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, 2019~~March 31, 2020



☐	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		(I.R.S. Employer
of incorporation or organization)		Identification No.)

3500 College Boulevard
Leawood,	Kansas	66211
(Address of principal executive offices)		(Zip Code)

(913) 327-4200

(Registrant’s telephone number, including area code)

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	~~EEFT~~EEFT26	Nasdaq Global ~~Select~~ 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~~“accelerated filer,” “smaller reporting ~~company”~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange ~~Act~~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 ~~August 7, 2019~~,May 6, 2020, Euronet Worldwide, Inc. had ~~54,486,877~~52,205,743 shares of Common Stock outstanding.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

Table of Contents



		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	3
	Consolidated Statements of Income for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	4
	Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	5
	Consolidated Statements of Changes in Equity for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	6
	Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	8
	Notes to the Unaudited Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2423
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4241
Item 4.	Controls and Procedures	4342
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	4342
Item 1A.	Risk Factors	4443
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4443
Item 6.	Exhibits	45

	Signatures	46

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)



	As of
	March 31, 2020			December 31, 2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	709,521		$	786,081
ATM cash	558,580			665,641
Restricted cash	28,953			34,301
Settlement assets	773,336			1,013,067
Trade accounts receivable, net of credit losses of $3,967 at March 31, 2020 and $3,892 at December 31, 2019	92,860			201,935
Prepaid expenses and other current assets	309,385			217,707
Total current assets	2,472,635			2,918,732
Operating right of use lease assets	379,584			377,543
Property and equipment, net of accumulated depreciation of $411,616 at March 31, 2020 and $410,243 at December 31, 2019	356,558			359,980
Goodwill	714,499			743,823
Acquired intangible assets, net of accumulated amortization of $201,810 at March 31, 2020 and $204,853 at December 31, 2019	130,177			141,847
Other assets, net of accumulated amortization of $47,941 at March 31, 2020 and $46,788 at December 31, 2019	130,932			115,741
Total assets	$	4,184,385		$	4,657,666
LIABILITIES AND EQUITY
Current liabilities:
Settlement obligations	$	773,336		$	1,013,067
Trade accounts payable	88,392			81,743
Accrued expenses and other current liabilities	365,326			294,557
Current portion of operating lease liabilities	129,151			127,353
Short-term debt obligations and current maturities of long-term debt obligations	3,528			6,089
Income taxes payable	40,090			52,583
Deferred revenue	61,767			58,588
Total current liabilities	1,461,590			1,633,980
Debt obligations, net of current portion	1,083,618			1,090,939
Operating lease obligations, net of current portion	243,639			241,977
Deferred income taxes	52,613			56,067
Other long-term liabilities	53,653			55,361
Total liabilities	2,895,113			3,078,324
Equity:
Euronet Worldwide, Inc. stockholders’ equity:
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued	—			—
Common Stock, $0.02 par value. 90,000,000 shares authorized; 62,853,785 issued at March 31, 2020 and 62,775,762 issued at December 31, 2019	1,257			1,256
Additional paid-in-capital	1,198,097			1,190,058
Treasury stock, at cost, 10,648,096 shares at March 31, 2020 and 8,554,908 shares at December 31, 2019	(703,716		)	(463,704		)
Retained earnings	1,018,475			1,016,554
Accumulated other comprehensive loss	(224,667		)	(164,890		)
Total Euronet Worldwide, Inc. stockholders’ equity	1,289,446			1,579,274
Noncontrolling interests	(174		)	68
Total equity	1,289,272			1,579,342
Total liabilities and equity	$	4,184,385		$	4,657,666

As of
June 30,
2019 December 31,
2018
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,558,461
$ 1,054,357
Restricted cash 71,297
76,595
Trade accounts receivable, net of allowances for doubtful accounts of $24,937 at June 30, 2019 and $24,287 at December 31, 2018 836,713
693,616
Prepaid expenses and other current assets 235,279
263,019
Total current assets 2,701,750
2,087,587
Operating right of use lease assets 376,343
—
Property and equipment, net of accumulated depreciation of $381,771 at June 30, 2019 and $373,180 at December 31, 2018 324,298
291,869
Goodwill 706,367
704,197
Acquired intangible assets, net of accumulated amortization of $201,566 at June 30, 2019 and $190,920 at December 31, 2018 104,374
114,485
Other assets, net of accumulated amortization of $54,549 at June 30, 2019 and $50,821 at December 31, 2018 120,204
123,017
Total assets $ 4,333,336
$ 3,321,155
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable $ 432,140
$ 528,913
Accrued expenses and other current liabilities 791,213
712,012
Current portion of operating lease liabilities 124,131
—
Short-term debt obligations and current maturities of long-term debt obligations 23,998
38,017
Income taxes payable 47,490
40,159
Deferred revenue 62,455
59,293
Total current liabilities 1,481,427
1,378,394
Debt obligations, net of current portion 1,096,735
589,782
Operating lease liabilities, net of current portion 241,630
—
Deferred income taxes 52,984
57,145
Other long-term liabilities 62,337
62,992
Total liabilities 2,935,113
2,088,313
Equity:
Euronet Worldwide, Inc. stockholders’ equity:
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued —
—
Common Stock, $0.02 par value. 90,000,000 shares authorized; 62,563,955 issued at June 30, 2019 and 59,897,309 issued at December 31, 2018 1,251
1,198
Additional paid-in-capital 1,172,834
1,104,264
Treasury stock, at cost, 8,083,716 shares at June 30, 2019 and 8,077,311 shares at December 31, 2018 (393,353 ) (391,551 )
Retained earnings 772,501
669,805
Accumulated other comprehensive loss (155,050 ) (151,043 )
Total Euronet Worldwide, Inc. stockholders’ equity 1,398,183
1,232,673
Noncontrolling interests 40
169
Total equity 1,398,223
1,232,842
Total liabilities and equity $ 4,333,336
$ 3,321,155

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except share and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenues	$	691,867		$	622,224		$	1,269,376		$	1,172,739		$	583,907		$	577,509
Operating expenses:
Direct operating costs	393,811			361,512			747,644			704,836			359,456			353,833
Salaries and benefits	98,550			91,723			191,345			177,429			101,240			92,795
Selling, general and administrative	53,842			52,357			101,989			102,368			60,793			48,147
Depreciation and amortization	27,767			26,263			54,407			52,265			30,816			26,640
Total operating expenses	573,970			531,855			1,095,385			1,036,898			552,305			521,415
Operating income	117,897			90,369			173,991			135,841			31,602			56,094
Other income (expense):
Interest income	513			416			856			712			567			343
Interest expense	(10,029		)	(10,061		)	(18,228		)	(17,667		)	(9,233		)	(8,199		)
Loss on early retirement of debt	(8,903		)	—			(9,831		)	—			—			(928		)
Loss from unconsolidated affiliates	—			—			—			(117		)
Foreign currency exchange (loss) gain, net	(121		)	(20,690		)	3,087			(18,755		)	(18,806		)	3,208
Other (losses) gains	(29		)	29			(4		)	60
Other gains													31			25
Other expense, net	(18,569		)	(30,306		)	(24,120		)	(35,767		)	(27,441		)	(5,551		)
Income before income taxes	99,328			60,063			149,871			100,074			4,161			50,543
Income tax expense	(31,323		)	(16,427		)	(47,287		)	(30,094		)	(2,441		)	(15,964		)
Net income	68,005			43,636			102,584			69,980			1,720			34,579
Net loss attributable to noncontrolling interests	148			88			112			157
Net loss (income) attributable to noncontrolling interests													201			(36		)
Net income attributable to Euronet Worldwide, Inc.	$	68,153		$	43,724		$	102,696		$	70,137		$	1,921		$	34,543

Earnings per share attributable to Euronet Worldwide, Inc. stockholders:
Basic	$	1.28		$	0.85		$	1.95		$	1.36		$	0.04		$	0.67
Diluted	$	1.25		$	0.82		$	1.90		$	1.30		$	0.04		$	0.62

Weighted average shares outstanding:
Basic	53,212,759			51,226,898			52,546,647			51,563,090			53,607,104			51,880,534
Diluted	54,702,459			53,492,835			53,945,770			53,871,279			54,779,321			55,576,867

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited, in thousands)

Three Months Ended
June 30, Six Months Ended
June 30,
2019 2018 2019 2018
Net income $ 68,005
$ 43,636
$ 102,584
$ 69,980
Translation adjustment 12,161
(58,533 ) (4,024 ) (35,585 )
Comprehensive income (loss) 80,166
(14,897 ) 98,560
34,395
Comprehensive loss attributable to noncontrolling interests 136
180
129
194
Comprehensive income (loss) attributable to Euronet Worldwide, Inc. $ 80,302
$ (14,717 ) $ 98,689
$ 34,589



	Three Months Ended March 31,
	2020			2019
Net income	$	1,720		$	34,579
Translation adjustment	(59,818		)	(16,156		)
Comprehensive (loss) income	(58,098		)	18,423
Comprehensive loss (income) attributable to noncontrolling interests	242			(7		)
Comprehensive (loss) income attributable to Euronet Worldwide, Inc.	$	(57,856	)	$	18,416

See accompanying notes to the unaudited consolidated financial statements.

~~Euronet Worldwide, Inc. and Subsidiaries~~EURONET WORLDWIDE, INC. AND SUBSIDIARIES

~~Consolidated Statements of Changes in Equity~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited, in thousands, except share data)

Number of
Shares
Outstanding

Common
Stock

Additional
Paid-in
Capital

Treasury
Stock
Balance as of December 31, 2017 52,808,158
$ 1,178
$ 1,072,005
$ (217,161 )
Net income (loss)
Other comprehensive income
Stock issued under employee stock plans 116,358
2
2,468
(1,237 )
Share-based compensation 4,029

Repurchase of shares (1,418,895 ) (125,000 )
Balance as of March 31, 2018 51,505,621
1,180
1,078,502
(343,398 )
Net income (loss)
Other comprehensive loss
Stock issued under employee stock plans 89,954
1
1,484
260
Share-based compensation 4,550

Repurchase of shares (613,704 ) (50,000 )
Balance as of June 30, 2018 50,981,871
$ 1,181
$ 1,084,536
$ (393,138 )



	Number of Shares Outstanding	Common Stock		Additional Paid-in Capital			Treasury Stock
Balance as of December 31, 2018	51,819,998	$	1,198	$	1,104,264		$	(391,551	)
Net income
Other comprehensive loss
Stock issued under employee stock plans	130,136	3		5,194			(1,756		)
Share-based compensation				4,490
Issuance of convertible notes, net of tax				71,660
Repurchase and conversions of convertible notes, net of tax	6			(42,917		)
Balance as of March 31, 2019	51,950,140	$	1,201	$	1,142,691		$	(393,307	)

Number of
Shares
Outstanding

Common
Stock

Additional
Paid-in
Capital

Treasury
Stock
Balance as of December 31, 2018 51,819,998
$ 1,198
$ 1,104,264
$ (391,551 )
Net income
Other comprehensive loss
Stock issued under employee stock plans 130,136
3
5,194
(1,756 )
Share-based compensation 4,490

Issuance of convertible notes, net of tax 71,660

Repurchases and conversions of convertible notes, net of tax 6
(42,917 )
Balance as of March 31, 2019 51,950,140
1,201
1,142,691
(393,307 )
Net income (loss)
Other comprehensive income
Stock issued under employee stock plans 41,856
1,740
(46 )
Share-based compensation 6,003

Redemptions and conversions of convertible notes, net of tax 2,488,243
50
22,400

Balance as of June 30, 2019 54,480,239
$ 1,251
$ 1,172,834
$ (393,353 )



	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	)

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

~~Consolidated Statements of Changes in Equity (continued)~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

(Unaudited, in thousands)

Retained Earnings
Accumulated Other
Comprehensive Loss

Noncontrolling
Interests
Total
Balance as of December 31, 2017 $ 436,954
$ (94,458 ) $ 960
$ 1,199,478
Net income (loss) 26,413
(69 ) 26,344
Other comprehensive income 22,894
54
22,948
Stock issued under employee stock plans 1,233
Share-based compensation 4,029
Repurchase of shares (125,000 )
Balance as of March 31, 2018 463,367
(71,564 ) 945
1,129,032
Net income (loss) 43,724
(88 ) 43,636
Other comprehensive loss (58,442 ) (91 ) (58,533 )
Stock issued under employee stock plans 1,745
Share-based compensation 4,550
Repurchase of shares (50,000 )
Balance as of June 30, 2018 $ 507,091
$ (130,006 ) $ 766
$ 1,070,430



	Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balance as of December 31, 2018	$	669,805	$	(151,043	)	$	169		$	1,232,842
Net income	34,543					36			34,579
Other comprehensive loss			(16,156		)	(29		)	(16,185		)
Stock issued under employee stock plans									3,441
Share-based compensation									4,490
Issuance of convertible notes, net of tax									71,660
Repurchases and conversions of convertible notes									(42,917		)
Balance as of March 31, 2019	$	704,348	$	(167,199	)	$	176		$	1,287,910

Retained Earnings
Accumulated Other
Comprehensive Loss

Noncontrolling
Interests
Total
Balance as of December 31, 2018 $ 669,805
$ (151,043 ) $ 169
$ 1,232,842
Net income 34,543
36
34,579
Other comprehensive loss (16,156 ) (29 ) (16,185 )
Stock issued under employee stock plans 3,441
Share-based compensation 4,490
Issuance of convertible notes, net of tax 71,660
Repurchases and conversions of convertible notes, net of tax (42,917 )
Balance as of March 31, 2019 704,348
(167,199 ) 176
1,287,910
Net income (loss) 68,153
(148 ) 68,005
Other comprehensive income 12,149
12
12,161
Stock issued under employee stock plans 1,694
Share-based compensation 6,003
Redemptions and conversions of convertible notes, net of tax 22,450
Balance as of June 30, 2019 $ 772,501
$ (155,050 ) $ 40
$ 1,398,223



	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

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Six Months Ended
June 30,
2019 2018
Net income $ 102,584
$ 69,980
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 54,407
52,265
Share-based compensation 10,493
8,579
Unrealized foreign exchange (gain) loss, net (3,087 ) 18,755
Deferred income taxes 4,555
192
Loss on early retirement of debt

9,831
—
Loss from unconsolidated affiliates —
117
Accretion of convertible debt discount and amortization of debt issuance costs 9,685
6,994
Changes in working capital, net of amounts acquired:
Income taxes payable, net 7,302
(729 )
Trade accounts receivable (146,441 ) 35,456
Prepaid expenses and other current assets 25,606
12,304
Trade accounts payable (95,083 ) (99,237 )
Deferred revenue 3,457
(84 )
Accrued expenses and other current liabilities 85,262
(35,553 )
Changes in noncurrent assets and liabilities (11,857 ) 265
Net cash provided by operating activities 56,714
69,304
Cash flows from investing activities:
Acquisitions, net of cash acquired —
(12,854 )
Purchases of property and equipment (67,727 ) (53,381 )
Purchases of other long-term assets (3,436 ) (3,717 )
Other, net 2,403
962
Net cash used in investing activities (68,760 ) (68,990 )
Cash flows from financing activities:
Proceeds from issuance of shares 7,037
4,136
Repurchase of shares (2,448 ) (176,657 )
Borrowings from revolving credit agreements 2,043,598
2,573,941
Repayments of revolving credit agreements (2,253,498 ) (2,333,885 )
Proceeds from long-term debt obligations 1,194,900
—
Repayments of long-term debt obligations (446,702 ) (6,199 )
(Repayments of) borrowings from short-term debt obligations, net (14,184 ) 302,841
Debt issuance costs (19,673 ) —
Other, net (3,085 ) (3,255 )
Net cash provided by financing activities 505,945
360,922
Effect of exchange rate changes on cash and cash equivalents and restricted cash 4,907
(25,471 )
Increase in cash and cash equivalents and restricted cash 498,806
335,765
Cash and cash equivalents and restricted cash at beginning of period 1,130,952
900,518

Cash and cash equivalents and restricted cash at end of period $ 1,629,758
$ 1,236,283

Supplemental disclosure of cash flow information:
Interest paid during the period $ 7,107
$ 9,857
Income taxes paid during the period $ 36,543
$ 31,710



	Three Months Ended March 31,
	2020			2019
Net income	$	1,720		$	34,579
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	30,816			26,640
Share-based compensation	6,338			4,490
Unrealized foreign exchange loss (gain), net	18,806			(3,208		)
Deferred income taxes	(2,043		)	3,468
Accretion of convertible debt discount and amortization of debt issuance costs	4,616			4,071
Changes in working capital, net of amounts acquired:
Income taxes payable, net	(10,454		)	635
Trade accounts receivable	300,063			(31,456		)
Prepaid expenses and other current assets	(119,648		)	33,787
Trade accounts payable	(126,242		)	(115,380		)
Deferred revenue	4,119			3,005
Accrued expenses and other current liabilities	14,811			51,377
Changes in noncurrent assets and liabilities	(17,018		)	953
Net cash provided by operating activities	105,884			12,961
Cash flows from investing activities:
Acquisitions, net of cash acquired	475			—
Purchases of property and equipment	(30,392		)	(31,390		)
Purchases of other long-term assets	(2,046		)	(1,783		)
Other, net	357			187
Net cash used in investing activities	(31,606		)	(32,986		)
Cash flows from financing activities:
Proceeds from issuance of shares	1,700			5,171
Repurchase of shares	(240,530		)	(2,275		)
Borrowings from revolving credit agreements	805,500			1,209,446
Repayments of revolving credit agreements	(805,500		)	(1,425,398		)
Proceeds from long-term debt obligations	—			525,000
Repayments of long-term debt obligations	—			(94,199		)
Net borrowing from short-term debt obligations	(2,163		)	(11,779		)
Debt issuance costs	—			(11,812		)
Other, net	(1,651		)	(1,452		)
Net cash (used in) provided by financing activities	(242,644		)	192,702
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(59,260		)	(12,387		)
(Decrease) increase in cash and cash equivalents and restricted cash	(227,626		)	160,290
Cash and cash equivalents and restricted cash at beginning of period	1,817,379			1,130,952

Cash and cash equivalents and restricted cash at end of period	$	1,589,753		$	1,291,242

Supplemental disclosure of cash flow information:
Interest paid during the period	$	3,678		$	5,491
Income taxes paid during the period	$	16,064		$	12,074

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL

Organization

Euronet Worldwide, Inc. ~~(together with its subsidiaries, the~~(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, ~~software solutions,~~ electronic distribution of prepaid mobile airtime and other ~~digital media~~electronic payment products, ~~foreign currency exchange services~~ 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 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, ~~2018~~2019, including the notes thereto, set forth in the Company’s ~~2018~~2019 Annual Report on Form 10-K. ~~Certain amounts in prior years have been reclassified to conform to the current year's presentation.~~

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 ~~reported~~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, ~~2019.~~2020.

Seasonality

Euronet’s ~~EFT~~Electronic Funds Transfer ("EFT") Processing Segment experiences its heaviest demand for ~~ATM cash withdrawal transactions and~~ dynamic currency conversion ~~("DCC")~~ services during the third quarter of the fiscal year, normally coinciding with the tourism ~~season followed by lower transaction levels during the fourth quarter.~~season. Additionally, the EFT Processing and epay ~~Segment is~~Segments are normally impacted by seasonality during the fourth quarter and ~~the~~ 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~~money transfer segment varies by ~~regions~~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 ~~experiences~~ its lowest transaction levels during the first quarter of ~~each~~the year.

COVID-19 (coronavirus)

The outbreak of the COVID-19 (coronavirus) pandemic has resulted in travel restrictions across borders, and shelter-in-place orders in most of the countries where the Company operates. The majority of these orders went into effect in late February 2020 or early March 2020. These orders have negatively impacted all of our three operating segments. The EFT Segment has experienced declines in transaction volumes due to these restrictions, especially high-margin cross-border transactions. Although the epay Segment has experienced revenue growth from increased digital content purchases which can be completed remotely, many of its POS retail locations have been closed, reducing in person transactions. Our Money Transfer Segment has experienced declines in transaction volumes due to the restrictions noted above, which have also led to the temporary closure of many of our company owned stores and agents. The Money Transfer Segment has experienced an increase in receivable delinquencies as our agents have been temporarily closed as nonessential services.

In response to the COVID-19 driven impacts, the Company has implemented several key measures to offset the impact across the business, including negotiating certain third party contracts, reducing travel, decreasing planned 2020 capital expenditures, and expanding ATM winterizations (placing them in dormancy status) in more sites and more markets.

(2) RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS

~~The Company adopted Accounting Standards Update (ASU) 2016-02,~~ ~~Leases~~ (Topic 842), as amended, as of January 1, 2019, using the modified retrospective approach and comparative periods were not restated. The new standards provide a number of optional practical expedients in transition.

The Company elected the “package of practical expedients” which permits the Company not to reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected to combine lease and non-lease components and to include short-term leases with an initial term of 12 months or less on the balance sheet.

In addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases. The election of the hindsight practical expedient resulted in, for substantially all leases in effect on January 1, 2019, the lease term for implementation of this pronouncement, as the lease’s life being January 1, 2019 through the lease’s contractual termination date, rather than the actual lease life as set out in the lease agreement. Lease lives for lease agreements committed to on January 1, 2019 and, thereafter, are included based on the lease’s commencement date and termination date. In the application of hindsight, the Company evaluated the performance of all the leases and the associated markets in relation to the Company’s

~~operations, which resulted in the determination that the exercise of renewal options would not be reasonably certain in determining the expected lease term.~~

~~Adoption of the new standard resulted in the recognition of additional operating right of use lease assets and lease liabilities of approximately $296.9 million, as of January 1, 2019.~~

~~In June 2016,~~March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for contracts, hedging relationships, and other transactions affected by reference rate reform due to the anticipated cessation of LIBOR on or before December 31, 2021. This guidance is effective from March 12, 2020 through December 31, 2022 and could impact the accounting for LIBOR provisions in the Company’s unsecured credit agreement. The Company does not expect that the adoption of this guidance will have a significant impact on its consolidated financial statements.

The Company adopted ASU 2016-13, Financial Instruments - Credit Losses ~~(Topic~~(Topic 326), as of January 1, 2020, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ~~replaces~~replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The ~~Company does not expect that the~~ adoption of this ~~guidance to~~standard did not have a significant impact on ~~its~~the Company's consolidated financial ~~statements.~~statements and related disclosures.

(3) SETTLEMENT ASSETS AND OBLIGATIONS

Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled prepaid transactions. The Company records corresponding settlement obligations relating to amounts payable. Settlement assets consist of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. Cash received by Euronet agents and merchants generally become 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, 2020		December 31, 2019
Settlement assets:
Settlement cash and cash equivalents	$	256,456	$	282,188
Settlement restricted cash	36,243		49,168
Accounts receivable	364,148		574,410
Prepaid expenses and other current assets	116,489		107,301
Total settlement assets	$	773,336	$	1,013,067
Settlement obligations:
Trade account payables	$	353,498	$	504,667
Accrued expenses and other current liabilities	419,838		508,400
Total settlement obligations	$	773,336	$	1,013,067

A portion of the Company's credit losses are recorded in the accounts receivable within settlement assets. The balance of credit losses related to accounts receivable within settlement assets was $28.3 million and $24.0 million as of March 31, 2020 and December 31, 2019, respectively.

The table below reconciles cash and cash equivalents, restricted cash, ATM cash, settlement cash and cash equivalents, and settlement restricted cash as presented within "Cash and cash equivalents and restricted cash" in the Consolidated Statement of Cash Flows.



	As of
(in thousands)	March 31, 2020		December 31, 2019		March 31, 2019		December 31, 2018
Cash and cash equivalents	$	709,521	$	786,081	$	558,454	$	385,031
Restricted cash	28,953		34,301		34,398		31,237
ATM cash	558,580		665,641		421,897		395,378
Settlement cash and cash equivalents	256,456		282,188		235,946		273,948
Settlement restricted cash	36,243		49,168		40,547		45,358
Cash and cash equivalents and restricted cash at end of period	$	1,589,753	$	1,817,379	$	1,291,242	$	1,130,952

(4) STOCKHOLDERS' EQUITY

Earnings Per Share

Basic earnings per share has been computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the respective ~~periods.~~period. Diluted earnings per share has been computed by dividing earnings available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for ~~any~~the potential dilution ~~from~~of options to purchase the Company's ~~common stock,~~Common Stock, assumed vesting of restricted stock and the assumed conversion of the ~~Company’s~~Company's convertible ~~debentures.~~ debt.

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


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended March 31,
	2019	2018	2019	2018	2020	2019
Computation of diluted weighted average shares outstanding:
Basic weighted average shares outstanding	53,212,759	51,226,898	52,546,647	51,563,090	53,607,104	51,880,534
Incremental shares from assumed exercise of stock options and vesting of restricted stock	1,489,700	1,494,766	1,399,123	1,537,018	1,172,217	1,285,139
Incremental shares from assumed conversion of convertible notes	—	771,171	—	771,171
Incremental shares from assumed conversion of convertible debentures					—	2,411,194
Diluted weighted average shares outstanding	54,702,459	53,492,835	53,945,770	53,871,279	54,779,321	55,576,867

The table includes ~~the impact of~~ all stock options and restricted stock that are dilutive to the ~~Company’s~~Company's weighted average common shares outstanding during the ~~three and six months ended June 30, 2019 and 2018.~~period. The calculation of diluted 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 782,000 and 805,000~~ for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~respectively,~~of approximately 886,000 and ~~approximately 1,209,000 and 1,124,000 for the three and six months ended June 30, 2018,~~402,000, respectively.

The Company issued new Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019 and retired the existing convertible notes ("Retired Convertible Notes") that would have matured in 2044 on May 28, 2019. The Company's Convertible Notes currently have, and the Retired Convertible Notes had, a settlement ~~features~~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 and the Retired Convertible Notes were included in the calculation of diluted earnings per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price. The Retired Convertible Notes had a dilutive effect infor thethree ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 as the ~~$83.77~~$142.59 market price per share of ~~Common Stock~~common stock as of ~~June 30, 2018~~March 31, 2019 exceeded the $72.18 conversion price per share. 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. AsThe market price per share per share of ~~June 30, 2019, the Convertible Notes did not have a~~common stock was $85.72, therefore, according to ASC Topic 260, Earnings per Share (“ASC 260”), there was 0 dilutive effect onof the ~~earnings per share.~~assumed conversion of the debentures as of March 31, 2020, whereas the dilutive effect was 2,411,194shares for the three months ended March 31, 2019. See Note 7,8, Debt Obligations, to the Consolidated Financial Statements for more information about the convertible notes.

Share repurchases

The Company's Board of Directors ~~has~~had authorized a stock repurchase program ~~("Repurchase Program")~~ allowing Euronet to repurchase up to $375 million in value or 10.0 million shares of stock through March 31, 2020. ~~During~~On March 11, 2019, in connection with the ~~three and six months~~

~~ended June 30, 2019, there were no~~issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of ~~stock, the remaining maximum dollar~~$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 ~~that may yet be purchased~~of common stock through February 28, 2022. For the first quarter of 2020, the Company repurchased $239.8 million in value of Euronet common stock under the ~~Repurchase program was $200.0 million.~~repurchase programs. Repurchases under ~~the Repurchase Program~~either 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. For the first half of 2019, the Company did not make any repurchases under the Repurchase Program. In connection with the issuance of the Convertible Notes, the Board of Directors of the Company authorized the Company to repurchase up to $120 million of the Company’s common stock concurrently with or following the issuance of the Convertible Notes. This authorization will expire on March 11, 2021. For the three and six months ended June 30, 2019, the Company did not make any repurchases under this special authorization.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded foreign currency translation ~~gains~~losses of ~~$12.2~~$59.8 million for the ~~second quarter of 2019,~~three months ended March 31, 2020 and ~~losses of $4.0 million, $58.5 million, and $35.6~~$16.2 million for the ~~first half of 2019,the~~ three ~~and six~~ months ended ~~June 30, 2018, respectively.~~March 31, 2019. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

~~(4)~~(5) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

A summary of acquired intangible assets and goodwill activity for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 is presented below:


(in thousands)	Acquired Intangible Assets			Goodwill		Total Intangible Assets			Acquired Intangible Assets			Goodwill			Total Intangible Assets
Balance as of December 31, 2018	$	114,485		$	704,197	$	818,682
Increases (decreases):
Balance as of December 31, 2019									$	141,847		$	743,823		$	885,670
Decreases:
Acquisition	—			686		686			—			(474		)	(474		)
Amortization	(10,303		)	—		(10,303		)	(5,726		)	—			(5,726		)
Other (primarily changes in foreign currency exchange rates)	192			1,484		1,676			(5,944		)	(28,850		)	(34,794		)
Balance as of June 30, 2019	$	104,374		$	706,367	$	810,741
Balance as of March 31, 2020									$	130,177		$	714,499		$	844,676

Estimated amortization expense on intangible assets with finite lives ~~before income taxes,~~ as of ~~June 30, 2019,~~March 31, 2020, is expected to total ~~$10.2~~$16.1 million for the remainder of ~~2019, $19.7 million for~~ 2020, ~~$18.9~~$20.8 million for 2021, ~~$17.8~~$19.8 million for 2022, ~~$13.1~~$15.3 million for 2023, ~~and $6.7~~$9.3 million for ~~2024.~~

~~In January 2019, the Company completed the acquisition of the majority interests of a small Indonesian business in which the Company previously held the minority interest~~2024 and $6.3 million for an immaterial amount of cash consideration. The acquisition has been accounted for as business combinations in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment.2025.

The Company’s annual goodwill impairment test is performed during the fourth quarter of its fiscal year. The annual impairment test for the year ended December 31, ~~2018~~2019 resulted in no impairment charge. The Company considered the impact of COVID-19 on its operations at the reporting unit level and determined that there was no impairment as of March 31, 2020.

Determining the fair value of reporting units requires significant management judgment in estimating future cash flows and assessing potential market and economic conditions. It is reasonably possible that the Company’s operations will not perform as expected, or that the estimates or assumptions included in the ~~2018~~2019 annual impairment test could change, which may result in the Company recording material non-cash impairment charges during the year in which these changes take place. In response to the COVID-19 pandemic, we will continue to monitor the evaluation of global medical experts and scientists. As information regarding the impact of the COVID-19 pandemic on the Company's business, including intangible assets, becomes available, the impacts to cash flows and the related impact on recovery of intangible assets will be evaluated.

~~(5)~~

(6) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:


	As of				As of
(in thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Money transfer settlement obligations	$	405,228	$	310,710
Accrued expenses	274,033		293,864		$	228,724	$	246,699
Accrued amounts due to mobile operators and other content providers	80,298		65,878
Derivative liabilities	25,577		36,102		130,555		41,935
Current portion of capital lease obligations	6,077		5,458		6,047		5,919
Deferred income taxes					—		4
Total	$	791,213	$	712,012	$	365,326	$	294,557

~~(6)~~(7) UNEARNED REVENUES

Accounting Standards Codification ("ASC") Topic 606, “Revenue from Contracts with Customers” (“Topic 606”) requires the deferral of incremental costs to obtain customer contracts, known as contract assets, which are then amortized to expense as part of selling, general and administrative expense over the respective periods of expected benefit. Such costs are not material; however, the Company has implemented processes and controls to record such costs on an ongoing basis and will disclose them if they become material.

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 first ~~half~~quarter of ~~2019~~2020 is primarily driven by ~~$26.3~~$19.0 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, largely offset by ~~$23.2~~$15.7 million of revenues recognized that were included in the deferred revenue balance as of December 31, ~~2018.~~2019.

~~(7)~~(8) DEBT OBLIGATIONS

Debt obligations consist of the following:


	As of						As of
(in thousands)	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Credit Facility:
Revolving credit agreements, due 2023	$	6,129		$	215,725

Revolving credit agreement							$	—		$	—
Convertible Debt:
0.75% convertible notes, unsecured, due 2049	429,563			—			440,713			436,965
1.50% convertible notes, unsecured, due 2044	—			379,859

1.375% Senior Notes, due 2026	682,080			—			661,560			673,440

Other obligations	24,279			38,513			3,598			6,215

Total debt obligations	1,142,051			634,097			1,105,871			1,116,620
Unamortized debt issuance costs	(21,318		)	(6,298		)	(18,725		)	(19,592		)
Carrying value of debt	1,120,733			627,799			1,087,146			1,097,028
Short-term debt obligations and current maturities of long-term debt obligations	(23,998		)	(38,017		)	(3,528		)	(6,089		)
Long-term debt obligations	$	1,096,735		$	589,782		$	1,083,618		$	1,090,939

Credit Facility

On October 17, 2018, the Company entered into ~~a new~~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(or 0.175% to 1.0% for base rate ~~loans.~~loans). The ~~Credit Facility~~unsecured revolving credit agreement allows for borrowings in Australian Dollars, British Pounds Sterling, Canadian Dollars, Czech Koruna, Danish Krone, ~~Euros,~~euros, Hungarian Forints, Japanese Yen, New Zealand Dollars, Norwegian Krone, Polish Zlotys, Swedish Krona, Swiss Francs, and U.S. Dollars. The ~~weighted average interest rate~~revolving credit facility contains a $200 million sublimit for the issuance of ~~the Company's borrowing under the Credit Facility~~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 unsecured revolving credit agreement contains customary affirmative and negative covenants, events of default and financial covenants. The Company was ~~2.23%~~in compliance with all debt covenants, as of ~~June 30, 2019.~~March 31, 2020.

Convertible Debt

OnOn March 18, 2019, the Company completed the sale of ~~$525~~$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. The Company used $94.2 million~~share if certain conditions are met (relating to the closing price of Euronet Common Stock exceeding certain thresholds for specified periods). Holders of the ~~net proceeds from~~Convertible Notes have the ~~issuance~~option to require the Company to purchase their notes on each of ~~the new debt~~March 15, 2025, March 15, 2029, March 15, 2034,

March 15, 2039 and March 15, 2044 at a repurchase price equal to ~~repurchase $49 million aggregate~~100% of the principal amount of the ~~Company's 1.5%~~ Convertible ~~Senior~~ Notes ~~outstanding due 2044 (the "Retired Convertible Notes") from a limited number of holders in privately negotiated transactions. The Company expects~~ to ~~use~~be repurchased, plus accrued and unpaid interest to, but excluding, the ~~remainder of the net proceeds for general corporate purposes, which may include repaying borrowings outstanding under the Credit Facility, share repurchases or acquisitions.~~relevant repurchase date.

On March 18, 2019, the Company provided a notice of redemption to the trustee of the indenture governing the ~~Retired~~Company's 1.5% Convertible Senior Notes due 2044 (the ~~"Existing Indenture"~~"Retired Convertible Notes"), pursuant to which the Company would redeem all of the remaining principal amount outstanding of the Retired Convertible Notes on May 28, 2019 (the "Redemption Date") for cash at a redemption price equal to 100% of the principal amount of the Retired Convertible Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date. The issuance of the Convertible Notes and the conversion of the Retired Convertible Notes, resulted in a $25.6 million recognition and a $34.2 million reversal of deferred tax liabilities within the additional paid-in capital as of June 30, 2019, respectively.

Prior to the Redemption Date, approximately $352.4 million principal amount of the Retired Convertible Notes were submitted for conversion. The Company elected to settle the conversion of such Retired Convertible Notes through a combination of cash and stock. The Company paid cash equal to $1,000 for each $1,000 principal amount of Retired Convertible Notes submitted for conversion and satisfied the remainder of the conversion obligation by issuing shares of the Company's Common Stock

valued bonds valued at $147.24 per share. As a result, the Company paid cash of $352.4 million and issued approximately 2.5 million shares of its Common Stock. In accordance with ASC 470, the Company recognized a loss of $9.8 million on the conversion and redemption of the debt for the first half of 2019, representing the difference between the fair value of the Retired Convertible Notes converted and the carrying value of the bonds at the time of conversion.

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 Retired Convertible Notes was $1.5 million for the first half of 2019. Accretion expense was $1.8 million and $4.6 million for the three and six months ended June 30, 2019, respectively.

Contractual interest expense for the Convertible Notes was $1.0 million ~~and $1.1~~for the three months ended March 31, 2020. Accretion expense for the Convertible Notes was $3.7 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively. Accretion~~March 31, 2020. Contractual interest expense for the Convertible Notes and Retired Convertible Notes was ~~$3.6~~$0.2 million and ~~$4.2~~$1.5 million, respectively for the three ~~and six~~ months ended ~~June 30, 2019, respectively.~~March 31, 2019. Accretion expense for the Convertible Notes and Retired Convertible Notes was $0.6 million and $2.9 million, respectively for the three months ended March 31, 2019. The effective interest rate was 4.4% for the three ~~and six~~ months ended ~~June 30, 2019.~~March 31, 2020. As of ~~June 30, 2019,~~March 31, 2020, the unamortized discount was ~~$95.4~~$84.3 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 ($669.9 million) aggregate principal amount of Senior Notes that expire on May 2026 (the “Senior Notes”). The Senior Notes accrue interest at a rate of 1.375% per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of ~~June 30, 2019,~~March 31, 2020, the Company has outstanding €600 million ($~~682.1~~661.6 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, 2020 and December 31, 2019, borrowings under these arrangements were $3.6 million and $6.2 million, respectively.

Uncommitted Line of Credit

On September 4, 2019, the Company entered into an Uncommitted Loan Agreement with Bank of America which may provide Euronet up to $100.0 million under an uncommitted line of credit. Interest on borrowings is equal to LIBOR plus 0.65% and the agreement expires September 4, 2020. As of March 31, 2020, 0 amounts were outstanding under the line of credit.

~~(8)~~(9) 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,~~dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) ~~short-term borrowings that are payable in currencies~~certain foreign currency denominated other ~~than the U.S. dollar.~~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 ~~Topic~~ 815~~Derivatives and Hedging~~ ~~("ASC Topic 815")~~, primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates ~~being~~are reflected concurrently in earnings for both the derivative instrument and the ~~hedged~~ transaction and ~~having~~have an offsetting effect.

Foreign currency exchange contracts - Ria Operations and Corporate

In the United States, the ~~Company's Ria operations use~~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. As of ~~June 30, 2019,~~March 31, 2020, the Company ~~held in its Ria operations~~ had

foreign currency forward contracts outstanding in the U.S. with a notional value of ~~$278 million,~~$213 million. The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds, euros and Mexican pesos.

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 ~~foreign currency denominated~~short-term borrowings that are payable in currencies other ~~asset and liability positions.~~than the U.S dollar. As of ~~June 30, 2019,~~March 31, 2020, the Company had foreign currency forward contracts outstanding with a notional value of ~~$86~~$193 million, primarily in ~~euros and Polish zloty.~~euros.

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 ~~may hedge some or all of~~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 ~~$16.1~~$18.1 million and ~~$34.7~~$18.6 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~respectively, and $16.8 million and $35.5 million for the three and six months ended June 30,~~

~~2018,~~ respectively. All of the derivative contracts used in the ~~Company's~~Company' s xe operations are economic hedges and are not designated as hedges under ASC ~~Topic~~ 815. The 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 amounts of foreign currency derivative customer contracts held by the Company in its xe operations as of ~~June 30, 2019~~March 31, 2020 was approximately ~~$1.4~~$1.5 billion. The significant majority of customer contracts are written in major currencies such as the ~~U.S. dollar,~~ euro, ~~New Zealand~~U.S. dollar, British pound, Australian dollar and ~~Australian~~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							Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value							Fair Value					Fair Value
(in thousands)	Balance Sheet Location	June 30, 2019		December 31, 2018		Balance Sheet Location	June 30, 2019			December 31, 2018			Balance Sheet Location	March 31, 2020		December 31, 2019		Balance Sheet Location	March 31, 2020			December 31, 2019
Derivatives not designated as hedging instruments
Foreign currency exchange contracts	Prepaid expenses and other current assets	$	38,182	$	44,637	Accrued expenses and other current liabilities	$	(25,577	)	$	(36,102	)	Prepaid expenses and other current assets	$	142,148	$	54,765	Accrued expenses and other current liabilities	$	(130,555	)	$	(41,935	)

The following tables summarize the gross and net fair value of derivative assets and liabilities as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 (in thousands):

Offsetting of Derivative Assets


							Gross Amounts Not Offset in the Consolidated Balance Sheet														Gross Amounts Not Offset in the Consolidated Balance Sheet
As of June 30, 2019	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
As of March 31, 2020															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	$	38,182	$	—	$	38,182	$	(19,279	)	$	(3,838	)	$	15,065	$	142,148	$	—	$	142,148	$	(105,671	)	$	(14,633	)	$	21,844

As of December 31, 2018
As of December 31, 2019
Derivatives subject to a master netting arrangement or similar agreement	$	44,637	$	—	$	44,637	$	(25,187	)	$	(9,918	)	$	9,532	$	54,765	$	—	$	54,765	$	(34,935	)	$	(7,362	)	$	12,468

Offsetting of Derivative Liabilities


									Gross Amounts Not Offset in the Consolidated Balance Sheet															Gross Amounts Not Offset in the Consolidated Balance Sheet
As of June 30, 2019	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
As of March 31, 2020																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	$	(25,577	)	$	—	$	(25,577	)	$	19,279	$	969	$	(5,329	)	$	(130,555	)	$	—	$	(130,555	)	$	105,671	$	1,760	$	(23,124	)

As of December 31, 2018
As of December 31, 2019
Derivatives subject to a master netting arrangement or similar agreement	$	(36,102	)	$	—	$	(36,102	)	$	25,187	$	2,048	$	(8,867	)	$	(41,935	)	$	—	$	(41,935	)	$	34,935	$	827	$	(6,173	)

See Note 9,10, 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 ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


			Amount of Gain (Loss) Recognized in Income on Derivative Contracts (a)															Amount of Gain Recognized in Income on Derivative Contracts (a)
	Location of Gain (Loss) Recognized in Income on Derivative Contracts		Three Months Ended June 30,							Six Months Ended June 30,						Location of Gain Recognized in Income on Derivative Contracts		Three Months Ended March 31,
(in thousands)		2019				2018			2019				2018				2020			2019
Foreign currency exchange contracts		Foreign currency exchange gain (loss), net		$	(2,126	)	$	7,085			$	334		$	8,380
Foreign currency exchange contracts - Ria Operations																Foreign currency exchange gain, net		$	1,019		$	2,459

(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 10, Fair Value Measurements, for the determination of the fair values of derivatives.

~~(9)~~(10) 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.

The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis:


		As of June 30, 2019											As of March 31, 2020
(in thousands)	Balance Sheet Classification	Level 1		Level 2			Level 3		Total			Balance Sheet Classification	Level 1		Level 2			Level 3		Total
Assets
Foreign currency exchange contracts	Other current assets	$	—	$	38,182		$	—	$	38,182		Other current assets	$	—	$	142,148		$	—	$	142,148
Liabilities
Foreign currency exchange contracts	Other current liabilities	$	—	$	(25,577	)	$	—	$	(25,577	)	Other current liabilities	$	—	$	(130,555	)	$	—	$	(130,555	)


		As of December 31, 2018											As of December 31, 2019
(in thousands)	Balance Sheet Classification	Level 1		Level 2			Level 3		Total			Balance Sheet Classification	Level 1		Level 2			Level 3		Total
Assets
Foreign currency exchange contracts	Other current assets	$	—	$	44,637		$	—	$	44,637		Other current assets	$	—	$	54,765		$	—	$	54,765
Liabilities
Foreign currency exchange contracts	Other current liabilities	$	—	$	(36,102	)	$	—	$	(36,102	)	Other current liabilities	$	—	$	(41,935	)	$	—	$	(41,935	)

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable ~~accrued expenses~~ and ~~other current~~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 ~~of the relatively short-term maturities of these financial instruments. The carrying value of the Company’s Credit Facility approximates fair value because~~ interest is ~~primarily~~ based on LIBOR ~~which~~that resets at various intervals of less than one year. The Company estimates the fair ~~values~~value of the Convertible ~~Notes and Senior~~ Notes using quoted prices in inactive markets for identical liabilities (Level 2). As of ~~June 30, 2019,~~ March 31, 2020, the fair values of the Convertible Notes and ~~the~~ Senior Notes were ~~$519.2~~$597.0 million and ~~$678.0~~$615.7 million, respectively, with carrying values of ~~$429.6~~$440.7 million and ~~$682.1~~$661.6 million, respectively.

~~(10)~~

(11) SEGMENT INFORMATION

~~The Company’s~~Euronet’s reportable operating segments have been determined in accordance with ASC Topic 280, Segment ~~Reporting.~~Reporting (“ASC 280”). The Company currently operates in the following ~~three~~3 reportable operating segments:

Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East and Asia ~~Pacific and the United States.~~Pacific. 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 surcharge 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 ~~digital media~~other electronic payment products in Europe, the Middle East, Asia Pacific, the ~~United States~~U.S. and South America.

Through the Money Transfer Segment, the Company provides global money transfer services under the brand names, Ria, AFEX Money Express, IME, and xe. Ria, AFEX Money Express 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 and offers money transfers on its currency data websites.~~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. ~~The Company~~Furthermore, xe provides cash management solutions and foreign currency risk management services to small-to-medium sized ~~businesses under the brand name HiFM.~~businesses.

In addition, the Company accounts for non-operating activity, ~~most~~ 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 ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018~~:2019:


	For the Three Months Ended June 30, 2019											For the Three Months Ended March 31, 2020
(in thousands)	EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated		EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated
Total revenues	$	231,946	$	184,160	$	276,783	$	(1,022	)	$	691,867	$	145,825	$	172,911	$	266,234	$	(1,063	)	$	583,907
Operating expenses:
Direct operating costs	105,568		140,427		148,834		(1,018		)	393,811		87,536		130,074		142,909		(1,063		)	359,456
Salaries and benefits	21,339		14,998		52,713		9,500			98,550		22,091		15,697		53,864		9,588			101,240
Selling, general and administrative	10,745		9,424		31,731		1,942			53,842		10,941		8,838		38,582		2,432			60,793
Depreciation and amortization	17,778		1,756		8,159		74			27,767		20,322		1,844		8,571		79			30,816
Total operating expenses	155,430		166,605		241,437		10,498			573,970		140,890		156,453		243,926		11,036			552,305
Operating income (expense)	$	76,516	$	17,555	$	35,346	$	(11,520	)	$	117,897	$	4,935	$	16,458	$	22,308	$	(12,099	)	$	31,602


	For the Three Months Ended June 30, 2018											For the Three Months Ended March 31, 2019
(in thousands)	EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated		EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated
Total revenues	$	194,893	$	166,463	$	261,816	$	(948	)	$	622,224	$	145,703	$	176,114	$	256,581	$	(889	)	$	577,509
Operating expenses:
Direct operating costs	96,326		125,423		140,707		(944		)	361,512		83,776		133,525		137,404		(872		)	353,833
Salaries and benefits	19,046		14,327		49,118		9,232			91,723		19,431		14,753		51,156		7,455			92,795
Selling, general and administrative	10,216		8,490		31,426		2,225			52,357		9,086		8,052		29,109		1,900			48,147
Depreciation and amortization	16,383		1,894		7,953		33			26,263		16,642		1,785		8,138		75			26,640
Total operating expenses	141,971		150,134		229,204		10,546			531,855		128,935		158,115		225,807		8,558			521,415
Operating income (expense)	$	52,922	$	16,329	$	32,612	$	(11,494	)	$	90,369	$	16,768	$	17,999	$	30,774	$	(9,447	)	$	56,094

The following table presents the Company’s total assets by reportable segment:



	Total Assets as of
(in thousands)	March 31, 2020		December 31, 2019
EFT Processing	$	1,755,395	$	1,914,144
epay	763,636		962,671
Money Transfer	1,406,116		1,560,136
Corporate Services, Eliminations and Other	259,238		220,715
Total	$	4,184,385	$	4,657,666

For the Six Months Ended June 30, 2019
(in thousands)
EFT
Processing
epay
Money
Transfer

Corporate
Services,
Eliminations
and Other
Consolidated
Total revenues $ 377,649
$ 360,274
$ 533,364
$ (1,911 ) $ 1,269,376
Operating expenses:
Direct operating costs 189,344
273,952
286,238
(1,890 ) 747,644
Salaries and benefits 40,770
29,751
103,869
16,955
191,345
Selling, general and administrative 19,831
17,476
60,840
3,842
101,989
Depreciation and amortization 34,420
3,541
16,297
149
54,407
Total operating expenses 284,365
324,720
467,244
19,056
1,095,385
Operating income (expense) $ 93,284
$ 35,554
$ 66,120
$ (20,967 ) $ 173,991

For the Six Months Ended June 30, 2018
(in thousands)
EFT
Processing
epay
Money
Transfer

Corporate
Services,
Eliminations
and Other
Consolidated
Total revenues $ 330,597
$ 343,308
$ 500,652
$ (1,818 ) $ 1,172,739
Operating expenses:
Direct operating costs 178,163
260,345
268,138
(1,810 ) 704,836
Salaries and benefits 36,051
28,744
96,475
16,159
177,429
Selling, general and administrative 19,331
17,223
61,125
4,689
102,368
Depreciation and amortization 32,583
3,772
15,848
62
52,265
Total operating expenses 266,128
310,084
441,586
19,100
1,036,898
Operating income (expense) $ 64,469
$ 33,224
$ 59,066
$ (20,918 ) $ 135,841

~~The following table presents the Company’s property and equipment and total assets by reportable segment:~~

Property and Equipment, net as of Total Assets as of
(in thousands) June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
EFT Processing $ 237,468
$ 215,106
$ 2,052,915
$ 1,220,141
epay 37,381
31,172
718,894
780,220
Money Transfer 49,384
45,517
1,508,408
1,310,775
Corporate Services, Eliminations and Other 65
74
53,119
10,019
Total $ 324,298
$ 291,869
$ 4,333,336
$ 3,321,155

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 June 30, 2019 For the Six Months Ended June 30, 2019
(in thousands)
EFT
Processing
epay
Money
Transfer
Total
EFT
Processing
epay
Money
Transfer
Total
Europe $ 192,696
$ 123,322
$ 93,576
$ 409,594
$ 300,307
$ 238,228
$ 179,135
$ 717,670
North America 7,958
37,732
145,528
191,218
16,163
77,396
280,360
373,919
Asia Pacific 31,287
18,920
31,577
81,784
61,164
36,294
62,290
159,748
Other 5
4,186
6,102
10,293
15
8,356
11,579
19,950
Eliminations —
—
—
(1,022 ) —
—
—
(1,911 )
Total $ 231,946
$ 184,160
$ 276,783
$ 691,867
$ 377,649
$ 360,274
$ 533,364
$ 1,269,376

For the Three Months Ended June 30, 2018 For the Six Months Ended June 30, 2018
(in thousands)
EFT
Processing
epay
Money
Transfer
Total
EFT
Processing
epay
Money
Transfer
Total
Europe $ 158,413
$ 103,344
$ 81,816
$ 343,573
$ 258,499
$ 216,794
$ 155,774
$ 631,067
North America 8,327
42,270
143,755
194,352
16,343
83,321
272,739
372,403
Asia Pacific 28,146
17,158
31,713
77,017
55,740
34,611
63,854
154,205
Other 7
3,691
4,532
8,230
15
8,582
8,285
16,882
Eliminations —
—
—
(948 ) —
—
—
(1,818 )
Total $ 194,893
$ 166,463
$ 261,816
$ 622,224
$ 330,597
$ 343,308
$ 500,652
$ 1,172,739



	For the Three Months Ended March 31, 2020
(in thousands)	EFT Processing		epay		Money Transfer		Total
Europe	$	99,474	$	115,277	$	91,058	$	305,809
North America	15,019		33,852		137,895		186,766
Asia Pacific	31,328		19,274		30,848		81,450
Other	4		4,508		6,433		10,945
Eliminations	—		—		—		(1,063		)
Total	$	145,825	$	172,911	$	266,234	$	583,907



	For the Three Months Ended March 31, 2019
(in thousands)	EFT Processing		epay		Money Transfer		Total
Europe	$	107,611	$	114,906	$	85,559	$	308,076
North America	8,205		39,664		134,832		182,701
Asia Pacific	29,877		17,374		30,713		77,964
Other	10		4,170		5,477		9,657
Eliminations	—		—		—		(889		)
Total	$	145,703	$	176,114	$	256,581	$	577,509

~~(11)~~(12) INCOME TAXES

The Company's effective income tax rate was ~~31.5%~~58.7% and 31.6% for ~~both~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019,~~, respectively, compared to 27.3% and 30.1% for the three and six months ended~~ ~~June 30, 2018~~, respectively. The Company's effective income tax ~~rates~~rate for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 ~~and 2018 were~~was higher than the applicable statutory income tax rate of 21% primarily as a result of certain foreign earnings of the Company being subject to higher local statutory income tax ~~rates and~~rates. The Company's effective income tax rate for the three months ended March 31, 2019 was higher than the applicable statutory income tax rate of 21% largely because of the application to the Company of the ~~U.S.~~ global intangible low-taxed income ("GILTI") tax provision ~~to the Company. The GILTI provision subjects the Company's current~~and certain foreign earnings of the Company being subject to ~~U.S. taxation which creates additional U.S.~~higher local statutory income tax ~~expense.~~rates.

~~(12)~~(13) COMMITMENTS

As of ~~June 30, 2019,~~March 31, 2020, the Company had ~~$76.0~~$73.0 million of stand-by letters of credit/bank guarantees issued on its behalf, of which ~~$46.3~~$49.7 million are outstanding under the Credit Facility. The remaining stand-by letters of credit/bank guarantees are collateralized by ~~$3.7~~$3.9 million ofby cash deposits held by the respective issuing banks.

Under certain circumstances, Euronet grants guarantees in support of obligations of subsidiaries. As of ~~June 30, 2019,~~March 31, 2020, the

Company had granted off balance sheet guarantees for cash in various ATM networks amounting to ~~$12.6~~$11.4 million over the terms of the cash supply agreements and performance guarantees amounting to approximately ~~$41.6~~$37.5 million over the terms of agreements with the customers.

From time to time, the Company enters into agreements with commercial counterparties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. The amount of such potential obligations is generally not stated in the agreements. Euronet's liability under such indemnification provisions may be mitigated by relevant insurance coverage and may be subject to time and materiality limitations, monetary caps and other conditions and defenses. Such indemnification obligations include the following:

In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for damage to ATMs and theft of ATM network ~~cash that, is not recorded on the Company’s Consolidated Balance Sheets.~~cash. As of ~~June 30, 2019,~~March 31, 2020, the balance of such cash used in the Company's ATM networks for which the Company was responsible was approximately ~~$718~~$509 million. The Company maintains insurance policies to mitigate this exposure;

In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for losses suffered by its customers and other parties as a result of ~~any~~the breach of its computer systems, including in particular, losses arising from fraudulent transactions made using information stolen through its processing systems. The Company maintains ~~systems of internal controls and~~ insurance policies to mitigate this exposure;

In connection with the license of proprietary systems to customers, the Company provides certain warranties and infringement indemnities to the licensee, which generally warrant that such systems do not infringe on intellectual property owned by third parties and that the systems will perform in accordance with their specifications;

Euronet has entered into purchase and service agreements with vendors and consulting agreements with providers of consulting services, pursuant to which the Company has agreed to indemnify certain of such vendors and consultants, respectively, against third-party claims arising from the Company’s use of the vendor’s product or the services of the vendor or consultant;

In connection with acquisitions and dispositions of subsidiaries, operating units and business assets, the Company has entered into agreements containing indemnification provisions, which can be generally described as follows: (i) in connection with acquisitions of operating units or assets made by Euronet, the Company has agreed to indemnify the seller against ~~third-party~~third party claims made against the seller relating to the operating unit or asset and arising after the closing of the transaction, and (ii) in connection with dispositions made by Euronet, Euronet has agreed to indemnify the buyer against damages incurred by the buyer due to the buyer’s reliance on representations and warranties relating to the subject subsidiary, operating unit or business assets in the disposition agreement if such representations or warranties were untrue when made; and

Euronet has entered into agreements with certain third parties, including banks that provide fiduciary and other services to Euronet or to the Company’s benefit plans. Under such agreements, the Company has agreed to indemnify such service providers for third-party claims relating to carrying out their respective duties under such agreements.

The Company is also required to meet minimum capitalization and cash requirements of various regulatory authorities in the jurisdictions in which the Company has money transfer operations. The Company has obtained surety bonds in compliance with money transfer licensing requirements of the applicable governmental authorities.

To date, the Company is not aware of any significant claims made by the indemnified parties or third parties to guarantee agreements with the Company and, accordingly, no liabilities were recorded as of ~~June 30, 2019~~March 31, 2020 or December 31, ~~2018.~~2019.

~~(13)~~(14) LITIGATION AND CONTINGENCIES

From time to time, the Company is a party to legal or regulatory proceedings arising in the ordinary course of its business. Currently, there are no legal proceedings or regulatory findings that management believes, either individually or in the aggregate, would have a material adverse effect on the Company's consolidated financial condition or results of operations. In accordance with U.S. GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case.

~~(14)~~

(15) LEASES

The Company enters into operating leases for ATM sites, office ~~space,~~spaces, retail stores and equipment. The Company's finance leases are immaterial. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease terms.

The present value of lease payments is determined using the incremental borrowing rate based on information available at the lease commencement date. All leases with fixed payments, including leases with an initial term of 12 months or less, are recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Most leases include an option to renew, with renewal terms that can extend the lease terms. The exercise of lease renewal options is at the Company’s sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease terms. The Company also has a unilateral termination right for ~~a majority~~most of the ATM site leases. Since the Company is not reasonably certain to exercise the renewal or ~~terminal~~termination options, the options are not considered in determining the lease terms, and associated payment impacts are excluded from lease payments.

Certain of the Company's lease agreements include variable rental payments based on revenues generated from the use of the leased location and certain leases include rental payments adjusted periodically for inflation. Variable lease payments are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs and are excluded from the right of use assets and lease liabilities balances. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Future minimum lease payments

Future minimum lease payments under ~~the operating leases as of June 30, 2019 are:~~

As of June 30, 2019
Maturity of Lease Liabilities (in thousands)
Operating Leases
Remainder of 2019 $ 64,248
2020 107,916
2021 78,654
2022 53,295
2023 33,856
Thereafter 53,388
Total lease payments $ 391,357
Less: imputed interest (25,596 )
Present value of lease liabilities $ 365,761

~~Future minimum lease payments under the~~ non-cancelable operating leases (with initial lease terms in excess of one year) as of ~~December~~March 31, ~~2018 are as follows:~~2020 are:

(in thousands)
Operating
Leases
Year ending December 31,
2019 $ 80,803
2020 65,590
2021 49,052
2022 37,823
2023 30,192
Thereafter 48,191
Total minimum lease payments $ 311,651



	As of March 31, 2020
Maturity of Lease Liabilities (in thousands)	Operating Leases
Remainder of 2020	$	98,827
2021	99,540
2022	70,832
2023	49,670
2024	30,813
Thereafter	46,573
Total lease payments	$	396,255
Less: imputed interest	(23,465		)
Present value of lease liabilities	$	372,790

Lease expense recognized in the Consolidated Statements of Income is summarized as follows:


Lease Expense (in thousands)	Income Statement Classification	Three Months Ended June 30, 2019		Six months ended June 30, 2019		Income Statement Classification	Three Months Ended March 31, 2020
Operating lease expense	Selling, general and administrative and Direct operating costs	$	33,113	$	63,573	Selling, general and administrative and Direct operating costs	$	33,188
Variable lease expense	Selling, general and administrative and Direct operating costs	12,320		18,889		Selling, general and administrative and Direct operating costs	8,680
Total lease expense		$	45,433	$	82,462		$	41,868

Other information about lease amounts recognized in the consolidated financial statements is summarized as follows:



Lease Term and Discount Rate of Operating Leases	As of ~~June 30, 2019~~March 31, 2020
Weighted- average remaining lease term (years)	~~4.5~~4.4
Weighted- average discount rate	~~3.1~~3.0	%

The following table presents supplemental cash flow and non-cash information related to ~~leases:~~leases.


Other Information (in thousands)	Six months ended June 30, 2019		Three Months Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities (a)	$	62,935	$	32,792
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets:
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets
ROU assets obtained in exchange for new operating lease liabilities	$	157,914	$	50,525

(a) Included in Net cash provided by operating activities on the Company's Consolidated Statements of Cash Flows.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The terms "Euronet," the "Company," "we" and "us" as used herein refer to Euronet Worldwide, Inc. and its subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements that constitute forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Generally, the words "believe," "expect," "anticipate," "intend," "estimate," "will" and similar expressions identify forward-looking statements. However, the absence of these words or similar expressions does not mean the statement is not forward-looking. All statements other than statements of historical facts included in this document are forward-looking statements, including, but not limited to, statements regarding the following:

our business plans and financing plans and requirements;

trends affecting our business plans and financing plans and requirements;

the effect of the COVID-19 pandemic on our business;

trends affecting our business;

the adequacy of capital to meet our capital requirements and expansion plans;

the assumptions underlying our business plans;

our ability to repay indebtedness;

our estimated capital expenditures;

the potential outcome of loss contingencies;

our expectations regarding the closing of any pending acquisitions;

business strategy;

government regulatory action;

the expected effects of changes in laws or accounting standards;

technological advances; and

projected costs and revenues.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct.

Investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may materially differ from those in the forward-looking statements as a result of various factors, including, but not limited to, the effect of the COVID-19 pandemic on our business; conditions in world financial markets and general economic conditions, including the effects in Europe of the negotiations related to the United Kingdom's ~~proposed~~ departure from the European Union (E.U.), and economic conditions in specific countries and regions; technological developments affecting the market for our products and services; our ability to successfully introduce new products and services; foreign currency exchange rate fluctuations; the effects of any breach of our computer systems or those of our customers or vendors, including our financial processing networks or those of other third parties; interruptions in any of our systems or those of our vendors or other third parties; our ability to renew existing contracts at profitable rates; changes in fees payable for transactions performed for cards bearing international logos or over switching networks such as card transactions on ATMs; ~~Visa's rule change~~the impact of changes in rules imposed by international card organizations such as Visa and Mastercard on card transactions on ATMs, including reductions in ATM interchange fees, restrictions on the ability to ~~allow~~apply direct access fees, the ability to offer DCC transactions on ATMs, and increases in fees charged on DCC transactions; the impact of changes in laws and regulations affecting the profitability of our ~~ATMs to provide~~services, including regulation of DCC ~~beginning mid-April 2019;~~transactions or ATM access fees by the E.U.; our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, consumer and data protection and ~~GDPR or PSD2,~~the E.U.'s General Data Privacy Regulation and the Services Payment Directive ("PSD2") and Part II, Item 1A of this Quarterly Report on Form 10-Q, requirements; changes in laws and regulations affecting our business, including tax and immigration laws and any laws regulating payments, including DCC transactions; changes in our relationships with, or in fees charged by, our business partners; competition; the outcome of claims and other loss contingencies affecting Euronet; general economic, financial and market conditions and the duration and extent of any economic downturns related to the COVID-19 pandemic or future ~~economic downturns;~~events; the cost of borrowing, availability of credit and terms of and compliance with debt covenants; renewal of sources of funding as they expire and the availability of replacement funding; the outlook for markets we serve; and those factors referred to above and as set forth and more fully described in Part I, Item 1A — Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 and in Part II, Item ~~1A-Risk Factors in our~~1A of this Quarterly Report on Form ~~10-Q for the quarter ended June 30, 2019.~~10-Q. Our Annual Report on Form 10-K ~~and Quarterly Reports on Form 10-Q are~~is available on the SEC's EDGAR website at www.sec.gov, and copies may also be obtained by contacting the Company. Any forward-looking statements made in this Form 10-Q speak only

as of the date of this report. Except as required by law, we do not intend, and do not undertake any obligation, to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

OVERVIEW

COMPANY OVERVIEW, GEOGRAPHIC LOCATIONS AND PRINCIPAL PRODUCTS AND SERVICES

Euronet is a leading electronic payments provider. We offer payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Our primary product offerings include comprehensive ~~automated teller machine (“ATM”), point-of-sale (“POS”),~~ATM, POS, card outsourcing, card issuing and merchant acquiring ~~services;~~services, software solutions, ~~and cloud based payment solutions;~~ electronic distribution of prepaid mobile airtime and other electronic payment ~~products;~~products, foreign currency exchange services and global money transfer services. We operate in the following three segments:

•

~~The EFT Processing Segment, which processes transactions for a network of~~ ~~46,636~~ ~~ATMs and approximately~~ ~~307,000~~ POS terminals across Europe, the Middle East, Asia Pacific and the United States. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, DCC, domestic and international surcharge and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.

The EFT Processing Segment, which processes transactions for a network of 42,176 ATMs and approximately 329,000 POS terminals across Europe, the Middle East, Asia Pacific, and the United States. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, DCC, and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.

The epay Segment, which provides distribution, processing and collection services for prepaid mobile airtime and other electronic content. We operate a network of approximately 732,000 POS terminals providing electronic processing of prepaid mobile airtime top-up services and other electronic content in Europe, the Middle East, Asia Pacific, the United States and South America. We also provide vouchers and physical gift fulfillment services in Europe.

The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, AFEX Money Express, IME and xe and global account-to-account money transfer services under the brand name xe. We offer services under the brand names Ria, AFEX Money Express and IME through a network of sending agents, Company-owned stores (primarily in North America, Europe and Malaysia) and our websites (riamoneytransfer.com and online.imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately 402,000 locations. xe is a provider of foreign currency exchange information and offers money transfer services on its currency data websites (xe.com and x-rates.com). In addition to money transfers, we also offer customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up. Through our xe brand, we offer cash management solutions and foreign currency risk management services to small-to-medium sized businesses.

•

The epay Segment, which provides distribution, processing and collection services for digital media (formerly referred to as non-mobile content) and prepaid mobile airtime. We operate a network of approximately ~~700,000~~ POS terminals providing electronic processing of digital media and prepaid mobile airtime top-up services in Europe, the Middle East, Asia Pacific, the United States and South America. We also provide vouchers and physical gift fulfillment services in Europe.

•

The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, IME and xe. xe also provides global account-to-account money transfer services. We offer services under the brand names Ria and IME through a network of sending agents, Company-owned stores (primarily in North America, Europe and Malaysia) and Ria branded websites (riamoneytransfer.com and online.imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately ~~385,000~~ locations. xe offers money transfer services on its websites (xe.com and x-rates.com) and through its customer service representatives. The xe websites also provide foreign currency exchange information. In addition to money transfers, we also offer customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up. We offer services under the brand name xe through our websites (www.xe.com and https://transfer.xe.com). Through our HiFM brand, we offer cash management solutions and foreign currency risk management services to small-to-medium sized businesses.

We have six processing centers in Europe, five in Asia Pacific and two in North America. We have 36 principal offices in Europe, 14 in Asia Pacific, ~~nine~~10 in North America, three in the Middle East, two in South America and one in Africa. Our executive offices are located in Leawood, Kansas, USA. With approximately ~~72%~~70% of our revenues denominated in currencies other than the U.S. dollar, any significant changes in foreign currency exchange rates will likely have a significant impact on our results of ~~operations.~~operations (for a further discussion, see Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019).

SOURCES OF REVENUES AND CASH FLOW

Euronet ~~primarily~~ earns revenues and income primarily from ATM management fees, transaction fees, commissions and foreign currency exchange margin. Each operating segment’s sources of revenues are described below.

EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately ~~33% and 30%~~25% of total consolidated revenues for the ~~second~~first quarter ~~and first half~~ of ~~2019, respectively,~~2020, are ~~primarily~~ derived from fees charged for transactions made by cardholders on our proprietary network of ATMs, fixed management fees and transaction fees we charge to customers for operating ATMs and processing debit and credit cards under outsourcing and cross-border acquiring agreements, foreign currency exchange margin on DCC transactions, domestic and international surcharge, foreign currency dispensing and other value added services such as advertising, prepaid telecommunication recharges, bill payment, and money transfers provided over ATMs. Revenues in this segment are also derived from cardless payment, banknote recycling, tax refund services, license fees, professional services and maintenance fees for proprietary application software and sales of related hardware.

epay Segment — Revenues in the epay Segment, which represented approximately ~~27%~~ ~~and 28%~~30% of total consolidated revenues for the ~~second~~first quarter ~~and first half~~ of ~~2019, respectively,~~2020, are primarily derived from commissions or processing fees received from mobile phone operators for the processing and distribution of prepaid mobile airtime and commissions earned from the distribution of other ~~digital media products,~~electronic content, vouchers, and physical gifts. The proportion of epay Segment revenues earned from the distribution of prepaid mobile phone time as compared with other ~~digital media~~electronic products has decreased over time, and digital media content now produces approximately ~~61%~~40% of epay Segment revenues. Other ~~digital media products~~electronic content offered by this segment ~~include~~includes digital content such as music, games and software, as well as, other products including prepaid long distance calling card plans, prepaid Internet plans, prepaid debit cards, gift cards, vouchers, transport payments, lottery payments, bill payment, and money transfer.

Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately ~~40%~~ ~~and 42%~~45% of total consolidated revenues for the ~~second~~first quarter ~~and first half~~ of ~~2019, respectively,~~2020, are primarily derived from transaction fees, as well as the margin earned from purchasing foreign currency at wholesale exchange rates and selling the foreign currency to customers at retail exchange rates. We have a sending agent network in place comprised of agents, customer service representatives, Company-owned stores, primarily in North America, Europe and Malaysia, and Ria, and xe branded websites, along with a worldwide network of correspondent agents, consisting primarily of financial institutions in the transfer destination countries. Sending and correspondent agents each earn fees for cash collection and distribution services, which are recognized as direct operating costs at the time of sale.

The Company offers a money transfer product called Walmart-2-Walmart Money Transfer Service which allows customers to transfer money to and from Walmart stores in the U.S. Our Ria business executes the transfers with Walmart serving as both the sending agent and payout correspondent. Ria earns a lower margin from these transactions than its traditional money transfers; however, the arrangement has added a significant number of transactions to ~~Ria’s~~Ria's business. The agreement with Walmart establishes Ria as the only party through which Walmart will sell U.S. domestic money transfers branded with Walmart marks. The agreement is effective until April ~~2020.~~2023. Thereafter, it will automatically renew for subsequent one year terms unless either party provides notice to the contrary. The agreement imposes certain obligations on each party, the most significant being service level requirements by Ria and money transfer compliance requirements by Walmart. Any violation of these requirements by Ria could result in an obligation to indemnify Walmart or termination of the contract by Walmart. However, the agreement allows the parties to resolve disputes by mutual agreement without termination of the agreement.

Corporate Services, Eliminations and Other -— In addition to operating in our principal operating segments described above, our “Corporate Services, Eliminations and Other” category includes non-operating activity, certain inter-segment eliminations and the cost of providing corporate and other administrative services to the operating segments, including most share-based compensation expense. These services are not directly identifiable with our reportable operating segments.

~~OPPORTUNITIES AND CHALLENGES~~Opportunities and Challenges

Our expansion plans and opportunities are focused on eight primary areas:

increasing the number of ATMs and cash deposit terminals in our independent ATM networks;

increasing transactions processed on our network of owned and operated ATMs and POS devices;

signing new outsourced ATM and POS terminal management contracts;

expanding value added services and other products offered by our EFT Processing Segment, including the sale of DCC, acquiring and other prepaid card services to banks and retailers;

expanding our epay processing network and portfolio of digital content;

expanding our money transfer services, cross-currency ~~payment~~payments products and bill payment network;

expanding our cash management solutions and foreign currency risk management services; and

developing our credit and debit card outsourcing business.

EFT Processing Segment — The continued expansion and development of our EFT Processing Segment business will depend on various factors including, but not necessarily limited to, the following:

the impact of competition by banks and other ATM operators and service providers in our current target markets;

the demand for our ATM outsourcing services in our current target markets;

our ability to develop products or services, including value added services, to drive increases in transactions and revenues;

the expansion of our various business lines in markets where we operate and in new markets;

our entry into additional card acceptance and ATM management agreements with banks;

our ability to obtain required licenses in markets we intend to enter or expand services;

our ability to enter into sponsorship ~~agreements;~~agreements where our licenses are not applicable;

our ability to enter into and renew ATM network cash supply agreements with financial institutions;

the availability of financing for expansion;

our ability to efficiently to install ATMs contracted under newly awarded outsourcing agreements;

our ability to renew existing contracts at profitable rates;

our ability to maintain pricing at current levels or mitigate price reductions in certain markets;

the impact of changes in rules imposed by international card organizations such as Visa and Mastercard on card transactions on ATMs, including reductions in ATM interchange fees, restrictions on the ability to apply direct access fees, the ability to offer DCC transactions on ATMs, and increases in fees charged on DCC transactions;

the impact of changes in laws and regulations affecting the profitability of our services, including regulation of DCC transactions by the E.U.;

the impact of overall market trends on ATM transactions in our current target markets:

our ability to expand and sign additional customers for the cross-border merchant processing and acquiring business; ~~and~~

the continued development and implementation of our software products and their ability to interact with other leading ~~products.~~products; and

the duration and severity of the COVID-19 pandemic may limit access to ATM locations, create consumer fear regarding contracting the virus by touching ATM screens, keyboards or cash, impact consumer cross-border travel habits and reduce high margin cross-border transactions.

We consistently evaluate and add prospects to our list of potential ATM outsource customers. However, we cannot predict the increase or decrease in the number of ATMs we manage under outsourcing agreements because this depends largely on the willingness of banks to enter into outsourcing contracts with us. Due to the thorough internal reviews and extensive negotiations conducted by existing and prospective banking customers in choosing outsource vendors, the process of entering into or renewing outsourcing agreements can take several months. The process is further complicated by the legal and regulatory considerations of local countries. These agreements tend to cover large numbers of ATMs, so significant increases and decreases in our pool of managed ATMs could result from the acquisition or termination of one or more of these management contracts. Therefore, the timing of both current and new contract revenues is uncertain and unpredictable.

Software products are an integral part of our product lines, and our investment in research, development, delivery and customer support reflects our ongoing commitment to an expanded customer base.

epay Segment — The continued expansion and development of the epay Segment business will depend on various factors, including, but not necessarily limited to, the following:

our ability to maintain and renew existing agreements, and to negotiate new agreements in additional markets with mobile operators, digital content providers, agent financial institutions and retailers;

our ability to use existing expertise and relationships with mobile operators, digital content providers and retailers to our advantage;

the continued use of third-party providers such as ourselves to supply electronic processing solutions for existing and additional digital content;

the development of mobile phone networks in the markets in which we do business and the increase in the number of mobile phone users;

the overall pace of growth in the prepaid mobile phone and digital content market, including consumer shifts between prepaid and postpaid ~~services and moves by mobile operators to sell prepaid mobile airtime directly to consumers;~~

~~the effect of competition among mobile operators on the cost of mobile data and airtime which results in fewer or less frequent purchases of prepaid mobile airtime by consumers;~~services;

our market share of the retail distribution capacity;

the development of new technologies that may compete with POS distribution of prepaid mobile airtime and other products;

the level of commission that is paid to the various intermediaries in the electronic payment distribution chain;

our ability to fully recover monies collected by retailers;

our ability to add new and differentiated products in addition to those offered by mobile operators;

our ability to develop and effectively market additional value added services;

our ability to take advantage of cross-selling opportunities with our EFT Processing and Money Transfer Segments, including providing money transfer services through our distribution network; ~~and~~

the availability of financing for further ~~expansion.~~expansion; and

the duration and severity of the COVID-19 pandemic may limit access to POS merchant locations, our ability to maintain and grow our relationships with digital content providers that are experiencing increased demand due to the COVID-19 pandemic, and increase our credit risk as many of our merchants are temporarily closed as nonessential services.

In all of the markets in which we operate, we are experiencing significant competition which will impact the rate at which we may be able to grow organically. Competition among prepaid mobile airtime and ~~digital~~electronic content distributors results in the increase of commissions paid to retailers and increases in retailer attrition rates. To grow, we must capture market share from other prepaid mobile airtime and ~~digital~~electronic content distributors, offer a superior product offering and demonstrate the value of a global network. In certain markets in which we operate, many of the factors that may contribute to rapid growth (growth in ~~digital media products,~~electronic content, expansion of our network of retailers and access to products of mobile operators and other ~~digital media~~content providers) remain present.

Money Transfer Segment — The continued expansion and development of our Money Transfer Segment business will depend on various factors, including, but not necessarily limited to, the following:

the continued growth in worker migration and employment opportunities;

the mitigation of economic and political factors that have had an adverse impact on money transfer volumes, such as changes in the economic sectors in which immigrants work and the developments in immigration policies in the countries in which we operate;

the continuation of the trend of increased use of electronic money transfer and bill payment services among high-income individuals, immigrant workers and the unbanked population in our markets;

our ability to maintain our agent and correspondent networks;

our ability to offer our products and services or develop new products and services at competitive prices to drive increases in transactions;

the development of new technologies that may compete with our money transfer network, and our ability to acquire, develop and implement new technologies;

the expansion of our services in markets where we operate and in new markets;

our ability to strengthen our brands;

our ability to fund working capital requirements;

our ability to recover from agents funds collected from customers and our ability to recover advances made to correspondents;

our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate;

our ability to take advantage of cross-selling opportunities with ~~the~~our epay Segment, including providing prepaid services through our stores and agents worldwide;

our ability to leverage our banking and merchant/retailer relationships to expand money transfer corridors to Europe, Asia and Africa, including high growth corridors to Central and Eastern European countries;

the availability of financing for further expansion;

the ability to maintain banking relationships necessary for us to service our customers;

our ability to successfully expand our agent network in Europe using our payment institution licenses under the Second Payment Services Directive ("PSD2") and using our various licenses in the United States; ~~and~~

our ability to provide additional value-added products under the xe ~~brand.~~brand; and

the duration and severity of the COVID-19 pandemic impact on worker migration and employment opportunities, the ability of our customers to access agent network locations due to government ordered business closures, and the potential for an increase in credit risk and customer agent receivable defaults.

For all segments, our continued expansion may involve additional acquisitions that could divert our resources and management time and require integration of new assets with our existing networks and services. Our ability to effectively manage our growth has required us to expand our operating systems and employee base, particularly at the management level, which has

added incremental operating costs. An inability to continue to effectively manage expansion could have a material adverse effect on our business, growth, financial condition or results of operations. Inadequate technology and resources would impair our ability to maintain current processing technology and efficiencies, as well as deliver new and innovative services to compete in the marketplace.

SEGMENT SUMMARY RESULTS OF OPERATIONS

Revenues and operating income by segment for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018~~2019 are summarized in the tables below:


	Revenues for the Three Months Ended June 30,						Year-over-Year Change					Revenues for the Six Months Ended June 30,						Year-over-Year Change					Revenues for the Three Months Ended March 31,						Year-over-Year Change
(dollar amounts in thousands)	2019			2018			Increase (Decrease) Amount			Increase Percent		2019			2018			Increase (Decrease) Amount			Increase Percent		2020			2019			Increase (Decrease) Amount			Increase (Decrease) Percent
EFT Processing	$	231,946		$	194,893		$	37,053		19	%	$	377,649		$	330,597		$	47,052		14	%	$	145,825		$	145,703		$	122		—	%
epay	184,160			166,463			17,697			11	%	360,274			343,308			16,966			5	%	172,911			176,114			(3,203		)	(2	)%
Money Transfer	276,783			261,816			14,967			6	%	533,364			500,652			32,712			7	%	266,234			256,581			9,653			4	%
Total	692,889			623,172			69,717			11	%	1,271,287			1,174,557			96,730			8	%	584,970			578,398			6,572			1	%
Corporate services, eliminations and other	(1,022		)	(948		)	(74		)	8	%	(1,911		)	(1,818		)	(93		)	5	%	(1,063		)	(889		)	(174		)	20	%
Total	$	691,867		$	622,224		$	69,643		11	%	$	1,269,376		$	1,172,739		$	96,637		8	%	$	583,907		$	577,509		$	6,398		1	%

Operating Income (Expense) for the Three Months Ended June 30, Year-over-Year Change Operating Income (Expense) for the Six Months Ended June 30, Year-over-Year Change
(dollar amounts in thousands) 2019 2018 Increase (Decrease)
Amount Increase
Percent 2019 2018 Increase
Amount Increase
(Decrease) Percent
EFT Processing $ 76,516
$ 52,922
$ 23,594
45 % $ 93,284
$ 64,469
$ 28,815
45 %
epay 17,555
16,329
1,226
8 % 35,554
33,224
2,330
7 %
Money Transfer 35,346
32,612
2,734
8 % 66,120
59,066
7,054
12 %
Total 129,417
101,863
27,554
27 % 194,958
156,759
38,199
24 %
Corporate services, eliminations and other (11,520 ) (11,494 ) (26 ) — % (20,967 ) (20,918 ) (49 ) — %
Total $ 117,897
$ 90,369
$ 27,528
30 % $ 173,991
$ 135,841
$ 38,150
28 %



	Operating Income (Expense) for the Three Months Ended March 31,						Year-over-Year Change
(dollar amounts in thousands)	2020			2019			Increase (Decrease) Amount			Increase (Decrease) Percent
EFT Processing	$	4,935		$	16,768		$	(11,833	)	(71	)%
epay	16,458			17,999			(1,541		)	(9	)%
Money Transfer	22,308			30,774			(8,466		)	(28	)%
Total	43,701			65,541			(21,840		)	(33	)%
Corporate services, eliminations and other	(12,099		)	(9,447		)	(2,652		)	28	%
Total	$	31,602		$	56,094		$	(24,492	)	(44	)%

Impact of changes in foreign currency exchange rates

Our revenues and local expenses are recorded in the functional currencies of our operating entities, and then are translated into U.S. dollars for ~~financial~~ reporting purposes; therefore, amounts we earn outside the U.S. are negatively impacted by a stronger U.S. dollar and positively impacted by a weaker U.S. dollar. ~~Considering the results by country and the associated functional currency,~~If significant, in our discussion we ~~estimate that our reported consolidated operating income for the second quarter and first half of 2019 were each approximately 5% less, due~~will refer to the ~~changes~~impact of fluctuations in foreign currency exchange rates ~~when compared to the same periods~~in our comparison of ~~2018.~~operating segment results.

To provide further perspective on the impact of foreign currency exchange rates, the following table shows the changes in values relative to the U.S. dollar of the currencies of the countries in which we have our most significant operations:


	Average Translation Rate Three Months Ended June 30,				Decrease Percent			Average Translation Rate Six Months Ended June 30,							Decrease Percent			Average Translation Rate Three Months Ended March 31,							Decrease Percent
Currency (dollars per foreign currency)	2019		2018				2019				2018				Decrease Percent		2020				2019				Decrease Percent
Australian dollar	$	0.7002	$	0.7567	Decrease Percent	(7	)%		$	0.7064			$	0.7713		(8	)%		$	0.6144			$	0.7125		(14	)%
British pound	$	1.2851	$	1.3602	(6	)%		$	1.2938			$	1.3760		(6	)%		$	1.2405			$	1.3024		(5	)%
euro	$	1.1236	$	1.1919	(6	)%		$	1.1295			$	1.2104		(7	)%		$	1.1026			$	1.1354		(3	)%
Hungarian forint	$	0.0035	$	0.0038	(8	)%		$	0.0035			$	0.0039		(10	)%		$	0.0031			$	0.0036		(14	)%
Indian rupee	$	0.0144	$	0.0149	(3	)%		$	0.0143			$	0.0152		(6	)%		$	0.0133			$	0.0142		(6	)%
Malaysian ringgit	$	0.2412	$	0.2534	(5	)%		$	0.2428			$	0.2542		(4	)%		$	0.2319			$	0.2445		(5	)%
New Zealand dollar	$	0.6625	$	0.7042	(6	)%		$	0.6719			$	0.7156		(6	)%		$	0.5966			$	0.6813		(12	)%
Polish zloty	$	0.2626	$	0.2799	(6	)%		$	0.2633			$	0.2870		(8	)%		$	0.2418			$	0.2639		(8	)%

COMPARISON OF OPERATING RESULTS FOR THE THREE ~~AND SIX~~ MONTHS ENDED ~~JUNE 30, 2019~~MARCH 31, 2020 AND ~~2018~~2019

EFT PROCESSING SEGMENT

The following table ~~presents~~summarizes the results of operations for our EFT Processing Segment for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018~~2019 ~~for our EFT Processing Segment:~~:


	Three Months Ended June 30,				Year-over-Year Change				Six Months Ended June 30,				Year-over-Year Change				Three Months Ended March 31,				Year-over-Year Change
(dollar amounts in thousands)	2019		2018		Increase Amount		Increase Percent		2019		2018		Increase Amount		Increase Percent		2020		2019		Increase (Decrease) Amount			Increase (Decrease) Percent
Total revenues	$	231,946	$	194,893	$	37,053	19	%	$	377,649	$	330,597	$	47,052	14	%	$	145,825	$	145,703	$	122		—	%
Operating expenses:
Direct operating costs	105,568		96,326		9,242		10	%	189,344		178,163		11,181		6	%	87,536		83,776		3,760			4	%
Salaries and benefits	21,339		19,046		2,293		12	%	40,770		36,051		4,719		13	%	22,091		19,431		2,660			14	%
Selling, general and administrative	10,745		10,216		529		5	%	19,831		19,331		500		3	%	10,941		9,086		1,855			20	%
Depreciation and amortization	17,778		16,383		1,395		9	%	34,420		32,583		1,837		6	%	20,322		16,642		3,680			22	%
Total operating expenses	155,430		141,971		13,459		9	%	284,365		266,128		18,237		7	%	140,890		128,935		11,955			9	%
Operating income	$	76,516	$	52,922	$	23,594	45	%	$	93,284	$	64,469	$	28,815	45	%	$	4,935	$	16,768	$	(11,833	)	(71	)%
Transactions processed (millions)	752		677		75		11	%	1,444		1,299		145		11	%	785		691		94			14	%
ATMs as of June 30,	46,636		41,205		5,431		13	%	46,636		41,205		5,431		13	%
ATMs as of March 31,																	42,176		42,034		142			—	%
Average ATMs	45,717		40,513		5,204		13	%	43,317		39,082		4,235		11	%	44,813		40,918		3,895			10	%

Revenues

EFT Processing Segment total revenues for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 were ~~$231.9~~$145.8 million and ~~$377.6~~$145.7 million ~~respectively, an increase of $37.1 million or 19% and $47.1 million or 14% as compared to~~for the same ~~periods~~period in ~~2018, respectively. The increases in total~~2019. Total revenues for the three ~~and six~~ months ended ~~June 30, 2019 were primarily~~March 31, 2020 slightly increased due to growth in the Asia Pacific and United States markets, offset by the impact of fewer European ATM transactions, especially high-margin cross-border transactions (DCC), related to the COVID-19 pandemic driven government imposed border closures and shelter-in-place orders. The government imposed border closures went into place throughout Europe in late February 2020 and early March 2020. These closures resulted in a decrease in revenues in the month of March 2020 compared to March 2019. While the EFT Segment had an overall slight increase in revenues for the ~~number of ATMs under management~~quarter ended March 31, 2020, the growth rate was reduced by the decrease in ~~Europe and Asia Pacific. Specifically, the increase~~revenues in ~~the number of ATMs contributed~~March 2020 compared to increases in the number of transactions processed. The transaction growth includes an increase in value-added transactions on the ATMs and point-of-sale terminals, primarily attributable to increases in DCC transactions due to Visa's rule change to allow our ATMs to provide DCC beginning second quarter of 2019, domestic and international surcharge, and foreign currency dispensing.March 2019. Foreign currency ~~exchange rate~~ movements decreased total revenues by approximately ~~$13.1 million and $24.8~~$3.8 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively, as~~March 31, 2020 compared to the same ~~periods~~period in ~~2018, respectively.~~2019.

Average monthly revenues per ATM were ~~$1,691 and $1,453~~$1,085 for the three ~~and six~~ months ended ~~June 30, 2019, respectively, compared to $1,604~~March 31, 2020 and ~~$1,410~~$1,187 for the three ~~and six~~ months ended ~~June 30, 2018, respectively.~~March 31, 2019. Revenues per transaction were ~~$0.31~~$0.19 for the ~~second quarter of 2019 and $0.26~~three months ended March 31, 2020 compared to $0.21 for the ~~first half of 2019, compared to $0.29 for the second quarter of 2018 and $0.25 for the first half of 2018.~~same period in 2019. The ~~increases~~decreases in average monthly revenues per ATM ~~for~~and revenues per transaction were attributable to the ~~three~~revenue decrease from DCC, which earns higher revenues per transaction than other ATM or card-based services, surcharges and ~~six months ended June 30, 2019 were primarily~~ the result of an increase in value-added transactions on the ATMs and point-of-sale terminals, including increases in DCC transactions due to Visa's rule change to allow our ATMs to provide DCC beginning second quarter of 2019, domestic and international surcharge, andU.S. dollar strengthening against key foreign ~~currency dispensing.~~currencies.

Direct operating costs

EFT Processing Segment direct operating costs were ~~$105.6 million and $189.3~~$87.5 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, an increase of ~~$9.2~~$3.8 million or ~~10% and $11.2 million or 6% as~~4% compared to the same ~~periods~~period in ~~2018, respectively.~~2019. Direct operating costs in the EFT Processing Segment consist primarily of site rental fees, cash delivery costs, cash supply costs, maintenance, insurance, telecommunications, payment schemes processing fees, data center operations-related personnel, as well as the processing centers’ facility-related costs and other processing center-related expenses and commissions paid to retail merchants, banks and card processors involved with POS DCC transactions. The ~~increases~~increase in direct operating costs ~~for the three and six months ended June 30, 2019 were~~was primarily due to anthe increase in the number of ATMs under ~~management, particularly our independent ATM network, partly offset~~management. Foreign currency movements decreased direct operating costs for the three months ended March 31, 2020 by approximately $2.7 million compared to the ~~impact of the strengthening of the U.S. dollar against key foreign currencies.~~

same period in 2019.

Gross profit

Gross profit, which is calculated as revenues less direct operating costs, was ~~$126.4 million and $188.3~~$58.3 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively, compared to $98.6 million~~March 31, 2020 and ~~$152.4~~$61.9 million for the three ~~and six~~ months ended ~~June 30, 2018, respectively.~~March 31, 2019. The ~~increases~~decrease in gross profit ~~were~~was primarily due to ~~the growth in revenues from~~ increases in ATMs under management, DCC transactions, domestic and international surcharge, and foreign currency dispensing. The net impact of the U.S. dollar strengthening against key foreign currencies partly offset thedirect operating costs related to an increase in ~~gross profit for the three and six months ended June 30, 2019.~~ATM's under management. Gross profit as a percentage of revenues (“gross margin”) ~~was 54.5% and 49.9%~~decreased to 40.0% for the three ~~and six~~ months ended ~~June 30, 2019, respectively, as~~March 31, 2020, compared to ~~50.6% and 46.1%~~42.5% for the ~~three and six months ended June 30, 2018, respectively. For the three and six months ended June 30, 2019, the increase~~same period in 2019. The decrease in gross margin was attributable to ~~increases~~the decrease in DCC transactions ~~due to Visa's rule change to allow our ATMs to provide DCC beginning second quarter of 2019,~~and domestic and international surcharge, foreign currency dispensing, and also a higher volume of sales of POS devices in Greece in the second quarter of 2018 on which we earned a lower margin which did not occur in the current period.surcharge.

Salaries and benefits

Salaries and benefits expense increased ~~$2.3~~$2.7 million or ~~12% and $4.7 million or 13%~~14% for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, compared to the same ~~periods~~period in 2018, respectively. As a percentage of revenues, these costs increased to 9.2% and 10.8% for the second quarter and first half of 2019, respectively, compared to 9.8% and 10.9% and for the second quarter of 2018 and first half of 2018, respectively.2019. The ~~increases were~~increase was primarily due to additional headcount to support an increase in the number of ATMs and POS devices under management. The shelter-in-place orders that went into place in late February 2020 and March 2020 in response to the COVID-19 pandemic reduced transaction volumes and revenues during that time period, but human resources to support actual and planned growth were added throughout 2019 as well as the early part of the first quarter of 2020 before the COVID-19 pandemic took effect, which led to lower transactions and revenues in the quarter, especially high-margin cross-border transactions. As a percentage of revenues, these costs increased to 15.1% for the three months ended March 31, 2020, compared to 13.3% for the same period in 2019.

Selling, general and administrative

Selling, general and administrative expenses increased $1.9 million or 20% for the three ~~and six~~ months ended ~~June 30, 2019 were $10.7 million and $19.8 million, respectively, an~~March 31, 2020, compared to the same period in 2019. The increase ~~of $0.5 million for both the three and six months ended June 30, 2018. The increases in selling, general and administrative expenses were~~was primarily due to ~~an increase~~increases in ~~costs to support the growth in the business partly offset by the strengthening of the U.S. dollar against key foreign currencies.~~professional fees. As a percentage of revenues, selling, general and administrative expenses ~~were 4.6% and 5.3%~~increased to 7.5% for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, compared to ~~5.2% and 5.8%~~6.2% for the ~~three and six months ended June 30, 2018, respectively. The decreases~~same period in selling, general and administrative expenses as a percentage of revenues were primarily attributable to the increases in the number of DCC transactions processed due to Visa's rule change to allow our ATMs to provide DCC beginning second quarter of 2019, domestic and international surcharge, and foreign currency dispensing, which did not require similar increases in support costs.2019.

Depreciation and amortization

Depreciation and amortization expense increased ~~$1.4~~$3.7 million ~~and $1.8 million~~or 22% for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, compared to the same ~~periods~~period in ~~2018, respectively.~~2019. The ~~increases were~~increase was primarily ~~attributable~~due to the deployment of additional ATMs ~~under management~~ and software assets. As a percentage of revenues, depreciation and amortization ~~expense was 7.7% and 9.1%~~expenses increased to 13.9% for the ~~second quarter and first half of 2019, respectively, as~~three months ended March 31, 2020, compared to ~~8.4% and 9.9%~~11.4% for the same ~~periods of 2018. The decreases~~period in depreciation and amortization expenses as a percentage of revenues were primarily attributable to the increases in the number of DCC transactions processed due to Visa's rule change to allow our ATMs to provide DCC beginning second quarter of 2019, domestic and international surcharge, and foreign currency dispensing, which did not require similar increases in fixed assets.2019.

Operating income

EFT Processing Segment operating income for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 was ~~$76.5~~$4.9 million, ~~and $93.3 million, respectively, an increase~~a decrease of ~~$23.6~~$11.8 million or ~~45% and $28.8 million or 45% as~~71% compared to the same ~~periods~~period in 2018, respectively. EFT Processing Segment operating income for the three and six months ended June 30, 2019 increased primarily due to increases in the number of DCC transactions due to Visa's rule change to allow our ATMs to provide DCC beginning second quarter of 2019, domestic and international surcharge, and foreign currency dispensing as a result of the increased number of ATMs, partly offset by the impact of the strengthening of the U.S. dollar against key foreign currencies.

2019. Operating income as a percentage of revenues (“operating margin”) ~~was 33.0% and 24.7%~~decreased to 3.4% for the ~~second quarter and first half of 2019, respectively, compared to 27.2% and 19.5%~~three months ended March 31, 2020 from 11.5% for the same ~~periods of 2018.~~period in 2019. The ~~increase~~decreases in operating income and operating margin ~~was~~were primarily due to ~~higher revenues partially offset by higher~~an increase in direct operating ~~expenses incurred~~costs to support the ~~increased revenues and~~ additional ATMs under ~~management.~~management and a change in product mix. During late February 2020 and throughout March 2020, high margin cross-border transactions (DCC) decreased throughout Europe due to the COVID-19 pandemic driven government imposed border closures and shelter-in-place orders. Operating income per transaction ~~was $0.10 and $0.06~~decreased to $0.01 for the ~~second quarter and first half of 2019 as~~three months ended March 31, 2020 compared to ~~$0.08 and $0.05~~$0.02 for the same ~~periods of 2018.~~period in 2019.

EPAY SEGMENT

The following table presents the results of operations for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018~~2019 for our epay Segment:


	Three Months Ended June 30,				Year-over-Year Change					Six Months Ended June 30,				Year-over-Year Change					Three Months Ended March 31,				Year-over-Year Change
(dollar amounts in thousands)	2019		2018		Increase (Decrease) Amount			Increase (Decrease) Percent		2019		2018		Increase (Decrease)Amount			Increase (Decrease)Percent		2020		2019		Increase (Decrease) Amount			Increase (Decrease) Percent
Total revenues	$	184,160	$	166,463	$	17,697		11	%	$	360,274	$	343,308	$	16,966		5	%	$	172,911	$	176,114	$	(3,203	)	(2	)%
Operating expenses:
Direct operating costs	140,427		125,423		15,004			12	%	273,952		260,345		13,607			5	%	130,074		133,525		(3,451		)	(3	)%
Salaries and benefits	14,998		14,327		671			5	%	29,751		28,744		1,007			4	%	15,697		14,753		944			6	%
Selling, general and administrative	9,424		8,490		934			11	%	17,476		17,223		253			1	%	8,838		8,052		786			10	%
Depreciation and amortization	1,756		1,894		(138		)	(7	)%	3,541		3,772		(231		)	(6	)%	1,844		1,785		59			3	%
Total operating expenses	166,605		150,134		16,471			11	%	324,720		310,084		14,636			5	%	156,453		158,115		(1,662		)	(1	)%
Operating income	$	17,555	$	16,329	$	1,226		8	%	$	35,554	$	33,224	$	2,330		7	%	$	16,458	$	17,999	$	(1,541	)	(9	)%
Transactions processed (millions)	369		264		105			40	%	707		522		185			35	%	447		338		109			32	%

Revenues

epay Segment total revenues for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 were ~~$184.2~~$172.9 million, ~~and $360.3~~a decrease of $3.2 million ~~respectively, an increase of $17.7 million and $17.0 million as~~ compared to the same ~~periods~~period in ~~2018, respectively.~~2019. The ~~increases~~decrease in total revenues ~~were~~was primarily due to ~~an increase in promotional digital media transactions fulfilled~~the U.S. dollar strengthening against key foreign currencies, partially offset by ~~our cadooz subsidiary that were recorded on a gross value basis and~~ an increase in the number of transactions processed driven by continued digital media ~~transactions processed.~~growth. Foreign currency ~~exchange rate~~ movements decreased total revenues by approximately ~~$9.1~~$5.3 million for the ~~second~~ ~~quarter of 2019 and $24.9 million for the first half of 2019 as~~three months ended March 31, 2020, compared to the same ~~periods~~period in ~~2018, respectively.~~2019. The epay segment was impacted by the COVID-19 pandemic government imposed shelter-in-place orders, primarily at retail outlets, which was partially offset by increases in digital product offerings in Asia. Overall, revenues decreased in March 2020 compared to March 2019 due to consumer movement restrictions and temporary retail outlet closures as a result of the COVID-19 pandemic.

Revenues per transaction ~~were $0.50~~decreased to $0.39 for the ~~second~~ ~~quarter and $0.51 for the first half of 2019~~three months ended March 31, 2020 compared to ~~$0.63 and $0.66~~$0.52 for the same ~~periods~~period in ~~2018, respectively.~~2019. The decrease in revenues per transaction was primarily ~~the result of~~driven by the increase in ~~a high volume~~the number of ~~low-margin~~mobile transactions processed in ~~India.~~a region where we generally earn lower revenues per transaction.

Direct operating costs

epay Segment direct operating costs were ~~$140.4 million and $274.0~~$130.1 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively, an increase~~March 31, 2020, a decrease of ~~$15.0~~$3.5 million ~~and $13.6 million as~~ compared to the same ~~periods~~period in ~~2018, respectively.~~2019. Direct operating costs in our epay Segment include the commissions ~~we pay~~paid to retail merchants for the distribution and sale of prepaid mobile airtime and other prepaid products, expenses incurred to operate POS terminals and the cost of vouchers sold and physical gifts fulfilled. The ~~increases~~decrease in direct operating costs ~~for the second quarter and first half of 2019 were~~was primarily due to ~~the increases in promotional digital media transactions fulfilled by our cadooz subsidiary and commission paid to wholesalers partially offset by the impact of~~ the U.S. dollar strengthening against key foreign currencies. Foreign currency movements decreased direct operating costs for the three months ended March 31, 2020 by approximately $3.9 million compared to the same period in 2019.

Gross profit

Gross profit was ~~$43.7 million and $86.3~~$42.8 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively, as~~March 31, 2020 compared to ~~$41.0 million and $83.0~~$42.6 million for the three ~~and six~~ months ended ~~June 30, 2018, respectively. The increases were primarily due~~March 31, 2019. Gross margin increased to the growth in digital media transactions processed, partly offset by a decrease in prepaid mobile transactions processed in certain markets and the net impact of the U.S. dollar strengthening against key foreign currencies.

~~During the three and six months ended June 30, 2019, the gross margin was 23.7% and 24.0%~~24.8% for the three ~~and six~~ months ended ~~June 30, 2019, respectively, as~~March 31, 2020, compared to ~~24.7% and~~ 24.2% for the same ~~periods~~period in ~~2018, respectively. The decreases in~~2019 due to overall growth of the ~~gross margin for the three and six months ended June 30, 2019 were driven by the promotional digital media transactions fulfilled by our cadooz subsidiary that was recorded on a gross value basis.~~

business.

Salaries and benefits

Salaries and benefits ~~expense~~ increased ~~$0.7~~$0.9 million or ~~5% and $1.0 million or 4%~~6% for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, compared to the same ~~periods~~period in ~~2018, respectively. The increases were mainly driven by increased headcount~~2019 to support continued growth inof the ~~segment.~~business. As a percentage of revenues, salaries and benefits ~~were 8.1% and 8.3%~~increased to 9.1% for the three ~~and six~~ months ended ~~June 30, 2019, respectively, which were generally consistent with 8.6% and~~March 31, 2020, compared to 8.4% for the same ~~periods~~period in ~~2018, respectively.~~2019.

Selling, general and administrative

Selling, general and administrative expenses were ~~$9.4 million and $17.5~~$8.8 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, an increase of ~~11% and 1% as~~$0.8 million or 10% compared to the same ~~periods~~period in ~~2018, respectively.~~2019. As a percentage of revenues, selling, general and administrative expenses ~~were~~increased to 5.1% ~~and 4.9%~~ for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020, compared to ~~5.1% and 5.0%~~4.6% for the same ~~periods~~period in ~~2018, respectively.~~2019.

Depreciation and amortization

Depreciation and amortization expense primarily represents depreciation of POS terminals we ~~place~~install in retail stores and ~~the~~ amortization of acquired intangible assets. Depreciation and amortization ~~expense was $1.8~~expenses increased $0.1 million ~~and $3.5 million~~or 3% for the three ~~and six~~ months ended ~~June 30, 2019, respectively, a decrease of 7% and 6% as~~March 31, 2020, compared to the same ~~periods in 2018, respectively. The decreases were primarily due to certain intangible assets becoming fully amortized~~period in 2019. As a percentage of revenues, depreciation and amortization expense ~~was 1.0% for both the three and six months ended June 30, 2019 as compared~~increased to 1.1% for ~~both~~ the three ~~and six~~ months ended ~~June 30, 2018.~~March 31, 2020 compared to 1.0% for the same period in 2019.

Operating income

epay Segment operating income for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 was ~~$17.6~~$16.5 million, ~~and $35.6~~a decrease of $1.5 million ~~respectively, an increase of $1.2 million and $2.3 million as~~or 9% compared to the same ~~periods~~period in ~~2018, respectively.~~2019. Operating ~~income~~margin decreased to 9.5% for the three ~~and six~~ months ended ~~June 30, 2019 improved as a result of the increase in the portion of higher-margin digital media transactions.~~

~~Operating margin for the three and six months ended June 30, 2019 was 9.5% and 9.9%, respectively, as compared to the 9.8% and 9.7%~~March 31, 2020 from 10.2% for the same ~~periods~~period in 2018, respectively. The decrease in the second quarter of 2019 was primarily due to the promotional digital media transactions fulfilled by our cadooz subsidiary. The increase in the first half of 2019 was primarily driven by an increase in the percentage of revenues from digital media products which earn a higher margin than mobile transactions.2019. Operating income per transaction decreased to ~~$0.05~~$0.04 for ~~both~~ the three ~~and six~~ months ended ~~June 30, 2019, respectively, from $0.06 for both~~March 31, 2020 compared to $0.05 in the same ~~periods~~period in ~~2018, respectively.~~2019. The decreases in ~~the three~~operating income and ~~six months ended June 30, 2019~~operating margin were primarily due to the U.S. dollar strengthening against key foreign currencies, an increase in ~~high volume, low margin transactions processed~~headcount to support the growth of the business, and decreased revenue growth in ~~India.~~certain markets that were negatively impacted by the COVID-19 pandemic. Foreign currency movements decreased operating income for the three months ended March 31, 2020 by approximately $0.4 million compared to the same period in 2019.

MONEY TRANSFER SEGMENT

The following table presents the results of operations for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018~~2019 for the Money Transfer Segment:


	Three Months Ended June 30,				Year-over-Year Change				Six Months Ended June 30,				Year-over-Year Change					Three Months Ended March 31,				Year-over-Year Change
(dollar amounts in thousands)	2019		2018		Increase Amount		Increase Percent		2019		2018		Increase (Decrease)Amount			Increase Percent		2020		2019		Increase (Decrease) Amount			Increase (Decrease) Percent
Total revenues	$	276,783	$	261,816	$	14,967	6	%	$	533,364	$	500,652	$	32,712		7	%	$	266,234	$	256,581	$	9,653		4	%
Operating expenses:
Direct operating costs	148,834		140,707		8,127		6	%	286,238		268,138		18,100			7	%	142,909		137,404		5,505			4	%
Salaries and benefits	52,713		49,118		3,595		7	%	103,869		96,475		7,394			8	%	53,864		51,156		2,708			5	%
Selling, general and administrative	31,731		31,426		305		1	%	60,840		61,125		(285		)	—	%	38,582		29,109		9,473			33	%
Depreciation and amortization	8,159		7,953		206		3	%	16,297		15,848		449			3	%	8,571		8,138		433			5	%
Total operating expenses	241,437		229,204		12,233		5	%	467,244		441,586		25,658			6	%	243,926		225,807		18,119			8	%
Operating income	$	35,346	$	32,612	$	2,734	8	%	$	66,120	$	59,066	$	7,054		12	%	$	22,308	$	30,774	$	(8,466	)	(28	)%
Transactions processed (millions)	28.9		26.9		2.0		7	%	55.5		51.2		4.3			8	%	27.4		26.6		0.8			3	%

Revenues

Money Transfer Segment total revenues for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 were ~~$276.8~~$266.2 million, ~~and $533.4 million, respectively,~~ an increase of ~~$15.0~~$9.7 million or ~~6% and $32.7 million or 7% as~~4% compared to the same ~~periods~~period in ~~2018.~~2019. The ~~increases~~increase in ~~total~~ revenues ~~for the three and six months ended June 30, 2019 were~~was primarily due to ~~an increase~~increases in the number of international money transfers processed, driven by growth in ~~the~~our U.S. and foreign agent and correspondent payout ~~networks.~~networks, and growth in xe, driven by recent currency volatility. Revenues per transaction increased to $9.72 for the three months ended March 31, 2020 compared to $9.65 for the same period in 2019. The overall growth rate in revenues was negatively impacted by the COVID-19 pandemic due to the temporary closure of Company owned stores and retail agents due to government imposed shelter-in-place orders. Revenues decreased for the month of March 2020 compared to March 2019. Foreign currency ~~exchange rate~~ movements decreased total revenues by approximately ~~$7.9~~$4.5 million for the ~~second~~ ~~quarter of 2019 and $17.1 million for the first half of 2019 as~~three months ended March 31, 2020 compared to the same ~~periods~~period in ~~2018.~~

Revenues per transaction decreased to $9.58 and $9.61 for the second quarter and first half of 2019, respectively, from $9.73 and $9.78 for the same periods in 2018. The decreases were primarily due to the impact of the U.S. dollar strengthening against key foreign currencies.2019.

Direct operating costs

Money Transfer Segment direct operating costs were ~~$148.8 million and $286.2~~$142.9 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, an increase of ~~$8.1~~$5.5 million or ~~6% and $18.1 million or 7% as~~4% compared to the same ~~periods~~period in ~~2018.~~2019. Direct operating costs in the Money Transfer Segment primarily consist of commissions paid to agents who originate money transfers on our behalf and correspondent agents who disburse funds to the customers’ destination beneficiaries, together with less significant costs, such as bank depository fees. The ~~increases~~increase in direct operating costs ~~for the three and six months of 2019 were~~was primarily due to growth in the number of money transfer transactions processed in both the U.S. and foreign ~~markets.~~markets, partially offset by the impact of the U.S. dollar strengthening against key foreign currencies. Foreign currency movements decreased direct operating costs for the three months ended March 31, 2020 by approximately $1.9 million compared to the same period in 2019.

Gross profit

Gross profit was ~~$127.9 million and $247.1~~$123.3 million for the three ~~and six~~ months ended ~~June 30, 2019, respectively, as~~March 31, 2020 compared to ~~$121.1 million and $232.5~~$119.2 million for the three ~~and six~~ months ended ~~June 30, 2018, respectively.~~March 31, 2019. The ~~increases~~increase in gross profit ~~were~~was primarily due to growth in the number of money transfer transactions processed in both the U.S. and foreign markets.

~~During~~ Gross margins of 46.3% for the three ~~and six~~ months ended ~~June 30, 2019, gross margin remained~~March 31, 2020 were essentially flat ~~at 46.2% and 46.3%, respectively, as~~ compared to 46.4% for the same ~~periods~~period in ~~the 2018.~~2019.

Salaries and benefits

Salaries and benefits expense increased ~~$3.6~~$2.7 million or ~~7% and $7.4 million or 8%~~5% for the three ~~and six~~ months ended ~~June 30, 2019, respectively, as~~March 31, 2020, compared to the same ~~periods~~period in ~~2018.~~2019. The ~~increases~~increase in salaries and benefits ~~were~~was primarily due to the expansion of our ~~operations in the U.S. and foreign markets.~~operations. As a percentage of revenues, salaries and benefits ~~were essentially flat at 19.0% and 19.5%~~increased to 20.2% for the three ~~and six~~ months ended ~~June 30, 2019, respectively, as~~March 31, 2020, compared to ~~18.8% and 19.3%~~19.9% for the same ~~periods~~period in ~~2018~~2019. The increase in salaries and benefits was the result of headcount increases in place to support the growth of the business in advance of the COVID-19 pandemic.

Selling, general and administrative

Selling, general and administrative expenses for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 were ~~$31.7~~$38.6 million, ~~and $60.8 million, respectively,~~ an increase of ~~$0.3~~$9.5 million or ~~1% for the second quarter of 2019, and were essentially consistent for the first half of 2019 as~~33% compared to the same ~~periods of 2018.~~period in 2019. The increase ~~for the second quarter of 2019~~ was primarily due to expenses incurred to support the growth of our money transfer services, the expansion of new products in both the U.S. and foreign markets, ~~largely offset by~~and an increase in additional charges taken to cover anticipated agent receivable defaults as a result of government ordered business closures required to manage the ~~impact of the U.S. dollar strengthening against key foreign currencies.~~

COVID-19 pandemic. As a percentage of revenues, selling, general and administrative expenses ~~were 11.5% and 11.4%~~increased to 14.5% for the three ~~and six~~ months ended ~~June 30, 2019, respectively, as~~March 31, 2020, compared to ~~12.0% and 12.2%~~11.3% for the same ~~periods~~period in ~~2018. The decreases were primarily due to the increase in the number of money transfers processed, which did not require similar increases in support costs.~~2019.

Depreciation and amortization

Depreciation and amortization expense increased $0.4 million or 5% for the three months ended March 31, 2020, compared to the same period in 2019. Depreciation and amortization primarily ~~represents~~represent amortization of acquired intangible assets and depreciation of money transfer terminals, computers and software, leasehold improvements and office equipment. Depreciation and amortization expense increased $0.2 million or 3% and $0.4 million or 3% for the three and six months ended June 30, 2019, respectively, as compared to the same periods in 2018, largely due to the increased capital additions as a result of business growth.

As a percentage of revenues, depreciation and amortization ~~expense was 2.9% for the second quarter of 2019 and 3.1% for the first half of 2019, which was essentially unchanged compared to 3.0% and~~expenses were flat at 3.2% for the ~~same periods of 2018.~~three months ended March 31, 2020 and 2019.

Operating income

Money Transfer Segment operating income for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 was ~~$35.3~~$22.3 million, ~~and $66.1 million, respectively, an increase~~a decrease of ~~$2.7~~$8.5 million or ~~8% and $7.1 million or 12% as~~28% compared to the same ~~periods of 2018.~~period in 2019. Operating ~~income~~margin decreased to 8.4% for the three ~~and six~~ months ended ~~June 30, 2019 increased primarily due to the growth in the number of money transfers processed partly offset by the additional salaries and benefits costs incurred.~~

~~As a percentage of revenues, operating margin was 12.8% and 12.4% for the three and six months ended June 30, 2019, respectively, as~~March 31, 2020, compared to ~~12.5% and 11.8%~~12.0% for the same ~~periods~~period in ~~2018. Operating income per transaction increased to $1.22 and $1.19 for the three and six months ended June 30, 2019, respectively, from $1.21 and $1.15 for the same periods in 2018.~~2019. The ~~increases~~decreases in operating ~~margin~~income and operating ~~income per transaction~~margin were primarily due to the ~~growth~~increase in selling, general and administrative expenses incurred to support the ~~number~~expansion of ~~money transfers processed which did not require similar increases~~new products and markets and COVID-19 pandemic related anticipated agent receivables default charges. Operating income per transaction decreased to $0.81 for the three months ended March 31, 2020, compared to $1.16 for the same period in ~~support costs.~~2019.

CORPORATE SERVICES

The following table presents the operating expenses for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018~~2019 for Corporate Services:


	Three Months Ended June 30,				Year-over-Year Change					Six Months Ended June 30,				Year-over-Year Change					Three Months Ended March 31,				Year-over-Year Change
(dollar amounts in thousands)	2019		2018		Increase (Decrease) Amount			Increase (Decrease) Percent		2019		2018		Increase (Decrease) Amount			Increase (Decrease) Percent		2020		2019		Increase Amount		Increase Percent
Salaries and benefits	$	9,500	$	9,232	$	268		3	%	$	16,955	$	16,159	$	796		5	%	$	9,588	$	7,455	$	2,133	29	%
Selling, general and administrative	1,946		2,229		(283		)	(13	)%	3,863		4,697		(834		)	(18	)%	2,432		1,917		515		27	%
Depreciation and amortization	74		33		41			124	%	149		62		87			140	%	79		75		4		5	%
Total operating expenses	$	11,520	$	11,494	$	26		—	%	$	20,967	$	20,918	$	49		—	%	$	12,099	$	9,447	$	2,652	28	%

Corporate operating expenses

Overall, operating expenses for Corporate Services ~~were $11.5 million and $21.0 million~~increased 28% for the three ~~and six~~ months ended ~~June 30, 2019, which were consistent when~~March 31, 2020 compared to the same ~~periods~~period in ~~2018.~~2019. The ~~increases were~~increase is primarily ~~attributable~~due to an increase in ~~bonus expense due~~stock compensation driven by the issuance of a special retention stock incentive award granted to ~~our improved operating results compared~~key executives in April of 2019. These awards vest based on the Company’s achievement of certain long-term performance targets over the next three to ~~targets.~~four years.

OTHER INCOME (EXPENSE), NET


	Three Months Ended June 30,						Year-over-Year Change					Six Months Ended June 30,						Year-over-Year Change					Three Months Ended March 31,						Year-over-Year Change
(dollar amounts in thousands)	2019			2018			Increase (Decrease) Amount			Increase (Decrease) Percent		2019			2018			Increase (Decrease) Amount			Increase (Decrease) Percent		2020			2019			Increase (Decrease) Amount			Increase (Decrease) Percent
Interest income	$	513		$	416		$	97		23	%	856			712			144			20	%	$	567		$	343		$	224		65	%
Interest expense	(10,029		)	(10,061		)	32			—	%	(18,228		)	(17,667		)	(561		)	3	%	(9,233		)	(8,199		)	(1,034		)	13	%
Foreign currency exchange (loss) gain, net																							(18,806		)	3,208			(22,014		)	(686	)%
Loss on early extinguishment of debt	(8,903		)	—			(8,903		)	n/m		(9,831		)	—			(9,831		)	n/m		—			(928		)	928			n/m
Foreign currency exchange (loss) gain, net	(121		)	(20,690		)	20,569			n/m		3,087			(18,755		)	21,842			n/m
Loss from unconsolidated affiliates	—			—			—			n/m		—			(117		)	117			n/m
Other (loss) gains	(29		)	29			(58		)	n/m		(4		)	60			(64		)	n/m		31			25			6			24	%
Other expense, net	$	(18,569	)	$	(30,306	)	$	11,737		n/m		$	(24,120	)	$	(35,767	)	$	11,647		n/m		$	(27,441	)	$	(5,551	)	$	(21,890	)	394	%

________________

n/m — Not meaningful

Interest income

The increase in interest income for the three ~~and six~~ months ended ~~June 30, 2019 when~~March 31, 2020 compared to the same ~~periods~~period in ~~2018 was~~2019 is primarily due to ~~the~~an increase in interest ~~earned from the immediate proceeds we received from the issuance of Convertible Notes and the Senior Notes before they were fully utilized in the business.~~rates on cash balances held at banks.

Interest expense

The increase in interest expense for the ~~first half of 2019~~three months ended March 31, 2020 compared to the same period in ~~2018~~2019 was primarily related to the ~~greater weighted average borrowings outstanding~~issuance of the Senior Notes partially offset by ~~lower weighted average borrowing rates.~~

~~Loss on early extinguishment of debt~~

~~The increase~~a decrease in ~~loss on early extinguishment of debt for the three and six months ended June 30, 2019 when compared to the same periods in 2018 was due to the retirement of the Retired~~ Convertible Notes ~~that would have matured~~outstanding in ~~2044 on May 28, 2019.~~the period.

Foreign currency exchange (loss) gain, net

Foreign currency exchange activity includes gains and losses on certain foreign currency exchange derivative contracts and the impact of remeasurement of assets and liabilities denominated in foreign currencies. Assets and liabilities denominated in currencies other than the local currency of each of our subsidiaries give rise to foreign currency exchange gains and losses. Foreign currency exchange gains and losses that result from remeasurement of these assets and liabilities are recorded in net income. The majority of our foreign currency exchange gains or losses are due to the remeasurement of ~~the change in USD value of our euro-denominated Senior Notes beginning second quarter of 2019 and~~ intercompany loans which are not considered a long-term investment in nature and are in a currency other than the functional currency of one of the parties to the loan. For example, we make intercompany loans based in euros from our corporate division, which is composed of U.S. dollar functional currency entities, to certain European entities that use the euro as the functional currency. As the U.S. dollar strengthens against the euro, foreign currency exchange losses are recognized by our corporate entities because the number of euros to be received in settlement of the loans decreases in U.S. dollar terms. Conversely, in this example, in periods where the U.S. dollar weakens, our corporate entities will record foreign currency exchange gains.

We recorded a net foreign currency exchange ~~loss~~losses of ~~$0.1~~$18.8 million for the ~~second quarter of 2019 and a net gain of $3.1 million for the first half of 2019, as~~three months ended March 31, 2020, compared to net foreign currency exchange ~~losses~~gains of ~~$20.7 million and $18.8~~$3.2 million for the same ~~periods~~period in ~~2018.~~2019. These realized and unrealized foreign currency exchange losses and gains reflect the fluctuation in the value of the U.S. dollar against the currencies of the countries in which we operated during the respective periods.

INCOME TAX EXPENSE

The Company's effective income tax rate was ~~31.5%~~58.7% and 31.6% for ~~both~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019,~~, respectively, as compared to 27.3% and 30.1% for the three and six months ended June 30, 2018,~~ respectively. The Company's effective income tax rate for the three ~~and six~~ months ended ~~June 30, 2019~~ ~~and 2018~~March 31, 2020 was higher than the applicable statutory income tax rate of 21% primarily as a result of certain foreign earnings of the Company being subject to higher local statutory income tax ~~rates and~~rates. The Company’s effective income tax rate for the three months ended March 31, 2019 was higher than the applicable statutory income tax rate of 21% largely because of the application to the Company of the ~~U.S.~~ global intangible low-taxed income ("GILTI") tax provision ~~to the Company. The GILTI provision subjects the Company's current~~and certain foreign earnings of the Company being subject to ~~U.S. taxation which creates additional U.S.~~higher local statutory income tax ~~expense.~~rates. The increase in the effective tax rate for the first ~~half~~quarter of ~~2019~~2020 compared to the same period in ~~2018 is due to (i)~~2019 was largely the ~~release~~result of ~~unrecognized tax benefits in the first half of 2018 from the settlement or expiration of tax audit examinations and (ii)~~ the mix of ~~foreign~~ earnings ~~in higher~~and the rates of tax ~~rate jurisdictions.~~being applied to those earnings.

NET ~~LOSS~~INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

Noncontrolling interests ~~represents~~represent the elimination of net income or loss attributable to the minority shareholders’ portion of the following consolidated subsidiaries that are not wholly owned:



Subsidiary	Percent Owned	Segment - Country
Movilcarga	95%	epay - Spain
Euronet China	85%	EFT - China
Euronet Pakistan	70%	EFT - Pakistan
Euronet Infinitium Solutions	65%	EFT - India

NET INCOME ATTRIBUTABLE TO EURONET

Net income attributable to Euronet was ~~$68.2~~$1.9 million and ~~$102.7~~$34.5 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~respectively, an increase of $24.4 million and~~respectively. Net income attributable to Euronet decreased $32.6 million asfor the three months ended March 31, 2020 compared to the same ~~periods~~period in ~~2018.~~2019. The ~~increase~~decrease in net income for the ~~first half of 2019~~three months ended March 31, 2020 was primarily due to ~~an increase~~a decrease in operating income of ~~$38.2~~$24.5 million, ~~a $21.8~~an increase of $22.0 million ~~increase~~ in net foreign currency exchange ~~gain, partly~~losses, an increase in interest expense of $1.0 million, partially offset by a ~~$17.2 million increase~~decrease in income tax expense ~~an increase~~of $13.5 million, a decrease in loss on early ~~extinguishment on~~retirement of debt of ~~$9.8~~$0.9 million, an increase in net income attributable to noncontrolling interests of $0.2 million, and an increase in interest ~~expense~~income of ~~$0.6~~$0.2 million.

LIQUIDITY AND CAPITAL RESOURCES

Working capital

As of ~~June 30, 2019 and December~~March 31, ~~2018,~~2020, we had working capital of $1,011.0 million, which is calculated as the difference between total current assets and total current liabilities, compared to working capital of ~~$1,220~~$1,284.8 million ~~and $709~~as of December 31, 2019. The decrease in working capital is primarily due to $239.8 million ~~respectively.~~of share repurchases during the first quarter of 2020. Our ratio of current assets to current liabilities was 1.69 and 1.79 at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018 was 1.82 and 1.51,~~2019, respectively. ~~The increase in working capital was primarily due to the addition of current portion of operating lease liabilities and ATM cash funded by the long-term debt.~~

We require substantial working capital to finance operations. ~~In the~~The Money Transfer Segment ~~we fund~~funds the payout of the majority of our consumer-to-consumer money transfer services before receiving the benefit of amounts collected from customers by agents. Working capital needs increase due to weekends and ~~domestic and international~~ banking holidays. As a result, we may report more or less working capital for the Money Transfer Segment based solely upon the day on which the reporting period ends. The epay Segment produces positive working capital, but much of it is restricted in connection with the administration of its customer collection and vendor remittance activities. In our EFT Processing Segment, we obtain a significant portion of the cash required to operate our ATMs through various cash supply arrangements, the amount of which is not recorded on Euronet's Consolidated Balance Sheets. However, in certain countries, we fund the cash required to operate our ATM network from borrowings under ~~our~~the revolving credit facilities and cash flows from operations. As of ~~June 30, 2019,~~March 31, 2020, we had approximately ~~$809~~$558.6 million of our own cash in use or designated for use in our ATM network, which is recorded in ATM cash ~~and cash equivalents and trade accounts receivable, for ATM withdrawals pending settlement,~~ on ~~the~~Euronet's Consolidated Balance Sheet.

~~We had~~The Company has $709.5 million of unrestricted cash as of March 31, 2020 compared to $786.1 million as of December 31, 2019. The decrease in cash primarily due to $239.8 million in share repurchases during the first quarter of 2020, partially offset by cash generated from operations. Additionally, the Company has $558.6 million of cash in ATMs at March 31, 2020, giving the Company access to $1,268.1 million in available cash, and ~~cash equivalents of $1,558~~$950.3 million ~~at June 30, 2019, of which $1,294 million was held outside of~~available under the ~~United States and~~credit facility with no significant long-term debt principal payments until March 2025. This liquidity is ~~expected~~available to ~~be indefinitely reinvested for continued use in foreign operations. Repatriation of these assets to~~fund operations through the ~~U.S. could have negative tax consequences.~~

pandemic crisis.

The following table identifies cash and cash equivalents provided by/(used in) our operating, investing and financing activities for the ~~six~~three month periods ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):


	Six Months Ended June 30,						Three Months Ended March 31,
Liquidity	2019			2018			2020			2019
Cash and cash equivalents and restricted cash provided by (used in):
Operating activities	$	56,714		$	69,304		$	105,884		$	12,961
Investing activities	(68,760		)	(68,990		)	(31,606		)	(32,986		)
Financing activities	505,945			360,922			(242,644		)	192,702
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash	4,907			(25,471		)	(59,260		)	(12,387		)
Increase in cash and cash equivalents and restricted cash	$	498,806		$	335,765
(Decrease) increase in cash and cash equivalents and restricted cash							$	(227,626	)	$	160,290

Operating activity cash flow

Cash flows provided by operating activities were ~~$56.7~~$105.9 million for the first ~~half~~quarter of ~~2019~~2020 compared to ~~$69.3~~$13.0 million for the first ~~half~~quarter of ~~2018.~~2019. The ~~decrease is~~increase in operating cash flows was primarily due to fluctuations in working capital mainly associated with the timing of the settlement processes with content providers in the epay Segment, ~~and~~ with correspondents in the Money Transfer Segment, ~~partly offset by improved operating results.~~and with card organizations and banks in the EFT Processing Segment.

Investing activity cash flow

Cash flows used in investing activities were ~~$68.8~~$31.6 million for the first ~~half~~quarter of ~~2019~~2020 compared to ~~$69.0~~$33.0 million for the ~~first half of 2018. During the first half of 2018, we used $12.9 million for a business acquisition. There was no material acquisition~~same period in ~~the first half of~~ 2019. We used ~~$67.7~~$30.4 million for purchases of property and equipment for the first ~~half~~quarter of ~~2019~~2020 compared to ~~$53.4~~$31.4 million for the first ~~half~~quarter of ~~2018.~~2019. Cash used for software development and other investing activities totaled ~~$1.0~~$1.7 million and ~~$2.8~~$1.6 million for the first ~~half~~quarter of ~~2019~~2020 and ~~2018,~~2019, respectively.

Financing activity cash flow

Cash flows used in financing activities were $242.6 million for the first quarter of 2020 compared to cash flows provided by financing activities ~~were $505.9~~of $192.7 million for the ~~first half of 2019 compared to $360.9 million for the first half of 2018.~~same period in 2019. Our financing activities for the first ~~half~~quarter of ~~2019~~2020 consisted of ~~net borrowings~~cash outflows of ~~$524.1~~$2.2 million compared to net borrowings of ~~$536.7~~$203.1 million for the first ~~half~~quarter of ~~2018.~~2019. The ~~increase~~decrease in net borrowings for the first ~~half~~quarter of ~~2019~~2020 compared to the same period ~~of 2018~~in 2019 was the result of the issuance of ~~$1,195~~$525.0 million of ~~new Convertible Notes and Senior Notes~~convertible notes in the first quarter of 2019 which was used to fund the operating cash of our IAD networks, repay revolving credit facility borrowings and repurchase a portion of ~~$2,253~~existing convertible notes. We repurchased $240.5 million and retire the Retired Convertible Notes of $447 million. During the second quarter of 2018, we entered into a short-term credit facility in the amount of $300 million for the sole purpose of providing providing cash for our ATM network which expired on November 30, 2018. During the second quarter of 2019, we repaid $14$2.3 million of ~~short-term debt obligations. We repurchased $2.4 million and $176.7 million of~~ our common stock during the first ~~half~~quarter of 2020 and 2019, ~~and 2018,~~ respectively. ~~During~~Of the ~~first half of 2018, we~~$240.5 million repurchased ~~$175.0~~shares, $239.8 million of ~~our shares and paid $1.7 million for~~Euronet Common Stock was repurchased under the ~~amount of payroll taxes represented by the common stock withheld on restricted stock vestings and stock option exercises compared to $2.4 million for the same period of 2019.~~Repurchase Program. We received proceeds ~~from stock option exercises~~ of ~~$7.0~~$1.7 million and ~~$4.1~~$5.2 million during the first quarter of 2020 and 2019, respectively, for the ~~first half~~issuance of ~~2019 and 2018, respectively.~~stock in connection with our Stock Incentive Plan.

Other sources of capital

Credit Facility - On October 17, 2018, the Company entered into a $1.0 billion unsecured credit agreement (the "Credit Facility") that expires on October 17, 2023. The Credit Facility allows for borrowings in Australian Dollars, British Pounds Sterling, Canadian Dollars, Czech Koruna, Danish Krone, Euros, Hungarian Forints, Japanese Yen, New Zealand Dollars, Norwegian Krone, Polish Zlotys, Swedish Krona, Swiss Francs, and USU.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.

As of ~~June 30, 2019,~~March 31, 2020, fees and interest on borrowings are based upon the Company's corporate credit rating (as defined in the ~~Credit Facility)~~credit agreement) and are based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over the London InterBank Offered Rate ("LIBOR") or a margin over the base rate, as selected by us, with the applicable margin ranging from 1.125% to 2.0% (or 0.175% to 1.0% for base rate loans).

As of ~~June 30, 2019,~~March 31, 2020, we had ~~$6.1 million of~~no borrowings and ~~$46.3~~$49.7 million of stand-by letters of credit outstanding under the Credit Facility. The remaining ~~$947.6~~$950.3 million under the Credit Facility was available for ~~borrowing based upon~~borrowing.

Uncommitted Line of Credit - On September 4, 2019, the ~~borrowing base~~Company entered into an Uncommitted Loan Agreement with Bank of America which may provide Euronet up to $100.0 million under an uncommitted line of credit. Interest on borrowings is equal to LIBOR plus 0.65% and ~~financial covenants in our Credit Facility.~~

the agreement expires September 4, 2020. As of March 31, 2020, no amounts were outstanding under the line of credit.

Convertible debt - On March 18, 2019, we completed the sale of $525.0 million in principal amount of Convertible Senior Notes due 2049 (“Convertible Notes”). The Convertible Notes were issued pursuant to an indenture, dated as of March 18,

2019 (the ~~"Indenture"~~“Indenture”), by and between the Company and U.S. Bank National Association, , as trustee. The Convertible Notes have an interest rate of 0.75% per annum payable semi-annually in March and September, and are convertible into shares of Euronet ~~Common Stock~~common stock at a conversion price of approximately $188.73 per share if certain conditions are met (relating to the closing prices of Euronet ~~Common Stock~~common stock exceeding certain thresholds for specified periods).

~~The Company may not redeem the Notes prior to September 20, 2022. The Company may redeem for cash all or any portion~~ Holders of the Convertible Notes at its option, (i) on or after September 20, 2022 if the closing sale price of the Company's Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption and (ii) on or after March 20, 2025 and prior to the maturity date, regardless of the foregoing sale price condition, in each case at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes.

~~Additionally, holders~~ have the ~~right~~option to require the Company to repurchase for cash all or part of their Convertible 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 ~~addition, if a fundamental change, as defined in~~connection with the ~~Indenture, occurs prior to~~issuance of the ~~maturity date, holders may require the Company to repurchase for cash all or part of their~~ Convertible Notes, ~~at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.~~we recorded $12.8 million in debt issuance costs, which are being amortized through March 1, 2025.

~~1.375%~~ Senior Notes ~~due 2026~~ - On May 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of ~~the~~ Senior Notes that expire on May 2026 (the “Senior Notes”). The Senior Notes accrue interest at a rate of 1.375% per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of ~~June 30, 2019,~~March 31, 2020, the Company has outstanding €600 million ($~~682.1~~661.6 million) ~~euro-denominated~~ 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 debt obligations -— Certain of our subsidiaries ~~also~~ have available credit lines and overdraft facilities to generally supplement short-term working capital ~~requirements. As of June 30, 2019, there was $24.3~~requirements, when necessary. There were $3.6 million and $6.2 million outstanding under these other obligation ~~arrangements.~~arrangements as of March 31, 2020 and December 31, 2019, respectively.

Other uses of capital

Capital expenditures and needs - Total capital expenditures ~~including capital lease expenditures,~~ for the first ~~half~~quarter of ~~2019~~2020 were ~~$72.8~~$30.4 million. These capital expenditures were ~~made~~ primarily for the purchase of ATMs to expand our ~~independent ATM~~IAD network in Europe, ~~and Asia,~~ the purchase and installation of ATMs in key under-penetrated markets, the purchase of POS terminals for the epay and Money Transfer Segments, and office, data center and company store computer equipment and software. Total capital expenditures for ~~2019~~2020 are currently estimated to range from approximately ~~$140~~$65 million to ~~$150~~$70 million. The Company has reduced estimated capital expenditures for 2020 due to the COVID-19 pandemic.

At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts available under our Credit Facility and other existing and potential future financing ~~sources,~~ will be sufficient to meet our debt, leasing, and capital expenditure obligations. If our capital resources are not sufficient to meet these obligations, we will seek to refinance our debt and/or issue additional equity under terms acceptable to us. However, we can offer no assurances that we will be able to obtain favorable terms for the refinancing of any of our debt or other obligations or for the issuance of additional equity.

Share repurchase plan

The Company's Board of Directors had authorized a stock repurchase program allowing Euronet to repurchase up to $375 million in value or 10.0 million shares of stock through March 31, 2020. The Company has repurchased all $375 million of stock under this program. On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of $120 million in value of the Company's common stock through March 11, 2021. The Company has repurchased $110.4 million of stock under this program. 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, 2020, the Company repurchased 2.1 million shares under the repurchase programs at a weighted average purchase price of $114.41 for a total value of $239.8 million. Repurchases under either 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.

Inflation and functional currencies

Generally, the countries in which we operate have experienced low and stable inflation in recent years. Therefore, the local currency in each of these markets is the functional currency. Currently, we do not believe that inflation will have a significant effect on our results of operations or financial position. We continually review inflation and the functional currency in each of the countries where we operate.

OFF BALANCE SHEET ARRANGEMENTS

On occasion, we grant guarantees of the obligations of our subsidiaries and we sometimes enter into agreements with unaffiliated third parties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. Our liability under such indemnification provisions may be subject to time and materiality limitations, monetary caps and other conditions and defenses. As of ~~June 30, 2019~~March 31, 2020, there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019. To date, we are not aware of any significant claims made by the indemnified parties or parties to whom we have provided guarantees on behalf of our subsidiaries and, accordingly, no liabilities have been recorded as of ~~June 30, 2019~~.March 31, 2020. See also Note ~~12,~~13, Commitments, to the unaudited consolidated financial statements included elsewhere in this report.

CONTRACTUAL OBLIGATIONS

As of ~~June 30, 2019,~~March 31, 2020, there have been no material changes outside the ordinary course of business in our future contractual obligations from the amounts reported within our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, other than those resulting from changes in the amount of debt outstanding discussed in the Liquidity and Capital Resources section.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

As of ~~June 30, 2019,~~March 31, 2020, our total debt outstanding, excluding unamortized debt issuance costs, was ~~$1,142~~$1,105.9 million. Of this amount, ~~$1,112~~$440.7 million, net of debt discounts, or ~~97%~~40% of our total debt obligations, relates to ~~our Convertible Notes and Senior Notes that each have~~contingent convertible notes having a fixed coupon rate. ~~The $525~~Our $525.0 million ~~aggregate~~outstanding principal amount of ~~the Convertible Notes issued on March 18, 2019,~~contingent convertible notes accrue cash interest at a rate of 0.75% of the principal amount per annum. ~~The~~Based on quoted market prices, as of March 31, 2020, the fair value of ~~the~~our fixed rate ~~Convertible Notes~~convertible notes was ~~$519.2~~$597.0 million, ~~as of June 30, 2019 based on quoted market prices,~~ compared to a carrying value of ~~$429.6~~$440.7 million. Interest expense for ~~the Convertible Notes,~~these notes, including accretion and amortization of deferred debt issuance costs, has a weighted average interest rate of 4.4%~~. The~~ annually. Further, as of March 31, 2020 we had no borrowings under our Credit Facility. Additionally, $661.6 million, or 60% of our total debt obligations, relates to Senior Notes having a fixed coupon rate. Our €600 million ~~aggregate~~outstanding principal amount of ~~the~~ Senior Notes accrue cash interest at a rate of 1.375% of the principal ~~amount~~ per annum. Based on quoted market prices, as of ~~June 30, 2019,~~March 31, 2020, the fair value of our fixed rate Senior Notes was ~~$678.0~~$615.7 million, compared to a carrying value of ~~$682.1~~$661.6 million. The ~~Credit Facility borrowings were $6.1~~remaining $3.6 million, or 1%0.3% of our total debt obligations. If we were to maximize the potential borrowings available under the Credit Facility and maintain these borrowings for one year, a 1% (100 basis points) increase in the applicable interest rate would result in additional annual interest expense to the Company of approximately $9.5 million.

~~The remaining $24.3 million, or 2%, of our total debt~~ obligations, ~~as of June 30, 2019,~~ is related to borrowings by certain subsidiaries to fund, from time to time, working capital requirements. These arrangements generally are due within one year and accrue interest at variable rates.

Our excess cash is invested in instruments with original maturities of three months or less or in certificates of deposit that may be withdrawn at any time without penalty; therefore, as investments mature and are reinvested, the amount we earn will increase or decrease with changes in the underlying short-term interest rates.

Foreign currency exchange rate risk

For the first ~~half~~quarter of ~~2019,~~2020, approximately ~~72%~~70% and of our revenues were generated in non-U.S. dollar countries and we expect to continue generating a significant portion of our revenues in countries with currencies other than the U.S. dollar.

We are particularly vulnerable to fluctuations in exchange rates of the U.S. dollar to the currencies of countries in which we have significant operations, primarily the euro, British pound, Australian dollar, Polish zloty, Indian rupee, New Zealand dollar, Malaysian ringgit and Hungarian forint. As of ~~June 30, 2019~~,March 31, 2020, we estimate that a 10% fluctuation in these foreign currency exchange rates would have the combined annualized effect on reported net income and working capital of approximately ~~$90~~$38.0 million to ~~$95~~$43.0 million. This effect is estimated by applying a 10% adjustment factor to our non-U.S. dollar results from operations, intercompany loans that generate foreign currency ~~exchange~~ gains or losses and working capital balances that require translation from the respective functional currency to the U.S. dollar reporting currency.

Additionally, we have other non-current, non-U.S. dollar assets and liabilities on our balance sheet that are translated to the U.S. dollar during consolidation. These items primarily represent goodwill and intangible assets recorded in connection with acquisitions in countries other than the U.S. We estimate that a 10% fluctuation in foreign currency exchange rates would have a non-cash impact on total comprehensive income of approximately ~~$140~~$138.0 million to ~~$145~~$143.0 million as a result of the change in value of these items during translation to the U.S. dollar. For the fluctuations described above, a strengthening U.S. dollar produces a financial loss, while a weakening U.S. dollar produces a financial gain.

We believe this quantitative measure has inherent limitations and does not take into account any governmental actions or changes in either customer purchasing patterns or our financing or operating strategies. Because a majority of our revenues and expenses isare incurred in the functional currencies of our international operating entities, the profits we earn in foreign currencies are positively impacted by a weakening of the U.S. dollar and negatively impacted by a strengthening of the U.S. dollar. Additionally, ~~a significant portion of~~ our debt obligations are primarily in U.S. dollars; therefore, as foreign currency exchange rates fluctuate, the amount available for repayment of debt will also increase or decrease.

We use derivatives to minimize our exposures related to changes in foreign currency exchange rates and to facilitate foreign currency risk management services by writing derivatives to customers. Derivatives are used to manage the overall market risk associated with foreign currency exchange rates; however, we do not perform the extensive record-keeping required to account for the derivative transactions as hedges. Due to the relatively short duration of the derivative contracts, we use the derivatives primarily as economic hedges. Since we do not designate foreign currency derivatives as hedging instruments pursuant to the accounting standards, we record gains and losses on foreign exchange derivatives in earnings in the period of change.

A majority of our consumer-to-consumer money transfer operations ~~involves~~involve receiving and disbursing different currencies, in which we earn a foreign currency spread based on the difference between buying currency at wholesale exchange rates and selling the currency to consumers at retail exchange rates. We enter into foreign currency forward and cross-currency swap contracts to minimize exposure related to fluctuations in foreign currency exchange rates. The changes in fair value related to these contracts are recorded in Foreign currency exchange (loss) gain, net on the Consolidated Statements of Income. As of ~~June 30, 2019,~~March 31, 2020, we had foreign currency derivative contracts outstanding with a notional value of ~~$278~~$213 million, primarily in Australian dollars, British pounds, Canadian dollars, euros and Mexican pesos, that were not designated as hedges and mature within a few days.

For derivative instruments our xe operations write ~~for~~to customers, we aggregate the foreign currency exposure arising from customer contracts, and hedge the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties as part of a broader foreign currency portfolio. The changes in fair value related to the total portfolio of positions are recorded in Revenues on the Consolidated Statements of Income. As of ~~June 30, 2019,~~March 31, 2020, we held foreign currency derivative contracts outstanding with a notional value of ~~$1.4~~$1.5 billion, primarily in U.S. dollars, euros, British pounds, Australian dollars and New Zealand dollars, that were not designated as hedges and for which the majority mature within the next twelve months.

We use longer-term foreign currency forward contracts to mitigate risks associated with changes in foreign currency exchange

rates on certain foreign currency denominated other asset and liability positions. As of ~~June 30, 2019,~~March 31, 2020, the Company had foreign currency forward contracts outstanding with a notional value of ~~$86~~$193 million, primarily in euros.

See Note 8,9, Derivative Instruments and Hedging Activities, to our Consolidated Financial Statements for additional information.

ITEM 4. CONTROLS AND PROCEDURES

Our executive management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of ~~June 30, 2019~~.March 31, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of these disclosure controls and procedures were effective as of such date to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Change in Internal Controls

There ~~have not~~has been ~~any changes~~no change in our internal control over financial reporting during the ~~three months ended June 30, 2019~~first quarter of 2020 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is, from time to time, a party to legal or regulatory proceedings arising in the ordinary course of its business.

The discussion regarding contingencies in Part I, Item 1 — Financial Statements (unaudited), Note ~~13,~~14, Litigation and Contingencies, to the unaudited consolidated financial statements in this report is incorporated herein by reference.

Currently, there are no legal or regulatory proceedings that management believes, either individually or in the aggregate, would have a material adverse effect on the Company's consolidated financial condition or results of operations. In accordance with U.S. GAAP, we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These liabilities are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case or proceeding.

ITEM 1A. RISK FACTORS

~~There~~Except as otherwise described herein, there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2018 and Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2019, as filed with the SEC.

The outbreak of COVID-19 (coronavirus) has negatively impacted and could continue to negatively impact the global economy. In addition, the COVID-19 pandemic could disrupt or otherwise negatively impact global credit markets and our operations, including the demand for our products and services.

The significant outbreak of COVID-19 has resulted in a widespread health crisis, which has negatively impacted and could continue to negatively impact the global economy. In addition, the global and regional impact of the outbreak, including official or unofficial quarantines and governmental restrictions on activities taken in response to such event, could have a negative impact on our operations, including voluntary or mandatory temporary closures of our facilities or offices; interruptions in our supply chain, which could impact the cost or availability of raw materials; disruptions or restrictions on our ability to travel or to market and distribute our products and services; reduced consumer demand for our products and services due to reduced consumer traffic in, or closure of, retail and other locations where our products and services are offered; and labor shortages.

For example, the COVID-19 pandemic has resulted in travel restrictions within and between countries, and sheltering in place orders in most of the countries where we do business. The majority of these orders went into effect at the end of February and throughout various times in March. These orders have negatively impacted all of our three operating segments. The EFT operating segment has experienced declines in transaction volumes as the restrictions noted above have reduced transactions on our network of ATMs. The epay Segment has experienced the closure of many of its POS retail locations. Finally, our money transfer segment has experienced declines in transaction volumes. Our network of company owned stores, and agents have experienced closures as many of our agents and stores were deemed nonessential services and ordered to close.

More broadly, the outbreak could potentially lead to an economic downturn that could affect demand for our products and services. Furthermore, our offices and the retail and other locations where our products and services are offered and those of our suppliers and vendors must comply with new and additional regulations imposed by state and local governments in response to the recent coronavirus outbreak, including COVID-19 safety guidance for indoor facilities. The implementation of compliance measures may cause a reduction in the number of transactions that we process.

The COVID-19 outbreak could disrupt or otherwise negatively impact credit markets, which could adversely affect the availability and cost of capital. Such impacts could limit our ability to fund our operations and satisfy our obligations.

A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to the locations where our products and services are offered and to our customers, management, support staff, professional advisors and our independent auditors. These factors, in turn, may not only impact our operations, financial condition and demand for our products and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

The extent and potential impact of the COVID-19 outbreak on our operational and financial performance will depend on future developments, including the duration, severity and spread of the virus, actions that may be taken by governmental authorities and the impact on our supply chain, customers, operations, workforce and the financial markets, all of which are highly uncertain and cannot be predicted. These and other potential impacts of an epidemic, pandemic or other health crisis, such as COVID-19, could therefore materially and adversely affect our business, financial condition and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to shares of the Company's Common Stock that were purchased by the Company during the three months ended ~~June 30, 2019.~~

March 31, 2020.

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (in thousands) (1)
April 1 - April 30, 2019 —
$ —
—
$ 320,000
May 1 - May 31, 2019 —
—
—
$ 320,000
June 1 - June 30, 2019 —
—
—
$ 320,000
Total —
$ —
—



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (in thousands) (1)
January 1 - January 31, 2020	—	$	—	—	$	249,124
February 1 - February 28, 2020	862,130	132.22		862,130	$	385,133
March 1 - March 31, 2020	1,233,533	101.96		1,233,533	$	259,362
Total	2,095,683	$	114.41	2,095,663

(1) Amount remaining to be repurchased at the end of the period. The Board of Directors ~~has~~had authorized a stock repurchase program ~~("Repurchase Program")~~ allowing Euronet to repurchase up to $375 million in value or 10.0 million shares of stock through March 31, 2020. ~~Euronet~~The Company has repurchased ~~$175~~all $375 million of stock under ~~the Repurchase Program.~~this program. On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of $120 million in value of Euronet’s common stock through March 11, 2021. Euronet has repurchased $110.4 million of stock under this program. 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. Repurchases under either remaining 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.

ITEM 6. EXHIBITS



Exhibit		Description

~~4.1~~		Indenture, dated May 22, 2019, between the Company and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on May 22, 2019 and incorporated herein by reference).
~~4.2~~		Supplemental Indenture, dated May 22, 2019, between the Company and U.S. Bank National Association, as trustee (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on May 22, 2019 and incorporated herein by reference).
~~4.3~~		~~Form of 1.375% Senior Note due 2026 (included as Exhibit A to Exhibit 4.2 above)~~)
31.1*		Section 302 — Certification of Chief Executive Officer
31.2*		Section 302 — Certification of Chief Financial Officer
32.1**		Section 906 — Certification of Chief Executive Officer
32.2**		Section 906 — Certification of Chief Financial Officer
101*		The following materials from Euronet Worldwide, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2019,~~March 31, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at ~~June 30, 2019~~March 31, 2020 (unaudited) and December 31, ~~2018,~~2019, (ii) Consolidated Statements of Income (unaudited) for the three months ended March 31, 2020 and ~~six months ended June 30,~~ 2019, ~~and 2018,~~ (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three ended March 31, 2020 and ~~six months ended June 30,~~ 2019, ~~and 2018,~~ (iv) Consolidated Statements of Changes in Equity (unaudited) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (v) Consolidated Statements of Cash Flows (unaudited) for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ and (vi) Notes to the Unaudited Consolidated Financial Statements.
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_________________________

* Filed herewith.

** Pursuant to Item 601(b)(32) of Regulation S-K, this Exhibit is furnished rather than filed with this Form 10-Q.

PLEASE NOTE: Pursuant to the rules and regulations of the ~~Securities and Exchange Commission,~~SEC, we have filed or incorporated by reference the agreements referenced above as exhibits to this ~~Quarterly~~Annual Report on Form ~~10-Q.~~10-K. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~August 8, 2019~~May 7, 2020

Euronet Worldwide, Inc.



By:	/s/ MICHAEL J. BROWN
	Michael J. Brown
	Chief Executive Officer


By:	/s/ RICK L. WELLER
	Rick L. Weller
	Chief Financial Officer



	As of
	June 30, 2019			December 31, 2018
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,558,461		$	1,054,357
Restricted cash	71,297			76,595
Trade accounts receivable, net of allowances for doubtful accounts of $24,937 at June 30, 2019 and $24,287 at December 31, 2018	836,713			693,616
Prepaid expenses and other current assets	235,279			263,019
Total current assets	2,701,750			2,087,587
Operating right of use lease assets	376,343			—
Property and equipment, net of accumulated depreciation of $381,771 at June 30, 2019 and $373,180 at December 31, 2018	324,298			291,869
Goodwill	706,367			704,197
Acquired intangible assets, net of accumulated amortization of $201,566 at June 30, 2019 and $190,920 at December 31, 2018	104,374			114,485
Other assets, net of accumulated amortization of $54,549 at June 30, 2019 and $50,821 at December 31, 2018	120,204			123,017
Total assets	$	4,333,336		$	3,321,155
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable	$	432,140		$	528,913
Accrued expenses and other current liabilities	791,213			712,012
Current portion of operating lease liabilities	124,131			—
Short-term debt obligations and current maturities of long-term debt obligations	23,998			38,017
Income taxes payable	47,490			40,159
Deferred revenue	62,455			59,293
Total current liabilities	1,481,427			1,378,394
Debt obligations, net of current portion	1,096,735			589,782
Operating lease liabilities, net of current portion	241,630			—
Deferred income taxes	52,984			57,145
Other long-term liabilities	62,337			62,992
Total liabilities	2,935,113			2,088,313
Equity:
Euronet Worldwide, Inc. stockholders’ equity:
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued	—			—
Common Stock, $0.02 par value. 90,000,000 shares authorized; 62,563,955 issued at June 30, 2019 and 59,897,309 issued at December 31, 2018	1,251			1,198
Additional paid-in-capital	1,172,834			1,104,264
Treasury stock, at cost, 8,083,716 shares at June 30, 2019 and 8,077,311 shares at December 31, 2018	(393,353		)	(391,551		)
Retained earnings	772,501			669,805
Accumulated other comprehensive loss	(155,050		)	(151,043		)
Total Euronet Worldwide, Inc. stockholders’ equity	1,398,183			1,232,673
Noncontrolling interests	40			169
Total equity	1,398,223			1,232,842
Total liabilities and equity	$	4,333,336		$	3,321,155



	For the Six Months Ended June 30, 2019
(in thousands)	EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated
Total revenues	$	377,649	$	360,274	$	533,364	$	(1,911	)	$	1,269,376
Operating expenses:
Direct operating costs	189,344		273,952		286,238		(1,890		)	747,644
Salaries and benefits	40,770		29,751		103,869		16,955			191,345
Selling, general and administrative	19,831		17,476		60,840		3,842			101,989
Depreciation and amortization	34,420		3,541		16,297		149			54,407
Total operating expenses	284,365		324,720		467,244		19,056			1,095,385
Operating income (expense)	$	93,284	$	35,554	$	66,120	$	(20,967	)	$	173,991



	For the Six Months Ended June 30, 2018
(in thousands)	EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated
Total revenues	$	330,597	$	343,308	$	500,652	$	(1,818	)	$	1,172,739
Operating expenses:
Direct operating costs	178,163		260,345		268,138		(1,810		)	704,836
Salaries and benefits	36,051		28,744		96,475		16,159			177,429
Selling, general and administrative	19,331		17,223		61,125		4,689			102,368
Depreciation and amortization	32,583		3,772		15,848		62			52,265
Total operating expenses	266,128		310,084		441,586		19,100			1,036,898
Operating income (expense)	$	64,469	$	33,224	$	59,066	$	(20,918	)	$	135,841



	Property and Equipment, net as of				Total Assets as of
(in thousands)	June 30, 2019		December 31, 2018		June 30, 2019		December 31, 2018
EFT Processing	$	237,468	$	215,106	$	2,052,915	$	1,220,141
epay	37,381		31,172		718,894		780,220
Money Transfer	49,384		45,517		1,508,408		1,310,775
Corporate Services, Eliminations and Other	65		74		53,119		10,019
Total	$	324,298	$	291,869	$	4,333,336	$	3,321,155



(in thousands)	Operating Leases
Year ending December 31,
2019	$	80,803
2020	65,590
2021	49,052
2022	37,823
2023	30,192
Thereafter	48,191
Total minimum lease payments	$	311,651



	Operating Income (Expense) for the Three Months Ended June 30,						Year-over-Year Change					Operating Income (Expense) for the Six Months Ended June 30,						Year-over-Year Change
(dollar amounts in thousands)	2019			2018			Increase (Decrease) Amount			Increase Percent		2019			2018			Increase Amount			Increase (Decrease) Percent
EFT Processing	$	76,516		$	52,922		$	23,594		45	%	$	93,284		$	64,469		$	28,815		45	%
epay	17,555			16,329			1,226			8	%	35,554			33,224			2,330			7	%
Money Transfer	35,346			32,612			2,734			8	%	66,120			59,066			7,054			12	%
Total	129,417			101,863			27,554			27	%	194,958			156,759			38,199			24	%
Corporate services, eliminations and other	(11,520		)	(11,494		)	(26		)	—	%	(20,967		)	(20,918		)	(49		)	—	%
Total	$	117,897		$	90,369		$	27,528		30	%	$	173,991		$	135,841		$	38,150		28	%