ equity
1,019,406
 
1,255,481
Noncontrolling interests
(264
)
 
43
Total equity
1,019,142
 
1,255,524
Total liabilities and equity
$
5,195,518
 
$
4,744,276
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
June 30,

Six Months Ended
June 30,


 

2022



2021


2022

 
2021


Revenues 
$
843,309


$
714,686


$
1,561,776

 
$
1,367,356


Operating expenses:







 
 
 

Direct operating costs, exclusive of depreciation

500,662



470,816


958,815

 
905,332


Salaries and benefits

131,308



121,071


258,073

 
236,739


Selling, general and administrative

74,249



59,119


138,105

 
117,895


Depreciation and amortization

36,013



33,559


69,003

 
66,820


Total operating expenses

742,232



684,565


1,423,996

 
1,326,786


Operating income

101,077



30,121


137,780

 
40,570


Other income (expense):








 
 
 

Interest income

245



204


390

 
386


Interest expense

(8,862
)


(9,457
)

(14,996
)
 
(18,646
)

Foreign currency exchange gain (loss), net

(14,698
)


116


(20,160
)
 
(3,916
)

Other gains, net






192

 
31

Other expense, net

(23,315
)


(9,137
)

(34,574
)
 
(22,145
)

Income before income taxes

77,762



20,984


103,206
 
18,425

Income tax expense

(20,728
)


(12,352
)

(37,882
)
 
(18,414
)

Net income 

57,034



8,632


65,324
 
11

Net income (loss) attributable to noncontrolling interests

184



3


191
 
(41
)
Net income (loss) attributable to Euronet Worldwide, Inc.
$
57,218


$
8,635


$
65,515
 
$
(30
)

 








 
 
 

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








 
 
 

Basic
$
1.13


$
0.16


$
1.29
 
$
0.00


Diluted
$
1.08


$
0.16


$
1.25
 
$
0.00


 








 
 
 

Weighted average shares outstanding:








 
 
 

Basic

50,394,610



52,805,367


50,726,281

 
52,784,106


Diluted

53,766,914



54,008,839


54,133,724

 
52,784,106



See accompanying notes to the unaudited consolidated financial statements.


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

 

Three Months Ended
June 30,


Six Months Ended
June 30,

 

2022



2021


2022
 
2021

Net income
$
57,034


$
8,632


$
65,324
 
$
11

Translation adjustment

(88,278
)


12,686


(109,392
)
 
(30,215
)

Comprehensive income (loss)

(31,244
)


21,318

(44,068
)
 
(30,204
)

Comprehensive income (loss) attributable to noncontrolling interests

(263
)


(8
)
(307
)
 
4


Comprehensive income (loss) attributable to Euronet Worldwide, Inc.
$
(31,507
)

$
21,310


$
(44,375
)
 
$
(30,200
)

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, 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
)
Net (loss) income
Other comprehensive loss
Stock issued under employee stock plans 
25,769
1
1,199
267
Share-based compensation

10,984

Balance as of June 30, 2021
52,822,254
1,269
1,252,456
(703,247
)

 
 
Number of
Shares Outstanding
 
Common
Stock
 
Additional
Paid-in Capital
 
Treasury
Stock
Balance as of December 31, 2021
 
51,147,884
 
$
1,275
 
$
1,274,118
 
$
(931,212
)
Net income (loss)
 
 
 
 
 
 
 
 
Other comprehensive loss
 
 
 
 
 
 
 
 
Stock issued under employee stock plans
 
40,173
 
1
 
1,989
 
142
Share-based compensation
 
 
 
 
 
9,803
 
 
Repurchase of shares
(639,535
)
(70,351
)
Adoption of ASU 2020-06
(74,080
)
Balance as of  March 31, 2022
 
50,548,522
 
1,276
 
1,211,830
 
(1,001,421
)
Net income (loss)



Other comprehensive loss



Stock issued under employee stock plans
31,233
1
1,322
(73
)
Share-based compensation

10,142

Repurchase of shares
(1,000,000 )


(104,600
)
Balance as of June 30, 2022
49,579,755
1,277
1,223,294
(1,106,094
)

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, 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
Net (loss) income
8,635
(3
)
8,632
Other comprehensive loss
12,675
11
12,686
Stock issued under employee stock plans
1,467
Share-based compensation
10,984
Balance as of June 30, 2021
1,013,125
(124,384
)
277
1,439,496

 
 
 Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
Noncontrolling
Interests
 
Total
Balance as of December 31, 2021
 
$
1,083,882
 
$
(172,582
)
 
$
43
 
$
1,255,524
Net income (loss)
 
8,297
 
 
 
(7
)
 
8,290
Other comprehensive loss
 
 
 
(21,077
)
 
(37
)
 
(21,114
)
Stock issued under employee stock plans
 
 
 
 
 
 
 
2,132
Share-based compensation
 
 
 
 
 
 
 
9,803
Repurchase of shares
(70,351
)
Adoption of ASU 2020-06
33,390
(40,690
)
 Balance as of March 31, 2022
 
1,125,569
 
(193,659
)
 
(1
)
 
1,143,594
Net income (loss)
57,218

(184
)
57,034
Other comprehensive loss

(88,199
)
(79
)
(88,278
)
Stock issued under employee stock plans



1,250
Share-based compensation



10,142
Repurchase of shares














(104,600)

Balance as of June 30, 2022
1,182,787
(281,858
)
(264
)
1,019,142

See accompanying notes to the unaudited consolidated financial statements.


EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in thousands)
 
 
Six Months Ended June 30,
 
2022
 
2021
Net income
$
65,324
 
$
11
Adjustments to reconcile net income to net cash provided by operating activities: 
 
 
 
Depreciation and amortization
69,003
 
66,820
Share-based compensation
19,945
 
19,476
Unrealized foreign exchange loss, net
20,160
 
3,916
Deferred income taxes
3,407
 
1,271
Accretion of convertible debt discount and amortization of debt issuance costs
2,351
 
10,012
Changes in working capital, net of amounts acquired:
 
Income taxes payable, net
(9,390
)
 
(785
)
Trade accounts receivable, including amounts in settlement assets
58,157
 
136,121
Prepaid expenses and other current assets, including amounts in settlement assets
(153,256
)
 
136,331
Trade accounts payable, including amounts in settlement obligations
(119,462
)
 
(213,158
)
Deferred revenue
(9,925
)
 
(30
)
Accrued expenses and other current liabilities, including amounts in settlement obligations
255,516
 
17,340
Changes in noncurrent assets and liabilities
(21,171
)
 
(4,018
)
Net cash provided by operating activities
180,659
 
173,307
Cash flows from investing activities:
 
 
Acquisitions, net of cash acquired
(330,023
)
 
-
Purchases of property and equipment
(53,052
)
 
(45,076
)
Purchases of other long-term assets
(3,856
)
 
(4,273
)
Other, net
(35
)
 
1,017
Net cash used in investing activities
(386,966
)
 
(48,332
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of shares
3,732
 
5,271
Repurchase of shares
(175,287
)
 
(943
)
Borrowings from revolving credit agreements
4,049,100
 
1,606,100
Repayments of revolving credit agreements
(3,385,400
)
 
(1,855,700
)
Net borrowings (repayments) from short-term debt obligations
1,345
 
(45
)
Other, net
(2,248
)
 
(3,236
)
Net cash provided by (used in) financing activities
491,242
 
(248,553
)
Effect of exchange rate changes on cash and cash equivalents and restricted cash
(195,239
)
 
(43,278
)
Increase (decrease) in cash and cash equivalents and restricted cash
89,696
 
(166,856
)
Cash and cash equivalents and restricted cash at beginning of period
2,086,102
 
2,099,508
 
 
 
 
Cash and cash equivalents and restricted cash at end of period
$
2,175,798
 
$
1,932,652
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Interest paid during the period
$
15,858
 
$
13,688
Income taxes paid during the period
$
47,119
 
$
18,886
See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

(1) GENERAL
Organization
Euronet Worldwide, Inc. (the "Company", "Euronet", "we" and "us") was established as a Delaware corporation on December 13, 1996 and succeeded Euronet Holding N.V. as the group holding company, which was founded and established in 1994. Euronet is a leading 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 ATM, POS, card outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment products, and international payment services.
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 our audited consolidated financial statements for the year ended December 31, 2021, including the notes thereto, set forth in our 2021 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, 2022.
Seasonality
Euronet’s EFT Processing Segment normally experiences its heaviest demand for DCC services during the third quarter of the fiscal year, normally coinciding with the tourism season. Additionally, the EFT Processing and epay Segments are normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year.

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. We adopted this standard on January 1, 2022 using the modified retrospective approach, which resulted in our Convertible Senior Notes Due 2049 being recognized as a single liability. As a result of the adoption of this standard we recorded a $99.7 million decrease to additional paid-in capital, a $56.8 million decrease in debt discounts and a $42.9 million increase in retained earnings. The adoption of this standard also impacted our deferred tax liability by decreasing our deferred tax liability by $15.0 million, decreasing retained earnings by $10.6 million, and increasing additional paid-in capital by $25.6 million. Additionally, the elimination of the treasury stock method will increase the number of dilutive shares used in the diluted earnings per share calculation, if dilutive, by 2.8 million shares. 

 

(3) ACQUISITIONS

 

On March 15, 2022 we completed the acquisition of the Merchant Acquiring Business of Piraeus Bank ("PBMA"). The acquisition includes 205,000 POS terminals at 170,000 merchants throughout Greece, as well as Piraeus Bank’s online merchant acquiring business and expands our omnichannel payments strategy where we use our proprietary technology to provide cash, card-based acquiring solutions, alternative payment acquiring, online acquiring, tokenized payment services and other payment products. Additionally, the acquisition includes a long-term commercial framework agreement between Piraeus Bank and Euronet which includes collaborative product distribution, processing and customer referrals. 

 

The purchase price was €313.8 million, or approximately $346.2 million, which includes $331 million cash paid at closing plus $15.2 million of estimated contingent consideration for a ten-year earnout contingent on performance targets outlined in the commercial framework agreement. The contingent consideration is related to a percentage of the net fee income received during the ten-year period of the commercial framework agreement and there is no contractual maximum amount of consideration under this agreement.

 

The initial accounting for this acquisition is not complete as of June 30, 2022. The purchase price was preliminarily allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective provisional fair values at the date of acquisition. Additional time is needed to refine and review the results of the valuation of assets and liabilities. The acquisition has been accounted for as a business combination in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment.  


8


 


The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date.

(in thousands)
As of March 15, 2022
Other current assets
$
1,707
Settlement assets
78,718
Property and equipment
6,095
Acquired intangible assets
122,455
     Total assets acquired
$
208,975
Trade accounts payable
$
1,499
Settlement liabilities
66,925
Accrued expenses and other current liabilities
5,929
Deferred revenue
500
Other long-term liabilities
99
     Total liabilities assumed
$
74,952
Goodwill
212,183
 
Net assets acquired
$
346,206

 

Assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date. The fair value measurements of intangible assets were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy. Level 3 inputs include discount rates that would be used by a market participant in valuing these assets, projections of revenues and cash flows, and customer attrition rates, among others.    

 

We acquired a customer relationship intangible asset with a preliminary fair value of $112.2 million that is being amortized on a straight-line basis over 15 years and a contract related intangible asset of $10.3 million that is being amortized on a straight-line basis over 10 years.

 

Goodwill, with a preliminary value of $212.2 million, arising from the acquisition was included in the EFT Processing Segment. The factors that make up goodwill include synergies from combining PBMA operations and intangible assets that do not qualify for separate recognition. Goodwill and intangible assets associated with this acquisition are deductible for tax purposes.

 

The results of PBMA operations are included in our consolidated results of operation, as part of our EFT Processing business segment, beginning on March 16, 2022. For the three and six months ended June 30, 2022, PBMA had $27.5 million and $31.2 million in revenue. The PBMA business is impacted by higher transaction volumes during the tourism season in the second and third quarters.

 

(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. We record corresponding settlement obligations relating to accounts payable. Settlement assets consist of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. The settlement cash held at the Company is primarily generated from the monies remitted by consumers through Company agents and financial institutions in payment of the face value of the payment service or foreign currency purchased and the related fees charged to purchase the currency. We use our cash and cash equivalents to pay the face value of the payment service product upon presentation by the recipient. Cash received by Company agents and merchants generally becomes available to us 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 us. 
9


 

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

 

 
As of
(in thousands)
June 30,
2022
December 31,
2021
Settlement assets:
 
 
Settlement cash and cash equivalents
$
213,649
$
203,624
Settlement restricted cash
49,840
74,897
Accounts receivable, net of credit losses of $30,009 and $27,341 
593,738
619,738
Prepaid expenses and other current assets
200,196
204,130
Total settlement assets
$
1,057,423
$
1,102,389
Settlement obligations:
 
 
Trade account payables
$
383,652
$
461,135
Accrued expenses and other current liabilities
673,771
641,254
Total settlement obligations
$
1,057,423
$
1,102,389

 

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)
 
June 30,
2022
 
December 31,
2021
 
June 30,
2021
 
December 31,
2020
Cash and cash equivalents
 
$
1,014,859
 
$
1,260,466
 
$
994,488
 
$
1,420,255
Restricted cash
 
6,616
 
3,693
 
3,328
 
3,334
ATM cash
 
890,834
 
543,422
 
565,084
 
411,054
Settlement cash and cash equivalents
 
213,649
 
203,624
 
311,131
 
188,191
Settlement restricted cash
 
49,840
 
74,897
 
58,621
 
76,674
Cash and cash equivalents and restricted cash at end of period
 
$
2,175,798
 
$
2,086,102
 
$
1,932,652
 
$
2,099,508

 

(5) 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 our common stock, assumed vesting of restricted stock and the assumed conversion of our convertible debt, if such conversion would be dilutive. 

 

10


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

  Three Months Ended
June 30,

Six Months Ended
June 30,
 
2022

2021

2022

2021
Computation of diluted earnings:



   Net income (loss)
$
57,218
$
8,635
$
65,515
$
(30
)
   Add: Interest expense from assumed conversion of convertible notes, net of tax
1,098


2,113

      Net income (loss) for diluted earnings per share calculation
$
58,316
$
8,635
$
67,628
$
(30
)



Computation of diluted weighted average shares outstanding:



Basic weighted average shares outstanding
50,394,610

52,805,367

50,726,281

52,784,106
Incremental shares from assumed exercise of stock options and vesting of restricted stock
590,486

1,203,472

625,625

Incremental shares from assumed conversion of convertible debt
2,781,818


2,781,818

Diluted weighted average shares outstanding

53,766,914

54,008,839

54,133,724

52,784,106

The table includes all stock options and restricted stock that are dilutive to our 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 our weighted average common shares outstanding of approximately 2,971,768 and 2,972,786 for the three and six months ended June 30, 2022 and 1,239,000 and 2,429,000 for the three and six months ended June 30, 2021, respectively. 

We issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. Our Convertible Notes currently have a settlement feature requiring us upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of our common stock or a combination thereof, at our option. We have stated our intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium; however, after adopting ASU 2020-06, 2.8 million incremental shares assumed for conversion of convertible notes shall be included in the dilutive earnings per share calculation, if dilutive, regardless of whether the market price trigger has been met. Therefore, our Convertible Notes were included in the calculation of diluted earnings (loss) per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price of $188.73 per share. See Note 9, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes.

Share repurchases

On February 26, 2020, we 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. On December 8, 2021, we put a repurchase program in place to repurchase up to $300 million in value, but not more than 5.0 million shares of common stock through December 8, 2023. Under the repurchase programs we repurchased $104.6 million and $175.0 million of stock, for the three and six months ended June 30, 2022, respectively. 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. We recorded foreign currency translation losses of $88.3 million and $109.4 million for the three and six months ended June 30, 2022, respectively, and gain of $12.7 million and loss of $30.2 million for the same periods in 2021. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three and six months ended June 30, 2022 and 2021.

11


(6) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

 

A summary of acquired intangible assets and goodwill activity for the six months ended June 30, 2022 is presented below:
(in thousands)
 
Acquired
Intangible
Assets
 
Goodwill
 
Total
Intangible
Assets
Balance as of December 31, 2021
 
$
97,793
 
$
641,605
 
$
739,398
Increases (decreases):
 
 
 
 
 
 
Acquisition
 
122,455
 
212,183
 
334,638
Amortization
 
(13,325
)
 
 
(13,325
)
Foreign currency exchange rate changes
 
(9,642
)
 
(45,940
)
 
(55,582
)
Balance as of June 30, 2022
 
$
197,281
 
$
807,848
 
$
1,005,129

 

Of the total goodwill balance of $807.8 million as of June 30, 2022$371.5 million relates to the Money Transfer Segment, $315.1 million relates to the EFT Processing Segment and the remaining $121.2 million relates to the epay SegmentEstimated amortization expense on acquired intangible assets with finite lives as of June 30, 2022, is expected to total $13.9 million for the remainder of 2022, $23.7 million for 2023, $17.6 million for 2024, $14.4 million for 2025, $14.0 million for 2026 and $12.8 million for 2027.

 

(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

Accrued expenses and other current liabilities consist of the following: 
 
 
As of
(in thousands)
 
June 30,
2022
 
December 31, 2021
Accrued expenses
 
$
376,386
 
$
285,098
Derivative liabilities
 
51,074
 
23,285
Accrued payroll expenses
48,098
55,162
Current portion of finance lease obligations
 
3,262
 
4,147
Total
 
$
478,820
 
$
367,692

 

(8) DEFERRED REVENUES

 

We record deferred revenues when cash payments are received or due in advance of our performance. The decrease in the deferred revenue balance for the six months ended June 30, 2022 is the result of $20.2 million of cash payments received in the current year for which we have not yet satisfied the performance obligations, offset by $34.0 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2021.

 

12


9) DEBT OBLIGATIONS

 

Debt obligations consist of the following:

 

  
 
As of
(in thousands)
 
June 30,
2022
 
December 31, 2021
Credit Facility:
 
 
 
 
Revolving credit agreement
 
$
497,100
 
$
283,400









Uncommitted Credit Agreements


450,000




Convertible Debt:
 
 
 
 
0.75% convertible notes, unsecured, due 2049
 
525,000
 
468,235
 
 
 
 
 
1.375% Senior Notes, due 2026
 
628,920
 
682,080
 
 
 
 
 
Other obligations
 
396
 
920
 
 
 
 
 
Total debt obligations
 
2,101,416
 
1,434,635
Unamortized debt issuance costs
 
(12,434
)
 
(13,729
)
Carrying value of debt
 
2,088,982
 
1,420,906
Short-term debt obligations and current maturities of long-term debt obligations 
 
(450,319
)
 
(821
)
Long-term debt obligations
 
$
1,638,663
 
$
1,420,085

 

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 June 30, 2022.

 

Uncommitted Credit Agreements

 

On May 25, 2022, the Company entered into an Uncommitted Credit Agreement for $300 million, fully drawn and outstanding at June 30, 2022, for the sole purpose of providing vault cash for ATMs, that expires no later than November 30, 2022. Each loan bears interest at the rate per annum equal to the secured overnight financing rate (“SOFR”) plus 1.00%. The weighted-average interest rate from the loan inception date to June 30, 2022 was 1.900%. 

 

On June 24, 2022, the Company entered into an Uncommitted Loan Agreement for $150 million, fully drawn and outstanding at June 30, 2022, for the sole purpose of providing vault cash for ATMs, that expires no later than June 23, 2023. Each loan is a Prime rate loan, a Bloomberg Short-term Bank Yield ("BSBY") rate loan or bears interest at the rate agreed to by the Bank and the Company at the time such loan is made. The weighted-average interest rate from the loan inception date to June 30, 2022 was 2.317%. 

 

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.

 

13


 

Prior to the adoption of ASU 2020-06 as of January 1, 2022, in accordance with ASC 470-20-30-27, proceeds from the issuance of convertible debt was allocated between debt and equity components so that debt was discounted to reflect our nonconvertible debt borrowing rate. ASC 470-20-35-13 required the debt discount to be amortized over the period the convertible debt was 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 and $2.0 million for the three and six months ended June 30, 2021, respectively. Accretion expense for the Convertible Notes was $4.0 million and $7.9 million for the three and six months ended June 30, 2021. See Footnote 2, Recently Issued and Adopted Accounting Pronouncements, for more information regarding this adoption.

 

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 are due 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 June 30, 2022, the Company has outstanding 600 million ($628.9 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 June 30, 2022 and December 31, 2021, borrowings under these arrangements were $0.4 million and $0.9 million, respectively.

 

Debt Issuance Costs

 

As of June 30, 2022, we had unamortized debt issuance costs of