UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-K
_________________________
(Mark One)
þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 20172019
  
 OR
  
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                 to


Commission File Number 001-31648


EURONET WORLDWIDE, INC.
(Exact name of Registrant as specified in its charter)
________________________


DELAWAREDelaware74-2806888
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)


3500 COLLEGE BOULEVARD
LEAWOOD, KANSAS
College Boulevard

Leawood,Kansas66211
(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 ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock $0.02 par valueEEFTNasdaq StockGlobal Select Market LLC
Preferred Stock Purchase Rights1.375% Senior Notes due 2026EEFT26Nasdaq StockGlobal Market LLC


Securities registered pursuant to Section 12(g) of the Act: None
_________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨Noþ


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 ¨


Indicate by check mark whether the registrant has submitted electronically, and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ No ¨


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting companyo
Emerging growth companyo 
   
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 Act). Yes ¨ No þ


As of June 30, 2017,28, 2019, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $4.4$8.8 billion. The aggregate market value was determined based on the closing price of the Common Stock on June 30, 2017.28, 2019.


As of February 27, 201828, 2020, the registrant had 51,419,51253,519,855 shares of Common Stock outstanding.


Documents Incorporated By Reference


Portions of the registrant's Proxy Statement for its 20182020 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2017,2019, are incorporated by reference into Part III of this Annual Report on Form 10-K.


     




Table of Contents
Item NumberItem DescriptionPage
   
 
Item 1.
Item IA.1A.
Item 1B.
Item 2.
Item 3.
Item 44.
   
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
   
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
   
 
Item 15.
Item 16.
   
 

Part I


Item 1. Business


References in this report to “we,“we,” “our,” “us,” the “Company” and “Euronet” “Euronet” refer to Euronet Worldwide, Inc. and its subsidiaries unless the context requiresindicates otherwise.




Business Overview


General Overview


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”), card outsourcing, card issuing and merchant acquiring services; software solutions and cloud based payment solutions; electronic distribution of prepaid mobile airtime and other electronic payment products; foreign exchange services and global money transfer services.


Core Business Segments


We operate in the following three segments as of December 31, 2017:2019:


The EFTElectronic Fund Transfer ("EFT") Processing Segment processes transactions for a network of 37,13346,070 ATMs and approximately 248,000330,000 POS terminals across Europe, the Middle East and Asia Pacific. 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, and card issuing and merchant acquiring services. In addition to our core business, we offer a variety of value added services, including ATM and POS dynamic currency conversion, domestic and international ATM surcharge, advertising, customer relationship management (“CRM”), mobile top-up, bill payment, fraud management, and foreign remittance payout.payout, cardless payout, banknote recycling solutions and tax-refund services. Through this segment, we also offer a suite of integrated electronic financial transaction (“EFT”) software solutions for electronic payment and transaction delivery systems. In 20172019, the EFT Processing Segment accounted for approximately 28%32% of Euronet's consolidated revenues.


The epay Segment provides distribution and processing of prepaid mobile airtime and other electronic content and payment processing services for various prepaid products, cards and services throughout itsour worldwide distribution network. We operate a network that includes approximately 707,000728,000 POS terminals that enable electronic processing of prepaid mobile airtime “top-up” services and other non-mobiledigital media 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, gift card distribution and processing services in most of our markets and digital code distribution in a growing number of markets. In 20172019, the epay Segment accounted for approximately 33%28% of Euronet's consolidated revenues.


The Money Transfer Segment provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, AFEX, Money Express, and IME, and global account-to-account money transfer services under the brand names HiFX andname 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 imeremit.com)online.imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately 343,000397,000 locations. xe is a provider of foreign currency exchange information and offers money transfer services on its currency data websites (xe.com(www.xe.com and x-rates.com)www.x-rates.com). We offer global account-to-account money transfer services under the brand name HiFX through our HiFX websites (www.hifx.com, www.hifx.co.uk(www.xe.com and www.hifx.com.au)https://transferxe.com) and HiFXxe customer service representatives. In addition to money transfers, we offer customers bill payment services (primarily in the U.S.), payment alternatives such as money orders, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and mobile top-up. Through our HiFM brand,xe, we offer cash management solutions and foreign currency risk management services to small-to-mediumsmall-and-medium sized businesses. We are one of the largest global money transfer companies in terms ofmeasured by revenues and transaction volumes. In 20172019, the Money Transfer Segment accounted for approximately 39%40% of Euronet's consolidated revenues.


Euronet conducts business globally, serving customers in approximately 160170 countries. We have 13 transaction processing centers, including six in Europe, five in Asia Pacific and two in North America. We also maintain 6166 business offices that are located in 41 countries. Our corporate offices are located in Leawood, Kansas, USA.

Historical Perspective


Euronet was established in 1994 as Euronet Bank Access Kft., a Hungarian limited liability company. Operations began in 1995 when we established a processing center in Budapest, Hungary and installed our first ATMs in Hungary, followed by Poland and Germany in 1996. Euronet was reorganized in March 1997 in connection with its initial public offering, and at that time, our operating entities became wholly owned subsidiaries of Euronet Services, Inc., a Delaware corporation. We changed our name from Euronet Services, Inc. to Euronet Worldwide, Inc. in August 2001.


Initially, most of Euronet's resources were devoted to establishing and expanding the ATM network and ATM management services business in Europe. In December 1998, we acquired Arkansas Systems, Inc. (now known as "Euronet USA"), a U.S.-based company that produces electronic payment and transaction delivery systems software for retail banks internationally, which resulted in significant ongoing savings in third-party licensing, services and maintenance costs. By the end of 1998, we were doing business in Hungary, Poland, Germany, the Czech Republic and Croatia. From 1998 until 2005, we developed networks in India, Slovakia, Serbia and Bulgaria.


In 2005, we expanded theour product offerings of the EFT Processing Segment through the acquisition of Instreamline S.A., a Greek company that provides credit card and POS outsourcing services in addition to debit card and transaction gateway switching services in Greece and the Balkan region. In 2007, we combined our EFT and Software segments as both businesses are strategically aligned due to the fact that our software segment primarily supports our EFT service offerings and processing centers. In 2009 Euronet, through one of its group companies, was granted authorization as an e-money institution in the United Kingdom ("U.K.") under the E-Money Directive of the European Union ("E.U."). Euronet obtained relevant memberships of Visa and MasterCard during 2011. In 2011, the Second E-Money Directive ("2EMD") came into effect. 2EMD enables authorized e-money institutions to provide payment services and issue e-money throughout the European Economic Area ("EEA") under a single regulatory framework. As a result of 2EMD, Euronet, through one of its group companies, obtained relevant memberships of Visa and Mastercard during 2011. By obtaining the status as an authorized e-money institution together with its principal memberships of Visa and MasterCard,Mastercard, Euronet has been able to expand its Independent ATM DeployedDeployment ("IAD") networks across Europe. In 2018, Euronet, through one of its group companies, was reauthorized by the U.K. Financial Conduct Authority to provide payment services under the Second Payment Services Directive (“PSD2”) as well as continue to provide e-money serves under the 2EMD. By the end of 2017,2019, Euronet's IAD network of ATMs had expanded to include 2129 countries. Our product portfolio for the EFT Processing Segment operates in 86 countries.


In 2003, Euronet added a complementary business line through the acquisition of epay Limited (“epay”), which had offices in the U.K. and Australia. Through subsequent acquisitions between 2003 and 2011, the epay Segment continued to expand in Europe (Germany, Romania, Spain and the U.K.), the U.S., the Middle East, Asia and Brazil, and established new offices in New Zealand, Poland, India and Italy. We believe the epay Segment is the world's leading international network for distribution and processing of prepaid mobile airtime ("top-up") as well as other electronic payment products and services.


In 2007, we established the Money Transfer Segment after completing the acquisition of Los Angeles-based Ria, one of the largest global money transfer companies in terms ofmeasured by revenues and transaction volumes. Established in 1987, Ria originates and terminates transactions through a network of sending agents and Company-owned stores located around the world. In November 2009, Ria obtained a payment services license under the E.U.'s Payment Services Directive ("PSD") from the U.K. Financial Services Authority, (now the Financial Conduct Authority), which allowed Ria to operate under one license and one regulator for all European Economic AreaEEA Member States.States ("Member States"). Ria also obtained payment services licenses in Spain and France. The licenselicenses also facilitated expansion into new markets through the sales of money transfers through agents in countries where the use of agents was not previously permitted. Ria became reauthorized under PSD2 in 2018. In 2014, Euronet added a complementary product to the money transfer portfolio through the acquisition of HiFX, which offersoffered account-to-account international payment services to high-income individuals and small-to-mediumsmall-and-medium sized businesses. In 2015, we completed the acquisition of IME (M) Sdn Bhd
("IME") which provided Euronet with immediate entry into the Asian and Middle East money transfer send markets. In 2015, we also added a complementary business line through the acquisition of xe Corporation ("xe"), which provides currency-related data and international payment services. In addition to expanding its money transfer network, the segment expanded its product portfolio to offer complementary non-money transfer products such as bill payment and check cashing, and prepaid services in conjunction with the epay Segment.

In October 2016, the Company completed the acquisition of YourCash Europe Limited and its subsidiaries (“YourCash”). YourCash is a company incorporated in England that owns and operates primarily merchant filled ATMs in the United Kingdom, the Netherlands, Belgium and Ireland.




In March 2018, the Company completed the acquisition of Innova Tax Free Group S.L. and its subsidiaries (“Innova”). Innova is a company incorporated in Spain and offers tax refunds services to consumers in Spain, Portugal, United Kingdom, France, Italy and Germany. In May 2018, the Company acquired Easycash Ireland Limited (“Easycash”). Easycash owns and operates a network of ATMs in the Republic of Ireland.



In November 2019, the company completed the acquisition of a small ATM outsourcing network.



Business Segment Overview


For a discussion of operating results by segment, please see Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, and Note 16, Business Segment Information, to the Consolidated Financial Statements.


EFT Processing Segment


Overview


Our EFT Processing Segment provides 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; card issuing and merchant acquiring services. In addition to our core business, we offer a variety of value added services, including ATM and POS dynamic currency conversion, domestic and international surcharge, advertising, CRM, prepaid mobile top-up, bill payment, money transfer, fraud management, and foreign remittance payout.payout, cardless payout, banknote recycling solutions and tax-refund services. We provide these services either through our Euronet-owned ATMs and POS terminals, through contracts under which we operate ATMs and POS terminals on behalf of our customers or, for certain services, as stand alonestand-alone products. Through this segment, we also offer a suite of integrated EFTelectronic financial transaction software solutions for electronic payment and transaction delivery systems.


The majorprimary sources of revenues generated by our ATM network are recurring monthly management fees, transaction-based fees, surcharges and margins earned on dynamic currency conversion transactions. We receive fixed monthly fees under many of our outsourced management contracts. The EFT Processing Segment also generates revenues from POS operations and merchant management, card network management for credit, debit, prepaid and loyalty cards, prepaid mobile airtime recharge and other electronic content on ATMs and ATM advertising. We primarily service financial institutions in the developing markets of Central, Eastern and Southern Europe (Hungary, Poland, the Czech Republic, Croatia, Romania, Serbia, Greece and Ukraine), the Middle East and Asia Pacific (India, China, Malaysia, Pakistan and Pakistan)the Philippines), as well as several developed countries ofin Western Europe. As of December 31, 2017,2019, we operated 37,13346,070 ATMs compared to 33,97340,354 at December 31, 2016.2018. The increase was largely due to the expansion of our ATM networks in IndiaAsia Pacific and several European countries, and the acquisition of YourCash.Europe.


We monitor the number of transactions made by cardholders on our network. These include cash withdrawals, balance inquiries, deposits, prepaid mobile airtime recharge purchases, dynamic currency conversion transactions and certain denied (unauthorized) transactions. We do not bill certain transactions on our network to financial institutions, and we have excluded these transactions for reporting purposes. The number of transactions processed over our networks has increased over the last five years at a compound annual growth rate (“CAGR”) of approximately 18.6%19.1% as indicated in the following table:


(in millions)2013201420152016201720152016201720182019
EFT Processing transactions per year1,1881,2621,5231,8852,352
EFT Processing Segment transactions per year1,5231,8852,3522,7213,052


Our processing centers for the EFT Processing Segment are located in Martinsreid, Germany; Budapest, Hungary; Mumbai, India; Beijing, China; and Karachi, Pakistan. They operate 24 hours a day, seven days a week and consist of production IBM iSeries computers or a combination of Windows and Linux servers, which run various proprietary software packages. Our processing centers run two types of proprietary transaction switching software: our legacy ITM software, which we have used and sold to banks since 1998 through our Software Solutions unit, and a new, innovative switching software package named “Renaissance”“REN” which has been rolled out to ouris hosted in Germany and India. The processing center in Budapest, Hungary.centers operates 24 hours a day, seven days a week. We have transitioned all of our European networks to Renaissance and willbeen progressively be transitioning all of our networks to Renaissance. REN.


EFT Processing Products and Services


Outsourced Management Solutions


Euronet offers outsourced management servicessolutions to financial institutions, merchants, mobile phone operators and other organizations using our processing centers' electronic financial transaction processing software. Our outsourced management servicessolutions include management of existing ATM networks, development of new ATM networks, management of POS networks,

management of automated deposit terminals, management of credit and debit card databases and other financial processing services. These servicessolutions include 24-hour monitoring of each ATM's status and cash condition, managing the cash levels in each ATM, coordinating the cash delivery and providing automatic dispatches for necessary service calls. We also provide real-time transaction authorization, advanced monitoring, network gateway access, network switching, 24-hour customer service, maintenance, cash settlement and reconciliation, forecasting and reporting. Since our infrastructure can support a significant

increase in transactions, any new outsourced management servicessolutions agreements should provide additional revenue with lower incremental cost.


Our outsourced management servicessolutions agreements generally provide for fixed monthly management fees and, in most cases, fees payable for each transaction. The transaction fees under these agreements are generally lower than those under card acceptance agreements.


Euronet-Branded ATM Transaction Processing


Our Euronet-branded ATM networks, also known as IAD networks, are primarily managed by a processing center that uses our internally developed software solutions. The ATMs in our IAD networks are able to process transactions for holders of credit and debit cards issued by or bearing the logos of financial institutions and international card organizations such as American Express®, Visa®, MasterCardMastercard®, Diners Club International®, Discover® and UnionPay International©, as well as international ATM networks such as PULSE®. This is accomplished through our agreements and relationships with these institutions, international credit and debit card issuers and international card associations.


When a bank cardholder conducts a transaction on a Euronet-owned ATM or automated deposit terminal, ("ADT"), we receive a fee from the cardholder's bank for that transaction. The bank pays us this fee either directly or indirectly through a central switching and settlement network. When paid indirectly, this fee is referred to as the “interchange fee.” All of the banks in a shared ATM and POS switching system establish the amount of the interchange fee by agreement. We receive transaction-processingtransaction processing fees for successful transactions and, in certain circumstances, for transactions that are not completed because they fail to receive authorization. The fees paid to us by the card issuers are independent of any fees charged by the card issuers to cardholders in connection with the ATM transactions. In some cases, we may also charge a direct access fee or surcharge to cardholders at the ATM. The direct access fee is added to the amount of the cash withdrawal and debited from the cardholder's account.


We generally receive fees or earn margin from our customers for six types of ATM transactions:


Cash withdrawals;


Cash deposits;


Balance inquiries;


Transactions not completed because the relevant card issuer does not give authorization;


Dynamic currency conversion; and


Prepaid telecommunication recharges and other electronic content.


Card Acceptance or Sponsorship Agreements


Our agreements with financial institutions and international card organizations generally provide that all credit and debit cards issued by the customer financial institution or organization may be used at all ATMs that we operate in a given market. In most markets, we actoperate under sponsorship by our own e-money licensed entity, E360.Euronet 360 Finance Limited ("E360"). In a fewsome markets, we have agreements with a financial institution under which we are designated as a service provider (which we refer to as “sponsorship agreements”) for the acceptance of domestic cards and/or cards bearing international logos, such as Visa and MasterCard.Mastercard. These card acceptance or sponsorship agreements allow us to receive transaction authorization directly from the card issuing institution or international card organization.organizations on a stand-in basis. Our agreements generally provide for a term of three to seven years and renew automatically unless either party provides notice of non-renewal prior to the termination date. In some cases, the agreements are terminable by either party upon six months' notice. We are generally able to connect a financial institution to our network within 30 to 90 days of signing a card acceptance agreement. Generally, theThe financial institution provides the cash needed to complete transactions on the ATM, but we do provide a significant portion of the cash to our IAD network to fund ATM transactions ourselves. Euronet is generally liable for the cash in the ATM networks.


Under our card acceptance agreements, the ATM transaction fees we charge vary depending on the type of transaction and the number of transactions attributable to a particular card issuer. Our agreements generally provide for payment in local currency. Transactioncurrency, though transaction fees are sometimes denominated in euros or U.S. dollars. Transaction fees are billed to financial institutions and card organizations with payment terms typically no longer than one month.



Dynamic Currency Conversion


We offer dynamic currency conversion (“DCC”) over our IAD networks, ATM networks that we operate on an outsourced basis for banks, and over banks' ATM networks or POS devices as a stand-alone service. DCC is a feature of the underlying ATM or POS transaction that is offered to customers completing transactions using a foreign debit or credit card issued in a country with a currency other than the currency where the ATM or POS is located. The customer is offered a choice between completing the transaction in the local currency or in the customer's home currency via a DCC transaction. If a cardholder chooses to perform a DCC transaction, the acquirer or processor performs the foreign exchange conversion at the time that the funds are delivered at an ATM or transactions completed through the POS terminal, which results in a pre-defined amount of the customer's home currency being charged to their card. Alternatively, the customer may have the transaction converted inby the ordinary way,card issuing bank, in which the amount of local currency is communicated to the card issuing bank and the card issuing bank makes the conversion to the customer's home currency.


When a customer chooses DCC at an ATM or POS device and Euronet acts as the acquirer or processor, we receive all or a portion of the foreign exchange margin on the conversion of the transaction. On our IAD ATMs, Euronet receives the entire foreign exchange margin. If Euronet is not the acquirer or processor of the transaction, we share the DCC revenue with the sponsor bank. On ATMs or POS devices that are operated for banks, or where we offer DCC as a stand-alone service to banks or merchants, we share the foreign exchange margin. The foreign exchange margin on a DCC transaction can substantially increaseincreases the amount Euronet earns from the underlying ATM or POS transaction and increase the profitabilitysupports deployment of thoseadditional ATMs on which DCC is offered.in new locations.


Other Products and Services


Our network of owned or operated ATMs allows for the sale of financial and other products or services at a low incremental cost. We have developed value added services in addition to basic cash withdrawal and balance inquiry transactions. These value added services include mobile top-up, fraud management, bill payment, domestic and international surcharge, CRM, foreign remittance payout, cardless payout, banknote recycling, electronic content, merchant acquiring,ticket and voucher, and advertising. We are committed to the ongoing development of innovative new products and services to offer our EFT processing customers.


Euronet offers multinational merchants a Single European Payments Area (“SEPA”)-compliant cross-border transaction processing solution. SEPA is an area in which all electronic payments can be made and received in euros, whether between or within national boundaries, under the same basic conditions, rights and obligations, regardless of theirthe location. This single, centralized acquiring platform enables merchants to benefit from cost savings and faster, more efficient payments transfer. Although many European countries are not members of the eurozone, theour platform can serve the merchants in these countries as well, through itsour multi-currency functionality.


Software Solutions


We also offer a suite of integrated software solutions for electronic payments and transaction delivery systems. We generate revenues for our software products from licensing, professional services and maintenance fees for software and sales of related hardware, primarily to financial institutions around the world.


Additionally, ourOur software products are an integral part of the EFT Processing Segment product lines, and our investment in research, development, delivery and customer support reflects our ongoing commitment to an expanded customer base both internally and externally. Our proprietary software is used by our processing centers in ourthe EFT Processing Segment, resulting in cost savings and added value compared to third-party license and maintenance options. Our proprietary software consists of our legacy ITM software, which we have used and sold to banks since 1998 through our Software Solutions unit, and an innovative switching software package named “Renaissance”REN that we released in 2017.

We currently operate REN in our processing center to process payments for our own networks in Europe and we are progressively transitioning all our networks globally to REN. The private cloud architecture of REN allows us to simultaneously deploy REN across multiple physical locations. While we currently only operate REN for our internal resources, REN is scalable and will allow us to offer payment and digital solutions to third parties. In addition to payments processing, REN also supports other digital elements, including card issuing for physical and virtual cards, loyalty services,

Know Your Customer compliance, real time settlement, inventory management, risk and fraud management and other services. REN will be used as a platform to connect Euronet assets to offer digital payment solutions.

EFT Processing Segment Strategy


The EFT Processing Segment maintains a strategy to expand the network of ATMs and POS terminals into developed and developing markets that have the greatest potential for growth. In addition, we follow a supporting strategy to increase the penetration of value added (or complementary) services across our existing customer base, including DCC, surcharge, cardless payment, banknote recycling solutions, tax refund services, advertising, fraud management, bill payment, mobile top-up, CRM and foreign remittance payout.


We continually strive to make our own ATM networks more efficient by eliminating underperforming ATMs and installing ATMs in more desirable locations. We make selective additions to our own ATM network if we see market demand and profit opportunities. In tourist locations, we also shut down ATMs during the winter season when tourist activity is low.



In recent years, the need for “all-in” services has increased. Banks, particularly smaller banks, are increasingly looking for integrated ATM, POS and card issuing processing and management services. Euronet is well positioned for this opportunity as it can offer a full end-to-end solution to the potential partners.


Additional growth opportunities are driven through financial institutions that are receptive to outsourcing the operation of their ATM, POS and card networks. The operation of these devices requires expensive hardware and software and specialized personnel. These resources are available to us, and we offer them to our customers under outsourcing contracts. The expansion and enhancement of our outsourced management solutions in new and existing markets will remain an important business opportunity for Euronet. Increasing the number of non-owned ATMs and POS terminals that we operate under management services agreements and continued development of our credit and debit card outsourcing business wouldcould provide continued growth while minimizing our capital investment.


Complementary services offered by our epay Segment, where we provide prepaid mobile top-up services through POS terminals, strengthens the EFT Processing Segment's line of services. We plan to continue to expand our technology and business methods into other markets where we operate and further leverage our relationships with mobile phone operators and financial institutions to facilitate that expansion.


Seasonality


Our EFT Processing business experiences its heaviest demand for cash withdrawals and DCC during the third quarter of the fiscal year, coinciding with the tourism season. It is also impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels after the holiday season. This seasonality is increased due to our practice of "winterizing" ATMs in tourist locations that experience significantly higher traffic during the summer. Winterizing involves shutting down the ATMs during the slower winter months and results in lower overall transaction volumes in the EFT Processing Segment during those months. As we have expanded our IAD network in tourist locations, the financial impact of winterization has increased, because we continue to bear the expense of winterized ATMs even though they do not generate transactions during the winter months.


Significant Customers and Government Contracts


No individual customer of the EFT Processing Segment makes up greater than 10% of total consolidated revenues. In India, we have contracts with government-owned banks to provide certain ATM driving and transaction switching services and mobile airtime recharge services. Additionally, certain government-owned banks are members of our shared ATM network in India. In Croatia, we lease land and other property for certain ATM sites from companies that are majority-owned by the government. In Pakistan, we have a contract with a government-owned bank to provide software support services.


Competition


Our principal EFT Processing Segment competitors include ATM networks owned by financial institutions and national switches consisting of consortiums of local banks that provide outsourcing and transaction services to financial institutions and independent ATM deployers in a particular country. Additionally, large, well-financed companies that operate ATMs offer ATM network and outsourcing services, and those that provide card outsourcing, POS processing and merchant acquiring services also compete with us in various markets. Small local operators have also recently begun offering their services, particularly in the IAD market. None of these competitors has a dominant market share in any of our markets. Competitive factorsadvantages in our

EFT Processing Segment include breadth of service offering, network availability and response time, price to both the financial institution and to its customers, ATM location and access to other networks.


epay Segment


Overview


We currently offer prepaid mobile airtime top-up services and other non-mobile prepaidelectronic content and payment processing services for various prepaid products, cards and services on a network of approximately 707,000728,000 POS terminals across approximately 323,000339,000 retailer locations in Europe, the Middle East, Asia Pacific, the United States and South America. Our processing centers for the epay Segment are located in Billericay, U.K.; Martinsried, Germany; Hamburg, Germany; Milan, Italy; Buena Park, California, USA; and Kansas City, Missouri, USA.


Since 2003, we have expanded our prepaid business in new and existing markets by drawing upon our depth of experience to build and expand relationships with content providers, mobile phone operators and retailers. We offer a wide range of products across our retail networks, including prepaid mobile airtime, prepaid debit cards, prepaid gift cards, prepaid electronic content

such as music, games and software, prepaid vouchers, transport payments, lottery payments, prepaid long distance and bill payment processing assistance through partnerships with various licensed money transmitters.


Sources of Revenues


The epay Segment generates commissions orand processing fees from the distribution of electronic content and from telecommunications service providers for the sale and distribution of prepaid mobile airtime. In 2017,2019, of the total revenues and gross profit for the epay Segment, approximately 70%63% of total revenues and approximately 60%72% of gross profit was from electronic content other than prepaid mobile airtime (non-mobile(digital media products).


Customers generally purchase non-mobiledigital media prepaid content as a gift or for self-use. Content is generally purchased in two ways:


Directly online from the content provider using an online payment method; or
Through physical retail stores, online retailers or other electronic channels, including payment wallets, online banking, mobile applications and other sources.


Customers using mobile phones generally pay for their usage in one of two ways:


Through “postpaid” accounts, where usage is billed at the end of each billing period; or
Through “prepaid” accounts, where customers pay in advance by crediting their accounts prior to usage.


Although mobile phone operators in the U.S. and certain European countries have provided service principally through postpaid accounts, the norm in many other countries in Europe and the rest of the world is to offer wireless service on a prepaid basis.


Prepaid mobile phone credits are generally distributed using personal identification numbers or "PINs."("PINs"). We distribute PINs in two ways. First, we establish an electronic connection to the mobile operator and the retailer. When the sale to a customer is initiated, the terminal requests the PIN from the mobile operator via our transaction processing platform. These transactions obtain the PIN directly from the mobile operator and, therefore, Euronet does not carry PIN inventory.operator. The customer pays the retailer and the retailer becomes obligated to make settlement to us of the principal amount of the mobile airtime sold. We maintain systems that know the amount of mobile top-up sold by the retailer which allows us in turn to bill that retailer for the mobile top-up sold.


Second, we purchase PINs from the mobile operator which are electronically sent to our processing platform. We establish an electronic connection with the POS terminals in retailer locations and our processing platform provides the terminal with a PIN when the mobile top-up is purchased. We maintain systems that monitor transaction levels at each terminal. As sales of prepaid mobile airtime to customers are completed, the inventory on the platform is reduced by the PIN purchased. The customer payment and settlement with the retailer are the same as described above.


We expand our distribution networks through theby signing of new contracts with retailers, and in some markets, through the acquisition ofby acquiring existing networks. We are continuingcontinue to focus on growing our distribution network through independent sales organizations that contract directly with retailers in their network to distribute prepaid mobile airtime or other non-mobiledigital media content from the retailers' POS terminals. We continue to increase our focus on direct relationships with chains of supermarkets, convenience stores, petrolgas stations, and other larger scale retailers, where we can negotiate agreements with the retailers on multi-year bases.

In addition to the sale of traditional mobile top-up volume described above, we have expanded distribution into non-mobiledigital media products and other value-added services. We have leveraged our existing technology infrastructure to sell non-mobiledigital media products, which have been sold through our traditional retailer network and new retailer networks such as electronic channels. In the U.S., most prepaid non-mobiledigital media content is purchased for gifting; in markets outside the U.S., consumers generally purchase prepaid non-mobiledigital media content for self-use.


epay Products and Services


Prepaid Mobile Airtime Transaction Processing


We process prepaid mobile airtime top-up transactions on our POS network across Europe, the Middle East, Asia Pacific, North America and South America for two types of clients: distributors and retailers. Both types of client transactions start with a consumer in a retail store. The retailer uses a specially programmed POS terminal in the store, the retailer's electronic cash

register (ECR) system, or web-based POS device that is connected to our network to buy prepaid mobile airtime. The customerconsumer will select a predefined amount of mobile airtime from the carrier of choice, and the retailer enters the selection into the POS terminal. The consumer will pay that amount to the retailer (in cash or other payment methods accepted by the retailer). The POS device then transmits the selected transaction to our processing center. Using the electronic connection we maintain with the mobile phone operator or drawing from our inventory of PINs, the purchased amount of mobile airtime will be either credited to the consumer's account or delivered via a PIN printed by the terminal and given to the consumer. In the case of PINs printed by the terminal, the consumer must then call the mobile phone operator's toll-free number to activate the purchased airtime to the consumer's mobile account.


One difference in our relationships with various retailers and distributors is the way in which we charge for our services. For distributors and certain very large retailers, we charge a processing fee. However, the majority of our transactions occur with smaller retailers. With these clients, we receive a commission or discount on each transaction that is withheld from the payments made to the mobile phone operator, and we share that commission/discount with the retailers.


Closed Loop Gift Cards


Closed loop (private-branded) gift cards are generally described as merchant-specific prepaid cards, used for purchases exclusively at a particular merchant's locations. We distribute closed loop gift cards in various categories, including dining, retail, and digital media, such as music, games and software. Generally, the gift card is activated when a consumer loads funds (with cash, debit or credit card payment) or purchases a preloaded value gift card at a retail store location or online.


Open Loop Gift Cards


Open loop (network-branded) gift cards are prepaid gift cards associated with an electronic payment network (such as Visa or MasterCard)Mastercard) and are honored at multiple, unaffiliated locations (wherever cards from these networks are generally accepted). They are not merchant-specific. We distribute and issue single-use, non-reloadable open loop gift cards carrying the Visa brand in our retail channels. After the consumer purchases the preloaded value gift card at a retail store location or online, the consumer must call the toll-free number on the back of the card to activate it.


Open Loop Reloadable


We distribute Visa and MasterCardMastercard issued debit cards provided by Green Dot, NetSpend and other card issuers. We also manage and distribute a proprietary debit card that allows a retailer to issue its own reloadable store-branded card. Open loop reloadable cards have features similar to a bank checking account, including direct deposit, purchasing capability wherever a credit card is accepted, bill payment and ATM access. Fees are charged to consumers for the initial load and reload transactions, monthly account maintenance and other transactions.


Other Products and Services


Our POS network is used for the distribution of other products and services, including games and software, bill payment, lottery tickets and transportation products. Through our cadoozCadooz subsidiary, we also distribute vouchers and physical gifts into the business-to-business ("B2B") channel principally for the purposes of employee and customer incentives and rewards. In certain locations, the terminals used for prepaid services can also be used for electronic funds transfer to process credit and debit card payments for retail merchandise. We provide promotion and advertising for content providers of their prepaid

content throughout our retail distribution network. We also provide card production and processing services to some of our prepaid gift card partners and telecom content providers.


Retailer and Distributor Contracts


We provide our prepaid services through POS terminals or web-based POS devices installed in retail outlets or, in the case of major retailers, through direct connections between their ECR systems and our processing centers. In markets where we operate proprietary technology (the U.K., Germany, Australia, Poland, Ireland, New Zealand, Spain, Greece, India, Italy, Brazil and the U.S.), we generally own and maintain the POS terminals. In certain countries in Europe, the terminals are sold to the retailers or to distributors who service the retailer. Our agreements with major retailers for the POS services typically have one to three-year terms. These agreements include terms regarding the connection of our networks to the respective retailer's registers or payment terminals or the maintenance of POS terminals, and obligations concerning settlement and liability for transactions processed. Generally, our agreements with individual or small retailers have shorter terms and provide that either party can terminate the agreement upon three to six months' notice.


In Germany, distributors are key intermediaries in the sale of mobile top-up. As a result, our business in Germany is substantially concentrated in, and dependent upon, relationships with our major distributors. The termination of any of our agreements with major distributors could materially and adversely affect our prepaid business in Germany. However, we have been establishing agreements with independent German retailers in order to diversify our exposure to such distributors.


The number of transactions processed on our POS network has increased over the last five years at a CAGR of approximately 1.6% asare indicated in the following table:table below:


(in millions)2013201420152016201720152016201720182019
epay processing transactions per year1,1151,2441,3351,2941,1861,3351,2941,1861,1491,542


The loss of a high-volume, low-margin customer in the Middle East in 2017 contributed to a decline in processing transactions in 2017 and 2018. The addition of a high-volume, low-margin market in India contributed to an overall increase in processing transactions in 2019.

epay Segment Strategy


Mobile top-up transactions are declining in many developed markets and transaction fees for mobile transactions are being compressed by the mobile operators. epay's strategy is to defend margins in developing markets by providing value added services to mobile operators and to decrease our reliance on mobile top-up by increasing distribution of other electronic content. New product initiatives focus on products such as gift card malls, prepaid debit cards, transport and electronic content, including music, software and games. Strategic execution behind new products includes the development of relationships with global consumer product brands. This strategy leverages the global scale of the epay business allowing global brands to be sold in many or all of the countries in which we have a presence. Examples of global brands we distribute include iTunes, Google Play, Sony, and Microsoft.


Telecommunications companies and other content providers have a substantial opportunity to increase revenues by diversifying the products and services currently offered to their retailers. epay is deploying additional content through its POS network to retailers and distributors all over the world. The reach, capabilities and quality of the epay network are appealing as a global distribution channel. We are one of the largest worldwide multi-country operators, and believe we have a distinct competitive advantage from the existing relationships that we maintain with prepaid content providers and retailers.


Seasonality


As the product mix continues to change, the epay business is impacted by seasonality during the fourth quarter and first quarter of each year due to the higher transaction levels during the holiday season and lower levels following the holiday season.


Significant Customers and Government Contracts


No individual customer of our epay Segment makes up greater than 10% of total consolidated revenues. epay has a contract for the technology and distribution infrastructure for six state-owned lotteries in Germany. In addition, epay has contracts with the state of Florida's (USA) Turnpike partners and Transurban Limited, the largest manager of toll road networks in Australia, Cubic supporting New South Wales Transport ticketing in Australia and with New Zealand Transport Authority, which operates all toll roads in New Zealand. In Germany, cadoozCadooz has a contract with Deutsche Bahn, which is majority owned by the German state. We also have a contract for the distribution of mobile airtime with a Saudi company, which is majority owned by the Saudi government. There are no other government contracts in the epay Segment.


Competition


We face competition in the prepaid business in all of our markets. We compete with a few multinational companies that operate in several of our markets. In other markets, our competition is from smaller, local companies. The mobile operators in all of our markets have retail distribution networks, and in some markets, on-line distribution of their own through which they offer top-up services for their own products.


We believe our size and market share are competitive advantages in many markets. In addition, we believe our processing platforms are a competitive advantage. We have extremely flexible technical platforms that enable us to tailor POS solutions to individual retailers and mobile operator and non-mobiledigital media content provider requirements where appropriate. Our platforms are also able to provide value added services other than processing which makes us a more valuable partner to the content providers and retailers. We have introduced new digital products into the marketplace such as digital payment for online media subscriptions. Many of these products are not offered by our competitors and in many countries, these are new products. We are capitalizing on being the first to market for these products.


The principal competitive factors in the epay Segment include price (that is, the level of commission paid to retailers for each transaction), breadth of products and up-time offered on the system. Major retailers with high volumes are in a positionable to demand a larger share of the commission, which increases the amount of competition among service providers. We are seeing signs that some mobile operators are expanding their distribution networks to provide top-up services on-line or via mobile devices, which provides other alternatives for consumers to use.


Money Transfer Segment


Overview


We provide global money transfer services primarily under the brand names Ria, IME, xe and HiFX.xe. Ria and IME provide consumer-to-consumer money transfer services through a global network of more than 343,000397,000 locations and our websiteswebsite riamoneytransfer.com and imeremit.com.online.imeremit.com. Most of our money transfers are originated through sending agents in approximately 3234 countries, with money transfer delivery completed in 147160 countries. The initiation of a consumer money transfer occurs through retail agents, Company-owned stores or online, while the delivery of money transfers can occur with bank correspondents, retailer agents or from certain ATMs. Our websites allow consumers to send funds online, using a bank account or credit or debit card, for pay-out directly to a bank account or for cash pickup.


In addition, we provide global account-to-account money transfer services under the brand names HiFX andname xe. We offer money transfer services via our HiFX websites (www.hifx.com, www.hifx.co.uk(www.xe.com and www.hifx.com.au)https://transferxe.com) and through HiFX customer service representatives. xe also provides foreign currency exchange information and offers money transfer services on its currency data websites (www.xe.com and www.x-rates.com). Through our HiFM brand,xe, we offer cash management solutions and foreign currency risk management services to small-to-mediumsmall-and-medium sized businesses.


We monitor the number of transactions made through our money transfer networks. The number of transactions processed on our network has increased over the last five years at a CAGR of approximately 27.2%13.7% as indicated in the following table:


(in millions)2013201420152016201720152016201720182019
Money transfer transactions per year35.248.568.782.392.268.782.392.2107.6114.5


Our sending agent network includes a variety of agents, including Walmart, large/medium size regional retailers, convenience stores, bodegas, multi-service shops and phone centers, which are predominantly found in areas with a large immigrant population. Each Ria money transfer transaction is processed using Euronet's proprietary software system and checked for security, completeness and compliance with federal and state regulations at every step of the process. Senders can track the

progress of their transfers through Ria's customer service representatives, and funds are delivered quickly to their beneficiaries via our extensive payout network, which includes large banks and non-bank financial institutions, post offices and large retailers. Our processing centers for the Money Transfer Segment are located in Buena Park, California, USA; Bracknell, U.K.; Auckland, New Zealand; Kansas City, Missouri, USA; and Kuala Lumpur, Malaysia. We mainly operate Ria call centers in Buena Park, California; Antiguo Cuscatlán, El Salvador; Kuala Lumpur, Malaysia; Dakar, Senegal; Mumbai, India and Madrid, Spain and provide multi-lingual customer service for both our agents and consumers. Additionally, we operate a HiFX call centerscenter for xe in Sydney, Australia.


We are one of the largest global money transfer companies in terms ofmeasured by revenues and transaction volumes. Our Money Transfer Segment processed approximately $38.8$54 billion in money transfers in 2017.2019.


Money Transfer Products and Services


Money transfer products and services are sold primarily through three channels at agent locations, Company-owned stores and on internet enabled devices at riamoneytransfer.com, imeremit.com, www.hifx.com, www.hifx.co.uk, www.hifx.com.auonline.imeremit.com, xe.com, and
xe.com https://transferxe.com (online transactions).


In an online transaction, customers send funds, using a bank account or credit or debit card, for pay-out at most of our agent locations around the world or directly to a bank account.



Through our TeleRia service, customers connect to our call center from a telephone available at an agent location and a representative collects the information over the telephone and enters it directly into our secure proprietary system. As soon as the data capture is complete, our central system automatically faxes a confirmation receipt to the agent location for the customer to review and sign and the customer pays the agent the money to be transferred, together with a fee. The agent then faxes the signed receipt back to Ria to complete the transaction.


Through our 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 significantly lower margin from these transactions than its traditional money transfers; however, the arrangement adds a significant number of transactions to 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 had an initial term expiring in April 2017 and was renewed for an additional three-year period until April 2020. Thereafter, it will automatically renew for 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.


In addition to money transfers, Ria also offers customers bill payment services, payment alternatives such as money orders, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and mobile top-up. These services are all offered through our Company-owned stores while select services are offered through our agents in certain markets.


Ria money orders are widely recognized and exchanged throughout the United States. Our check cashing services cover payroll and personal checks, cashier checks, tax refund checks, government checks, insurance drafts and money orders. Our bill payment services offer timely posting of customer bills for over 30008,000 companies, including electric and gas utilities and telephone/wireless companies. Bill payment services are offered primarily in the U.S.


HiFXxe offers account-to-account international payment service to high-income individuals and small-to-mediumsmall-and-medium sized businesses, complementing our existing consumer-to-consumer money transfer business. HiFXxe has an innovativea multi-channel platform which allows customers to make transfers, track payments and manage their international payment activity online or through a customer service representative. HiFMxe offers cash management solutions and foreign currency risk management services to small-to-mediumsmall-and-medium sized businesses.

xe also offers foreign currency exchange subscriptions and advertising on its websites and money transfer services on its websites. Until October 2016, xe used a third party provider to provide its money transfer services, and received only a share of the revenues from transactions. In October 2016, the provision of money transfer services over the xe website was migrated to HiFX, and we are now receiving all of the revenues from transactions over the xe websites.


Sources of Revenues


Revenues in the Money Transfer Segment are derived through the charging of a transaction fee, as well as a margin earned from purchasing foreign currency at wholesale exchange rates and selling the foreign currency to customers at retail exchange

rates. Sending agents and receiving agents for consumer-to-consumer products each earn fees for cash collection and distribution services. Euronet recognizes these fees as direct operating costs at the time of sale.


Money Transfer Segment Strategy


The Money Transfer Segment's strategy is to increase the volume of money transfers processed by leveraging our existing banking and merchant/retailer relationships to expand our agent and correspondent networks in existing corridors. In addition, we pursue expansion into high-potential money transfer corridors from the U.S. and internationally beyond the traditional U.S. to Mexico corridor. Further, we expect to continue to take advantage of cross-selling opportunities with our epay and EFT Processing Segments by providing prepaid services through our stores and agents and offering our money transfer services at select prepaid retail locations and ATMs we operate in key markets. We will continue to make investments in our systems to support this growth. Additionally, we are expanding our HiFX and xe businessesbusiness into new markets.



Seasonality


Our money transfer business is significantly impacted by seasonality that varies by region. In most of our markets, we experience increased money transfer transaction levels during the month of May and in the fourth quarter of each year, coinciding with various holidays. Additionally, in the U.S. to Mexico corridor, we usually experience our heaviest volume during the May through October time frame, coinciding with the increase in worker migration patterns and various holidays, and our lowest volumes during the first quarter.


Significant Customers and Government Contracts


No individual customer of our Money Transfer Segment makes up greater than 10% of total consolidated revenues. The Money Transfer Segment maintains correspondent relationships with a number of financial institutions whose ownership includes governments of the correspondents' countries of origin. Those countries include Armenia, Bangladesh, Benin, Bhutan, Bosnia-Herzegovina, Burundi, China, Costa Rica, Cote d'Ivoire, Cuba, Djibouti, Dominican Republic, Ecuador, Egypt, Eritrea, Ethiopia, Fiji, Gabon, Ghana, Guatemala, Guyana, Indonesia, Mali, Mauritania, Mexico, Pakistan, Philippines, Poland, Romania, Saudi Arabia, Senegal, Serbia, Togo, Tunisia, Uganda, Ukraine, Vietnam, Burkina Faso, El Salvador, Gambia, Georgia, Guinea, Guinea Bissau, Honduras, India, Kenya, Kyrgyzstan, Laos, Liberia, Mauritius, Moldova, Morocco, Myanmar, Niger, Nigeria, Rwanda, Samoa, Sri Lanka, Suriname, Tanzania, Thailand, Turkey, Yemen and Zambia.


Competition


Our primary competitors in the money transfer and bill payment business include other large money transfer companies and electronic money transmitters, together with hundreds of smaller registered and unregistered money transmitters, as well as certain major national and regional banks, financial institutions and independent sales organizations. Our competition includes The Western Union Company, the leading competitor with revenue approximately threetwo times greater than the next largest competitor.our revenue. The Western Union Company has a significant competitive advantage due to its greater resources and access to capital for expansion. This may allow them to offer better pricing terms to customers, agents or correspondents, which may result in a loss of our current or potential customers or could force us to lower our prices. In addition to traditional money payment services, new technologies are emerging that compete with traditional money payment services, such as stored-value cards, debit networks and web-based services and digital currencies. Our continued growth also depends upon our ability to compete effectively with these alternative technologies.


Product Research, Development and Enhancement

In the EFT Processing Segment, development has historically focused on expanding the range of services offered to our bank customers from ATM and POS outsourcing to card processing and software services.

We are committed to the maintenance and improvement of our software products. We regularly engage in software product development and enhancement activities aimed at the development and delivery of new products, services and processes to our customers. Our research and development costs for software products to be sold, leased or otherwise marketed totaled $15.4 million, $12.0 million, and $7.8 million in 2017, 2016 and 2015, respectively. Development costs that were capitalized totaled $7.8 million, $6.6 million and $5.2 million in 2017, 2016 and 2015, respectively.

In our epay Segment, development has focused on expanding the types of electronic payment products and services available to consumers over our network to include, for example, prepaid vouchers, transport payments, lottery payments, gift and debit cards, and bill payment capabilities. This is intended to make our offerings more attractive to retailers.

In the Money Transfer Segment, development has focused on expanding our services to Internet enabled devices through our various websites. This is intended to expand our customer base in existing and new corridors.

Financial Information by Geographic Area

For information on results of operations, property and equipment, and total assets by geographic location, please see Note 16, Business Segment Information, to the Consolidated Financial Statements. Additionally, see Item 1A - Risk Factors, for risk factors related to foreign operations.



Employees


We had approximately 6,6007,700, 6,2007,100 and 5,6006,600 employees as of December 31, 20172019, 20162018, and 20152017, respectively. We believe our future success will depend in part on our ability to continue to recruit, retain and motivate qualified management, technical and administrative employees. Currently, no union represents any of our employees, except in one of our Spanish subsidiaries. We experienced no work stoppages or strikes by our workforce in 20172019 and we consider relations with our employees to be good.


Government Regulation


As discussed below, many of our business activities are subject to regulation in our current markets. In the Money Transfer Segment, we are subject to a wide variety of laws and regulations of the U.S., individual U.S. states and foreign governments. These include international, federal and state anti-money laundering laws and regulations, money transfer and payment instrument licensing laws, escheat laws, laws covering consumer privacy, data protection and information security and consumer disclosure and consumer protection laws. Our operations have also been subject to increasingly strict requirements intended to help prevent and detect a variety of illegal financial activity, including money laundering, terrorist financing, unauthorized access to personal customer data and other illegal activities. The more significant of these laws and regulations are discussed below. Noncompliance with these laws and requirements could result in the loss or suspension of licenses or registrations required to provide money transfer services through retail agents, Company owned stores or online. For more discussion, see Item 1A - Risk Factors.


Any further expansion of our activity into areas that are qualified as “financial activity” under local legislation may subject us to licensing and we may be required to comply with various conditions to obtain such licenses. Moreover, the interpretations of bank regulatory authorities as to the activity we currently conduct might change in the future. We monitor our business for compliance with applicable laws or regulations regarding financial activities.


Certain of our European product offerings, including in particular, our money transfer services, merchant acquiring and bill payment products, are regulated services requiring a license under the PSD2, which replaced PSD as implementedeffective January 13, 2018. Key changes made by PSD2 to PSD include: extension of PSD rules on transparency to additional transactions not previously covered by PSD; enhanced cooperation and information exchange between authorities in each European country. The PSDthe context of authorization and supervision of payment institutions and electronic money institutions; and increased obligations around the management of operational and security risk, increased obligations relating to complaints handling and additional requirements regarding payment security.
PSD2 requires a license to perform certain defined "payment services" in a European country, which may be extended throughout the European Economic Area Member States ("Member States") through passporting. Conditions for obtaining the license include minimum capital requirements, establishment of procedures for safeguarding of funds, and certain governance and reporting requirements. In addition, certain obligations relating to internal controls and the conduct of business, in particular, consumer disclosure requirements and certain rules regarding the timing and settlement of payments, must be met. We have payment institution licenses in the U.K., France, Germany, and Spain and are complying with these requirements. To date, we have passported our U.K. authorization, German and Spanish payment services authorizations to fourteen host member states operating under the PSDseveral Member States and our Spanish authorization to oneseveral host member state operating under the PSD.Member States. Additionally, in the U.K., we have obtained an e-money license under the 2EMD. The e-money license allows Euronet to issue e-money and provide the same payment services as a PSDPSD2 licensee.  The e-money license imposes certain requirements similar to those of the payment services license, including minimum capital requirements, consumer disclosure and internal controls and can be passported to Member States. Our e-money license holder is currently operating in twentyover twenty-one Member States.

The EU adopted the Second Payment Services Directive ("PSD2"), which came into effect on January 13, 2018 and requires any currently authorized payment institution or e-money institution to be reauthorized under the PSD2 by July 13, 2018. Key changes made by PSD2 to PSD include: extension of PSD rules on transparency to additional transactions not currently covered by PSD; enhanced cooperation and information exchange between authorities in the context of authorization and supervision of payment institutions; and increased obligations around the management of operational and security risk, increased obligations relating to complaints handling and additional requirements regarding payment security.

Failure to be reauthorized under PSD2 by July 13, 2018 means the provision of regulated services must cease after this date. Once reauthorized, an failure to comply with the requirements of PSD2 could result in the imposition of fines and penalties and/or the suspension of our authorization. Our failure to obtain re-authorization or comply with new requirements could materially and adversely affect our operations or results.


Money Transfer and Payment Instrument Licensing


Licensing requirements in the U.S. are generally driven by the various state banking departments regulating the businesses of money transfers and issuances of payment instruments. Typical requirements include the meeting of minimum net worth requirements, maintaining permissible investments (e.g., cash, agent receivables, and government-backed securities) at levels commensurate with outstanding payment obligations and the filing of a security instrument (typically in the form of a surety

bond) to offset the risk of default of trustee obligations by the license holder. We are required by many state regulators to submit ongoing reports of licensed activity, most often on a quarterly or monthly basis, that address changes to agent and branch locations, operating and financial performance, permissible investments and outstanding transmission liabilities. These periodic reports are utilized by the regulator to monitor ongoing compliance with state licensing laws. A number of major state regulators also conduct periodic examinations of license holders and their authorized delegates, generally with a frequency of every one to two years. Examinations are most often comprehensive in nature, addressing both the safety and soundness and overall compliance by the license holder with regard to state and federal regulations. Such examinations are typically performed on-site at the license holder's headquarters or operations center; however, certain states may choose to perform examinations off-site as well.


Money transmitters, issuers of payment instruments and their agents are required to comply with U.S. federal, state and/or foreign anti-money laundering laws and regulations. In summary, our Money Transfer Segment, as well as our agent network, is subject to regulations issued by the different state and foreign national regulators who license us, the Office of Foreign Assets

Control (“OFAC”), the Bank Secrecy Act as amended by the USA PATRIOT ACT (“BSA”), the Financial Crimes Enforcement Network (“FINCEN”), as well as any existing or future regulations that impact any aspect of our money transfer business.


A similar set of regulations applies to our money transfer businesses in most of the foreign countries in which we originate transactions. These laws and regulations include monetary limits for money transfers into or out of a country, rules regarding the foreign currency exchange rates offered, as well as other limitations or rules for which we must maintain compliance.


Regulatory bodies in the U.S. and abroad may impose additional rules on the conduct of our Money Transfer Segment that could have a significant impact on our operations and our agent network. In this regard, the U.S. federal government has implemented U.S. federal regulations for electronic money transfers. Prior to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010 (“Dodd-Frank Act”), international money transfers, were generally not addressed by existing federal consumer protection regulations. The Dodd-Frank Act expanded the scope ofincluding the Electronic Fund Transfer Act, to providewhich provides consumer protections for international remittance transfers. On January 20, 2012, theThe Consumer Financial Protection Bureau ("CFPB"), established under the Dodd-Frank Act with authority to implement the consumer protective measures, adopted a rule that increasedprovides additional protections for consumers who transmit money internationally. The CFPB's Rule for International Remittances became effective October 28, 2013. Included among the protections areinternationally, including disclosure requirements, cancellation rights and error resolution procedures for consumer complaints. The Dodd-Frank Act further protects consumers by makingUnder U.S. federal law, it is unlawful for any provider of consumer financial products or services to engage in unfair, deceptive or abusive acts or practices (collectively, "UDAAPs") and grants the. The CFPB withhas rule making and enforcement authority to prevent UDAAPs in connection with transactions for consumer financial products or services. The CFPB audits our compliance with these rules, and we may be subject to fines or penalties for violations of any of such rules.


Escheat Regulations


Our Money Transfer Segment is subject to the unclaimed or abandoned property (i.e., “escheat”) regulations of the United States and certain foreign countries in which we operate. These laws require us to turn over property held by Euronet on behalf of others remaining unclaimed after specified periods of time (i.e., “dormancy” or “escheat” periods). Such abandoned property is generally attributable to the failure of beneficiary parties to claim money transfers or the failure to negotiate money orders, a form of payment instrument. We have policies and programs in place to help us monitor the required information relating to each money transfer or payment instrument for possible eventual reporting to the jurisdiction from which the order was originally received. In the U.S., reporting of unclaimed property by money service companies is performed annually, generally with a due date of on or before November 1. State banking department regulators will typically include a review of Euronet escheat procedures and related filings as part of their examination protocol.


Privacy and Information Security Regulations


Our Money Transfer Segment operations involve the collection and storage of certain types of personal customer data that are subject to privacy and security laws in the U.S. and abroad. In the United States, we are subject to the Gramm-Leach-Bliley Act (“GLBA”) and various state laws including California Consumer Privacy Act ("CCPA"), which requires that financial institutions have in place policies regarding the collection, processing, storage and disclosure of information considered nonpublic personal information. Laws in other countries include those adopted by the member states of the E.U. under Directive 95/46 EC of the European Parliament and of the Council of 24 October 1995 (the “Directive”), which will be replaced by the's General Data Protection Regulation (2016/679) ("GDPR"), which became effective from May 25, 2018, as well as the laws of other countries.


The E.U. has passed a new regulation called the GDPR that establishes stringent requirements for the collection and processing of personal information of individuals within the E.U. The GDPR establishes certain rights of individuals regarding personal

information processed by companies as well as requirements for information security, and imposes significant fines that may be revenue-based for violation of its requirements. The GDPR will come into effect across the E.U. on May 25, 2018. Any failure on our part to meet the requirements of the GDPR could result in the imposition of fines and penalties that could affect our financial results.


We comply with the GLBA and state privacy provisions. In October 2015, the European Court of Justice invalidated the European Commission’s decision of 2000 regarding the transfer of personal data from the E.U. to the United States (known as the "Safe Harbor Decision"). Despite the October 2015 ruling of the European Court of Justice, we believe we remain in compliance with E.U. regulations regarding the transfer of personal data to the United States.States and other jurisdictions.


Recently, as identity theft has been on the rise, there has been increased public attention to concerns about information security and consumer privacy, accompanied by laws and regulations addressing the issue. We believe we are compliant with these laws and regulations; however, this is a rapidly evolving area and there can be no assurance that we will continue to meet the existing and new regulations, which could have a material, adverse impact on our Money Transfer Segment business.


Anti-corruption and Bribery
 
We are subject to the Foreign Corrupt Practices Act ("FCPA"), which prohibits U.S. and other business entities from making improper payments to foreign government officials, political parties or political party officials. We are also subject to the

applicable anti-corruption laws in the jurisdictions in which we operate, such as the U.K. Bribery Act, thus potentially exposing us to liability and potential penalties in multiple jurisdictions. The anti-corruption provisions of the FCPA are enforced by the United States Department of Justice. In addition, the Securities and Exchange Commission ("SEC") requires strict compliance with certain accounting and internal control standards set forth under the FCPA. Because our services are offered in many countries throughout the world, we face a higher risk associated with FCPA, the U.K. Bribery Act and other similar laws than many other companies and we have policies and procedures in place to address compliance with the FCPA, the U.K. Bribery Act and other similar laws. Any determination that we have violated these laws could have an adverse effect on our business, financial position and results of operations. Failure to comply with our policies and procedures andor the FCPA and other laws can expose Euronet and/or individual employees to potentially severe criminal and civil penalties. Such penalties could have a material adverse effect on our business, financial condition and results of operations.
Money Transfer Compliance Policies and Programs


We have developed risk-based policies and programs to comply with existing and new laws, regulations and other requirements outlined above, including having dedicated compliance personnel, training programs, automated monitoring systems and support functions for our offices and agents. To assist in managing and monitoring our money laundering and terrorist financing risks, we continue to have our compliance programs, in many countries, independently examined on an annual basis. In addition, we continue to enhance our anti-money laundering, counter-terrorist financing compliance policy, procedures and monitoring systems, as well as our consumer protection policies and procedures.


Intellectual Property


Each of our three operating segments utilizes intellectual property which is protected in varying degrees by a combination of trademark, patent and copyright laws, as well as trade secret protection, license and confidentiality agreements.


The brand names of “Ria,” “Ria Financial Services,” “Ria Envia,” “HiFX,“xe,“HiFM,” “xe,”"AFEX," "IME," derivations of those brand names and certain other brand names are material to our Money Transfer Segment and are registered trademarks and/or service marks in most of the markets in which our Money Transfer Segment operates. Consumer perception of these brand names is important to the growth prospects of our money transfer business. We also hold a U.S. patent on a card-based money transfer and bill payment system that allows transactions to be initiated primarily through POS terminals and integrated cash register systems.


With respect to our EFT Processing Segment, we have registered or applied for registration of our trademarks, including the names “Euronet” and “Bankomat” and/or our blue diamond logo, as well as other trade names in most markets in which these trademarks are used. Certain trademark authorities have notified us that they consider these trademarks to be generic and, therefore, not protected by trademark laws. This determination does not affect our ability to use the Euronet trademark in those markets, but it would prevent us from stopping other parties from using it in competition with Euronet. We have registered the “Euronet” trademark in the class of ATM machines in Germany, the U.K. and certain other Western European countries. We have filed pending applications and/or obtained patents for a number of our new software products and our processing technology, including certain top-up services.



With respect to our epay Segment, we have filed trademark applications for the “epay” brand in the U.S., U.K., the E.U. through a Community Trademark application, Brazil, India, Australia and New Zealand. The epay trademark has issued to registration in the U.S., U.K., the E.U., Australia, New Zealand and Brazil. The trademark applicationsapplication in India is still pending. We cannot be certain that we are entitled to use the epay trademark in any markets other than those in which we have registered the trademark. We have filed patent applications for some of our POS top-up and certain other products in support of epay technology. Certain patents have been granted while others have been refused or are still pending. We also hold a patent license covering certain of epay's operations in the U.S.


Technology in the areas in which we operate is developing very rapidly, and we are aware that many other companies have filed patent applications for products, processes and services similar to those we provide. The procedures of the U.S. patent office make it impossible for us to predict whether our patent applications will be approved or will be granted priority dates that are earlier than other patents that have been filed for similar products or services. Moreover, many “process patents” have been filed in the U.S. over recent years covering processes that are in wide use in the money transfer, EFT and prepaid processing industries. If any of these patents are considered to cover technology that has been incorporated into our systems, we may be required to obtain additional licenses and pay royalties to the holders of such patents to continue to use the affected technology or be prohibited from continuing the offering of such services if licenses are not obtained. This could materially and adversely affect our business.

Executive Officers of the Registrant

Information about our Executive Officers

The name, age, period of service and position held by each of our Executive Officers as of March 1, 2018February 28, 2020 are as follows:


NameAgeServed SincePosition Held
Michael J. Brown6163July 1994Chairman, Chief Executive Officer and President
Rick L. Weller6062November 2002Executive Vice President - Chief Financial Officer
Jeffrey B. Newman6365December 1996Executive Vice President - General Counsel
Kevin J. Caponecchi5153July 2007Executive Vice President - Chief Executive Officer, epay, Software and EFT Asia Pacific Division
Juan C. Bianchi4749April 2007Executive Vice President - Chief Executive Officer, Money Transfer Segment
Nikos Fountas5456September 2009Executive Vice President - Chief Executive Officer, EFT Europe, Middle East and Africa Division
Martin L. Bruckner4244January 2014Senior Vice President - Chief Technology Officer


MICHAEL J. BROWN, Chairman, Chief Executive Officer and President. Mr. Brown is one of the founders of Euronet and has served as our Chairman of the Board and Chief Executive Officer since 1996, and has served as President since December 2014. He also co-founded our predecessor company in 1994. Mr. Brown has been a Director of Euronet since our incorporation in December 1996 and previously served on the boards of Euronet's predecessor companies. In 1979, Mr. Brown founded Innovative Software, Inc., a computer software company that was merged in 1988 with Informix. Mr. Brown served as President and Chief Operating Officer of Informix from February 1988 to January 1989. He served as President of the Workstation Products Division of Informix from January 1989 until April 1990. In 1993, Mr. Brown was a founding investor of Visual Tools, Inc. Visual Tools, Inc. was acquired by Sybase Software in 1996. Mr. Brown received a B.S. in Electrical Engineering from the University of Missouri - Columbia in 1979 and a M.S. in Molecular and Cellular Biology at the University of Missouri - Kansas City in 1997.


RICK L. WELLER, Executive Vice President, Chief Financial Officer. Mr. Weller has been Executive Vice President and Chief Financial Officer of Euronet since he joined Euronet in November 2002. From January 2002 to October 2002, he was the sole proprietor of Pivotal Associates, a business development firm. From November 1999 to December 2001, Mr. Weller held the position of Chief Operating Officer of ionex telecommunications, inc., a local exchange company. He is a certified public accountant and received his B.S. in Accounting from the University of Central Missouri.


JEFFREY B. NEWMAN, Executive Vice President, General Counsel. Mr. Newman has been Executive Vice President and General Counsel of Euronet since January 2000. He joined Euronet in December 1996 as Vice President and General Counsel. Prior to this, he practiced law with the Washington, D.C. based law firm of Arent Fox Kintner Plotkin & Kahn and the Paris based law firm of Salans Hertzfeld & Heilbronn. He is a member of the District of Columbia, California and Paris, France bars.

He received a B.A. in Political Science and French from Ohio University in 1976 and law degrees from Ohio State University and the University of Paris.


KEVIN J. CAPONECCHI, Executive Vice President, Chief Executive Officer, epay, Software and EFT Asia Pacific Division. Mr. Caponecchi joined Euronet in July 2007 and served as President until assuming his current role in December 2014. Prior to joining Euronet, Mr. Caponecchi served in various capacities with subsidiaries of General Electric Company for 17 years. From 2003 until June 2007, Mr. Caponecchi served as President of GE Global Signaling, a provider of products and services to freight, passenger and mass transit systems. From 1998 through 2002, Mr. Caponecchi served as General Manager - Technology for GE Consumer & Industrial, a provider of consumer appliances, lighting products and electrical products. Mr. Caponecchi holds degrees in physics from Franklin and Marshall College and industrial engineering from Columbia University.


JUAN C. BIANCHI, Executive Vice President - Chief Executive Officer, Money Transfer Segment. Mr. Bianchi joined Euronet subsequent to the acquisition of Ria in 2007. Prior to the acquisition, Mr. Bianchi served as the Chief Executive Officer of Ria and has spent his entire career at either Ria or AFEX Money Express, a money transfer company purchased by Ria's founders. Mr. Bianchi began his career at AFEX in Chile in 1992, joined AFEX USA's operations in 1996, and became chief operating officer of AFEX-Ria in 2003. Mr. Bianchi studied business at the Universidad Andres Bello in Chile and completed the Executive Program in Management at UCLA's John E. Anderson School of Business.


NIKOS FOUNTAS, Executive Vice President - Chief Executive Officer, EFT Europe, Middle East and Africa Division. Mr. Fountas has been Executive Vice President of the Company's EFT Processing Segment in Europe since December 2012. Mr. Fountas joined Euronet subsequent to the Company's 2005 acquisition of Instreamline S.A. (now Euronet Card Services) in Greece. He served as managing director of the Company's Greece EFT subsidiary, responsible for Euronet's European card processing and cross-border acquiring operations until September 2009. In September 2009, Mr. Fountas took over responsibilities as managing director of Euronet's Europe EFT Processing Segment. Prior to joining Euronet, Mr. Fountas spent over 20 years working in management and executive-level positions in the IT field for several companies, including IBM for 12 years. He has a degree in computer science (Honors) from York University in Canada and post graduate studies in business administration from Henley Management School and IBM Business Professional Institute.


MARTIN L. BRUCKNER, Senior Vice President - Chief Technology Officer. Mr. Bruckner has been Senior Vice President and Chief Technology Officer of Euronet since January 2014. Mr. Bruckner joined Euronet in 2007 as head of software development and IT operations for Transact GmbH. In 2009, he was promoted to Chief Technology Officer of Euronet's epay segment. Prior to joining Euronet, Mr. Bruckner established his own IT company called MLB Development GmbH, where he developed software systems for various European companies. Mr. Bruckner has more than 20 years of software development experience and published his first software product (BBS systems) at the age of 15. He received a Doctorate of Law from the University of Rostock and a law degree from the University of Bielefeld.


Availability of Reports, Certain Committee Charters and Other Information


Our Website addresses are www.euronetworldwide.com and www.eeft.com. We make available all SEC public filings, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act") on our Websites free of charge as soon as reasonably practicable after these documents are electronically filed with, or furnished to, the SEC. The information on our Websites is not, and shall not be deemed to be, a part of this report or incorporated into any other filings we make with the SEC. In addition, our SEC filings are made available via the SEC's EDGAR filing system accessible at www.sec.gov.


The charters for our Audit, Compensation, and Corporate Governance and Nominating Committees, as well as the Code of Business Conduct & Ethics for our employees, including our Chief Executive Officer and Chief Financial Officer, are available on our Website at www.euronetworldwide.com in the “Investor Relations” section.“For Investors” section under "Document and Charters".



Item 1A. Risk Factors


Our operations are subject to a number of risks and uncertainties, including those described below. You should carefully consider the risks described below before making aninvestment decision. The risks and uncertainties described below are not necessarilyorganized in order of priority or probability.


If any of the following risks actually occurs, our business, financialcondition or results of operations could be materially adversely affected. Inthat case, the trading price of our Common Stock could decline substantially.


This Annual Report also contains forward-looking statements that involve risksand uncertainties. Our actual results could differ materially from thoseanticipated in the forward-looking statements as a result of a number offactors, including the risks described below and elsewhere in this AnnualReport.


Our business may suffer from risks related to acquisitions and potential futureacquisitions.


A substantial portion of our growth has been due to acquisitions, and we continue to evaluate and engage in discussions concerning potential acquisition opportunities, some of which could be material. We cannot assure you that we will be able to successfully integrate, or otherwise realize anticipated benefits from, our recent acquisitions or any future acquisitions. Failure to successfully integrate or otherwise realize the anticipated benefits of these acquisitions could adversely impact our long-term competitiveness and profitability. The integration of any future acquisitions will involve a number of risks that could harm our financial condition, results of operations and competitive position. In particular:


The integration plans for our acquisitions are based on benefits that involve assumptions as to future events, including our ability to successfully achieve anticipated synergies, leveraging our existing relationships, as well as general business and industry conditions, many of which are beyond our control and may not materialize. Unforeseen factors may offset components of our integration plans in whole or in part. As a result, our actual results may vary considerably, or be considerably delayed, compared to our estimates;

The integration process could disrupt the activities of the businesses that are being combined. The combination of companies requires, among other things, coordination of administrative and other functions. In addition, the loss of key employees, customers or vendors of acquired businesses could materially and adversely impact the integration of the acquired businesses;


The execution of our integration plans may divert the attention of our management from other key responsibilities;


We may assume unanticipated liabilities and contingencies; or


Our acquisition targets could fail to perform in accordance with our expectations at the time of purchase.


Future acquisitions may be effected through the issuance of our Common Stock or securities convertible into our Common Stock, which could substantially dilute the ownership percentage of our current stockholders. In addition, shares issued in connection with future acquisitions could be publicly tradable, which could result in a material decrease in the market price of our Common Stock.


A lack of business opportunities or financial or other resources may impede ourability to continue to expand at desired levels, and our failure to expandoperations could have an adverse impact on our financial condition.


Certain factors on which our ability to expand each of our divisions is dependent are set forth at Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Opportunities and Challenges. If any of such factors impede our ability to expand our businesses, our financial results and condition could be materially and adversely affected.


We are subject to business cycles, seasonality and other outside factors thatmay negatively affect our business.


A recessionary economic environment in any of our markets or other outside factors could have a negative impact on banks, mobile phone operators, content providers, retailers and our individual customers and could reduce the level of transactions in all of our divisions, which would, in turn, negatively impact our financial results. If banks, mobile phone operators and content providers experience decreased demand for their products and services, or if the locations where we provide services decrease

in number, we will process fewer transactions, resulting in lower revenues. In addition, a recessionary economic environment could reduce the level of transactions taking place on our networks, which will have a negative impact on our business.


Our experience is that the level of transactions on our networks is also subject to substantial seasonal variation. In the EFT Processing Segment, mostly in Europe, we usually experience our heaviest demand for dynamic currency conversion during the third quarter of the fiscal year, coinciding with the tourism season in Europe. As a result, our revenues earned in the third quarter of the year will usually be greater than other quarters of the fiscal year. Additionally, transaction levels have consistently been higher in the fourth quarter of the fiscal year due to increased use of ATMs, prepaid products and money transfer services during the holiday season. Generally, the level of transactions drops in the first quarter, during which transaction levels are generally the lowest we experience during the year, which reduces the level of revenues that we record. In the Money Transfer Segment, we experience increased transaction levels during the May through October timeframe, coinciding with certain holidays and the increase in worker migration patterns. As a result of these seasonal variations, our quarterly operating results may fluctuate materially and could lead to volatility in the price of our shares.


Additionally, economic or political instability, wars, civil unrest, terrorism, epidemics (including but not limited to, Coronavirus outbreak) and natural disasters may make money transfers to, from or within a particular country more difficult. The inability to timely complete money transfers could adversely affect our business.


The current U.S. presidential administration has proposed certain actions that could have an adverse effect on our money transfer business.


Our money transfer business relies on the free flow of funds along remittance corridors, and our largest corridor is the U.S. to Mexico. Our business benefits from free trade agreements such as the North American Free Trade Agreement ("NAFTA"). On August 6, 2017,September 30, 2018, the U.S. Trade Representative opened the renegotiation of NAFTAdrafted a new free trade agreement with the governments of Canada and Mexico. TheMexico, which was signed on November 30, 2018. If the new USMCA Agreement is not approved by all three countries, then the U.S. administration has periodically indicated a willingness tomay exercise its right to withdraw from NAFTA after a six month notice period. In addition, future tariffs, border taxesThe U.S. and other measures are currently under scrutiny byMexico have approved the current U.S. administration.USMCA agreement. Any withdrawal from or significant renegotiation of, NAFTA or the adoption of other proposals that tax, restrict or otherwise limit remittances or transfers of money out of the U.S. could have a material adverse impact on our business.

A prolonged economic slowdown or lengthy or severe recession in the U.S. orelsewhere could harm our operations.


Concerns over slow economic growth, level of sovereign debt in many parts of the world, inflation levels, energy costs and geopolitical issues have contributed to increased volatility and diminished expectations for the world economy and the markets going forward. These factors, combined with volatile oilenergy and commodity prices, reduced business and consumer confidence and slow recovery from high unemployment rates, have negatively impacted the world economy. A prolonged economic downturn or recession could materially impact our results from operations. A recessionary economic environment could have a negative impact on mobile phone operators, content providers, retailers and our other customers and could reduce the level of transactions processed on our networks, which would, in turn, negatively impact our financial results. If content providers and financial institutions experience decreased demand for their products and services, or if the locations where we provide services decrease in number, we will process fewer transactions, resulting in lower revenues.


Retaining the founder and key executives of our company, and of companies thatwe acquire, and finding and retaining qualified personnel is important to ourcontinued success, and any inability to attract and retain such personnel could harm our operations.


The development and implementation of our strategy has depended in large part on the co-founder of our company, Michael J. Brown. The retention of Mr. Brown is important to our continued success. In addition, the success of the expansion of businesses that we acquire may depend in large part upon the retention of the founders or leaders of those businesses. Our success also depends in part on our ability to hire and retain highly skilled and qualified management, operating, marketing, financial and technical personnel. The competition for qualified personnel in the markets where we conduct our business is intense and, accordingly, we cannot assure you that we will be able to continue to hire or retain the required personnel.


Our officers and some of our key personnel have entered into service or employment agreements containing non-competition, non-disclosure and non-solicitation covenants, which grant incentive stock options and/or restricted stock with long-term vesting requirements. However, most of these contracts do not guarantee that these individuals will continue their employment with us. The loss of our key personnel could have a material adverse effect on our business, growth, financial condition or results of operations.


We have a substantialmoderate amount of debt and other contractual commitments, and while thecost of servicing those obligations couldis not expected to adversely affect our business, andsuchthe risk could increase if we incur more debt. We may be required to prepayour obligations under the secured syndicated credit facility.


We have a substantial amount of indebtedness. As of December 31, 2017,2019, total liabilities were $1,940.63,078 million, of which $404.01,091 million represents long-term debt obligations, and total assets were $3,140.04,658 million. We may not have sufficient funds to satisfy all such obligations as a result of a variety of factors, some of which may be beyond our control. If the opportunity of a strategic acquisition arises or if we enter into new contracts that require the installation or servicing of infrastructure, such as processing centers, ATM machines or POS terminals on a faster pace than anticipated, we may be required to incur additional debt for these purposes and to fund our working capital needs, including ATM network cash, which we may not be able to obtain. The level of our indebtedness could have important consequences to investors, including the following:


our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements or other purposes may be limited or financing may be unavailable;


a portion of our cash flows must be dedicated to the payment of principal and interest on our indebtedness and other obligations and will not be available for use in our business;


our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate;


our level of indebtedness will make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations; and


because a portion of our debt bears interest at a variable rate of interest, our actual debt service obligations could increase as a result of adverse changes in interest rates.


If we fail to make required debt payments, or if we fail to comply with other covenants in our debt service agreements, we would be in default under the terms of these agreements. This default would permit the holders of the indebtedness to accelerate repayment of this debt and could cause defaults under other indebtedness that we have.


Restrictive covenants in our credit facilities may adversely affect us. Our credit facility contains two financial covenants that we must meet as defined in the agreement: (1) Consolidated Total Leverage Ratio, and (2) Consolidated Fixed ChargeInterest Coverage Ratio. To remain in compliance with our debt covenants, we may be required to increase Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), repay debt, or both. We cannot assure you that we will have sufficient assets, liquidity or EBITDA to meet or avoid these obligations, which could have an adverse impact on our financial condition.


Our ability to secure additional financing for growth or to refinance any of our existing debt is also dependent upon the availability of credit in the marketplace, which has experienced severe disruptions in the past. If we are unable to secure additional financing or such financing is not available at acceptable terms, we may be unable to secure financing for growth or refinance our debt obligations, if necessary.


In the event that we need debt financing in the future, uncertainty inthe credit markets could affect our ability to obtain debt financing onreasonable terms.


In the event we were to require additional debt financing in the future, uncertainty in the credit markets could materially impact our ability to obtain debt financing on reasonable terms. The inability to access debt financing on reasonable terms could materially impact our ability to make acquisitions, refinance existing debt or materially expand our business in the future.


Increases in interest rates will adversely impact our results of operations.


A portion of our existing indebtedness has variable interest rates. Increases in variable interest rates will increase the amount of interest expense that we pay for our borrowings and have a negative impact on our results of operations.



We may be required to recognize impairment charges related tolong-lived assets and goodwill recorded in connection with our acquisitions, which would adversely impact our results of operations.


Our total assets include approximately $867.9885.7 million, or 28%19% of total assets, in goodwill and acquired intangible assets recorded as a result of acquisitions. We assess our goodwill, intangible assets and other long-lived assets as and when required by accounting principles generally accepted in the U.S. to determine whether they are impaired. If operating results in any of our key markets, including Australia, Germany, Greece, Malaysia, India, New Zealand, the U.S., the U.K., Poland and Romania, deteriorate or our plans do not progress as expected when we acquired these entities, or if capital markets depress our value or that of similar companies, we may be required to record additional impairment write-downs of goodwill, intangible assets or other long-lived assets. This could have a material adverse effect on our results of operations and financial condition.


The processes and systems we employ may be subject to patent protection byother parties, and any claims could adversely affect our business and results of operations.


In certain countries, including the U.S., patent protection legislation permits the protection of processes and systems. We employ processes and systems in various markets that have been used in the industry by other parties for many years, and which we or other companies that use the same or similar processes and systems consider to be in the public domain. However, we are aware that certain parties believe they hold valid patents that cover some of the processes and systems employed in our business lines in the U.S. and elsewhere. We believe the processes and systems we use have been in the public domain prior to the patents we are aware of. The question of whether a process or system is in the public domain is a legal determination, and if this issue is litigated we cannot be certain of the outcome of any such litigation. If a person were to assert that it holds a patent covering any of the processes or systems we use, we would be required to defend ourselves against such claim. If unsuccessful, we may be required to pay damages for past infringement, which could be trebled if the infringement was found to be willful. We may also be required to seek a license to continue to use the processes or systems. Such a license may require either a single payment or an ongoing license fee. No assurance can be given that we will be able to obtain a license which is reasonable in fee and scope. If a patent owner is unwilling to grant such a license, or we decide not to obtain such a license, we may be required to modify our processes and systems to avoid future infringement. Any such occurrences could materially and adversely affect one or more of our business lines in any affected markets and could result in our reconsidering the rate of expansion of business in those markets.


We conduct a significant portion of our business in Central and EasternEuropean countries, and we have subsidiaries in the Middle East, Asia Pacificand South America, where the risk of continued political, economic andregulatory change that could impact our operating results is greater than inthe U.S. or Western Europe.


We have subsidiaries in Central and Eastern Europe, the Middle East, Asia Pacific and South America. We expect to continue to expand our operations to other countries in these regions. Some of these countries have undergone significant political, economic and social change in recent years and the risk of new, unforeseen changes in these countries remains greater than in the U.S. or Western Europe. In particular, changes in laws or regulations or in the interpretation of existing laws or regulations, whether caused by a change in government or otherwise, could materially adversely affect our business, growth, financial condition or results of operations.


For example, currently there are no limitations in any of the countries in which we have subsidiaries on the repatriation of profits from these countries, but foreign currency exchange control restrictions, taxes or limitations may be imposed or tightened in the future with regard to repatriation of earnings and investments from these countries. If exchange control restrictions, taxes or limitations are imposed or tightened, our ability to receive dividends or other payments from affected subsidiaries could be reduced, which may have a material adverse effect on us. As discussed under "Liquidity and Capital Resources" in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, under existing U.S. tax laws, repatriation of certain assets to the U.S. could have adverse tax consequences.


In addition, corporate, contract, property, insolvency, competition, securities and other laws and regulations in many of the countries in which we operate have been, and continue to be, substantially revised. Therefore, the interpretation and procedural safeguards of the new legal and regulatory systems are in the process of being developed and defined, and existing laws and regulations may be applied inconsistently. Also, in some circumstances, it may not be possible to obtain the legal remedies provided for under these laws and regulations in a reasonably timely manner, if at all.



We conduct business in many international markets with complex and evolving taxrules, including value added tax rules, which subjects us to international taxcompliance risks which could adversely affect our operating results.


While we obtain advice from legal and tax advisors as necessary to help assure compliance with tax and regulatory matters, most tax jurisdictions that we operate in have complex and subjective rules regarding the valuation of intercompany services, cross-border payments between affiliated companies and the related effects on income tax, value added tax (“VAT”), transfer tax and share registration tax. Our foreign subsidiaries frequently undergo VAT reviews, and from time to time undergo comprehensive tax reviews and may be required to make additional tax payments should the review result in different interpretations, allocations or valuations of our services.


Uncertainties in the interpretation and application of the Tax Cuts and Jobs Act of 2017 could materially affect our tax obligations and effective tax rate.


The Tax Cuts and Jobs Act of 2017 (the "Act") was enacted on December 22, 2017, and it significantly affected U.S. tax law by, among other things, changing how the U.S. imposes income tax on multinational corporations. The Act contains several key tax provisions that affect us, including a one-time mandatory transition tax on previously undistributed foreign earnings, a reduction of the corporate income tax rate to 21% effective January 1, 2018, and new taxes on certain foreign sourced earnings, among others.


We are required to recognize the effect of the tax law changes in the period of enactment, including determining the transition tax, re-measuring our U.S. deferred tax assets and liabilities and reassessing the net realizability of our deferred tax assets and liabilities. Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. We haveAs of December 31, 2017, we recorded provisional estimates in our financial statements with respect to certain income tax effects of the Act for which the accounting is incomplete, but a reasonable estimate was able to be determined. We will continueDuring 2018, we continued to perform additional analysis on the application of the Act, taking into account any additional regulatory guidance that iswas issued by the applicable taxing authorities, which may resultresulted in adjustments to our previously reported provisional estimates. In accordance with the SEC's guidance, we will recognize any adjustments to our previously reported provisional estimates, in the relevant future periods,some of which could materially affectaffected our tax obligations and our effective tax rate.


In addition, the Act requires complex computations not previously provided in U.S. tax law, and the application of accounting guidance for such items is currently uncertain in some respects. Further, compliance with the Act and the accounting for such provisions require accumulation of information not previously required or regularly produced. The U.S. Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how the law is applied and thus impact our results of operations in the period issued.

Increases in taxes could negatively impact our operating results.


As a result of economic downturns, tax receipts have decreased and/or government spending has increased in many of the countries in which we operate. Consequently, governments may increase tax rates or implement new taxes in order to compensate for gaps between tax revenues and expenditures. Additionally, governments may prohibit or restrict the use of certain legal structures designed to minimize taxes. Any such tax increases, whether borne by us or our customers, could negatively impact our operating results or the demand for our products.


We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act or other similar anti-corruption laws.
Our operations in countries outside the United States are subject to anti-corruption laws and regulations, including restrictions imposed by the FCPA. The FCPA and similar anti-corruption laws in other jurisdictions, such as the U.K. Bribery Act, generally prohibit companies and their intermediaries from making improper payments to government officials or employees of commercial enterprises for the purpose of obtaining or retaining business. We operate in many parts of the world that have experienced corruption to some degree and, in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.
Our employees and agents interact with government officials on our behalf, including as necessary to obtain licenses and other regulatory approvals necessary to operate our business, import or export equipment, employ expatriates and resolve tax disputes. We also have a number of contracts with foreign governments or entities owned or controlled by foreign governments. These interactions and contracts create a risk of violation of the FCPA or other similar laws.

Although we have implemented policies and procedures designed to ensure compliance with local laws and regulations as well as U.S. laws and regulations, including the FCPA, there can be no assurance that all of our employees, consultants, contractors and agents will abide by our policies. If we are found to be liable for violations of the FCPA or similar anti-corruption laws in other jurisdictions, either due to our own or others' acts or inadvertence, we could suffer from criminal or civil penalties which could have a material and adverse effect on our results of operations, financial condition and cash flows.
Because we are a multinational company conducting a complex business in manymarkets worldwide, we are subject to legal and operational risks related tostaffing and management, as well as a broad array of local legal and regulatoryrequirements which could adversely affect our operations.


Operating outside of the U.S. creates difficulties associated with staffing and managing our international operations, as well as complying with local legal and regulatory requirements. We operate financial transaction processing networks that offer new products and services to customers, and the laws and regulations in the markets in which we operate evolve and are subject to rapid change. Although we have knowledgeable local staff in countries in which we deem it appropriate, we cannot assure you that we will continue to be found to be operating in compliance with all applicable customs, currency exchange control, data protection, employment, transfer pricing and other laws or regulations to which we may be subject. We also cannot assure you that these laws will not be modified in ways that may adversely affect our business.


Our business may be adversely affected if recent developments to applicable data protection regulations in the European Union require us to cease the transfer of personal data from the European Union to the United States.


In October 2015, the European Court of Justice invalidated the European Commission’s decision regarding the transfer of personal data from the E.U. to the United States (known as the "Safe Harbor Decision"). Prior to the ruling of the European Court of Justice, the Safe Harbor Decision provided a mechanism that facilitated personal data transfers to the United States in compliance with the E.U.’s Directive on Data Protection. Our money transfer business relies on the transfer of E.U. citizens’ personal information to the United States to enable payment of money remittance transactions to beneficiaries through our correspondent network. Despite the October 2015 ruling of the European Court of Justice, we believe we remain in compliance with E.U. regulations regarding the transfer of personal data to the United States.States and other jurisdictions. If we are unable to transfer personal data from the E.U. to the United States or other countries where we operate, then it could affect the manner in which we provide our services or adversely affect our financial results.


Because we derive our revenues from a multitude of countries with differentcurrencies, our business may be adversely affected by local inflation and foreign currencyexchange rates and policies.


We report our results in U.S. dollars, although a majority of our income is realized in foreign currencies. As exchange rates among the U.S. dollar, the euro, and other currencies fluctuate, the impact of these fluctuations may have a material adverse effect on our results of operations or financial condition as reported in U.S. dollars.


During 2015, Greece experienced a sovereign debt crisis which ledA significant number of our ATMs are located in countries in the European Union that use the euro. From time to speculation about the possibilitytime, some of Greecethese countries, have considered leaving the EurozoneEuropean Union and adopting another currency. Developments inIf such an event were to occur, the latter partconversion of 2015 resulted in Greece remaining a member of the European Union and the Eurozone. However, Greece's economy continues to struggle and in the future Greece could leave the E.U. The Company has considered the impact on its business in Greece should Greece adopt another currency. While there is a general risk of reporting net asset values and operating results in an adopted currency which may translate to U.S. dollars at different rates than the euro,cash that we recognize there is a more specific economic risk associated with cash balances in Greece. We hold cash in Greece in banks as well asand in our ATM network. A conversion of those cash amountsnetwork in that country from euros to another currency could have an adverse effect on our financial condition or results of operations, either from initial conversion or from subsequent changes in currency exchange rates. The magnitude of this risk increases when cash balances in our ATM network increase during the tourism season. While such a currency change does not appear to be an immediate risk under current circumstances, the Company continues to monitor developments in this area and will attempt to mitigate any adverse effects where possible.


In November 2016, without advance warning, the Indian government announced that it would remove from circulation two of the most often used Indian banknotes, the Rs 500 and Rs 1000 banknotes. The government expected that the notes would rapidly be replaced with a new Rs 500 note and a new Rs 2000 note, retiring (or demonetizing) completely the Rs 1000 banknote. However, distribution of the new notes was delayed, and circulation of the new notes only commenced in February 2017.  While the cash supply has beenwas restored progressively during the first months of 2017, the shortage of cash in November and December 2016 adversely impacted Euronet's 2016 fourth quarter revenue earned from ATM cash withdrawals on the more than 12,000 ATMs Euronet owns or operates as well as revenue earned from money transfer remittance payout in India. Any additional delay in restoring the cash supply will continue to adversely impact our results. The action by the Indian government

was motivated by a desire to penalize Indians holding large quantities of money earned from illicit business. Any similar action by other governments in countries in which we do business could have an adverse effect on our business.


Our Money Transfer Segment is subject to foreign currency exchange risks because our customers deposit funds in one currency at our retail and agent locations worldwide or in an online account and we typically deliver funds denominated in a different, destination country currency. Although we use foreign currency derivative contracts to mitigate a portion of this risk, we cannot eliminate all of the exposure to the impact of changes in foreign currency exchange rates for the period between collection and disbursement of the money transfers.


We have various mechanisms in place to discourage takeover attempts, which mayreduce or eliminate our stockholders' ability to sell their shares for apremium in a change of control transaction.


Various provisions of our certificate of incorporation and bylaws and of Delaware corporate law may discourage, delay or prevent a change in control or takeover attempt of our company by a third party which our management and board of directors opposes. Public stockholders who might desire to participate in such a transaction may not have the opportunity to do so. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change of control or change in our management and board of directors. These provisions include:


preferred stock that could be issued by our board of directors to make it more difficult for a third party to acquire, or to discourage a third party from acquiring, a majority of our outstanding voting stock;
classification of our directors into three classes with respect to the time for which they hold office;
supermajority voting requirements to amend the provision in our certificate of incorporation providing for the classification of our directors into three such classes;
non-cumulative voting for directors;
control by our board of directors of the size of our board of directors;
limitations on the ability of stockholders to call special meetings of stockholders; and
advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings. and
an exclusive forum bylaw provision for all internal corporate claims.


 
We are authorized to issue up to a total of 90 million shares of Common Stock,potentially diluting equity ownership of current holders and the share price ofour Common Stock.


We believe that it is necessary to maintain a sufficient number of available authorized shares of our Common Stock in order to provide us with the flexibility to issue Common Stock for business purposes that may arise as deemed advisable by our Board. These purposes could include, among other things, (i) to declare future stock dividends or stock splits, which may increase the liquidity of our shares; (ii) the sale of stock to obtain additional capital or to acquire other companies or businesses, which could enhance our growth strategy or allow us to reduce debt if needed; (iii) use in additional stock incentive programs and (iv) other bona fide purposes. Our Board of Directors may issue the available authorized shares of Common Stock without notice to, or further action by, our stockholders, unless stockholder approval is required by law or the rules of the NASDAQ Global Select Market. The issuance of additional shares of Common Stock may significantly dilute the equity ownership of the current holders of our Common Stock. Further, over the course of time, all of the issued shares have the potential to be publicly traded, perhaps in large blocks. This may result in dilution of the market price of the Common Stock.


An additional 13.08.7 million shares of Common Stock, representing approximately 25%16% of theshares outstanding as of December 31, 20172019, could be added to our total CommonStock outstanding through the exercise of options or the issuance of additionalshares of our Common Stock pursuant to existing convertible debt and other agreements. Once issued, these shares of Common Stock could be traded into themarket and result in a decrease in the market price of our Common Stock.


As of December 31, 20172019, we had 3.23.0 million and 0.40.5 million options and restricted stock awards outstanding, respectively, held by our directors, officers and employees, which entitle these holders to acquire an equal number of shares of our Common Stock. Of this amount, 2.21.7 million options are vested and exercisable as of December 31, 20172019. Approximately 3.72.4 million additional shares of our Common Stock may be issued in connection with our stock incentive and employee stock purchase plans.



Accordingly, based on current trading prices of our Common Stock, approximately 2.62.1 million shares could potentially be added to our total current Common Stock outstanding through the exercise of options and the vesting of restricted stock awards, which could adversely impact the trading price for our stock.


Of the 3.73.5 million total options and restricted stock awards outstanding, an aggregate of 2.22.1 million options and restricted stock awards are held by persons who may be deemed to be our affiliates and who would be subject to Rule 144. Thus, upon exercise of their options or sale of shares for which restrictions have lapsed, these affiliates' shares would be subject to the trading restrictions imposed by Rule 144. The remainder of the common shares issuable under option and restricted stock award arrangements would be freely tradable in the public market. Over the course of time, all of the issued shares have the potential to be publicly traded, perhaps in large blocks.


Upon the occurrence of certain events, another 5.62.8 million shares of Common Stock could be issued upon conversion of the Company's convertible notes issued in October 2014;March 2019; in certain situations, the number of shares issuable could be higher. While we have stated that we intend to settle any conversion of these notes by issuing cash for the principal value of the
notes and issuing shares of Common Stock for the conversion value in excess of the principal, which would significantly
reduce the number of shares issued upon conversion, if our financial condition significantly and adversely changes, we may not be able to settle as intended should the notes be converted.


Our competition in the EFT Processing Segment, epay Segment and Money TransferSegment includes large, well-financed companies and financial institutionslarger than us with earlier entry into the market. As a result, we may lack thefinancial resources and access to capital needed to capture increased marketshare.


EFT Processing Segment - Our principal EFT Processing competitors include ATM networks owned by banks and national switches consisting of consortiums of local banks that provide outsourcing and transaction services only to banks and independent ATM deployers in that country. Large, well-financed companies offer ATM network and outsourcing services that compete with us in various markets. In some cases, these companies also sell a broader range of card and processing services than we do, and are, in some cases, willing to discount ATM services to obtain large contracts covering a broad range of services. Competitive factors in our EFT Processing Segment include network availability and response time, breadth of service offering, price to both the bank and to its customers, ATM location and access to other networks.


epay Segment - We face competition in the epay business in all of our markets. A few multinational companies operate in several of our markets, and we therefore compete with them in a number of countries. In other markets, our competition is from

smaller, local companies. Major retailers with high volumes are in a position to demand a larger share of commissions or to negotiate directly with the mobile phone operators, which may compress our margins. Additionally, certain of our content providers, including mobile phone operators have entered into direct contracts with retailers and/or have developed processing technology that diminishes or eliminates the need for intermediate processors and distributors.


Money Transfer Segment - Our primary competitors in the money transfer and bill payment business include other large money transfer companies and electronic money transmitters, as well as certain major national and regional banks, financial institutions and independent sales organizations. Our competitors include The Western Union Company and MoneyGram International Inc. The Western Union Company has a significant competitive advantage due to its greater resources and access to capital for expansion. This may allow them to offer better pricing terms to customers, which may result in a loss of our current or potential customers or could force us to lower our prices. Either of these actions could have an adverse impact on our revenues. In addition, our competitors may have the ability to devote more financial and operational resources than we can to the development of new technologies that provide improved functionality and features to their product and service offerings. If successful, their development efforts could render our product and service offerings less desirable, resulting in the loss of customers or a reduction in the price we could demand for our services. In addition to traditional money payment services, new technologies are emerging that may effectively compete with traditional money payment services, such as stored-value cards, debit networks, web-based services and digital currencies. Our continued growth depends upon our ability to compete effectively with these alternative technologies.


If processing fees and commissions in our epay business continue to decline, our financial results may be adversely affected.


Our epay Segment derives revenues based on processing fees and commissions from mobile phone operators and other content providers. Growth in our prepaid mobile business in any given market is driven by a number of factors, including the overall pace of growth in the prepaid mobile phone market which is impacted by competing postpaid services, our market share of the retail distribution capacity, the level of commission that is paid to the various intermediaries in the prepaid mobile airtime distribution chain, and the value provided to the retailers through the types of products offered and the level of integration with

their systems. Also, competition among prepaid mobile distributors results in retailer churn and the reduction of commissions paid by prepaid content providers, although a portion of such reductions can be passed along to retailers. In recent years, processing fees and commissions per transaction have declined in most markets, and we expect that trend to continue. Additionally, the number of prepaid mobile top-up transactions we process has declined in certain markets. We have generally been able to mitigate these trends due to growth in the number of higher margin non-mobiledigital media product transactions, driven by acquisitions and organic growth. If we cannot continue to increase our transaction levels and per-transaction fees and commissions continue to decline, the combined impact of these factors could adversely impact our financial results.


Our epay and money transfer businesses may be susceptible to fraud and/orcredit risks occurring at the retailer, correspondent and/or consumer level, which could adversely affect our results of operations.


In our epay Segment, we contract with retailers that accept payment on our behalf, which we then transfer to a trust or other operating account for payment to content providers. In the event a retailer does not transfer to us payments that it receives for prepaid content sales, whether as a result of fraud, insolvency, billing delays or otherwise, we are responsible to the content provider for the cost of the product sold. We can provide no assurance that retailer fraud or insolvency will not increase in the future or that any proceeds we receive under our credit enhancement or insurance policies will be adequate to cover losses resulting from retailer fraud, which could have a material adverse effect on our business, financial condition and results of operations.


With respect to our money transfer business, we conduct the majority of our business through our agent network, which provides money transfer services directly to consumers at retail locations. Our agents collect funds directly from consumers and in turn, we collect from the agents the proceeds due to us resulting from the money transfer transactions. In addition, we advance funds to our correspondent banks to pay out money transfers and they may hold our funds for several days or more pending payment to beneficiaries. Therefore, we have credit exposure to our agents and correspondents. Additionally, our Company-owned stores transact a significant amount of business in cash. Although we have safeguards in place, cash transactions have a higher exposure to fraud and theft than other types of transactions. The failure of agents owing us significant amounts to remit funds to us or to repay such amounts, or the loss of cash in our stores could have a material adverse effect on our business, financial condition and results of operations.


Because we typically enter into short-term contracts with content providers andretailers, our epay business is subject to the risk of non-renewal of thosecontracts, or renewal under less favorable terms.


Our contracts with content providers to distribute and process content, including prepaid mobile airtime top-up services, typically have terms of less than three years. Many of those contracts may be canceled by either party upon three months' notice. Our contracts with content providers are not exclusive, so these providers may enter into contracts with other service providers. In addition, our service contracts with major retailers typically have terms of one to three years, and our contracts with smaller retailers typically may be canceled by either party upon three to six months' notice. The cancellation or non-renewal of one or more of our significant content provider or retail contracts, or of a large enough group of our contracts with smaller retailers, could have a material adverse effect on our business, financial condition and results of operations. The renewal of contracts under less favorable payment terms, commission terms or other terms could have a material adverse impact on our working capital requirements and/or results from operations. In addition, our contracts generally permit operators to reduce our fees at any time. Commission revenue or fee reductions by any of the content providers could also have a material adverse effect on our business, financial condition or results of operations.


The growth and profitability of our epay business may be adversely affected bychanges in state, federal or foreign laws, rules and regulations.


As we continue to expand our electronic payment product offerings, certain of those products may become regulated by state, federal or foreign laws, rules and regulations, including the U.S. CFPB. New product offerings may be considered to be money transfer related products which would require licensure for entities distributing or processing such products. If such products become more highly regulated and ultimately require licensure, our epay business may be adversely affected. Further, if regulations regarding the expiration of gift vouchers change in the countries where we offer them, the revenue epay recognizes from unredeemed vouchers may be negatively affected.


The growth in our epay business may be adversely affected if we are unable to expand and differentiate our offering of new electronic payment products.


The prepaid marketplace is currently experiencing high growth in the differentiation of product offerings. While our epay business is focused on expanding and differentiating its suite of prepaid product offerings on a global basis, there can be no

assurance that we will be able to enter into relationships on favorable terms with additional content providers or renew or expand current relationships and contracts on favorable terms. Inability to continue to grow our suite of electronic payment product offerings could have a material adverse effect on our business, financial condition and results of operations.


The stability and growth of our EFT Processing Segment may be adversely affected if we are unable to maintainour current card acceptance and ATM management agreements with banks andinternational card organizations, and to secure new arrangements for cardacceptance and ATM management.


The stability and future growth of our EFT Processing Segment depends in part on our ability to sign card acceptance and ATM management agreements with banks and international card organizations. Card acceptance agreements allow our ATMs to accept credit and debit cards issued by banks and international card organizations. ATM management agreements generate service income from our management of ATMs for banks.


These agreements have expiration dates, and banks and international card organizations are generally not obligated to renew them. Our existing contactscontracts generally have terms of five to seven years and a number of them expire or are up for renewal each year. In some cases, banks may terminate their contracts prior to the expiration of their terms. We cannot assure you that we will be able to continue to sign or maintain these agreements on terms and conditions acceptable to us or that international card organizations will continue to permit our ATMs to accept their credit and debit cards. The inability to continue to sign or maintain these agreements, or to continue to accept the credit and debit cards of local banks and international card organizations at our ATMs in the future, could have a material adverse effect on our business, growth, financial condition or results of operations.


Our operating results depend, in part, on the volume of transactions on ATMs in our network and the fees we can collect from processing these transactions. We generally have little control over the ATM transaction fees established in the markets where we operate, and therefore, cannot control any potential reductions in these fees which may adversely affect our results of operations.


Transaction fees from banks, customers and international card organizations for transactions processed on our ATMs have historically accounted for a substantial portion of our revenues. These fees are set by agreement among all banks in a particular market. The future operating results of our ATM business depend on the following factors:


the acceptance of our ATM processing and management services in our target markets;


the maintenance of the level of transaction fees we receive;


the continued use of our ATMs by credit and debit cardholders; and


our ability to generate revenues from interchange fees and from other value added services, including dynamic currency conversion.


The amount of fees we receive per transaction is set in various ways in the markets in which we do business. We have card acceptance agreements or ATM management agreements with some banks under which fees are set. However, we derive a significant portion of our revenues in many markets from interchange fees, surcharges or cash withdrawal related services that are set by the central ATM processing switch or various card organizations. The banks that participate in these switches or the card organizations that enable the services or transactions set the interchange fee and/or establish the rules regarding the services allowed, and we are not in a position in any market to greatly influence these fees or rules, which may change over time. A significant decrease in the interchange fee, or limitations placed on our ability to offer value added services via our ATM network, in any market could adversely affect our results in that market.


Although we believe that the volume of transactions in developing countries may increase due to growth in the number of cards being issued by banks in these markets, we anticipate that transaction levels on any given ATM in developing markets will not increase significantly. We can attempt to improve the levels of transactions on our ATM network overall by acquiring good sites for our ATMs, eliminating poor locations, entering new, less-developed markets and adding new transactions, including new value added services, to the sets of transactions that are available on our ATMs. However, we may not be successful in materially increasing transaction levels through these measures. Per-transaction fees paid by international card organizations have declined in certain markets in the past and competitive factors have required us to reduce the transaction fees we charge customers. If we cannot continue to increase our transaction levels and per-transaction fees generally decline, our results would be adversely affected.



Tightening of regulations may adversely affect our results.


The evolving regulatory environment may change the competitive landscape across various jurisdictions and adversely affect our financial results. If governments implement new laws or regulations, or organizations such as Visa and MasterCardMastercard issue new rules, that effectively limit our ability to provide DCC or set fees and/or foreign currency exchange spreads, then our business, financial condition and results of operations could be materially and adversely affected. In addition, changes in regulatory interpretations or practices could increase the risk of regulatory enforcement actions, fines and penalties and such changes may be replicated across multiple jurisdictions.


In October, 2017,March 2018, the E.U. conducted a consultationproposed additional regulations on various payment practices,cross border transactions within the E.U., including specific regulations on DCC. In connection withDecember 2018, the European Commission, European Council and European Parliament agreed to legislation that consultationrequires disclosure of foreign exchange margins applicable to DCC transactions and eventual comparability between foreign exchange rates offered by DCC providers and bank card issuers. The new legislation comes into effect in response to consumer complaints concerning DCC, the E.U. is considering whether DCC should be regulated. If the E.U. determines that regulation is appropriate, the approach taken in such regulation could range from banning DCC altogether, which we consider unlikely, to requiring additional disclosures be made to customers performing DCC transactions. Any suchApril 2020. Such regulation could materially and adversely impact our financial results, by reducing the number of DCC transactions performed over our networks and the level of profit we generate from such transactions.


The E.U. has passed a new regulation called the GDPR that establishes stringent requirements for the collection and processing of personal information of individuals within the E.U. The GDPR establishescame into effect across the E.U. on May 25, 2018. The GDPR established stringent requirements for the collection and processing of personal information of individuals within the E.U., established certain rights of individuals regarding personal information processed by companies as well as requirements for information security and imposesimposed significant fines that may be revenue-based for violation of its requirements. The GDPR will come into effect across the E.U. on May 25, 2018. The GDPR will applyapplies to transfers of personal information from the E.U. to U.S.-based companies.countries outside the E.U., including the U.S. Any failure on our

part to meet the requirements of the GDPR could result in the imposition of fines and penalties that could materially and adversely affect our financial results.


Developments in electronic financial transactionspayments could materially reduce ourtransaction levels and revenues.


Certain developments in the field of electronic financial transactionspayments may reduce the need for ATMs, prepaid product POS terminals and money transfer agents. An example of this type of development is the use of near field technology (NFC) in retail transactions, which if widely accepted in a market reduces the need for cash and can negatively impact the level of ATM transactions in that market. Advances in biometric payment solutions could have similar adverse impact.impacts. These developments may reduce the transaction levels that we experience on our networks in the markets where they occur. Financial institutions, retailers and agents could elect to increase fees to their customers for using our services, which may cause a decline in the use of our services and have an adverse effect on our revenues. If transaction levels over our existing network of ATMs, POS terminals, agents and other distribution methods do not increase, growth in our revenues will depend primarily on increased capital investment for new sites and developing new markets, which reduces the margin we realize from our revenues.


The mobile phone industry is a rapidly evolving area, in which technological developments, in particular the development of new billing models (such as "all you can eat" plans) and distribution methods or services, may affect the demand for other services in a dramatic way. The development of any new models or technology that reduce the need or demand for prepaid mobile airtime could materially and adversely affect our business.


In some cases, we are dependent upon international card organizations andnational transaction processing switches to provide assistance in obtainingsettlement from card issuers of funds relating to transactions on our ATMs, and any failure by them to provide the required cooperation could result in our inability to obtain settlement of funds relating to transactions.


Our ATMs dispense cash relating to transactions on credit and debit cards issued by banks. We have in place arrangements for the settlement to us of all of those transactions, but in some cases, we do not have a direct relationship with the card-issuing bank and rely for settlement on the application of rules that are administered by international card associations (such as Visa or MasterCard)Mastercard) or national transaction processing switching networks. If a bankcard association fails to settle transactions in accordance with those rules, we are dependent upon cooperation from such organizations or switching networks to enforce our right of settlement against such banks or card associations. Failure by such organizations or switches to provide the required cooperation could result in our inability to obtain settlement of funds relating to transactions and adversely affect our business. Moreover, international card associations and issuers of their cards (and, in the case of Visa, member banks) have the ability to change or apply their rules in ways that could negatively impact our business. As an example, DCC is not permitted on certain cards in certain geographic territories, and the scope of such restrictions could be extended. Any such change or application of the rules of international card associations could materially and adversely affect our business.



Because our business is highly dependent on the proper operation of ourcomputer networks and telecommunications connections, significant technicaldisruptions to these systems would adversely affect our revenues and financialresults.


Our business involves the operation and maintenance of sophisticated computer networks and telecommunications connections with financial institutions, mobile phone operators, other content providers, retailers and agents. This, in turn, requires the maintenance of computer equipment and infrastructure, including telecommunications and electrical systems, and the integration and enhancement of complex software applications. There are operational risks inherent in this type of business that can result in the temporary shutdown of part or all of our processing systems, such as failure of electrical supply, failure of computer hardware, security breaches and software errors. Transactions in the EFT Processing Segment are processed through our Budapest, Beijing, Mumbai and Karachi processing centers. Transactions in the epay Segment are processed through our London, Martinsried, Hamburg, Milan, Buena Park, California and Kansas City, Missouri processing centers. Transactions in our Money Transfer Segment are processed through our Buena Park, California, Kansas City, Missouri, Bracknell, Auckland, and Kuala Lumpur processing centers. Any operational problem in these centers may have a significant adverse impact on the operation of our networks. Even with disaster recovery procedures in place, these risks cannot be eliminated entirely, and any technical failure that prevents operation of our systems for a significant period of time will prevent us from processing transactions during that period of time and will directly and adversely affect our revenues and financial results.


We are subject to security breaches of our systems. Any such breach may cause us to incur financial losses, liability, harm to our reputation, litigation, regulatory enforcement actions and limitations on our ability to conduct our businesses.

We capture, transmit, handle and store sensitive information in conducting and managing electronic, financial and mobile transactions, such as card information, PIN numbers and personal information of various types. These businesses involve certain inherent security risks, in particular: the risk of electronic interception and theft of the information for use in fraudulent or other card transactions by persons outside the Company, including third party vendors or by our own employees; and the use of fraudulent cards on our network of owned or outsourced ATMs and POS devices. We incorporate industry-standard encryption technology and processing methodology into our systems and software, and maintain controls and procedures regarding access to our computer systems by employees and others, to maintain high levels of security. Although this technology and methodology decreases security risks, they cannot be eliminated entirely as criminal elements apply increasingly sophisticated technology to attempt to obtain unauthorized access to the information handled by ATM, money transfer and electronic financial transaction networks. In addition, the cost and timeframes required for implementation of new technology may result in a time lag between availability of such technology and our adoption of it. Further, our controls, procedures and technology may not be able to detect when there is a breach, causing a delay in our ability to mitigate it. As previously disclosed in our SEC filings, we have beenwere the subject of a computer security breach,breaches, and we cannot exclude the possibility of additional breaches in the future.
Any breach in our security systems could result in the perpetration of fraudulent financial transactions for which we may bear the liability. We are insured against various risks, including theft and negligence, but such insurance coverage is subject to deductibles, exclusions and limits that may leave us bearing some or all of any losses arising from security breaches.
We also collect, transfer and retain personal data as part of our money transfer business. These activities are subject to certain privacy laws and regulations in the U.S. and in other jurisdictions where our money transfer services are offered. We maintain technical and operational safeguards designed to comply with applicable legal requirements. Despite these safeguards, there remains a risk that these safeguards could be breached resulting in improper access to, and disclosure of, sensitive customer information. Breaches of our security policies or applicable legal requirements resulting in a compromise of customer data could expose us to regulatory enforcement action, subject us to litigation, limit our ability to provide money transfer services and/or cause harm to our reputation.
In addition to electronic fraud issues and breaches of our systems, the possible theft and vandalism of ATMs or cash in the ATMs present risks for our ATM business. We install ATMs at high-traffic sites and consequently our ATMs are exposed to theft and vandalism, and to a new form of attack whereby the security of the ATM is breached electronically by transmitting a command to the ATM to dispense cash without a card being present. We constantly monitor ATM security andtake measures to protect our systems from such attacks and other breaches, but we cannot be certain that our measures will be effective against new, rapidly developing methods used by criminal elements. Although we are insured against such risks, deductibles, exclusions or limitations in such insurance may leave us bearing some or all of any losses arising from theft or vandalism of ATMs or loss of cash due to security breaches of our ATM networks. In addition, we have experienced increases in claims under our insurance, which has increased our insurance premiums.



We could incur substantial losses if one of the third party depositoryinstitutions we use in our operations were to fail.


As part of our business operations, we maintain cash balances at third party depository institutions. We could incur substantial losses if a financial institution in which we have significant deposits fails.


We are required under certain national laws and the rules of financial transactionswitching networks in many of our markets to have ''sponsors'' to operate ATMsand switch ATM transactions. Our failure to secure ''sponsor'' arrangements in any of our markets that require bank sponsors could prevent us from doing business in thatmarket.


Under the laws of some countries, only a licensed financial institution may operate ATMs. Because we are not a licensed financial institution outside of the E.U. we are required to have a ''sponsor'' bank to conduct ATM operations in those countries. In addition, in all of our non-E.U. markets, the rules governing national transaction switching networks owned or operated by banks, and to other international financial transaction switching networks operated by organizations such as Citibank, Visa and MasterCard,Mastercard, require any company sending transactions through these switches to be a bank or a technical service processor that is approved and monitored by a bank. As a result, the operation of our ATM network in many of our markets depends on our ability to secure these ''sponsor'' arrangements with financial institutions.


To date, we have been successful in reaching contractual arrangements that have permitted us to operate in all of our target markets. However, we cannot assure you that we will continue to be successful in reaching these arrangements, and it is possible that our current arrangements will not continue to be renewed. If we are unable to secure “sponsor” arrangements in any market, we could be prevented from doing business in that market.


We rely on third party financial institutions to provide us with a portion of the cash required to operate our ATM networks in certain countries. If these institutions were unable or unwilling to provide us with the cash necessary to operate our ATM networks, we would be required to locate additional alternative sources of cash to operate these networks.
 
In our EFT Processing Segment, we primarily rely on third party financial institutions in certain countries in Europe and Asia Pacific to provide us with the cash required to operate our ATM networks. Under our agreements with these providers, we pay fees or interest, which is generally variable and could increase, based on the total amount of cash we are using from such provider at a given time, as well as other costs such as bank fees and cash transportation costs. As of December 31, 2017,2019, the amount of cash used in our ATM networks under these supply agreements was approximately $385.9$489 million. Before the cash is disbursed to ATM customers, beneficial ownership of the cash is generally retained by the cash providers, and we have no access or proprietary rights to the cash.


Our existing agreements with cash providers are generally multi-year agreements that expire at various times. However, each provider may have the right to demand the return of all or any portion of its cash at any time upon the occurrence of certain events beyond our control, including certain bankruptcy events affecting us or our subsidiaries, or a breach of the terms of our cash provider agreements.


If any of our cash supply providers were to demand return of their cash or terminate their agreements with us and remove their cash from our ATM devices, or if they fail to provide us with the cash our operations require, our ability to operate the ATM networks to which the provider supplies cash would be jeopardized, and we would need to locate additional alternative sources of cash, including, potentially the increased use of our own cash. Under those circumstances, the terms and conditions of the new or renewed agreements could potentially be less favorable to us, which would negatively impact our results of operations. Furthermore, restrictions on our access to cash to supply our ATMs could severely restrict our ability to keep our ATMs operating, which could subject us to performance penalties under our contracts with our customers.


We have already encountered difficulty in obtaining cash supply arrangements in certain of our markets, including Greece, and have begun providingdirectly provide cash for our ATM transactions in those markets. While the amounts involved are currently well within our capabilities given our cash flows and available financing, any failure to renew a major cash supply arrangement could require that we commit significant financial resources to the supply of cash to our ATM networks, which could adversely impact our results of operations.


Competition in our EFT Processing Segment has increased over the last severalyears, increasing the risk that certain of our long-term bank outsourcingcontracts may be terminated or not renewed upon expiration.


The developing markets in which we have done business have matured over the years, resulting in increasing competition. In addition, as consolidation of financial institutions in Central and Eastern Europe continues, certain of our customers have established or are establishing internal ATM management and processing capabilities. As a result of these developments, negotiations regarding renewal of contracts have become increasingly challenging and in certain cases we have reduced fees to extend contracts beyond their original terms. In certain other cases, contracts have been, and in the future may be, terminated by financial institutions resulting in a substantial reduction in revenue. Contract termination payments, if any, may be inadequate to replace revenues and operating income associated with these contracts. Although we have historically considered the risk of non-renewal of major contracts to be relatively low because of complex interfaces and operational procedures established for those contracts, the risk of non-renewal or early termination is increasing.


Our operating results in the money transfer business may be harmed if there are adverse changes in worker immigration patterns, our ability to expand our share of theexisting electronic market and to expand into new markets and our ability tocontinue complying with regulations issued by the Office of Foreign AssetsControl (“OFAC”), Bank Secrecy Act (“BSA”), Financial Crimes EnforcementNetwork (“FINCEN”),OFAC, BSA, FINCEN, USA PATRIOT Act regulations, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) or any other existing or futureregulations that impact any aspect of our money transfer business.


Our money transfer business primarily focuses on workers who migrate to foreign countries in search of employment and then send a portion of their earnings to family members in their home countries. Changes in U.S. and foreign government policies or enforcement, including changes that have been, or maybe,may be, implemented by the U.S. President or Congress, toward immigration may have a negative effect on immigration in the U.S. and other countries, which could also have an adverse impact on our money transfer revenues.


Both U.S. and foreign regulators have become increasingly aggressive in the enforcement of the various regulatory regimes applicable to our businesses and the imposition of fines and penalties in the event of violations. Our ability to continue

complying with the requirements of OFAC, BSA, FINCEN, the USA PATRIOT Act, the Dodd-Frank Act and other regulations (both U.S. and foreign) is important to our success in achieving growth and an inability to do this could have an adverse impact on our revenues and earnings. Anti-money laundering and consumer protection regulations require us to be responsible for the compliance by agents with such regulations. Although we have training and compliance programs in place, we cannot be certain our agents will comply with such regulations and we may be held responsible for their failure to comply, resulting in fines and penalties.


Future growth and profitability depend upon expansion within the markets in which we currently operate and the development of new markets for our money transfer services. Our expansion into new markets is dependent upon our ability to successfully apply our existing technology or to develop new applications to satisfy market demand. We may not have adequate financial and technological resources to expand our distribution channels and product applications to satisfy these demands, which may have an adverse impact on our ability to achieve expected growth in revenues and earnings.


Changes in state, federal or foreign laws, rules and regulations could impactthe money transfer industry, making it more difficult for our customers toinitiate money transfers which would harm our money transfer business.


Our money transfer services are subject to regulation by the U.S. states in which we operate, by the U.S. federal government and by the governments of the other countries in which we operate. Changes in the laws, rules and regulations of these governmental entities, and our ability to obtain or retain required licensure, could have a material adverse impact on our results of operations, financial condition and cash flow.


Changes in banking industry regulation and practice could make it moredifficult for us and our agents to maintain depository accounts with banks, which would harm our business.


The banking industry, in light of increased regulatory oversight, is continually examining its business relationships with companies that offer money transfer services and with retail agents that collect and remit cash collected from end consumers. Certain major national and international banks have already withdrawn from providing service to money services businesses ("MSBs").businesses. Should our own banks decide to not offer depository services to companies engaged in processing money transfer transactions, or to retail agents that collect and remit cash from end customers, our ability to complete money transfers, and to administer and collect fees from money transfer transactions, could be adversely impacted.


If we are unable to maintain our money transfer agent and correspondentnetworks, our business may be adversely affected.


Our consumer-to-consumer money transfer based revenues are primarily generated through the use of our agent and correspondent networks. If agents or correspondents decide to leave our network or if we are unable to sign new agents or correspondents, our revenue and profit growth rates may be adversely affected. Our agents and correspondents are also subject to a wide variety of laws and regulations that vary significantly, depending on the legal jurisdiction. Changes in these laws and regulations could adversely affect our ability to maintain the networks or the cost of providing money transfer services. In addition, agents may generate fewer transactions or less revenue due to various factors, including increased competition. Because our agents and correspondents are third parties that may sell products and provide services in addition to our money transfer services, they may encounter business difficulties unrelated to the provision of our services, which may cause the agents or correspondents to reduce their number of locations or hours of operation, or cease doing business altogether.


If consumer confidence in our money transfer business or brands declines, ourbusiness may be adversely affected.


Our money transfer business relies on customer confidence in our brands and our ability to provide efficient and reliable money transfer services. A decline in customer confidence in our business or brands, or in traditional money transfer providers as a means to transfer money, may adversely impact transaction volumes which would, in turn, be expected to adversely impact our business and possibly result in recording charges for the impairment of goodwill and/or other long-lived assets.


Our money transfer service offerings are dependent on financial institutions toprovide such offerings, and any adverse change in such offerings would harm our money transfer business.


Our money transfer business involves transferring funds internationally and is dependent upon foreign and domestic financial institutions, including our competitors, to execute funds transfers and foreign currency transactions. Changes to existing regulations of financial institution operations, such as those designed to combat terrorism or money laundering, could require us to alter our operating procedures in a manner that increases our cost of doing business or to terminate certain product offerings. In addition, as a result of existing regulations and/or changes to those regulations, financial institutions could decide to cease providing the services on which we depend, requiring us to terminate certain product offerings.


The Dodd-Frank Act could havean adverse effect on our ability to hedge risks associated with our business.


The Dodd-Frank Act established federal oversight and regulation of the over-the-counter derivatives market and entities that participate in that market. The act requires the U.S. Commodity Futures Trade Commission ("CFTC") to institute broad new position limits for futures and options traded on regulated exchanges. As the law favors exchange trading and clearing, the Dodd-Frank Act also may require us to move certain derivatives transactions to exchanges where no trade credit is provided and also comply with margin requirements in connection with our derivatives activities that are not exchange traded, although the application of those provisions to us is uncertain at this time. The Dodd-Frank Act also requires many counterparties to our derivatives instruments to spin off some of their derivatives activities to a separate entity, which may not be as creditworthy as the current counterparty, or cause the entity to comply with the capital requirements, which could result in increased costs to counterparties such as us. The Dodd-Frank Act and any new regulations could (i) significantly increase the cost of derivative contracts (including requirements to post collateral, which could adversely affect our available liquidity); (ii) reduce the availability of derivatives to protect against risks we encounter; and (iii) reduce the liquidity of foreign currency related derivatives.


If we reduce our use of derivatives as a result of the legislation and regulations, our results of operations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability to plan for and fund capital expenditures and working capital. Increased volatility may make us less attractive to certain types of investors. Any of these consequences could have a material adverse effect on our financial condition and results of operations.


The United Kingdom's referendum vote in favor of leavingdeparture from the European Union could adversely affect us.
On June 23, 2016, the U.K. held a referendum in which voters approved an exit from the E.U., commonly referred to as Brexit.
The announcementBrexit withdrawal agreement (officially: Agreement on the withdrawal of the resultsUnited Kingdom of Great Britain and Northern Ireland from the referendum resulted in significant volatility in global stock marketsEuropean Union and currency exchange rate fluctuations that resulted in the strengthening ofEuropean Atomic Energy Community) is a treaty between the U.S. dollar against foreign currencies in which we conduct business.  The strengthening ofEuropean Union (EU), the U.S. dollar relative to other currencies negatively impactsEuropean Atomic Energy Community ("Euratom"), and the amount of our reported earnings outside the U.S. becauseforeign currencies translate into fewer U.S. dollars.  

As a result of the referendum, the British government has begun negotiatingUnited Kingdom (UK), signed on 24 January 2020, setting the terms of the withdrawal of the latter from the former two (Brexit). The withdrawal agreement provides for a transition period until December 31, 2020, during which the U.K.’s future remains in the single market, in order to ensure frictionless trade until a long-term relationship withis agreed. However, as of February 2020, the withdrawal of the U.K. and Northern Ireland from the E.U. remains subject of negotiations yet to come. If no such agreement is reached by that date and the transition period is not extended, a no-deal Brexit would remain the default outcome in 2021. Although it isremains unknown what thosethe final terms will be, it is possiblelikely that there will be greater restrictions on the terms of trade and immigration between the U.K. and E.U. countries, and increased regulatory complexities. The effects of

xe adjusted operating income decreased compared to 2018 primarily due to lower revenues due to Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets either during a transitional period or more permanently.uncertainty.
Our EFT Processing Segment and our Money Transfer Segment operate subsidiaries that are licensed in the U.K. as payment institutions and as an e-money institution and have passported their licenses under the Electronic Money DirectivePSD2 and Payment Services Directive,2EMD, respectively, across the E.U.  IfMember States.  When the U.K. negotiates to leaveleaves the E.U. single market without an agreement or without an agreement to continue passporting rights, then U.K. payment and/or e-money institutions may lose their passporting rights.rights to continue providing services in the E.U. after December 31, 2020. These measures could potentially disrupt the markets we serve and cause us to use one of our other E.U. licenses or obtain new licenses in another E.U. member state to continue operating in the markets throughout the E.U. Obtaining such

If we are unable to shift business to one of our other E.U. licenses or obtain additional licenses would require additional investmentby the date that the U.K. leaves the E.U., then we may have a disruption to the services that we provide in the E.U. under our U.K. licenses. Any disruption of time and money, but would not be expected to materially and adversely affectour business following Brexit could have a material adverse effect on our business or financial results.

The COVID-19 pandemic could adversely affect us.

Our business is sensitive to the willingness of our customers to travel. A pandemic could cause disruptions in air and other forms of travel. As of the date of this filing, the COVID-19 (coronavirus) outbreak has resulted in several countries issuing travel warnings, although it has largely been concentrated in China, where the Company has a small presence. Our business is diversified across our segments and management does not believe that the disruptions would have a material adverse effect on our business, financial condition or results of operations. The extent to which our results are affected by the virus will largely depend on future developments which cannot be accurately predicted and are uncertain. This includes new information which may emerge concerning the severity of the virus and attempts to contain or treat the impact.
Item 1B. Unresolved Staff Comments
 
None.


Item 2. Properties


Our executive offices are located in Leawood, Kansas. As of December 31, 2017,2019, we also have 3536 principal offices in Europe, 1114 in Asia Pacific, nine10 in North America, three in the Middle East, two in South America and one in Africa. Our office leases generally provide for initial terms ranging from two to twelve years.


Our processing centers for the EFT Processing Segment are located in Martinsreid, Germany; Budapest, Hungary; Mumbai, India; Beijing, China; and Karachi, Pakistan. Processing centers we operate for the epay Segment are located in Billericay, U.K.; Martinsried, Germany; Hamburg, Germany; Milan, Italy; Buena Park, California, USA; and Kansas City, Missouri, USA. Our processing centers for the Money Transfer Segment are located in Buena Park, California, USA; Bracknell, U.K.; Auckland, New Zealand; Kansas City, Missouri, USA; and Kuala Lumpur, Malaysia.


All of our processing centers are leased and have off-site real time backup processing centers that are capable of providing full or partial processing services in the event of failure of the primary processing centers.


Item 3. 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 litigation in Part II, Item 8 - Financial Statements and Supplementary Data and Note 18, Litigation and Contingencies, to the Consolidated Financial Statements included elsewhere 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 upon the consolidated financial statementsConsolidated Financial Statements of the Company. In accordance with U.S. Generally Accepted Accounting Principles ("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 4. Mine Safety Disclosures


Not applicable.

Part II


Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


Market Information


Our Common Stock, $0.02 par value per share, (“Common Stock”), is quoted on the NASDAQ Global Select Market under the symbol EEFT. The following table sets forth the high and low daily sales prices during the quarters indicated for our Common Stock:

  2017 2016
For the quarters ended High Low High Low
December 31 $101.07
 $83.15
 $84.81
 $70.57
September 30 $99.53
 $85.67
 $82.20
 $68.04
June 30 $90.23
 $81.19
 $82.12
 $65.33
March 31 $85.97
 $70.51
 $79.78
 $52.00


Dividends


Since our inception, no dividends have been paid on our Common Stock or Preferred Stock. We do not intend to distribute dividends for the foreseeable future. Certain of our credit facilities consider payment of dividends a restricted payment which is a component in one of our financial covenants. Should we exceed the total amount allowed in the covenant, we would need to obtain lender consent prior to making any dividend payment.


Holders


At December 31, 20172019, we had 4544 stockholders of record of our Common Stock, and none of our Preferred Stock was outstanding. This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.


Private Placements and Issuances of Equity


During 20172019, we did not issue any equity securities that were not registered under the Securities Act of 1933, which have not been previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.



Stock Performance Graph


Set forth below is a graph comparing the total cumulative return on our Common Stock from December 31, 20122014 through December 31, 20172019 with the Total Returns Index for U.S. companies traded on the NASDAQ Global Select Market (the “Market Group”) and an index group of peer companies, the Total Returns Index for U.S. NASDAQ Financial Stocks (the “Peer Group”). Returns are based on monthly changes in price and assume reinvested dividends. These calculations assume the value of an investment in the Common Stock, the Market Group and the Peer Group was $100 on December 31, 2012.2014.


The following performance graph and related text are being furnished to and not filed with the SEC, and will not be deemed to be “soliciting material” or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically incorporate such information by reference into such filing.


stockpricea03.jpg
NOTE: Index Data: Calculated (or Derived) based from CRSP NASDAQ Stock Market (US(U.S. Companies) and CRSP NASDAQ Financial Index, Center for Research in Security Prices (CRSP®), Graduate School of Business, The University of Chicago. Copyright 2018.2019. Used with permission. All rights reserved.



Equity Compensation Plan Information


The table below sets forth information with respect to shares of Common Stock that may be issued under our equity compensation plans as of December 31, 2017.2019.


 (a) (b) (c) (a) (b) (c)
Plan category 
 
 Number of Securities to be
Issued Upon Exercise of Outstanding
Options and Rights
 
Weighted Average
Exercise Price of
Outstanding Options and Rights (1)
 
Number of Securities Remaining Available for Future Issuance Under Equity Compensation
Plans (Excluding Securities Reflected in Column (a))(2)
 
 
 Number of Securities to be
Issued Upon Exercise of Outstanding
Options and Rights
 
Weighted Average
Exercise Price of
Outstanding Options and Rights (1)
 
Number of Securities Remaining Available for Future Issuance Under Equity Compensation
Plans (Excluding Securities Reflected in Column (a))(2)
Equity compensation plans approved by security holders:     3,726,510
     2,388,186
Stock option awards 3,231,493
 $42.42
   3,015,775
 $81.29
  
Restricted stock unit awards 432,336
 
   493,948
 
  
Equity compensation plans not approved by security holders 
 
 
 
 
 
Total 3,663,829
 $42.42
 3,726,510
 3,509,723
 $81.29
 2,388,186
____________________________
(1)The weighted average exercise price in this column does not take into account the restricted stock unit awards.
(2)Included in this column is 0.30.2 million shares remaining under our employee stock purchase plan. During 2017,2019, Euronet issued 21,54716,713 shares to employees under the employee stock purchase plan.


Stock Repurchases


During the quarter ended December 31, 2017,2019, the Company did not repurchase any common stock.repurchased 217,829 shares at an average share price of $142.89.
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)
October 1 - October 31, 2017 
 $
 
 $149,431
November 1 - November 30, 2017 
 
 
 149,431
December 1 - December 31, 2017 
 
 
 250,000
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)
October 1 - October 31, 2019 217,829
 $142.89
 217,829
 $249,124
November 1 - November 30, 2019 
 
 
 249,124
December 1 - December 31, 2019 
 
 
 249,124
Total 217,829
 $
 217,829
  


(1) Amount remaining to be repurchased at the end of the period. In January 2016, the Company announced that itsThe Board of Directors has authorized a stock repurchase program ("2016Repurchase Program") allowing Euronet to repurchase up to $100$375 million in value or 5.010.0 million shares of its common stock through December 10, 2017 whenMarch 31, 2020. Euronet has repurchased 245.9 million of stock under the 2016 Program expired. In June 2016,Repurchase Program. On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional stock repurchase program ("Repurchase Program") with an effective date of July 28, 2016, allowing Euronet to repurchase up to $125$120 million in value or 3.0 million shares of itsEuronet’s common stock through June 14, 2018. In December 2017,March 11, 2021. On February 26, 2020, the Board of Directors amended the Repurchase Program, allowing EuronetCompany put a repurchase program in place to repurchase up to $250 million in value, or 6.0but not more than five million shares of its common stock through December 31, 2019.February 28, 2022. Repurchases under the Repurchase Programeither 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. Selected Financial Data


The following information should be read in conjunction with Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and accompanying notes contained in Item 8 - Financial Statements and Supplementary Data in this report. The historical results are not necessarily indicative of the results to be expected in any future period.


 Year Ended December 31, Year Ended December 31,
(dollar amounts in thousands, except per share amounts) 2017 2016 2015 2014 2013 2019 2018 2017 2016 2015
Income statement data:                    
Revenues $2,252,422
 $1,958,615
 $1,772,262
 $1,664,150
 $1,413,169
 $2,750,109
 $2,536,629
 $2,252,422
 $1,958,615
 $1,772,262
Operating expenses (1)
1,891,395
 1,628,313
 1,497,396
 1,433,964
 1,229,705

2,163,171
 2,072,694
 1,891,395
 1,628,313
 1,497,396
Depreciation and amortization 95,030
 80,529
 70,025
 71,455
 65,053
 111,744
 106,021
 95,030
 80,529
 70,025
Operating income (1) 265,997
 249,773
 204,841
 158,731
 118,411
 475,194
 357,914
 265,997
 249,773
 204,841
Other expenses, net (9,662) (16,880) (63,747) (17,228) (3,326) (41,387) (62,998) (9,662) (16,880) (63,747)
Income from continuing operations before income taxes 256,335
 232,893
 141,094
 141,503
 115,085
 433,807
 294,916
 256,335
 232,893
 141,094
Income tax expense (99,395) (58,795) (42,602) (40,015) (27,732) (87,112) (62,785) (99,395) (58,795) (42,602)
Income from continuing operations $156,940
 $174,098
 $98,492
 $101,488
 $87,353
 $346,695
 $232,131
 $156,940
 $174,098
 $98,492
Earnings per share from continuing operations:                    
Basic $2.99
 $3.34
 $1.89
 $1.96
 $1.76
 $6.49
 $4.52
 $2.99
 $3.34
 $1.89
Diluted $2.85
 $3.23
 $1.83
 $1.89
 $1.69
 $6.31
 $4.26
 $2.85
 $3.23
 $1.83
Balance sheet data (at period end):
                    
Assets $3,140,029
 $2,712,872
 $2,192,714
 $2,038,447
 $1,595,158
 $4,657,666
 $3,321,155
 $3,140,029
 $2,712,872
 $2,192,714
Debt obligations, long-term portion 404,012
 561,663
 405,472
 397,256
 185,478
 1,090,939
 589,782
 404,012
 561,663
 405,472
Capital lease obligations, long-term portion 9,753
 6,969
 4,147
 2,148
 2,872
Finance lease obligations, long-term portion 8,054
 8,199
 9,753
 6,969
 4,147
Summary network data                    
Number of operational ATMs at end of period 37,133
 33,973
 21,360
 20,364
 18,311
 46,070
 40,354
 37,133
 33,973
 21,360
EFT processing transactions during the period (millions) 2,352
 1,885
 1,523
 1,262
 1,188
 3,052
 2,721
 2,352
 1,885
 1,523
Number of operational prepaid processing POS terminals at end of period (rounded) 707,000
 661,000
 674,000
 681,000
 665,000
 728,000
 719,000
 683,000
 661,000
 674,000
Prepaid processing transactions during the period (millions) 1,186
 1,294
 1,335
 1,244
 1,115
 1,542
 1,149
 1,186
 1,294
 1,335
Money transfer transactions during the period (millions) 92.2
 82.3
 68.7
 48.5
 35.2
 114.5
 107.6
 92.2
 82.3
 68.7
___________________
(1)The results of 20172018 and 20132017 include non-cash charges related to impairment of goodwill and acquired intangible assets of $7.0 million and $34.1 million, and $18.4 million, respectively. Additionally, 2013 results include a $19.3 million non-cash acquisition-related contingent consideration gain.







Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
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, software solutions, electronic distribution of prepaid mobile airtime and other electronic payment 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 46,070 ATMs and approximately 330,000 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 728,000 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, IME and xe and global account-to-account money transfer services under the brand name xe. 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 our websites (riamoneytransfer.com and online.imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately 397,000 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 EFT Processing Segment, which processes transactions for a network of 37,133 ATMs and approximately 248,000 POS terminals across Europe, the Middle East and Asia Pacific. 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, dynamic currency conversion ("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 707,000 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, IME and xe and global account-to-account money transfer services under the brand name HiFX. 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 our websites (riamoneytransfer.com and imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately 343,000 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). We offer services under the brand name HiFX through our HiFX websites (www.hifx.com, www.hifx.co.uk and www.hifx.com.au) and HiFX customer service representatives. 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 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 3536 principal offices in Europe, 1114 in Asia Pacific, nine10 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 75%74% 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 (for a further discussion, see Item 1A - Risk Factors and Item 7A - Quantitative and Qualitative Disclosures About Market Risk).


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 28%32% of total consolidated revenues for the year ended December 31, 2017,2019, are 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 33%28% of total consolidated revenues for the year ended December 31, 2017,2019, 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 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 electronic products has decreased over time, and non-mobiledigital media content now produces approximately 70%63% of epay Segment revenues. Other electronic content offered by this segment 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. Agreements with mobile operators and prepaid content providers are important to the success of our business, and these agreements permit us to distribute prepaid mobile airtime and other electronic payment products to retailers.
Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately 39%40% of total consolidated revenues for the year ended December 31, 2017,2019, 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, xe and HiFXxe 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 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. 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


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 inand 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 electronic payment products;digital content;
expanding our money transfer services, cross-currency 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 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 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;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.


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;
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.


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 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 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 electronic content, expansion of our network of retailers and access to products of mobile operators and other 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;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 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.


The accounting policies of each segment are the same as those referenced in the summary of significant accounting policies (see Note 3, Summary of Significant Accounting Policies and Practices, to the Consolidated Financial Statements).

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 Revenues and Operating Income For The Years Ended December 31, 2017, 20162019 and 20152018


 Revenues Operating Income (Expense) Revenues Operating Income (Expense)
(in thousands) 2017 2016 2015 2017 2016 2015 2019 2018 2019 2018
EFT Processing $634,559
 $464,254
 $379,523
 $162,897
 $117,156
 $94,394
 $888,712
 $753,651
 $296,640
 $197,245
epay 733,998
 693,986
 708,373
 38,101
 68,242
 66,439
 769,329
 743,784
 89,204
 78,997
Money Transfer 886,858
 801,919
 685,635
 104,545
 101,526
 78,658
 1,096,226
 1,042,962
 134,790
 122,526
Total 2,255,415
 1,960,159
 1,773,531
 305,543
 286,924
 239,491
 2,754,267
 2,540,397
 520,634
 398,768
Corporate services, eliminations and other (2,993) (1,544) (1,269) (39,546) (37,151) (34,650) (4,158) (3,768) (45,440) (40,854)
Total $2,252,422
 $1,958,615
 $1,772,262
 $265,997
 $249,773
 $204,841
 $2,750,109
 $2,536,629
 $475,194
 $357,914


Summary


Our annual consolidated revenues increased by 15%8% for 20172019 compared to 2016 and by 11% for 2016 compared to 2015.2018.
The increasesincrease in revenues for 2017 and 2016 were2019 was primarily due to an increase in the number of ATMs under management, along with an increase in demand for dynamic currency conversion ("DCC")DCC, domestic and international surcharge and other value added services in our EFT Processing Segment, growth in the number of money transfers processed by the core Ria business, and the continued growth of the Walmart-2-Walmart money transfer service in our Money Transfer Segment, and an increase in the number of non-mobile transactions processed by our epay subsidiaries. These increases were partly offset by decreases in the number of prepaid mobile transactions processed by our epay subsidiaries. The October 2016 acquisition of YourCash Europe Limited and its subsidiaries ("YourCash") contributed to the increase in number of ATMs and transactions processed in our EFT Processing Segment in 2017 and 2016. The increase in revenues for 2016 also was due to the inclusion of a full year of contribution from IME since its acquisition in June 2015.
The increases in operating income for 2017 and 2016 were2019 was primarily due to the increase in ATMs under management, along with the increase in demand for DCC, domestic and international surcharge and other value added services, the increase in the number of money transfer transactions processed, including Walmart-2-Walmart transactions and those of our businesses acquired in 2015, and the increase in the number of non-mobile transactions processed for epay. These increases were partly offset by a decrease in the number of prepaid mobile transactions processed. The increases in operating income for 2017 were partially offset by charges of $34.1 million for goodwill and acquired intangible assets impairments, the reduced rates charged for the Walmart-2-Walmart product beginning in the second quarter of 2017, and an increase in salaries and benefits and other costs to support growth in the Money Transfer Segment.
Net income attributable to Euronet for 2017, 20162019 and 20152018 was $156.8346.7 million, or $2.85 per diluted share, $174.4 million, or $3.236.31 per diluted share and $98.8$232.9 million, or $1.83$4.26 per diluted share, respectively.
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 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, our 20172019 consolidated operating income was approximately 3% more5% less due to changes in foreign currency exchange rates when compared to 2016. We estimate that our reported consolidated operating income for 2016 was not significantly influenced by the changes in foreign currency exchange rates when compared to 2015.2018. If significant, in our discussion we will refer to the impact of fluctuations in foreign currency exchange rates in our comparison of 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 during 2017, 20162019 and 2015,2018, of the currencies of the countries in which we have our most significant operations:

 
Average Translation Rate
Year Ended December 31,
 2017 Increase (Decrease) Percent  2016 Decrease Percent 
Average Translation Rate
Year Ended December 31,
 2019 Increase (Decrease) Percent
  
Currency 2017 2016 2015   2019 2018 
Australian dollar $0.7668
 $0.7435
 $0.7521
 3 % (1)% $0.6954
 $0.7476
 (7)%
British pound $1.2886
 $1.3555
 $1.5283
 (5)% (11)% $1.2771
 $1.3352
 (4)%
euro $1.1297
 $1.1067
 $1.1102
 2 %  % $1.1194
 $1.1809
 (5)%
Hungarian forint $0.0037
 $0.0036
 $0.0036
 3 %  % $0.0034
 $0.0037
 (8)%
Indian rupee $0.0154
 $0.0149
 $0.0156
 3 % (4)% $0.0142
 $0.0147
 (3)%
Malaysian ringgit $0.2328
 $0.2418
 $0.2578
 (4)% (6)% $0.2416
 $0.2482
 (3)%
New Zealand dollar $0.7108
 $0.6968
 $0.7001
 2 %  % $0.6591
 $0.6924
 (5)%
Polish zloty $0.2656
 $0.2538
 $0.2656
 5 % (4)% $0.2606
 $0.2774
 (6)%





Comparison of Operating Results For The Years Ended December 31, 2017, 20162019 and 20152018 - By Operating Segment


EFT Processing Segment


The following table summarizes the results of operations for our EFT Processing Segment for the years ended December 31, 20172019 and 20162018:
 Year Ended December 31, Year-over-Year Change Year Ended December 31, Year-over-Year Change
(dollar amounts in thousands) 2017 2016 Increase Amount Increase Percent 2019 2018 Increase (Decrease) Amount Increase Percent
Total revenues $634,559
 $464,254
 $170,305
 37% $888,712
 $753,651
 $135,061
 18 %
Operating expenses:                
Direct operating costs 318,875
 224,793
 94,082
 42% 397,132
 366,977
 30,155
 8 %
Salaries and benefits 61,683
 51,822
 9,861
 19% 87,603
 75,791
 11,812
 16 %
Selling, general and administrative 33,158
 30,399
 2,759
 9% 35,518
 46,925
 (11,407) (24)%
Acquired intangible assets impairment 2,286
 
 2,286
 n/m
Depreciation and amortization 55,660
 40,084
 15,576
 39% 71,819
 66,713
 5,106
 8 %
Total operating expenses 471,662
 347,098
 124,564
 36% 592,072
 556,406
 35,666
 6 %
Operating income $162,897
 $117,156
 $45,741
 39% $296,640
 $197,245
 $99,395
 50 %
Transactions processed (millions) 2,352
 1,885
 467
 25% 3,052
 2,721
 331
 12 %
ATMs as of December 31 37,133
 33,973
 3,160
 9% 46,070
 40,354
 5,716
 14 %
Average ATMs 36,658
 27,795
 8,863
 32% 44,756
 40,094
 4,662
 12 %
____________________
n/m — Not meaningful.


Revenues
EFT Processing Segment total revenues for 20172019 were $634.6$888.7 million, an increase of $170.3$135.1 million or 37%18% as compared to 2016.2018. The increase in total revenues is primarily due to an increase in the number of ATMs under management in Europe. Specifically, the increase in the number of ATMs contributed to increases in the number of transactions processed, includingand additional DCC transactions, primarily in Europe. The acquisition of YourCash, completed during the fourth quarter of 2016, also contributed to the increase inand surcharge revenues. Foreign currency movements decreased total revenues for 2017. The increases were partially offset by the impact of a cash shortage in India due to the demonetization initiated in the fourth quarter of 2016. In the second half of 2017, the India cash supply was returned to near pre-demonetization levels. Foreign currency movements increased total revenues for 20172019 by approximately $16.745.4 million as compared to 2016.2018.
Average monthly revenues per ATM were $1,443$1,655 for 20172019 compared to $1,392$1,566 for 2016.2018. Revenues per transaction were $0.29 for 2019 and $0.28 for 2018. The increaseincreases in average monthly revenues per ATM was primarily due to the U.S. dollar weakening against key foreign currencies. Revenuesand revenues per transaction were $0.27 for 2017 and $0.25 for 2016. Theattributable to the revenue growth from DCC, which earns higher revenues per transaction than other ATM or card based services, andsurcharges partially offset by the U.S. dollar weakeningstrengthening against key foreign currencies was partly offset by the impact of the low margin ATM transactions in India.currencies.
Direct operating costs
EFT Processing Segment direct operating costs were $318.9$397.1 million for 2017,2019, an increase of $94.1$30.2 million or 42%8% as compared to 2016.2018. Direct operating costs in the EFT Processing Segment consist primarily of site rental fees, cash delivery costs, cash supply costs, maintenance, insurance, telecommunications, 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 increase in direct operating costs was primarily due to the increase in the number of ATMs under management, the impact of our acquisition of YourCash and the impact of the U.S. dollar weakening against key foreign currencies.

management. Foreign currency movements decreased direct operating costs for 2019 by approximately $22.0 million as compared to 2018.
Gross profit
Gross profit, which is calculated as revenues less direct operating costs, was $315.7$491.6 million for 20172019 compared to $239.5$386.7 million for 2016.2018. The increase in gross profit was primarily due to the growth in revenues from the increases in ATMs under management, and DCC transactions processed.and domestic and international surcharge. Gross profit as a percentage of revenues (“gross margin”) was 49.7%55.3% and 51.6%51.3% for 20172019 and 2016,2018, respectively. The decreaseincrease in gross profits as a percentage of revenuemargin was primarily due to increased operating costs dueattributable to the expansion of our ATM network, which includes fixed costs for our independent ATMs, the YourCashincreases in DCC transactions which earn lower margins per transaction than other ATM or card-based services in Europe, along with growth in the India market where we earn lower revenue per transaction and have experienced a cash shortage in the first part of the year due to the demonetization initiative in the region.domestic and international surcharge.
Salaries and benefits
Salaries and benefits increased $9.9$11.8 million or 19%16% for 20172019 compared to 2016. The increase in salaries and benefits was primarily attributable to additional headcount to support an increase in the number of ATMs and POS devices under management and our acquisition of YourCash. As a percentage of revenues, these costs decreased to 9.7% for 2017 from 11.2% for 2016, primarily due to growth in revenues earned from DCC and other value added service transactions on our ATMs under management, which require minimal incremental support costs.
Selling, general and administrative
Selling, general and administrative expenses for 2017 were $33.2 million, an increase of $2.8 million or 9% as compared to 2016. The increase was primarily due to the impact of our acquisition of YourCash and additional support costs as a result of the increase in the number of ATMs under management. As a percentage of revenues, these expenses decreased to 5.2% for 2017 from 6.5% for 2016. The decreases were primarily due to the growth in revenues from DCC and other value added service transactions on our ATMs under management, which require minimal support costs.
Acquired intangible assets impairment
The Company recorded a non-cash impairment charge of $2.3 million for 2017 related to certain customer relationships as a result of the closure of the Pure Commerce office in South Korea. No impairment charges were recorded in 2016.
Depreciation and amortization
Depreciation and amortization expense increased $15.6 million for 2017 compared to 2016. The increase was primarily attributable to the deployment of additional ATMs, including more expensive cash recycling ATMs, software assets, and the amortization of ATMs and intangible assets related to the acquisition of YourCash. As a percentage of revenues, depreciation and amortization expense was essentially flat at 8.8% for 2017 and 8.6% for 2016.
Operating income
EFT Processing Segment operating income for 2017 was $162.9 million, an increase of $45.7 million or 39% as compared to 2016. Operating income for 2017 increased primarily due to higher revenues from the additional number of ATMs under management, growth in revenues earned from DCC and other value added service transactions and the U.S. dollar weakening against key foreign currencies.
Operating income as a percentage of revenues (“operating margin”) was 25.7% for 2017 compared to 25.2% for 2016. Operating income per transaction increased to $0.07 for 2017 from $0.06 for 2016. Operating margin and operating income per transaction increased slightly for 2017 when compared to 2016. This increase is primarily attributable to higher operating revenues, partially offset by lower margin ATM transactions for YourCash and in India, and higher costs incurred to support the additional ATMs under management.


2016 Compared to 2015

The following table summarizes the results of operations for our EFT Processing Segment for the years ended December 31, 2016 and 2015:
   Year Ended December 31, Year-over-Year Change
 (dollar amounts in thousands) 2016 2015 Increase Amount 
Increase
Percent
 
 Total revenues $464,254
 $379,523
 $84,731
 22%
 Operating expenses:        
 Direct operating costs 224,793
 182,136
 42,657
 23%
 Salaries and benefits 51,822
 45,364
 6,458
 14%
 Selling, general and administrative 30,399
 25,822
 4,577
 18%
 Depreciation and amortization 40,084
 31,807
 8,277
 26%
 Total operating expenses 347,098
 285,129
 61,969
 22%
 Operating income $117,156
 $94,394
 $22,762
 24%
 Transactions processed (millions) 1,885
 1,523
 362
 24%
 ATMs as of December 31 33,973
 21,360
 12,613
 59%
 Average ATMs 27,795
 21,395
 6,400
 30%

Revenues
EFT Processing Segment total revenues for 2016 were $464.3 million, an increase of $84.7 million or 22% as compared to 2016. The increase in total revenues is primarily due to an increase in the number of ATMs under management. Specifically, the increase in the number of ATMs contributed to increases in the number of transactions processed, including DCC transactions, primarily in Europe. The acquisition of YourCash, completed during the fourth quarter of 2016, also contributed to the increase in total revenues for the year. The increases were partially offset by the impact of the U.S. dollar strengthening against key foreign currencies. Foreign currency movements reduced total revenues for 2016 by approximately $8.1 million as compared to 2015.
Despite the ongoing economic crisis in Greece and the related capital controls implemented by the Greek government, our EFT Processing business has seen an increase in the number of transactions processed, specifically POS and DCC transactions. In mid-2015, the Greek government implemented restrictions on the transfer of funds and cash withdrawals, which shifted the consumer behavior towards POS card payments. As result, there was an increase in transactions processed on our network of POS devices in Greece, which contributed to an increase in POS revenues. The decline in prices in Greece has resulted in an increase in tourism in the country which contributed to an increase in DCC revenues.
Average monthly revenues per ATM were $1,392 for 2016 compared to $1,478 for 2015. The decrease in average monthly revenues per ATM was primarily due to the addition of approximately 5,300 low-margin ATMs in India. Revenues per transaction were $0.25 for both 2016 and 2015. The revenue growth from DCC, which earns higher revenues per transaction than other ATM or card based services, was largely offset by the impact of the low margin ATM transactions in India.
Direct operating costs
EFT Processing Segment direct operating costs were $224.8 million for 2016, an increase of $42.7 million or 23% as compared to 2015. The increase in direct operating costs was primarily due to the increase in the number of ATMs under management, partly offset by the impact of the U.S. dollar strengthening against key foreign currencies.
Gross profit
Gross profit was $239.5 million for 2016 compared to $197.4 million for 2015. The increase in gross profit was primarily due to the growth in revenues from the increases in ATMs under management and DCC transactions processed. Gross margin was 51.6% and 52.0% for 2016 and 2015, respectively. The slight decrease in gross profit as a percentage of revenues was primarily due to increased operating costs due to the expansion of our ATM network, which includes fixed costs for our independent ATMs and increased site rental cost as we negotiate new locations and contracts, along with growth in the India market where we earn lower revenue per transaction.

Salaries and benefits
Salaries and benefits increased $6.5 million or 14% for 2016 compared to 2015.2018. The increase in salaries and benefits was primarily attributable to additional headcount to support an increase in the number of ATMs and POS devices under management. As a percentage of revenues, these costs decreased slightly to 11.2%9.9% for 20162019 from 12.0%10.1% for 2015, primarily due to growth in revenues earned from DCC and other value added service transactions on our ATMs under management, which require minimal incremental support costs.2018.


Selling, general and administrative
Selling, general and administrative expenses for 20162019 were $30.4$35.5 million, an increasea decrease of $4.6$11.4 million or 18%24% as compared to 2015. The increase was primarily due to the additional support costs as a result of the increase in the number of ATMs under management.2018. As a percentage of revenues, these expenses decreased to 6.5%4.0% for 20162019 from 6.8%6.2% for 2015.2018. The decrease was primarily due to non-recurring VAT benefits.
Depreciation and amortization
Depreciation and amortization expense increased $8.3$5.1 million for 20162019 compared to 2015.2018. The increase was primarily attributable to the deployment of additional ATMs, including more expensive cash recycling ATMs and software assets. As a percentage of revenues, depreciation and amortization expense was essentially flat at 8.6%decreased to 8.1% for 2016 and 8.4%2019 from 8.9% for 2015.2018. The decrease is primarily due to certain intangible assets becoming fully depreciated in 2019.
Operating income
EFT Processing Segment operating income for 20162019 was $117.2$296.6 million, an increase of $22.8$99.4 million or 24%50% as compared to 2015.2018. Operating income for 20162019 increased primarily due to higher revenues from the additional number of ATMs under management, and growth in revenues earned from DCC, surcharges and other value addedvalue-added service transactions.
Operating income as a percentage of revenues (“operating margin”) was 25.2%33.4% for 20162019 compared to 24.9%26.2% for 2015. Operating income per transaction remained at $0.06 for 2016 and 2015. Operating2018. The increase in operating margin and operating income per transaction were essentially flat for 2016 when compared to 2015. This iswas primarily attributabledue to higher operating revenues partially offset by low margin ATM transactions in India and higher costsexpenses incurred to support the increased revenues and additional ATMs under management.


Operating income per transaction increased to $0.10 for 2019 from $0.07 for 2018.


epay Segment


The following table summarizes the results of operations for our epay Segment for the years ended December 31, 20172019 and 2016:2018:
 Year Ended December 31, Year-over-Year Change Year Ended December 31, Year-over-Year Change
     
Increase
(Decrease) Amount
 
Increase
(Decrease) Percent
     
Increase
(Decrease) Amount
 
Increase
(Decrease) Percent
(dollar amounts in thousands) 2017 2016  2019 2018 
Total revenues $733,998
 $693,986
 $40,012
 6 % $769,329
 $743,784
 $25,545
 3 %
Operating expenses:                
Direct operating costs 564,032
 528,774
 35,258
 7 % 576,757
 564,252
 12,505
 2 %
Salaries and benefits 54,459
 51,378
 3,081
 6 % 61,540
 57,748
 3,792
 7 %
Selling, general and administrative 36,014
 34,517
 1,497
 4 % 35,054
 35,749
 (695) (2)%
Goodwill impairment 31,770
 
 31,770
 n/m
Depreciation and amortization 9,622
 11,075
 (1,453) (13)% 6,774
 7,038
 (264) (4)%
Total operating expenses 695,897
 625,744
 70,153
 11 % 680,125
 664,787
 15,338
 2 %
Operating income $38,101
 $68,242
 $(30,141) (44)% $89,204
 $78,997
 $10,207
 13 %
Transactions processed (millions) 1,186
 1,294
 (108) (8)%
Transactions processed (billions) 1.54
 1.15
 0.39
 34 %
____________________
n/m — Not meaningful.


Revenues
epay Segment total revenues for 20172019 were $734.0$769.3 million, an increase of $40.0$25.5 million or 6%3% as compared to 2016.2018. The increase in total revenues was primarily due to an increase in the number of non-mobile transactions processed in Germany, an increase in vouchers distributed by our cadooz subsidiary following the acquisition of new customers and the net impact of the U.S. dollar weakening against key foreign currencies.processed. Foreign currency movements increaseddecreased total revenues by approximately $14.7$35.0 million as compared to the same period in 2016. The increases in total revenues were partially offset by a decrease in prepaid mobile transactions processed in the U.S. and U.K. due to competitive pressures on prepaid mobile carriers and the result of high promotion driven revenues from non-mobile transactions in a particular market during the prior year which did not recur in the current year.2018.
Revenues per transaction increaseddecreased to $0.62$0.50 for 20172019 from $0.54$0.65 for 2016.2018. The increasedecrease in revenues per transaction was primarily driven by the increase in the number of non-mobilemobile transactions processed for whichin a region where we generally earn higherlower revenues per transaction than mobile transactions, and the net impact of the U.S. dollar weakening against key foreign currencies. The increase in revenues per transaction was also favorably impacted by the loss of a high-volume, low-margin customer in the Middle East.transaction.
Direct operating costs
epay Segment direct operating costs were $564.0$576.8 million for 2017,2019, an increase of $35.3$12.5 million or 7%2% as compared to 2016.2018. Direct operating costs in our epay Segment include the commissions we pay 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 increase in direct operating costs was primarily due to the increase in vouchers distributed by our cadooz subsidiary and non-mobilethe number of transactions processed in Germany as well as the net impact of the U.S. dollar weakening against key foreign currencies.processed.

Gross profit
Gross profit was $170.0$192.6 million for 20172019 compared to $165.2$179.5 million for 2016.2018. The increase in gross profit was primarily due to growth in non-mobile transactions processed in Germany, partly offset by decreases in prepaid mobile transactions processed in the U.S. and promotional activities for non-mobile transactions processed in a particular market.processed. Gross margin decreasedincreased to 23.2%25% for 20172019 from 23.8%24.1% for 2016, mainly2018, due to lower gross margins realized on voucher distributions andoverall growth of the result of high promotion-driven revenues from the non-mobile transactions in a particular market during the prior year which did not recur in the current year.

business.
Salaries and benefits
Salaries and benefits increased $3.1$3.8 million or 6%7% for 20172019 as compared to 2016.2018. The increase was primarily due to higher headcount in an effort to grow the segment. As a percentage of revenues, salaries and benefits remained relatively flat at 7.4%8.0% for 2017 and 2016.2019 compared to 7.8% for 2018.
Selling, general and administrative
Selling, general and administrative expenses for 20172019 were $36.0$35.1 million, an increasea decrease of $1.5$0.7 million or 4%2% as compared to 2016.2018. Selling, general and administrative expenses for 2017 increased2019 decreased mainly due to promotional costs for our non-mobile products in Germany and other costs related to the settlement of disputes in certain foreign markets.cost control efforts. As a percentage of revenues, these expenses remained relatively flat at 4.9%4.6% for 2017 and 5.0%2019 compared to 4.8% for 2016.
Goodwill impairment
During the fourth quarter of 2017, the Company completed its annual goodwill impairment testing and recorded non-cash goodwill impairment charges of $31.8 million related to the reporting units in the Middle East, the U.S. and the U.K.2018.
Depreciation and amortization
Depreciation and amortization expense primarily represents depreciation of POS terminals we install in retail stores and amortization of acquired intangible assets. Depreciation and amortization expense decreased $1.5$0.3 million or 13%4% in 20172019 as compared to 2016.2018. The decrease is primarily due to certain intangiblefixed assets becoming fully amortizeddepreciated in 2017 and the business continuing to require fewer additional company-owned terminals.2019. As a percentage of revenues, these expenses decreased to 1.3%remained flat at 0.9% for 2017 from 1.6% for 2016.both 2019 and 2018.
Operating income
epay Segment operating income for 20172019 was $38.1$89.2 million, a decreasean increase of $30.1$10.2 million or 44%13% as compared to 2016. Operating income for 2017 decreased primarily due to the goodwill impairment charge, partly offset by an increase in gross profit from non-mobile products in Germany.2018. Operating margin decreasedincreased to 5.2%11.6% for 20172019 from 9.8%10.6% for 2016.2018. Operating income per transaction was $0.03decreased to $0.06 for 20172019 from $0.07 for 2018. The increases of operating income and $0.05 for 2016. The decreasesmargin were mainly due to the goodwill impairment charged recorded. The decrease in operating income per transaction was partly offset by an increase in the portion of higher-margin non-mobile transactions.


2016 Compared to 2015

The following table summarizes the results of operations for our epay Segment for the years ended December 31, 2016 and 2015:
  Year Ended December 31, Year-over-Year Change
(dollar amounts in thousands) 2016 2015 
Increase
(Decrease) Amount
 Increase (Decrease) Percent
Total revenues $693,986
 $708,373
 $(14,387) (2)%
Operating expenses:        
Direct operating costs 528,774
 542,747
 (13,973) (3)%
Salaries and benefits 51,378
 49,752
 1,626
 3 %
Selling, general and administrative 34,517
 38,272
 (3,755) (10)%
Depreciation and amortization 11,075
 11,163
 (88) (1)%
Total operating expenses 625,744
 641,934
 (16,190) (3)%
Operating income $68,242
 $66,439
 $1,803
 3 %
Transactions processed (millions) 1,294
 1,335
 (41) (3)%

Revenues
epay Segment total revenues for 2016 were $694.0 million, a decrease of $14.4 million or 2% as compared to 2015. The decrease in total revenues was primarily due to the impact of the U.S. dollar strengthening against key foreign currencies, and a decrease in prepaid mobile transactions processed in the U.S. and U.K. due to competitive pressures on prepaid mobile carriers. Foreign currency movements reduced total revenues by approximately $16.2 million as compared to the same period in 2015. The decrease was partially offset by the transaction growth of non-mobile products processed in Germany, U.K. and Australia. The decreased revenue was also the result of high promotional activities for non-mobile transactions in a particular market during 2015 which did not recur in 2016; however, this decrease was partly offset by an unexpected high volume of non-mobile transactions in another emerging market.
Revenues per transaction increased to $0.54 for 2016 from $0.53 for 2015. The increase in revenues per transaction was primarily driven by the increase in the number of non-mobile transactions processed, for which we generally earn higher revenues per transaction than mobile transactions, partially offset by the impact of the U.S. dollar strengthening against key foreign currencies.
Direct operating costs
epay Segment direct operating costs were $528.8 million for 2016, a decrease of $14.0 million or 3% as compared to 2015. The decrease in direct operating costs was primarily due to the net impact of the U.S. dollar strengthening against key foreign currencies. The decreases were partly offset by additional cost to support the transaction growth of our non-mobile products.
Gross profit
Gross profit was $165.2 million for 2016 compared to $165.6 million for 2015. The slight decrease in gross profit was due to the net impact of the U.S. dollar strengthening against key foreign currencies and the decrease in prepaid mobile transactions processed in the U.S. and U.K, partially offset by the increase in non-mobile transactions. Gross margin increased to 23.8% for 2016 from 23.4% for 2015, mainly due to increase in non-mobile transactions processed, partly offset by lower gross margins realized on voucher redemptions.
Salaries and benefits
Salaries and benefits increased $1.6 million or 3% for 2016 as compared to 2015. The increase was primarily due to the increase in salaries, benefits and bonus expense, which was mainly driven by higher headcount in an effort to grow the segment. As a percentage of revenues, salaries and benefits increased slightly to 7.4% for 2016 from 7.0% for 2015, primarily due to the headcount growth.

Selling, general and administrative
Selling, general and administrative expenses for 2016 were $34.5 million, a decrease of $3.8 million or 10% as compared to 2015. Selling, general and administrative expenses for 2016 decreased due to management of cost. As a percentage of revenues, these expenses remained relatively flat at 5.0% for 2016 and 5.4% for 2015.
Depreciation and amortization
Depreciation and amortization expense was flat for 2016 as compared to 2015. As a percentage of revenues, these expenses were flat at 1.6% for 2016 and 2015.
Operating income
epay Segment operating income for 2016 was $68.2 million, an increase of $1.8 million or 3% as compared to 2015. Operating income for 2016 increased primarily due to lower support cost when compared to 2015. Operating margin was essentially flat at 9.8% for 2016 and 9.4% for 2015. Operating income per transaction was $0.05 for both 2016 and 2015. Despite the decrease in revenues and overall number of transactions processed, there was growth in non-mobile transactions which generally earn higher revenues per transaction thanlower-margin mobile transactions.


Money Transfer Segment


The following table summarizes the results of operations for our Money Transfer Segment for the years ended December 31, 20172019 and 20162018:
 Year Ended December 31, Year-over-Year Change Year Ended December 31, Year-over-Year Change
(dollar amounts in thousands) 2017 2016 Increase Amount Increase Percent 2019 2018 Increase Amount Increase Percent
Total revenues $886,858
 $801,919
 $84,939
 11% $1,096,226
 $1,042,962
 $53,264
 5%
Operating expenses:                
Direct operating costs 476,322
 422,508
 53,814
 13% 586,730
 560,930
 25,800
 5%
Salaries and benefits 168,371
 155,471
 12,900
 8% 208,792
 194,808
 13,984
 7%
Selling, general and administrative 108,022
 93,219
 14,803
 16% 133,068
 125,647
 7,421
 6%
Goodwill and acquired intangible assets impairment 
 7,049
 (7,049) n/m
Depreciation and amortization 29,598
 29,195
 403
 1% 32,846
 32,002
 844
 3%
Total operating expenses 782,313
 700,393
 81,920
 12% 961,436
 920,436
 41,000
 4%
Operating income $104,545
 $101,526
 $3,019
 3% $134,790
 $122,526
 $12,264
 10%
Transactions processed (millions) 92.2
 82.3
 9.9
 12% 114.5
 107.6
 6.9
 6%
____________________
n/m — Not meaningful.

Revenues
Money Transfer Segment total revenues were $886.9$1,096.2 million for 2017,2019, an increase of $84.9$53.3 million or 11%5% as compared to 20162018. The increase in revenues was primarily due to increases in the number of money transfers processed, driven by growth in our U.S. and foreign agent and correspondent payout networks, and an increase in transactions in our domestic Walmart-2-Walmart money transfer service. These increases were partly offset by reduced rates for our Walmart-2-Walmart product beginning in the second quarter of 2017, the effects of the hurricanes in Texas, Florida and Puerto Rico in 2017, and a decrease in transactions processed by HiFX as a result of currency volatility from the Brexit vote during 2016 which did not recur in 2017.
networks. Revenues per transaction was essentially flat at $9.57 for 2019 as compared to $9.69 for 2018. Foreign currency movements decreased total revenues for 2019 by approximately $26.7 million as compared to $9.62 for 2017 from $9.74 for 2016. The decrease was primarily due to the impact of the increase in volume from our Walmart money transfer product, which earns lower revenues per transaction than other money transfer services and reduced rates charged for that product beginning in the second quarter of 2017. In the fourth quarter of 2016, the Company took over the processing of xe money transfers from a third party and began recording the full customer fees as revenues, which partly offset the decreases in revenues per transaction.

2018.
Direct operating costs
Money Transfer Segment direct operating costs were $476.3$586.7 million for 2017,2019, an increase of $53.8$25.8 million or 13%5% as compared to 2016.2018. 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 increase in direct operating costs in 20172019 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.
Gross profit
Gross profit was $410.5$509.5 million for 20172019 compared to $379.4$482.0 million for 2016.2018. The increase in gross profit was primarily due to growth in the number of money transfer transactions processed in both the U.S. and foreign markets. Gross margins decreased to 46.3%remained flat at 46.5% for 20172019 compared to 47.3%46.2% for 2016. The decrease is primarily due to the growth of our Walmart money transfer product in the U.S., which earns a lower gross profit per transaction than other money transfer services and reduced rates charged for that product beginning in the second quarter of 2017.2018.
Salaries and benefits
Salaries and benefits increased $12.9$14.0 million or 8%7% for 20172019 compared to 20162018. The increase in salaries and benefits was primarily due to the expansion of our operations in foreign markets, partly offset by lower bonus expense resulting from slower operating income growth.operations. As a percentage of revenues, salaries and benefits improvedincreased slightly to 19.0% for 20172019 from 19.4%18.7% for 2016. The decrease is primarily due to the lower bonus expense.2018.
Selling, general and administrative
Selling, general and administrative expenses for 20172019 were $108.0$133.1 million, an increase of $14.8$7.4 million or 16%6% as compared to 2016.2018. The increase was primarily due to expenses incurred to support the growth of our money transfer services and the expansion of new products in both the U.S. and foreign markets. As a percentage of revenues, selling, general and administrative expenses increasedremained flat at 12.1% for 2019 compared to 12.2%12.0% for 2017 from 11.6%2018.
Acquired intangible assets impairment
Acquired intangible assets impairment charge for 2016, primarily2018 was $7.0 million due to the Company's decision to re-brand the HiFX trade name to xe. There was no impairment recorded in 2019.

Goodwill is not amortized but instead is at least annually tested for impairment as of October 1, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired. The Company first performed a qualitative review of all reporting units to determine that it was more likely than not that the fair value of each of the reporting units exceeded the carrying value. The Company determined that it was more likely than not that the fair value of the reporting units exceeded the carrying value except for one reporting unit. A quantitative impairment test was performed for the one reporting unit.  When performing the quantitative impairment test, the fair value is estimated with the income method by using the discounted cash flows and use of the guideline public company method using market multiple valuation techniques.

As of October 1, 2019, the fair value of the reporting unit exceeded the carrying value indicating no impairment.

The estimates of fair value require significant judgment. We based our fair value estimates on assumptions that we believe to be reasonable but that are inherently uncertain, including estimates of future growth raterates and operating margins and assumptions about the overall economic climate and the competitive environment for our business units. There can be no assurance that our estimates and assumptions made for purposes of support costs exceedingour goodwill impairment testing as of the growth ratetime of money transfer revenues as we develop and promote expanded payout locations and new products.testing will prove to be accurate predictions of the future.
Depreciation and amortization
Depreciation and amortization expense increased $0.4$0.8 million for 20172019 compared to 2016.2018. Depreciation and amortization primarily representsrepresent amortization of acquired intangible assets and depreciation of money transfer terminals, computers and software, leasehold improvements and office equipment. For 2017,2019, depreciation and amortization expense increased compared to 20162018 primarily due to investments made to support the growth in the business. As a percentage of revenues, depreciation and amortization expense decreased to 3.3%3.0% for 20172019 from 3.6%3.1% for 20162018, primarily due to certain intangible assets becoming fully amortized in 2017 and the effect of revenues earned from our Walmart money transfer product, which requires less capital investment than other money transfer products.2018.

Operating income
Money Transfer Segment operating income was $104.5$134.8 million for 2017,2019, an increase of $3.0$12.3 million or 3%10% as compared to 20162018. Operating income increased primarily due to the growth in the number of money transfers processed. The increase in operating income was partly offset by additional salaries and benefits and other costs incurred, reduced rates for Walmart-2-Walmart money transfer services as well as increased transactions processed by HiFX as a result of the Brexit vote in 2016, which did not recur in 2017.
Operating margin decreasedincreased to 11.8%12.3% for 20172019 from 12.7% for 2016 and operating11.7%. Operating income per transaction decreasedincreased to $1.13$1.18 for 20172019 from $1.23$1.14 for 2016. Operating margin and operating income per transaction decreased primarily due to the decrease in margin realized with the renewal of the the Walmart-2-Walmart agreement and the additional salaries and benefits and other costs incurred to support the growth in the business.


2016 Compared to 2015

The following table presents the results of operations for the years ended December 31, 2016 and 2015 for the Money Transfer Segment.
  Year Ended December 31, Year-over-Year Change
(dollar amounts in thousands) 2016 2015 Increase Amount Increase Percent
Total revenues $801,919
 $685,635
 $116,284
 17%
Operating expenses:        
Direct operating costs 422,508
 358,154
 64,354
 18%
Salaries and benefits 155,471
 137,077
 18,394
 13%
Selling, general and administrative 93,219
 85,096
 8,123
 10%
Depreciation and amortization 29,195
 26,650
 2,545
 10%
Total operating expenses 700,393
 606,977
 93,416
 15%
Operating income $101,526
 $78,658
 $22,868
 29%
Transactions processed (millions) 82.3
 68.7
 13.6
 20%
Revenues
Money Transfer Segment total revenues were $801.9 million for 2016, an increase of $116.3 million or 17% as compared to 2015. The increase in revenues was primarily due to increases in the number of money transfers processed, driven by growth in our U.S. and foreign agent and correspondent payout networks. Our domestic Walmart-2-Walmart money transfer service and organic growth accounted for a significant portion of the growth during the year. The acquisition of IME (M) Sdn Bhd ("IME") and xe Corporation ("xe") completed during 2015 also contributed to the increase in total revenues. The increases were partly offset by the U.S. dollar strengthening against key foreign currencies.
Revenues per transaction decreased to $9.74 for 2016 from $9.98 for 2015. The decrease was primarily due to the impact of our Walmart money transfer product, which earns lower revenues per transaction than other money transfer services.
Direct operating costs
Money Transfer Segment direct operating costs were $422.5 million for 2016, an increase of $64.4 million or 18% as compared to 2015. Direct operating costs in the Money Transfer Segment primarily represent 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 and cash handling costs. The increase in direct operating costs in 2017 was primarily due to growth in the number of money transfer transactions processed in both the U.S. and foreign markets and the impact of the acquisition of IME.
Gross profit
Gross profit was $379.4 million for 2016 compared to $327.5 million for 2015. The increase in gross profit was primarily due to growth in the number of money transfer transactions processed in both the U.S. and foreign markets. The impact of our acquisitions of IME and xe and the increased activity in our HiFX business also contributed to the increase in gross profits for 2016. Gross margins were essentially flat compared to the prior year which were 47.3% for 2016 and 47.8% for 2015.
Salaries and benefits
Salaries and benefits increased $18.4 million or 13% for 2016 compared to 2015. The increase in salaries and benefits was primarily due to the expansion of our operations in both U.S. and foreign markets. The acquisitions of IME and xe also contributed to the increase in salaries and benefits for 2016. As a percentage of revenues, salaries and benefits improved to 19.4% for 2016 from 20.0% for 2015. The decrease is primarily due to the increase in the number of money transfers processed, and the transaction growth exceeding headcount growth.

Selling, general and administrative
Selling, general and administrative expenses for 2016 were $93.2 million, an increase of $8.1 million or 10% as compared to 2015.2018. The increase was primarily due to expenses incurred to support the expansion of our money transfer products in both the U.S. and foreign markets. The acquisitions of IME and xe also contributed to the increase in selling, general, and administrative expenses for 2016. As a percentage of revenues, selling, general and administrative expenses decreased to 11.6% for 2016 from 12.4% for 2015, primarily due to an increasegrowth in the number of money transfers processed which did not require a similar increaseincreases in support costs.
Depreciation and amortization
Depreciation and amortization expense increased $2.5 million for 2016 compared to 2015. For 2016, depreciation and amortization expense increased compared to 2015 primarily due to the amortization of intangible assets related to the acquisition of IME and xe and investments made to support the growth in the business. As a percentage of revenues, depreciation and amortization expense decreased to 3.6% for 2016 from 3.9% for 2015, primarily due to certain intangible assets becoming fully amortized in the first quarter of 2015 and the effect of revenues earned from our Walmart money transfer product, which required less capital investment than other money transfer products.
Operating income
Money Transfer Segment operating income was $101.5 million for 2016, an increase of $22.9 million or 29% as compared to 2015. Operating income increased primarily due to the growth in the number of money transfers processed. The impact of our acquisition of IME also contributed to the increase in gross profits for 2016. The increase in operating income was partly offset by an increase in salaries and benefits and other costs to support the growth in the business.
Operating margin increased to 12.7% for 2016 from 11.5% for 2015 and operating income per transaction increased to $1.23 for 2016 from $1.14 for 2015. Operating margin and operating income per transaction improved for the current year primarily due to the increases in the number of money transfers processed partially offset by the additional salaries and benefits and other costs incurred to support the growth in the business, including cost incurred for the migration of the xe money transfers to HiFX's platform in the fourth quarter of 2016.

Corporate Services


The components of Corporate Services' operating expenses for 2017, 20162019, and 20152018 were as follows:

 Year Ended December 31, Year-over-Year Change Year Ended December 31, Year-over-Year Change
(dollar amounts in thousands) 2017 2016 2015 2016 Increase (Decrease) Percent 2015 Increase (Decrease) Percent 2019 2018 2019 Increase (Decrease) Percent
Salaries and benefits $26,274
 $29,749
 $26,969
 (12)% 10 % $36,809
 $32,085
 15 %
Selling, general and administrative 13,122
 7,227
 7,276
 82 % (1)% 8,326
 8,501
 (2)%
Depreciation and amortization 150
 175
 405
 (14)% (57)% 305
 268
 14 %
Total operating expenses $39,546
 $37,151
 $34,650
 6 % 7 % $45,440
 $40,854
 11 %
Corporate operating expenses
Overall, operating expenses for Corporate Services increased 6%11% for 2017,2019 as compared to 20162018. The increase is primarily attributable to the increase in selling, generalsalaries and administrativebenefits expenses mainly attributable to professional services and other costs incurred in connection with the proposed acquisition of MoneyGram International, Inc., partly offset by a decrease in salaries and benefits expense primarily due to a decreasean increase in incentive compensation related to the Company's performance relative to its targets.
Operating expenses for Corporate Services increased 7% for 2016 compared to 2015. The increase istargets, partly offset by a decrease in selling, general and administrative expense primarily attributable to an increase in salaries and benefits expense due to salary increases, an increasea decrease in headcount to support the growth in the Company and an increase in incentive and share-based compensation related to the improvement in Company results.professional services.

Other Expense, Net

 Year Ended December 31, Year-over-Year Change Year Ended December 31, Year-over-Year Change
(dollar amounts in thousands) 2017 2016 2015 
2017
Increase (Decrease)
Percent
 
2016
Increase (Decrease)
Percent
 2019 2018 
2019
(Decrease)
Increase
Percent
Interest income $2,443
 $1,696
 $2,170
 44 % (22)% $1,969
 $1,320
 49 %
Interest expense (32,571) (28,332) (24,814) 15 % 14 % (36,237) (37,573) (4)%
Income from unconsolidated affiliates 48
 
 
 n/m
  %
(Loss) Income from unconsolidated affiliates 
 (117) n/m
Other gains, net 118
 19,956
 315
 n/m
 n/m
 (9,820) 27
 n/m
Foreign currency exchange gain (loss), net 20,300
 (10,200) (41,418) n/m
 (75)%
Foreign currency exchange (loss) gain, net 2,701
 (26,655) n/m
Other expense, net $(9,662) $(16,880) $(63,747) (43)% (74)% $(41,387) $(62,998) (34)%
____________________
n/m — Not meaningful.


Interest income
The Company received interest on cash balances held with banks. The increase inis interest income for 2017 compared to 2016 wasin 2019 is primarily due to interest earned on a tax refund received in India in 2017. The decrease in interest income for 2016 compared to 2015 was primarily due to a decrease in interest earned on settlement funds held in New Zealand, Brazil and Russia.
Interest expense
Thean increase in interest expense for 2017 compared to 2016 as well as for 2016 compared to 2015, was primarily related to the additional borrowings under our credit facilities to fund the operating cash for our IAD networks.those balances.

Other gains, net
The results for 2016 included an investment gainIn 2019, the Company provided a notice of $19.4 million, which resulted from our membership in Visa Europe Limited ("Visa Europe") that was sold to Visa, Inc. ("Visa")redemption on June 21, 2016. Visa closed the transaction and provided considerationoutstanding Retired Convertible Notes. Prior to the membersredemption date, approximately $352.4 million principal amount of Visa Europe consisting ofthe Retired Convertible Notes was submitted for conversion for the remainder. The Company settled the principal amount with cash consideration of approximately €12.19 billion, issued (a) 2,480,466and issuing shares of Series B Convertible Participating PreferredCommon Stock and (b) 3,156,823 sharesvalued at $147.24 per

share. In accordance with ASC 470, the Company recognized a loss of Series C Convertible Participating Preferred Stock, and agreed to make an additional cash payment of €1.12 billion$9.8 million on the third anniversary of closing to Visa Europe members. Our portionconversion and redemption of the consideration consisted of cash of $11.9 million, Visa Series B Preferred Shares which are convertible into Visa common shares with an approximatedebt, representing the difference between the fair value of $6.4 million,the Retired Convertible Notes and a long-term receivablethe carrying value of approximately $1.1 million.the Retired Convertible Notes at the time of conversion.

Foreign currency exchange (loss) gain, (loss), 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 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 comprised 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 gain $20.3of $2.7 million in 2017,2019 and lossesa loss of $10.2 million and $41.4$26.7 million in 2016 and 2015, respectively.2018. These realized and unrealized foreign currency exchange gains and losses primarily reflect the respective weakening and strengthening of the U.S. dollar against the currencies of the countries in which we operate. Additionally, the 2015 loss includes the reclassification to the income statement of $0.8 million of accumulated other comprehensive loss related to translation adjustments resulting from the liquidation of a minor subsidiary.


Income Tax Expense


Our effective income tax rates as reported and as adjusted are calculated below:
 Year Ended December 31, Year Ended December 31,
(dollar amounts in thousands) 2017 2016 2015 2019 2018
Income before income taxes $256,335
 $232,893
 $141,094
 $433,807
 $294,916
Income tax expense (99,395) (58,795) (42,602) (87,112) (62,785)
Net income $156,940
 $174,098
 $98,492
 $346,695
 $232,131
Effective income tax rate 38.8% 25.2% 30.2% 20.1% 21.3%
Income before income taxes $256,335
 $232,893
 $141,094
 $433,807
 $294,916
Adjust: Goodwill and acquired intangible assets impairment (34,056) 
 
 
 (7,049)
Adjust: Other gains, net 118
 19,956
 315
 (9,820) 27
Adjust: Foreign currency exchange gain (loss), net 20,300
 (10,200) (41,418)
Adjust: Foreign currency exchange (loss) gain, net 2,701
 (26,655)
Income before income taxes, as adjusted $269,973
 $223,137
 $182,197
 $440,926
 $328,593
Income tax expense $(99,395) $(58,795) $(42,602) $(87,112) $(62,785)
Adjust: Income tax expense attributable to 2017 U.S. tax reform (41,597) 
 
Adjust: Income tax benefit (expense) attributable to 2017 U.S. tax reform 25,728
 12,262
Adjust: Income tax benefit attributable to acquired intangible assets impairment 3,411
 
 
 
 1,506
Adjust: Income tax expense attributable to other gains, net 
 (3,903) 
Adjust: Income tax benefit (expense) attributable to foreign currency exchange gain (loss), net (2,750) 789
 (1,018)
Adjust: Income tax benefit (expense) attributable to foreign currency exchange (loss) gain, net 10,990
 8,743
Income tax expense, as adjusted $(58,459) $(55,681) $(41,584) $(123,830) $(85,296)
Effective income tax rate, as adjusted 21.7% 25.0% 22.8% 28.1% 26.0%


We calculate our effective income tax rate by dividing income tax expense by pre-tax book income. Our effective income tax rates were 38.8%, 25.2% 20.1%and 30.2%21.3% for the years ended December 31, 2017, 20162019 and 2015,2018, respectively. On December 22, 2017, the U.S. enacted into law what is informally called the Tax Cuts and Jobs Act of 2017 (the "Act"("U.S. Tax Reform"). The effective income tax rate inIn 2017 includeswe had a net provisional tax expense of $41.6 million resulting from U.S. Tax Reform. In the Act.fourth quarter of 2018, we adjusted our accounting for the tax effects of U.S. Tax Reform. The net provisional tax expense was decreased in that period by approximately $12.3 million to $29.3 million. In the fourth quarter of 2019 after additional regulatory guidance was issued by applicable taxing authorities, the Company elected to claim U.S. tax credits for foreign tax paid on foreign source income, which reduced the net tax expense by $25.7 million for a total tax expense from U.S. Tax Reform of $3.6 million. See Note 13, Income Taxes, to the Consolidated Financial Statements for further information. The effective income tax rates were also significantly influenced by the goodwill and acquired intangible assets impairment charges in 2017, other non-operating gains (losses) and the impact of foreign currency exchange gains (losses). Excluding these items from pre-tax income, as well as the related tax effects for these items, our adjusted effective income tax rates were 21.7%, 25.0%28.1% and 22.8%26.0% for the years ended December 31, 2017, 20162019 and 2015,2018, respectively.
The effective income tax rates,rate, as adjusted, for 2017, 20162019 and 2015 were lower2018 was higher than the applicable statutory income tax rate of 35%21% primarily because of our U.S.higher income tax loss positionrates in foreign countries where we have significant operations and the realizationtax effects of deferred tax benefits in various jurisdictions. The Company had recorded significant net operating loss carryforwards in the U.S., creating related deferred tax assets. During periods when the Company generatedglobal intangible low-taxed income ("GILTI") provision of U.S. pre-tax book income but had tax differences that continued to create tax losses, no current income tax expense was recognized.Tax Reform. The effective income tax rate, as adjusted, for 2017 was lower than 2016 largely due to the realization of deferred tax benefits from the release of a $16.3 million valuation allowance against certain foreign net deferred tax assets. The effective income tax rate, as adjusted, for 2016 was2019 is higher than 2015 principally because2018 as a result of a change in our U.S. deferred tax position to an overall deferred tax liability. This change is largely due to certain differences related to share-based compensation which has created excess tax deductions that are not included in the net operating loss carryforwards recorded in our books.

During the fourth quarter of 2017, the Company recorded a net tax expense of $41.6 million resulting from the enactment of the Act. The expense is primarily related to the Act's transition tax on previously undistributedsubstantially more foreign earnings of foreign subsidiaries and is net of remeasurement of the Company's deferred tax assets and liabilities considering the Acts's newly enacted tax rates and certain other impacts. This provisional amount isCompany being subject to adjustment during the measurement period of up to one year following the December 2017 enactment of the Act as provided by recent SEC guidance. See Note 13, Income Taxes, to the Consolidated Financial Statements for further information.higher foreign statutory income tax rates.
We determine income tax expense based upon enacted tax laws applicable in each of the taxing jurisdictions where we conduct business. Based on our interpretation of such laws, and considering the evidence of available facts and circumstances and baseline operating forecasts, we have accrued the estimated income tax effects of certain transactions, business ventures, contractual and organizational structures, and the estimated future reversal of timing differences. Should a taxing jurisdiction change its laws or dispute our conclusions, or should management become aware of new facts or other evidence that could alter our conclusions, the resulting impact to our estimates could have a material adverse effect on our results of operations and financial condition.
Income before income taxes, as adjusted, income tax expense, as adjusted and effective income tax rate, as adjusted, are non-U.S. GAAP financial measures that management believes are useful for understanding why our effective income tax rates are significantly different than would be expected. These non-U.S. GAAP measures are used by management to conduct and evaluate its business during its regular review of operating results for the periods presented.


Net (Income) Loss Attributable To Noncontrolling Interest


Net incomeloss attributable to noncontrolling interests was $0.1 million for 20172019 and net losses of $0.30.7 million and $0.3 million for 2016 and 2015, respectively.2018. Noncontrolling interests 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 (1)
 Segment - Country
Movilcarga 95% epay - Spain
Euronet China 85% EFT - China
Euronet Pakistan 70% EFT - Pakistan
Universal Solution ProvidersEuronet Infinitium Solutions 100%65% EFT - UAEIndia
______________
(1) Percent owned as of December 31, 2017. The Company purchased the 49% noncontrolling interest of Universal Solution Providers in the third quarter of 2017.


Net Income Attributable to Euronet

Net income attributable to Euronet was $156.8346.7 million, $174.4 million and $98.8232.9 million for 2017, 20162019 and 2015,2018, respectively. Net income attributable to Euronet decreased $17.6increased $113.9 million in 2017 as2019 compared to 2016.2018. The decreaseincrease in net income for 2017 was primarily due to an increase in income tax expense of $40.6 million, an increase in interest expense of $4.2 million, a decrease in investment gains of $19.4 million, and a decrease in other non-operating income of $0.1 million. The increases were partly offset by an increase in operating income of $16.2 million, and an increase of $30.5 million in net foreign currency exchange gains.
The increase of $75.6 million for 20162019 was primarily due to an increase in operating income of $44.9$117.3 million, a decreasean increase of $31.2$29.4 million in net foreign currency exchange losses,gain, a decrease in interest expense of $1.3 million, an increase in interest income of $0.6 million, and an increase in investment gainsincome from unconsolidated affiliates of $19.4$0.1 million. The increases were partly offset by an increase in income tax expense of $16.2$24.3 million, an increase in interest expensenet loss attributable to early retirement of $3.5debt of $9.8 million, and an increase in other non-operating costsa decrease of $0.2net loss attributable to noncontrolling interests of $0.7 million.



Translation Adjustment


Translation gains and losses are the result of translating our foreign entities' balance sheets from local functional currency to the U.S. dollar reporting currency prior to consolidation and are recorded in comprehensive income. As required by U.S. GAAP, during this translation process, asset and liability accounts are translated at current foreign currency exchange rates and equity accounts are translated at historical rates. Historical rates represent the rates in effect when the balances in our equity accounts were originally created. By using this mix of rates to convert the balance sheet from functional currency to U.S. dollars, differences between current and historical exchange rates generate this translation adjustment.


We recorded a net gainloss on translation adjustments of $116.413.9 million in 2017,2019 and lossesa loss of $45.2$56.7 million in 2018. During 2019 and $67.8 million for 2016 and 2015, respectively. During 2017, the U.S. dollar weakened compared to most currencies, resulting in a translation gain which was recorded in comprehensive income, whereas2018, the U.S. dollar strengthened compared to most currencies, during 2016 and 2015, resulting in translation losses.losses which were recorded in comprehensive income.

Liquidity and Capital Resources


Working capital
As of December 31, 2017,2019, we had working capital of $482.5$1,284.8 million, which is calculated as the difference between total current assets and total current liabilities, compared to working capital of $405.9709.2 million as of December 31, 20162018. The increase in working capital is primarily due to the issuance Convertible Notes and Senior Notes in 2019. Our ratio of current assets to current liabilities was 1.341.79 and 1.51 as of December 31, 20172019 and December 31, 2016.2018, respectively.
We require substantial working capital to finance operations. The Money Transfer Segment 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 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 the revolving credit facilities and cash flows from operations. As of December 31, 2017,2019, we had approximately $369$665.6 million of our own cash in use or designated for use in our ATM network, which is recorded in ATM cash and cash equivalents on Euronet's Consolidated Balance Sheet.
We had cash and cash equivalents of $819.1$1,817 million as of December 31, 2017,2019, of which $544.3$1,504 million was held outside of the U.S. and is expected to be indefinitely reinvested for continued use in foreign operations. The risk of negative tax consequences for the repatriationRepatriation of these assets was significantly reduced becauseto the Company recognized U.S. federal tax expense on previously undistributed foreign earnings as a result of the Tax Cuts and Jobs Act of 2017. However, there remains other, lesser potentialcould have negative tax consequences for the repatriation of these assets.consequences.
The following table identifies cash and cash equivalents provided by/(used in) our operating, investing and financing activities for the years ended December 31, 2017, 20162019 and 20152018 (in thousands):
 Year Ended December 31, Year Ended December 31,
Liquidity 2017 2016 2015 2019 2018
Cash and cash equivalents provided by (used in):      
Cash and cash equivalents and restricted cash provided by (used in):    
Operating activities $291,318
 $368,182
 $215,054
 $504,488
 $397,233
Investing activities (101,858) (148,664) (193,983) (229,027) (132,283)
Financing activities (161,149) 79,510
 (1,190) 416,298
 2,024
Effect of foreign currency exchange rate changes on cash and cash equivalents 56,419
 (22,132) (30,373)
Increase (decrease) in cash and cash equivalents $84,730
 $276,896
 $(10,492)
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash (5,332) (36,540)
Increase in cash and cash equivalents and restricted cash $686,427
 $230,434


Operating cash flow
Cash flows provided by operating activities were $291.3504.5 million for 20172019 compared to $368.2$397.2 million for 2016.2018. The decreaseincrease in operating cash flows was primarily due to improved operating results, partly offset by fluctuations in working capital mainly associated with the timing of the settlement processes with content providers in the epay Segment, with correspondents in the Money Transfer Segment, and with card organizations and banks in the EFT Processing Segment, partly offset by improved operating results before the non-cash impacts of goodwill impairment charges, U.S. tax reform and foreign currency exchange gains.Segment.


Cash flows provided by operating activities were $368.2 million for 2016 compared to $215.1 million for 2015. The 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, with correspondents in the Money Transfer Segment, and with card organizations and banks in the EFT Processing Segment, and improved operating results before the non-cash impacts of foreign currency exchange losses.
Investing activity cash flow
Cash flows used in investing activities were $101.9$229.0 million for 20172019 compared to $148.7$132.3 million for 2016.2018. The decreaseincrease was primarily due to no cash being used for acquisitions in 2017 compared to $68.3 million for 2016, partly offset by the proceeds of $11.9 million received in 2016 for the sale of our ownership interest in Visa Europe and increased capital expenditures mainly related to our ATM network expansion. During 2019, we used $94.2 million for acquisitions. The Company completed four investments in 2019 and two investments in 2018. The acquisitions have been accounted for in accordance with U.S. GAAP and the results of operations have been included from the respective dates of acquisition. Purchases of property and equipment were $97.2$131.3 million and $87.4$112.5 million for 20172019 and 2016,2018, respectively. Cash used for software development and long-term assets totaled $6.0$7.3 million for 20172019 and $6.2$8.5 million for 2016.2018. Other investing activities consist mainly of proceeds from the sale of property and equipment of $1.4 million and $1.3$3.7 million for 20172019 and 2016, respectively.
Cash flows used$1.6 million in investing activities were $148.7 million for 2016 compared to $194.0 million for 2015. The decrease was primarily due to less cash paid for acquisitions and the proceeds of $11.9 million received for the sale of our ownership interest in Visa Europe, partially offset by increased capital expenditures related to our ATM network expansion. Cash used for acquisitions was $68.3 million for 2016 compared to $114.0 million for 2015. Purchases of property and equipment were $87.4 million and $74.6 million for 2016 and 2015, respectively. Cash used for software development and long-term assets totaled $6.2 million for 2016 and $6.4 million for 2015. Other investing activities consist mainly of proceeds from the sale of property and equipment of $1.3 million and $1.0 million for 2016 and 2015, respectively.2018.
Financing activity cash flow
Cash flows used in financing activities were $161.1 million for 2017 compared to cash flows provided by financing activities of $79.5were $416.3 million for 2016.2019 compared to $2.0 million for 2018. We generally borrow amounts under our revolving credit facility seasonally to fund our independent ATM network as well as several times each month to support the short-term cash needs of our Money Transfer Segmentsegment in order to fund the correspondent network in advance of collecting remittance amounts from the agency network. These borrowings related to the Money Transfer Segment are repaid over a very short period of time, generally within a few days. Net repaymentsborrowings on debt obligations were $164.5$500.2 million in 20172019 compared to net borrowingsrepayments of $152.2$170.5 million for 2016.2018. The increase in net repaymentsborrowings as compared to 20162018 was primarily the result of using cash generated from operations to repay borrowingsborrowing additional amounts under the revolving credit facility.facility for ATM cash needs. Additionally, for 20172019 and 2016,2018, we paid $4.9$6.5 million and $2.9$6.1 million, respectively, for capitalfinance lease obligations. We used $3.1$74.5 million and $77.4$177.9 million for the repurchase of shares during 20172019 and 2016,2018, respectively. Of the $74.5 million repurchased shares, $70.9 million in value of Euronet Common Stock were under the Repurchase Program. Further, we received proceeds of $11.0$15.0 million and $6.3$18.6 million during 20172019 and 2016,2018, respectively, for the issuance of stock in connection with our Stock Incentive Plan. Other financing activities provided cash of $0.3 million and $1.3 million during 2017 and 2016, respectively.
Cash flows provided by financing activities were $79.5 million for 2016 compared to cash flows used in financing activities of $1.2 million for 2015. Net borrowings on debt obligations were $152.2 million in 2016 compared to net repayments of $4.1 million for 2015. The increase in net borrowings as compared to 2015 was primarily the result of additional borrowings under the revolving credit facility to fund the operating cash of our IAD networks along with differences in the timing of operating settlements. Additionally, for 2016 and 2015, we paid $2.9 million and $3.2 million, respectively, for capital lease obligations. We used $77.4 million and $6.1 million for the repurchase of shares during 2016 and 2015, respectively. Further, we received proceeds of $6.3 million and $10.5 million during 2016 and 2015, respectively, for the issuance of stock in connection with our Stock Incentive Plan. Other financing activities provided cash of $1.3 million and $1.7 million during 2016 and 2015, respectively.

Other sources of capital
Credit FacilityAs of December 31, 2017, we hadOn October 17, 2018, the Company entered into a $675 million senior securednew $1.0 billion unsecured credit facility that matures on April 9, 2019agreement (the "Credit Facility") consisting of a $590 million revolving credit facility, a $10 million India revolving credit facilitythat 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 an $75 million term loan ("Term Loan A"), which had been reduced to $51.1 million through principal amortization payments.U.S. Dollars. The revolving credit facility allows for borrowings in U.S. dollars, euros, British pounds, Australian dollars and/or Indian rupees and contains a $200 million sublimit for the issuance of letters of credit, and a $25$50 million sublimit for U.S. Dollar swingline loans, and a $90 million sublimit for certain foreign currencies swingline loans. We use the revolving credit facility primarily to fund working capital requirements which are expected to increase as we expand the Money Transfer business and our independent ATM network. Based on our current projected working capital requirements, we anticipate that our revolving credit facility will be sufficient to fund our working capital needs.
As of December 31, 2017,2019, fees and interest on borrowings variedare based upon the Company's consolidated total leverage ratiocorporate credit rating (as defined in the 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 1.375%1.125% to 2.375% for LIBOR loans and 0.375%2.0% (or 0.175% to 1.375%1.0% for base rate loans.loans).
As of December 31, 2017,2019, we had borrowings of $51.1 million outstanding under the term loan. We had $3.0 million ofno borrowings and $57.3 million ofthe outstanding stand-by letters of credit outstanding under the revolving credit facility as of December 31, 2017.were $53.0 million. The remaining $539.7$947.0 million under the revolving credit facility was available for borrowing. As of December 31, 2017,2019, the weighted average interest ratesrate under the revolving credit facility and Term Loan A were 2.8% and 2.9%was 2.7%, respectively, excluding amortization of deferred financing costs.
Convertible debt — On October 30, 2014,March 18, 2019, we completed the sale of $402.5$525.0 million in principal amount of Convertible Senior Notes due 20442049 (“Convertible Notes”), and retired $401.5 million Convertible Senior Notes that would have been due in 2044 ("Retired Notes"). The ConvertibleRetired Notes havehad an interest rate of 1.5% per annum payable semi-annually in April and October, and were convertible into shares of Euronet Common Stock
The Convertible Notes were issued pursuant to an indenture, dated as of March 18, 2019 (the “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 at a conversion price of approximately $72.18$188.73 per share if certain conditions are met (relating to the closing prices of Euronet common stockCommon Stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require usthe Company to purchaserepurchase for cash all or part of their notes at parConvertible Notes on October 1, 2020, and have additional options to require us to purchase their notes at par on October 1, 2024,each of March 15, 2025, 2029, 2034, 2039 and 2039, or upon2044 at a change in controlrepurchase price equal to 100% of the Company.principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In connection with the issuance of the Convertible Notes, we recorded $10.7$12.8 million in debt issuance costs, which are being amortized through OctoberMarch 1, 2020.2025.
ATM FacilitySenior Notes—On June 27, 2017, we entered into a short-term credit facility inMay 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of $100 million for the sole purpose of providing cash for our ATM network during the tourism season. Interest was chargedSenior Notes that expire on this financing on an annual basis at the overnight LIBOR rate plus 2.0%May 2026 (the “Senior Notes”). The facility expiredSenior 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 December 31, 2019, the Company has outstanding €600 million ($673.4 million) principal amount of the Senior Notes. In addition, the Company

may redeem some or all of these notes on November 30, 2017.or after February 22, 2026 at their principal amount plus any accrued and unpaid interest.
Other debt obligations — Certain of our subsidiaries have available credit lines and overdraft facilities to generally supplement short-term working capital requirements, when necessary. As of December 31, 2017, there was $27.8There were $6.2 million and $38.5 million outstanding under these other obligation arrangements.arrangements as of December 31, 2019 and 2018, respectively. Short-term debt obligations at December 31, 20172019 were primarily comprised of $27.7$6.2 million due in 20182020 under these other obligation arrangements and $13.6 million of payments due in 2018 under the term loan.arrangements.
Other uses of capital
Capital expenditures and needs — Total capital expenditures for 20172019 were $105.2$131.3 million. These capital expenditures were primarily for the purchase of ATMs to expand our IAD network in Europe, 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 20182020 are currently estimated to be approximately $110$145 million to $120$150 million.
At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts available under our revolving credit facility and other existing and potential future financing 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
In January 2016, the Company announced that itsThe Company's Board of Directors has authorized a stock repurchase program ("2016 Program") allowing the Company to repurchase up to $100 million in value or 5.0 million shares of its common stock through December 10, 2017. For the year end December 31, 2017, the Company repurchased 1.1 million shares at a weighted average purchase price of $65.74 for a total value of $75.6 million under the 2016 Program.
In June 2016, the Board of Directors authorized an additional stock repurchase program ("Repurchase Program") with an effective date of July 28, 2016,, allowing Euronet to repurchase up to $125 million in value or 3.0 million shares of its common stock through June 14, 2018. In December 2017, the Board of Directors amended the Repurchase Program, allowing Euronet to

repurchase up to $250 million in value or 6.0 million shares of its common stock through December 31, 2019. On February 27, 2018, the Repurchase Program was further amended to increase the amount of common stock that may be purchased to an aggregate of $375 million in value or 10.0 million shares of stock and extending the expiration date of the Repurchase Program tothrough March 31, 2020. On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of $120 million in value of the Company's common stock through March 11, 2021. Repurchases under the Repurchase Programeither 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. No purchases were made under this plan during 2016 or 2017. The Company put a repurchase plan in place effective January 2, 2018 and as ofFor the date of this filing,year end December 31, 2019, the Company has repurchased $125.00.5 million in value of Euronet common stockshares under the Repurchase Program.Program at a weighted average purchase price of $143.76 for a total value of $70.9 million. For the year ended December 31, 2018, the Company repurchased 2.0 million shares under the Repurchase Program at a weighted average purchase price of $86.10 for a total value of $175.0 million.
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


We have certain significant off balance sheet items described below, in the following section, “Contractual Obligations” and in Note 19, Commitments, to the Consolidated Financial Statements.


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. 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 December 31, 2017.2019.


Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2017:2019:
 Payments due by period Payments due by period
(in thousands) Total 
Less than
1 year
 1-3 years 3-5 years 
More than
5 years
 Total 
Less than
1 year
 1-3 years 3-5 years 
More than
5 years
Long-term debt obligations, including interest $474,610
 $20,640
 $453,970
 $
 $
 $1,278,106
 $13,197
 $26,395
 $26,395
 $1,212,119
Obligations under operating leases 232,792
 63,685
 95,061
 47,486
 26,560
 392,525
 125,231
 154,609
 69,580
 43,105
Obligations under capital leases 17,253
 6,369
 8,605
 2,279
 
Obligations under finance leases 14,585
 6,322
 7,665
 598
 
Purchase obligations 21,173
 18,458
 1,478
 990
 247
 14,168
 8,646
 2,733
 1,867
 922
Total $745,828
 $109,152
 $559,114
 $50,755
 $26,807
 $1,699,384
 $153,396
 $191,402
 $98,440
 $1,256,146


The computation of interest for debt obligations with variable interest rates reflects interest rates in effect at December 31, 20172019 and assumes no change in our revolving credit borrowings prior to the maturity date of our credit facility. For additional information on debt obligations, see Note 10, Debt Obligations, to the Consolidated Financial Statements.
For additional information on capital and operating lease obligations, see Note 12, Leases, to the Consolidated Financial Statements. Purchase obligations primarily consist of ATM maintenance and services as well as telecommunications services and professional fees.
Our total liability for uncertain tax positions under Accounting Standards Codification ("ASC") 740-10-25 and -30 was $28.544.5 million as of December 31, 2017.2019. The application of ASC 740-10-25 and -30 requires significant judgment in assessing the outcome of future income tax examinations and their potential impact on the Company's estimated effective income tax rate and the value of deferred tax assets, such as those related to the Company's net operating loss carryforwards. It is reasonably possible that the balance of gross unrecognized tax benefits could significantly change within the next twelve months, as a result of the resolution of audit examinations and expirations of certain statutes of limitations and, accordingly, materially affect our consolidated financial statements. At this time, it is not possible to estimate the range of change due to the uncertainty of potential outcomes.


Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP which requires management to make estimates, judgments and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Management considers an accounting policy and estimate to be critical if it requires the use of assumptions that were uncertain at the time the estimate was made and if changes in the estimate or selection of a different estimate could have a material effect on the Company’s financial condition and results of operations. Our most critical estimates and assumptions are used for computing income taxes, allocating the purchase price to assets acquired and liabilities assumed in acquisitions, and potential impairment of long-lived assets and goodwill, and revenue recognition.goodwill. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates. For a summary of all of the Company’s significant accounting policies, see Note 3, Summary of Significant Accounting Policies and Practices, to the accompanying Consolidated Financial Statements.


Accounting for income taxes
The deferred income tax effects of transactions reported in different periods for financial reporting and income tax return purposes are recorded under the asset and liability method prescribed under ASC Topic 740, Income Taxes (“ASC 740”). This method gives consideration to the future tax consequences of deferred income or expense items and immediately recognizes changes in income tax laws upon enactment. The statement of income effect is generally derived from changes in deferred income taxes, net of valuation allowances, on the balance sheet as measured by differences in the book and tax bases of our assets and liabilities.

We have significant tax loss carryforwards, and other temporary differences, which are recorded as deferred tax assets and liabilities. Deferred tax assets realizable in future periods are recorded net of a valuation allowance based on an assessment of each entity's, or group of entities', ability to generate sufficient taxable income within an appropriate period, in a specific tax jurisdiction.
In assessing the recognition of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized. As more fully described in Note 13, Taxes, to the Consolidated Financial Statements, gross deferred tax assets were $128.4278.6 million as of December 31, 20172019, partially offset by a valuation allowance of $20.383.2 million. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We make judgments and estimates on the scheduled reversal of deferred tax liabilities, historical and projected future taxable income in each country in which we operate, and tax planning strategies in making this assessment.
Based upon the level of historical taxable income and current projections for future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not that we will realize the benefits of these deductible differences, net of the existing valuation allowance at December 31, 20172019. If we have a history of generating taxable income in a certain country in which we operate, and baseline forecasts project continued taxable income in this country, we will reduce the valuation allowance for those deferred tax assets that we expect to realize.
Additionally, we follow the provisions of ASC 740-10-25 and -30 to account for uncertainty in income tax positions. Applying the standard requires substantial management judgment and use of estimates in determining whether the impact of a tax position is “more likely than not” of being sustained on audit by the relevant taxing authority. We consider many factors when evaluating and estimating our tax positions, which may require periodic adjustments and which may not accurately anticipate actual outcomes. It is reasonably possible that amounts reserved for potential exposure could change significantly as a result of the conclusion of tax examinations and, accordingly, materially affect our operating results.

Business combinations
In accordance with ASC Topic 805, Business Combinations (“ASC 805”), we allocate the acquisition purchase price of an acquired entity to the assets acquired, including identifiable intangibles, and liabilities assumed based on their estimated fair values at the date of acquisition. Management applies various valuation methodologies to these acquired assets and assumed liabilities which often involve a significant degree of judgment, particularly when liquid markets do not exist for the particular item being valued. Examples of such items include loans, deposits, identifiable intangible assets and certain other assets and liabilities acquired or assumed in business combinations. Management uses significant estimates and assumptions to value such items, including, projected cash flows and discount rates. For larger or more complex acquisitions, we generally obtain third-party valuations to assist us in estimating fair values. The use of different valuation techniques and assumptions could change the amounts and useful lives assigned to the assets and liabilities acquired and related amortization expense. AsDuring the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of December 31, 2017, the Consolidated Balance Sheet includes goodwill of $717.4 million and acquired intangible assets, net of accumulated amortization, of $150.5 million.measurement period, any subsequent adjustments are recorded to earnings.
Goodwill and indefinite-lived intangible assets
In accordance with ASC Topic 350, Intangibles - Goodwill and Other (“ASC 350”), we evaluate the carrying value of our indefinite-lived assets, including goodwill, at least annually or more frequently whenever events or changes in circumstances indicate that the asset may be impaired, or in the case of goodwill, that the fair value of the reporting unit ismay be less than its carrying amount. Impairment tests are performed annually during the fourth quarter and are performed at the reporting unit level. Our annual process for evaluating goodwill requires us to perform a qualitative assessment for all reporting units not subjected directly to the quantitative goodwill impairment test. The qualitative factors evaluated by the Company include: economic conditions of the local business environment, overall financial performance, sensitivity analysis from the most recent Step 1 fair valuequantitative test, and other entity specific factors as deemed appropriate. If we determine a quantitative goodwill impairment test is appropriate, the test involves comparing the fair value of a reporting unit to its carrying amount, including goodwill, after any long-lived asset impairment charges. Generally, the fair value represents discounted projected future cash flows and market multiple of earnings. If the carrying amount of the reporting unit's goodwill exceeds the fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.
As of December 31, 2017, the Consolidated Balance Sheet includes goodwill of $717.4 million and acquired intangible assets, net of accumulated amortization, of $150.5 million. As a result of our annual impairment test for the year ended December 31, 2017, we recorded non-cash goodwill impairment charges of $31.8 million. See Note 8, Goodwill and Acquired Intangible Assets, Net, to the Consolidated Financial Statements for additional information regarding these charges. Our annual impairment tests for the years ended December 31, 2016 and 2015 indicated that there were no impairments. 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 our operations will not perform as expected, or that estimates or assumptions could change, which may result in the recording of material non-cash impairment charges during the year in which these determinations take place.
Impairment of long-lived assets
In accordance with ASC 350, long-lived assets, such as property and equipment andAcquired finite-lived intangible assets subject to amortization are reviewedamortized over their estimated useful lives. We evaluate the recoverability of our intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an assetsuch assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely

independent of the cash flows of other assets and liabilities. Recoverability of these assets to be held and used is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the
carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the respective asset. The same estimates are also used in planning for our long- and short-range business planning and forecasting. We assess the reasonableness of the inputs and outcomes of our discounted cash flow analysis against available comparable market data. Ifintangible assets is not recoverable, the carrying amount of ansuch assets is reduced to fair value. In addition to the recoverability assessment, we routinely review the remaining estimated useful lives of our finite-lived intangible assets. If we reduce the estimated useful life assumption for any asset, exceeds itsthe remaining unamortized balance would be amortized over the revised estimated future cash flows, an impairment charge is recognized byuseful life.

As of December 31, 2019, the amount by which the carrying amount exceeds the fair valueConsolidated Balance Sheets includes goodwill of the respective asset. Reviewing long-lived$743.8 million and acquired intangible assets, for impairment requires considerable judgment. The determinationnet of fair values requires significant judgment and is sensitive to changes in underlying assumptions. While we believe our judgments and assumptions are reasonable, adverse change in market conditions and future periods may impact our assumptions, resulting in future impairment losses.accumulated amortization, of $141.8 million. For the year ended December 31, 2017, we recorded a $2.3 million non-cash2019, no impairment charge forof goodwill or acquired intangible assets specifically related to Pure Commerce customer relationship assets in South Korea. See Note 8, Goodwill and Acquired Intangible Assets, Net, to the Consolidated Financial Statements for additional information regarding this charge.has been identified.

Revenue recognition
In accordance with U.S. GAAP, we recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collection is reasonably assured. The majority of our revenues are comprised of monthly recurring management fees and transaction-based fees that are recognized when the transactions are processed or the services are performed. When determining the proper revenue recognition for monthly management fees and transaction-based fees, we consider the guidance in Staff Accounting Bulletin (“SAB”) 101, “Revenue Recognition in Financial Statements,” as amended by SAB 104, “Revenue Recognition,” ASC Topic 605, Revenue Recognition (“ASC 605”) and various other interpretations.
Certain of our noncancelable customer contracts provide for the receipt of up-front fees paid to or received from the customer and/or decreasing or increasing fee schedules over the agreement term for substantially the same level of services provided by Euronet. As prescribed by SAB 101 and SAB 104, we recognize revenue under these contracts based on proportional performance of services over the term of the contract, which generally results in “straight-line” revenue recognition of the contracts' total cash flows, including any up-front payment.
Substantial management judgment and estimation is required in determining the proper revenue recognition methodology for our various revenue-producing activities, as well as the proper and consistent application of our determined methodology.
Recently Issued Accounting Pronouncements
In January 2017, the FASB issuedSee Item 8 of Part II, "Financial Statements and Supplementary Data - Note 3 - Summary of Significant Accounting Standards Update (“ASU”) 2017-04, Intangibles - GoodwillPolicies and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. As a result, an impairment charge will be recorded based on the excess of a reporting unit's carrying amount over its fair value. The amendments of this ASU are effective for reporting periods beginning after December 15, 2019 and early adoption of this ASU is permitted. The Company elected to adopt this ASU effective with the year ended December 31, 2017 and applied the guidance to the annual impairment test performed in the fourth quarter of 2017.Practices.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements and related disclosures.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, which provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. Restricted cash and restricted cash equivalents should now be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. Other than the revised statement of cash flows presentation of restricted cash, the adoption of this ASU is not expected to have an impact on the Company’s consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The amendments in this ASU state that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory, such as intellectual property and property and equipment, when the transfer occurs. This is a change from current U.S. GAAP, which requires companies to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (i.e., depreciation, amortization, or impairment). The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements and related disclosures.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific issues on how certain cash receipts and cash payments are presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect it to have a significant impact on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), 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 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 will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements and related disclosures.
In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which addresses how companies account for certain aspects of share-based payments to employees. This ASU requires all excess tax benefits and tax deficiencies be recognized in the statement of income as a component of income tax expense or benefit. The tax effects of exercised, expired or vested awards are treated as discrete items in the reporting period in which they occur and may result in increased volatility in the Company's effective tax rate. As part of the adoption of this standard during the first quarter of 2017, the Company was required to recognize previously unrecognized excess tax benefits on a modified retrospective basis and record an adjustment to deferred tax assets and retained earnings. Additionally, the Company applied the prospective transition method for the presentation of excess tax benefits from a financing activity to an operating activity in the Company’s consolidated statements of cash flows. Cash paid by the Company when directly withholding shares for tax withholding purposes is classified as a financing activity in the Consolidated Statements of Cash Flows. The Company made an accounting election to continue to estimate forfeitures when determining amortization expense of stock-based compensation.

For the year ended December 31, 2017, the adoption of the provisions of this ASU did not have a material impact on the Company’s Consolidated Statement of Income. A cumulative effect adjustment of $40.2 million for previously unrecognized excess tax benefits from prior fiscal years was recognized in beginning Retained earnings as of January 1, 2017. As a result of recognizing this excess tax benefit, the Company recorded a deferred tax asset of $40.2 million and an associated valuation allowance of $38.9 million to beginning Retained earnings. The offsetting deferred tax asset and valuation allowance resulted in a net increase of $1.3 million to beginning Retained earnings at adoption. 
Prior to 2017, excess tax benefits were recognized in additional paid-in capital and tax deficiencies were recognized either as an offset to accumulated excess tax benefits, if any, or in the Consolidated Statements of Income. Excess tax benefits were not recognized until the deduction reduced taxes payable. Additionally, excess tax benefits from stock-based compensation were included in financing activities within the Company’s Consolidated Statements of Cash Flows.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments. The new standard clarifies that an entity is required to assess whether the economic characteristics and risks of embedded put or call options are clearly and closely related to those of their debt hosts only in accordance with the four-step decision sequence in ASC 815, Derivatives and Hedging. For contingently exercisable put or call options, an entity does not have to assess whether the event that triggers the ability to exercise a put or call option is related to interest rates or credit risk of the entity. The ASU does not change the existing criteria for determining when bifurcation of an embedded put or call option in a debt instrument is required. The amendments of this ASU are effective for annual periods beginning after December 15, 2016, with early adoption permitted. Entities are required to apply the guidance to existing debt instruments using a modified retrospective transition method as of the period of adoption. The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements and related disclosures.
In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. The new standard specifies that liabilities within its scope are considered to be financial liabilities, and amends the guidance in ASC 405-20, Extinguishments of Liabilities, by directing entities to derecognize prepaid stored-value product liabilities based on expected breakage in proportion to the pattern of rights expected to be exercised by the consumer. Derecognition for breakage is permitted only to the extent that it is probable that a significant reversal of recognized breakage will not subsequently occur. The new standard is consistent with the breakage guidance in the new revenue standard. The ASU is effective for annual periods beginning after December 15, 2017, and is applied either using a modified retrospective transition method or retrospectively. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a significant impact on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases(Topic 842), which will update the existing guidance on accounting for leases and require new qualitative and quantitative disclosures about the Company’s leasing activities. The new standard requires lessees to account for all leases on the balance sheet, except for certain short-term leases that have a maximum possible lease term of 12 months. The accounting for lessors is largely unchanged from the previous accounting guidance, except for leverage lease accounting which is not permitted for leases entered into or modified after the effective date of the new standard. The new standard is effective for annual periods beginning after December 15, 2018 and interim periods within

those annual periods, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that the Company may elect to apply. The Company is currently evaluating the expected impact of the adoption of this standard on its consolidated financial statements and related disclosures.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect that the adoption of this standard will have a significant impact on its consolidated financial statements and related disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of the effective date of the new revenue recognition standard. The new standard became effective for the Company on January 1, 2018.The standard permits the use of either the full retrospective or modified retrospective transition method.
In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) - Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow Scope Improvements and Practical Expedients. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (Topic 606). These ASUs clarify the implementation guidance on a few narrow areas, make minor corrections and adds some practical expedients to the guidance in Topic 606.
Lastly, in February 2017, the FASB issued ASU 2017-05, Other Income -Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which clarifies the scope of asset derecognition guidance and provides guidance on partial sales of nonfinancial assets. This ASU clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and defines the term, “in-substance nonfinancial asset.” This ASU must be adopted at the same time as ASC 606.
The Company has continued its review of the requirements of the new revenue standard and currently does not expect the new revenue standard will have a material impact on the timing of revenue recognition on its consolidated financial statements or a material impact from the recognition of costs to obtain and/or fulfill a contract. The implementation team has reported preliminary findings to management and the Audit Committee and will continue to assess all potential effects of the standard. The Company is finalizing the review of certain customer contracts, principally in the epay segment, and currently believes the principal versus agent guidance will affect the presentation and classification of revenue for certain arrangements and estimates its revenue would have been approximately $25 million lower in 2017 to $75 million greater in 2017 and will not have an impact on net income. The Company will finalize its assessment of the effect the new revenue standard will have on its consolidated financial statements and will adopt the new standard in the first quarter of 2018 using the modified retrospective transition method.






Forward-Looking Statements
This document 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;
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, conditions in world financial markets and general economic conditions, including the effects in Europe of the recent Brexit voteU.K.'s departure from the E.U. and economic conditions in specific countries and regions; the effects of demonetization in India; 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; our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, consumer and data protection and GDPR or PSD2the European Union's General Data Protection Regulation and Second Revised Payment Service Directive 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; the cost of borrowing, availability of credit and terms of and compliance with debt covenants; impacts from the COVID-19 virus; and renewal of sources of funding as they expire and the availability of replacement funding and those factors referred to above and as set forth and more fully described in Part I, Item 1A — Risk Factors. Any forward-looking statements made in this Form 10-K 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.



Item 7A. Quantitative and Qualitative Disclosures Aboutabout Market Risk
Interest rate risk
As of December 31, 2017,2019, our total debt outstanding, excluding unamortized debt issuance costs, was $451.1 million.$1.1 billion. Of this amount, $369.3$437.0 million, net of debt discounts, or 82%39% of our total debt obligations, relates to contingent convertible notes having a fixed coupon rate. Our $402.5$525.0 million outstanding principal amount of contingent convertible notes issued in October 2014, accrue cash interest at a rate of 1.50%0.75% of the principal amount per annum. Based on quoted market prices, as of December 31, 2017,2019, the fair value of our fixed rate convertible notes was $503.7$569.4 million, compared to a carrying value of $369.3$437.0 million. Interest expense for these notes, including accretion and amortization of deferred debt issuance costs, has a weighted average interest rate of 4.7%4.4% annually. Further, as of December 31, 2019 we had no borrowings under our Credit Facility. Additionally, $54.1$673.4 million, or 12%60% of our total debt obligations, relates to borrowings underSenior Notes having a fixed coupon rate. Our €600 million outstanding principal amount of Senior Notes accrue cash interest at a rate of 1.375% of the principal per annum. Based on quoted market prices, as of December 31, 2019, the fair value of our Credit Facility. If we werefixed rate Senior Notes was $668.2 million, compared to maintain these borrowings for one year and maximize the potential borrowings available under the revolving credit facility for one year, a 1% (100 basis points) increase in the applicable interest rate would result in additional interest expense to the Companycarrying value of approximately $6.2$673.4 million.
The remaining $27.8$6.2 million, or 6%1% of our total debt obligations, 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.
Additionally, as of December 31, 2017,2019, we had approximately $15.1$14.0 million of capitalizedfinance leases with fixed payment and interest terms that expire between the years of 20182020 and 20222024 and bear interest at rates between 0.7%0.8% and 12.8%16.8%.
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 years ended December 31, 20172019 and 20162018, 75%74% and 72% of our revenues, respectively, were generated in non-U.S. dollar countries. 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 December 31, 2017,2019, 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 $85$77 million to $90$82 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 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 $100$140 million to $105$145 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 are 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, 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 involvesinvolve 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,(loss) gain, net on the Consolidated Statements of Income. As of December 31, 2017,2019, we had foreign currency derivative contracts outstanding with a notional value of $132.0$159.0 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 HiFXxe operations write 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 December 31, 2017,2019, we held foreign currency derivative contracts outstanding with a notional value of $1.3$1.2 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 December 31, 2017,2019, the Company had
foreign currency forward contracts outstanding with a notional value of $39.5$43 million, primarily in British pounds, euros and
Polish zloty.euros.
See Note 11, Derivative Instruments and Hedging Activities to our Consolidated Financial Statements for additional information.




Item 8. Financial Statements and Supplementary Data


Index to Consolidated Financial StatementsPage
  






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Report of Independent Registered Public Accounting Firm




TheTo the Stockholders and Board of Directors and Stockholders
Euronet Worldwide, Inc.:


Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Euronet Worldwide, Inc. and subsidiaries (the “Company”)Company) as of December 31, 20172019 and 2016,2018, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2017,2019, and the related notes (collectively, the “consolidatedconsolidated financial statements”statements.). We also have audited the Company’s internal control over financial reporting as of December 31, 2017,2019, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172019 and 2016,2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017,2019, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2019 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Change in Accounting Principle
As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.
As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition in 2018 due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report onOn Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

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dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidatedfinancial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the sufficiency of audit evidence over revenue
As discussed in Note 3 to the consolidated financial statements, the Company earned $2.75 billion of revenue in 2019. The Company earned revenue by payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers (collectively services). The services were provided to customers in 170 countries through 66 different business offices in 41 countries within 3 different reportable operating segments.
We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. The Company’s geographical dispersion of services worldwide, amongst various business lines required especially subjective auditor judgment in evaluating the sufficiency of audit evidence over revenue. Further, our audit team consisted of auditors located in various countries worldwide. This required especially challenging auditor judgment in the level of audit procedures and supervision applied at each country.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s revenue process, including controls related to the consolidation of global revenue amounts. We assessed the training and experience of the auditors on our audit team that were located in countries other than the United States. We tested a sample of individual revenue transactions at certain locations by comparing amounts recognized by the Company to relevant contracts and or payment and transaction support. After completion of these procedures, we evaluated the overall sufficiency of the audit evidence over revenues.
Assessment of the carrying value of goodwill of one reporting unit in the Money Transfer segment
As discussed in Notes 3 and 9 to the consolidated financial statements, the Company performs goodwill impairment testing on an annual basis and whenever events and changes in circumstances indicate that it is more likely than not (more than 50%) that the fair value of a reporting unit is less than its carrying amount. The goodwill balance as of December 31, 2019 was $743.8 million. The Company performed a goodwill impairment test for each reporting unit using a qualitative approach, except for one reporting unit in the Money Transfer segment which was tested using the quantitative approach.
We identified the assessment of the carrying value of goodwill for this one reporting unit in the Money Transfer segment using the quantitative approach as a critical audit matter, because significant auditor judgment was required to evaluate the impairment test. The fair value of that reporting unit was performed using a weighting of a discounted cash flow model and market multiples valuation technique and included key assumptions related to (1) the forecasted revenue growth rates, (2) the forecasted earnings before interest, income taxes, depreciation, and amortization (EBITDA) margin, (3) the discount rate, and (4) the EBITDA market multiple. Changes to these key assumptions could have a significant effect on the fair value determination and assessment of the carrying value of the goodwill.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s goodwill impairment assessment process, including controls related to the development of the key assumptions. We evaluated the Company’s forecasted revenue growth rates and forecasted EBITDA margin assumptions by comparing them to external market and industry data. We compared the Company’s historical forecasted results to actual results to assess the Company’s ability to accurately forecast. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating 1) the Company’s discount rate

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by comparing it against a discount rate range that was independently developed using publicly available third-party market data for comparable entities and 2) the Company’s EBITDA market multiple, by comparing it against a range of EBITDA multiples to publicly available third-party market data for comparable entities.




/s/ KPMG LLP


We have served as the Company's auditor since 2003.


Kansas City, Missouri
March 1, 2018February 28, 2020


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Consolidated Financial Statements


Euronet Worldwide, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
As of December 31,As of December 31,
2017 20162019 2018
ASSETS      
Current assets:      
Cash and cash equivalents$819,144
 $734,414
$786,081
 $385,031
ATM cash665,641
 395,378
Restricted cash81,374
 77,674
34,301
 31,237
Inventory — PINs and other95,672
 78,115
Trade accounts receivable, net of allowances for doubtful accounts of $20,958 at December 31, 2017 and $18,369 at December 31, 2016744,879
 502,989
Settlement assets1,013,067
 915,460
Trade accounts receivable, net201,935
 202,514
Prepaid expenses and other current assets149,117
 191,796
217,707
 157,967
Total current assets1,890,186
 1,584,988
2,918,732
 2,087,587
Property and equipment, net of accumulated depreciation of $340,128 at December 31, 2017 and $262,470 at December 31, 2016268,303
 202,145
Operating right of use lease assets377,543
 
Property and equipment, net of accumulated depreciation of $410,243 at December 31, 2019 and $373,180 at December 31, 2018359,980
 291,869
Goodwill717,386
 689,713
743,823
 704,197
Acquired intangible assets, net of accumulated amortization of $179,142 at December 31, 2017 and $150,347 at December 31, 2016150,543
 165,331
Other assets, net of accumulated amortization of $44,469 at December 31, 2017 and $36,984 at December 31, 2016113,611
 70,695
Acquired intangible assets, net of accumulated amortization of $204,853 at December 31, 2019 and $190,920 at December 31, 2018141,847
 114,485
Other assets, net of accumulated amortization of $46,788 at December 31, 2019 and $50,821 at December 31, 2018115,741
 123,017
Total assets$3,140,029
 $2,712,872
$4,657,666
 $3,321,155
LIABILITIES AND EQUITY      
Current liabilities:      
Settlement obligations$1,013,067
 $915,460
Trade accounts payable$494,841
 $456,682
81,743
 72,908
Accrued expenses and other current liabilities759,789
 615,153
294,557
 252,557
Current portion of capital lease obligations5,369
 3,293
Current portion of operating lease obligations127,353
 
Short-term debt obligations and current maturities of long-term debt obligations41,288
 32,161
6,089
 38,017
Income taxes payable54,437
 27,611
52,583
 40,159
Deferred revenue51,996
 44,200
58,588
 59,293
Total current liabilities1,407,720
 1,179,100
1,633,980
 1,378,394
Debt obligations, net of current portion404,012
 561,663
1,090,939
 589,782
Capital lease obligations, net of current portion9,753
 6,969
Operating lease obligations, net of current portion241,977
 
Deferred income taxes54,969
 44,079
56,067
 57,145
Other long-term liabilities64,097
 20,504
55,361
 62,992
Total liabilities1,940,551
 1,812,315
3,078,324
 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; 58,892,744 issued at December 31, 2017 and 58,389,242 issued at December 31, 20161,178
 1,168
Common Stock, $0.02 par value. 90,000,000 shares authorized; 62,775,762 issued at December 31, 2019 and 59,897,309 issued at December 31, 20181,256
 1,198
Additional paid-in capital1,072,005
 1,045,663
1,190,058
 1,104,264
Treasury stock, at cost, 6,084,586 shares at December 31, 2017 and 6,085,841 shares at December 31, 2016(217,161) (215,462)
Treasury stock, at cost, 8,554,908 shares at December 31, 2019 and 8,077,311 shares at December 31, 2018(463,704) (391,551)
Retained earnings436,954
 278,842
1,016,554
 669,805
Accumulated other comprehensive loss(94,458) (210,662)(164,890) (151,043)
Total Euronet Worldwide, Inc. stockholders’ equity1,198,518
 899,549
1,579,274
 1,232,673
Noncontrolling interests960
 1,008
68
 169
Total equity1,199,478
 900,557
1,579,342
 1,232,842
Total liabilities and equity$3,140,029
 $2,712,872
$4,657,666
 $3,321,155
See accompanying notes to the Consolidated Financial Statements.


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Euronet Worldwide, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except share and per share data)
 Year Ended December 31, Year Ended December 31,
 2017 2016 2015 2019 2018 2017
            
Revenues $2,252,422
 $1,958,615
 $1,772,262
 $2,750,109
 $2,536,629
 $2,252,422
Operating expenses:            
Direct operating costs 1,356,250
 1,174,545
 1,081,849
 1,556,483
 1,488,406
 1,356,250
Salaries and benefits 310,787
 288,420
 259,162
 394,744
 360,432
 310,787
Selling, general and administrative 190,302
 165,348
 156,385
 211,944
 216,807
 190,302
Goodwill and acquired intangible assets impairment 34,056
 
 
 
 7,049
 34,056
Depreciation and amortization 95,030
 80,529
 70,025
 111,744
 106,021
 95,030
Total operating expenses 1,986,425
 1,708,842
 1,567,421
 2,274,915
 2,178,715
 1,986,425
Operating income 265,997
 249,773
 204,841
 475,194
 357,914
 265,997
Other income (expense):            
Interest income 2,443
 1,696
 2,170
 1,969
 1,320
 2,443
Interest expense (32,571) (28,332) (24,814) (36,237) (37,573) (32,571)
Income from unconsolidated affiliates 48
 
 
(Loss) Income from unconsolidated affiliates 
 (117) 48
Foreign currency exchange gain (loss), net 20,300
 (10,200) (41,418) 2,701
 (26,655) 20,300
Other gains, net 118
 19,956
 315
Other (losses) gains, net (9,820) 27
 118
Other expense, net (9,662) (16,880) (63,747) (41,387) (62,998) (9,662)
Income before income taxes 256,335
 232,893
 141,094
 433,807
 294,916
 256,335
Income tax expense (99,395) (58,795) (42,602) (87,112) (62,785) (99,395)
Net income 156,940
 174,098
 98,492
 346,695
 232,131
 156,940
Less: Net (income) loss attributable to noncontrolling interests (95) 317
 316
Less: Net loss (income) attributable to noncontrolling interests 54
 720
 (95)
Net income attributable to Euronet Worldwide, Inc. $156,845
 $174,415
 $98,808
 $346,749
 $232,851
 $156,845
            
Earnings per share attributable to Euronet Worldwide, Inc. stockholders:            
Basic $2.99
 $3.34
 $1.89
 $6.49
 $4.52
 $2.99
Diluted $2.85
 $3.23
 $1.83
 $6.31
 $4.26
 $2.85
            
Weighted average shares outstanding:            
Basic 52,523,272
 52,276,951
 52,274,573
 53,449,834
 51,487,557
 52,523,272
Diluted 55,116,327
 54,001,079
 54,076,676
 54,913,887
 54,627,747
 55,116,327
                    
See accompanying notes to the Consolidated Financial Statements.


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Euronet Worldwide, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(in thousands)
 Year Ended December 31, Year Ended December 31,
 2017 2016 2015 2019 2018 2017
Net income $156,940
 $174,098
 $98,492
 $346,695
 $232,131
 $156,940
Other comprehensive income (loss), net of tax:            
Translation adjustment 116,401
 (45,175) (67,756) (13,894) (56,656) 116,401
Comprehensive income 273,341
 128,923
 30,736
 332,801
 175,475
 273,341
Comprehensive (income) loss attributable to noncontrolling interests (292) 358
 466
 101
 791
 (292)
Comprehensive income attributable to Euronet Worldwide, Inc. $273,049
 $129,281
 $31,202
 $332,902
 $176,266
 $273,049
See accompanying notes to the Consolidated Financial Statements.


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Euronet Worldwide, Inc. and Subsidiaries
Consolidated Statements of Changes in Equity
(in thousands, except share data)


 
Number of
Shares
Outstanding
 
 
Common
Stock
 
Additional
Paid-in
Capital
 
 
Treasury
Stock
 
Number of
Shares
Outstanding
 
 
Common
Stock
 
Additional
Paid-in
Capital
 
 
Treasury
Stock
Balance as of December 31, 2014 51,596,767
 $1,129
 $955,715
 $(133,788)
Net income (loss) 

 

 

 

Balance as of December 31, 2016 52,303,401
 $1,168
 $1,045,663
 $(215,462)
Net income 

 

 

 

Other comprehensive loss 

 

 

 

 

 

 

 

Stock issued under employee stock plans 743,782
 16
 11,686
 (4,877) 504,757
 10
 10,104
 (1,699)
Share-based compensation 

 

 12,802
 

 

 

 15,618
 

Shares issued in connection with acquisition 692,853
 14
 43,047
 

Repurchase of shares (1,600)     (85) 

     


Other 

 

 4
 

 

 


 620
 


Balance as of December 31, 2015 53,031,802
 1,159
 1,023,254
 (138,750)
Balance as of December 31, 2017 52,808,158
 1,178
 1,072,005
 (217,161)
Net income (loss) 

 

 

 

 

 

 

 

Other comprehensive loss 

 

 

 

 

 

 

 

Stock issued under employee stock plans 421,170
 9
 7,426
 (1,143) 1,039,480
 20
 15,634
 610
Share-based compensation 

 

 14,983
 

 

 

 16,764
 

Repurchase of shares (1,149,571)     (75,569) (2,032,599)     (175,000)
Balance as of December 31, 2016 52,303,401
 1,168
 1,045,663
 (215,462)
Net income 

 

 

 

Other comprehensive income 

 

 

 

Other 4,959
 

 (139) 

Balance as of December 31, 2018 51,819,998
 1,198
 1,104,264
 (391,551)
Net income (loss) 

 

 

 

Other comprehensive loss 

 

 

 

Stock issued under employee stock plans 504,757
 10
 10,104
 (1,699) 405,617
 8
 13,216
 (1,277)
Share-based compensation 

 

 15,618
 

 

 

 21,439
 

Issuance of convertible notes, net of tax 

 

 71,659
 

Repurchase of shares (493,010)     (70,876)
Redemptions and conversions of convertible notes, net of tax

 2,488,249
 $50
 (20,517)  
Other     620
   


   (3)  
Balance as of December 31, 2017 52,808,158
 $1,178
 $1,072,005
 $(217,161)
Balance as of December 31, 2019 54,220,854
 $1,256
 $1,190,058
 $(463,704)
See accompanying notes to the Consolidated Financial Statements.


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EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity (continued)
(in thousands)


  Retained Earnings 
Accumulated Other
Comprehensive Loss
 
 
Noncontrolling
Interests
 Total  Retained Earnings 
Accumulated Other
Comprehensive Loss
 
 
Noncontrolling
Interests
 Total
Balance as of December 31, 2014 $5,619
 $(97,922) $2,059
 $732,812
Net income (loss) 98,808
 

 (316) 98,492
Other comprehensive loss   (67,606) (150) (67,756)
Balance as of December 31, 2016 $278,842
 $(210,662) $1,008
 $900,557
Net income 156,845
 

 95
 156,940
Other comprehensive income   116,204
 197
 116,401
Stock issued under employee stock plans   

 

 6,825
   

 

 8,415
Share-based compensation   

 

 12,802
   

 

 15,618
Shares issued in connection with acquisition   
 
 43,061
Repurchase of shares   

 

 (85)   

 

 
Other   

 (227) (223) 1,267
 


 (340) 1,547
Balance as of December 31, 2015 104,427
 (165,528) 1,366
 825,928
Balance as of December 31, 2017 436,954
 (94,458) 960
 1,199,478
Net income (loss) 174,415
 

 (317) 174,098
 232,851
 

 (720) 232,131
Other comprehensive loss   (45,134) (41) (45,175)   (56,585) (71) (56,656)
Stock issued under employee stock plans   

 

 6,292
   

 

 16,264
Share-based compensation   

 

 14,983
   

 

 16,764
Repurchase of shares       (75,569)       (175,000)
Balance as of December 31, 2016 278,842
 (210,662) 1,008
 900,557
Net income 156,845
 

 95
 156,940
Other comprehensive income   116,204
 197
 116,401
Other 


 

 


 (139)
Balance as of December 31, 2018 669,805
 (151,043) 169
 1,232,842
Net income (loss) 346,749
 

 (54) 346,695
Other comprehensive loss   (13,847) (47) (13,894)
Stock issued under employee stock plans   
 
 8,415
   
 
 11,947
Share-based compensation   

 

 15,618
   

 

 21,439
Issuance of convertible notes, net of tax   

 

 71,659
Repurchase of shares       (70,876)
Redemptions and conversions of convertible notes, net of tax       (20,467)
Other 1,267
 

 (340) 1,547
 
 

 

 (3)
Balance as of December 31, 2017 $436,954
 $(94,458) $960
 $1,199,478
Balance as of December 31, 2019 $1,016,554
 $(164,890) 68
 $1,579,342
See accompanying notes to the Consolidated Financial Statements.




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Euronet Worldwide, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,Year Ended December 31,
2017 2016 20152019 2018 2017
Net income$156,940
 $174,098
 $98,492
$346,695
 $232,131
 $156,940
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization95,030
 80,529
 70,025
111,744
 106,021
 95,030
Share-based compensation15,618
 14,983
 12,802
21,439
 16,764
 15,618
Unrealized foreign exchange (gain) loss, net(20,300) 10,200
 41,418
(2,701) 26,655
 (20,300)
Non-cash impairment of goodwill and acquired intangible assets34,056
 
 

 7,049
 34,056
Other gains
 (19,449) 
Deferred income taxes(10,861) 850
 (5,017)17,113
 2,425
 (10,861)
Loss on early retirement of debt9,831
 
 
Loss (income) from unconsolidated affiliates
 117
 (48)
Accretion of convertible debt discount and amortization of debt issuance costs13,504
 12,885
 12,164
17,088
 14,121
 13,504
Changes in working capital, net of amounts acquired:    
    
Income taxes payable, net23,183
 13,935
 (13,467)13,177
 (13,317) 23,183
Restricted cash28,597
 (23,342) 17,621
Inventory — PINs and other(11,602) (6,712) 7,058
Trade accounts receivable(198,089) (87,732) (66,075)(87,882) 26,497
 (198,089)
Prepaid expenses and other current assets47,053
 (68,549) (39,796)(68,945) (29,066) 35,451
Trade accounts payable3,840
 9,705
 39,631
53,550
 45,562
 3,840
Deferred revenue3,724
 9,426
 3,898
132
 9,349
 3,724
Accrued expenses and other current liabilities82,795
 257,287
 37,453
98,459
 (37,595) 106,350
Changes in noncurrent assets and liabilities27,830
 (9,932) (1,153)
Changes in non-current assets and liabilities(25,212) (9,480) 27,878
Net cash provided by operating activities291,318
 368,182
 215,054
504,488
 397,233
 286,276
Cash flows from investing activities:          
Acquisitions, net of cash acquired
 (68,266) (113,969)(94,187) (12,854) 
Purchases of property and equipment(97,235) (87,411) (74,620)(131,287) (112,484) (97,235)
Purchases of other long-term assets(6,039) (6,175) (6,391)(7,274) (8,528) (6,039)
Proceeds from sale of investment
 11,900
 
Other, net1,416
 1,288
 997
3,721
 1,583
 1,416
Net cash used in investing activities(101,858) (148,664) (193,983)(229,027) (132,283) (101,858)
Cash flows from financing activities:          
Proceeds from issuance of shares10,990
 6,292
 10,510
14,979
 18,608
 10,990
Repurchase of shares(3,065) (77,360) (6,078)(74,456) (177,855) (3,065)
Borrowings from revolving credit agreements2,409,203
 2,648,093
 1,321,622
2,498,298
 5,773,294
 2,409,203
Repayments of revolving credit agreements(2,566,621) (2,495,632) (1,318,759)(2,714,203) (5,560,089) (2,566,621)
Repayments of long-term debt obligations(8,907) (7,031) (5,156)(446,702) (52,199) (8,907)
Repayments of capital lease obligations(4,883) (2,943) (3,211)
Net borrowing from (repayments of) short-term debt obligations1,853
 6,750
 (1,825)
Repayments of finance lease obligations(6,474) (6,137) (4,883)
Net borrowing from short-term debt obligations(32,091) 9,472
 1,853
Proceeds from long-term debt obligations1,194,900
 
 
Debt issuance costs(17,947) (3,071) 
Other, net281
 1,341
 1,707
(6) 1
 281
Net cash (used in ) provided by financing activities(161,149) 79,510
 (1,190)
Effect of exchange rate changes on cash and cash equivalents56,419
 (22,132) (30,373)
Increase (decrease) in cash and cash equivalents84,730
 276,896
 (10,492)
Cash and cash equivalents at beginning of period734,414
 457,518
 468,010
Cash and cash equivalents at end of period$819,144
 $734,414
 $457,518
Interest paid during the period$20,457
 $14,442
 $11,804
Income taxes paid during the period$48,644
 $43,178
 $54,607
Supplemental disclosure of non-cash investing and financing activities:     
Non-cash consideration received from sale of investment$
 $7,549
 $
Equity issued in connection with acquisition$
 $
 $43,061
Net cash provided by (used in ) financing activities416,298
 2,024
 (161,149)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(5,332) (36,540) 65,161
Increase in cash and cash equivalents and restricted cash686,427
 230,434
 88,430
Cash and cash equivalents and restricted cash at beginning of period1,130,952
 900,518
 812,088
Cash and cash equivalents and restricted cash at end of period$1,817,379
 $1,130,952
 $900,518

Euronet Worldwide, Inc. and Subsidiaries
Consolidated Statements of Cash Flows - (Continued)
(in thousands)
The table below reconciles Cash, Cash and cash equivalents, ATM cash, Restricted cash, Cash and cash equivalents and Restricted cash included within settlement assets.
Cash and cash equivalents$786,081
 $385,031
 $280,128
Restricted cash34,301
 31,237
 $32,185
ATM cash665,641
 395,378
 253,847
Settlement cash and cash equivalents282,188
 273,948
 285,169
Settlement restricted cash49,168
 45,358
 49,189
Cash and cash equivalents and restricted cash at end of period$1,817,379
 $1,130,952
 $900,518
      
Supplemental Cash Flow Disclosures:     
Interest paid during the period$13,125
 $23,554
 $20,457
Income taxes paid during the period$74,086
 $84,382
 $48,644
Supplemental disclosure of non-cash investing and financing activities:     
Non-cash consideration received from sale of investment$
 $
 $
See accompanying notes to the Consolidated Financial Statements.


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Notes to Consolidated Financial Statements


(1) Organization


Euronet Worldwide, Inc. (the “Company” or “Euronet”) was established as a Delaware corporation on December 13, 1997 and succeeded Euronet Holding N.V. as the group holding company, which was founded and established in 1994. Euronet is a leading electronic payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive automated teller machine (“ATM”), point-of-sale (“POS”), card outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment products, and global money transfer services.


(2) Basis of Preparation


The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of Euronet and its wholly owned and majority owned subsidiaries and all significant intercompany balances and transactions have been eliminated. Euronet's investments in companies that it does not control, but has the ability to significantly influence, are accounted for under the equity method. Euronet is not involved with any variable interest entities. Results from operations related to entities acquired during the periods covered by the consolidated financial statements are reflected from the effective date of acquisition.
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires that management make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant items subject to such estimates and assumptions include computing income taxes, contingent purchase price consideration, 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.
Seasonality
Euronet’s EFT Processing Segment experiences its heaviest demand for dynamic currency conversion services during the third quarter of the fiscal year, coinciding with the tourism season. Additionally, the EFT Processing and epay Segments are impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Seasonality in the money transfer segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year.

Settlement Assets and Obligations
As of December 31, 2019, we have recast our Consolidated Balance Sheets to include three new balance sheet captions entitled Settlement assets, Settlement obligations, and ATM cash. The historically reported Cash and cash equivalents and Restricted cash are now presented in Cash and cash equivalents, Restricted cash, ATM cash, or part of Settlement assets.
ATM cash represents cash included within the ATM network. Settlement assets represents funds received or to be received from agents for unsettled money transfers and due from merchants or unsettled prepaid transactions. Settlement assets consist of cash and cash equivalents, restricted cash, receivables and prepaid expenses and other current assets. Settlement obligations consist of money transfers, payables to agents and content providers. Amounts presented in Cash and cash equivalents as recast represents cash available from operations. Prior year amounts have been recast to conform to current year presentation.

(3) Summary of Significant Accounting Policies and Practices
Foreign currencies
Assets and liabilities denominated in currencies other than the functional currency of a subsidiary are remeasured at rates of exchange on the balance sheet date. Resulting gains and losses on foreign currency transactions are included in the Consolidated Statements of Income.
The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated to U.S. dollars using (i) exchange rates in effect at period end for assets and liabilities, and (ii) weighted average exchange rates during the period for revenues and expenses. Adjustments resulting from translation of such financial statements are reflected in accumulated other comprehensive income (loss) as a separate component of consolidated equity.

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Cash equivalents
The Company considers all highly liquid investments, with an original maturity of three months or less, and certificates of deposit, which may be withdrawn at any time at the discretion of the Company without penalty, to be cash equivalents.

ATM Cash
ATM cash represents cash within the ATM network either included within ATMs, within dedicated accounts, or in-transit to ATMs.
81Settlement 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.

TableSettlement assets consist of Contents
Index to Consolidated Financial Statements

Inventory - PINscash and other
Inventory - PINscash equivalents, restricted cash, receivables and prepaid expenses and other is valued at the lower of cost or market valuecurrent assets. Cash received by Euronet agents and primarily represents prepaid personal identification number (“PIN”) inventory for prepaid mobile airtime relatedmerchants generally become available to the epay Segment. PIN inventory is generally managed on a specific identification basis that approximates first in, first out for the respective denomination of prepaid mobile airtime sold. Inventory also includes vouchers, merchandise for physical reward fulfillment and other electronic payment products. Additionally, from time to time, Inventory - PINs and other may include ATMs, POS terminals, and mobile phone handsets heldCompany within two weeks after initial receipt by the business partner. Receivables, net from business partners represent funds collected by such business partners, but in transit to the Company.
Euronet has a large and diverse business partner base, thereby reducing the credit risk of the Company from any one business partner. In addition, the Company performs ongoing credit evaluations of its business partners’ financial condition and credit worthiness. Inventories represent prepaid cards and prepaid pin numbers that are used to settle amounts due to content providers.

Settlement obligations consist of money transfers, payables to agents and content providers. Money transfer payables 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 payables represent amounts not yet presented for resale.payment. Due to the agent funding and settlement process, payables to agents represent amounts due to agents for money transfers that have not been settled with transferees.

(in thousands)As of December 31, 2019As of December 31, 2018
Settlement assets:  
Settlement cash and cash equivalents$282,188
$273,948
Settlement restricted cash49,168
45,358
Account receivables574,410
491,102
Prepaid expenses and other current assets107,301
105,052
Total settlement assets$1,013,067
$915,460
Settlement obligations:  
Trade account payables$504,667
$456,005
Accrued expenses and other current liabilities508,400
459,455
Total settlement obligations$1,013,067
$915,460


Property and equipment
Property and equipment are stated at cost, less accumulated depreciation. Property and equipment acquired in acquisitions have been recorded at estimated fair values as of the acquisition date.
Depreciation is generally calculated using the straight-line method over the estimated useful lives of the respective assets. Depreciation and amortization rates are generally as follows:

ATMs or ATM upgrades5 - 7 years
Computers and software3 - 5 years
POS terminals3 - 5 years
Vehicles and office equipment3 - 10 years
Leasehold improvementsOver the lesser of the lease term or estimated useful life



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Goodwill and other intangible assets
The Company accounts for goodwill and other intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, Intangibles - Goodwill and Other (“ASC 350”). ASC 350 requires that the Company test for impairment on an annual basis and whenever events or circumstances dictate. Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.
ASC 350 provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the existing quantitative impairment test (described below), otherwise no further analysis is required. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test. The Company has a policy for its annual review of goodwill to perform the qualitative assessment for all reporting units not subjected directly to the two-step quantitative impairment test.
Under the qualitative assessment, various events and circumstances (or factors) that would affect the estimated fair value of a reporting unit are identified (similar to impairment indicators). These factors are then classified by the type of impact they would have on the estimated fair value using positive, neutral, and adverse categories based on current business conditions. Furthermore, the Company considers the results of the most recent two-step quantitative impairment test completed for a reporting unit and compares, among other factors, the weighted average cost of capital ("WACC") between the current and prior years for each reporting unit.
Under the quantitative impairment test, the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. The Company uses weighted results from the income approach or the discounted cash flow model ("DCF model") and guideline public company method ("Market Approach model") to estimate the current fair value of its reporting units when testing for impairment, as management believes forecasted cash flows and EBITDA are the best indicator of such fair value. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including sales volumes and gross margins, tax rates, capital spending, discount rates and working capital changes. Most of these assumptions vary significantly among the reporting units. Significant assumptions in the Market Approach model are projected EBITDA, selected market multiple, and the estimated control premium. If the carrying value of goodwill exceeds its fair value, an impairment loss equal to such excess would be recognized.

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The Company completed its annual goodwill impairment test in the fourth quarter of 2017.2019. It determined, after performing a quantitativequalitative review of eighteeneach reporting units,unit, that the fair value of fifteen of the reporting units exceeds the respective carrying amounts. For the remaining three reporting units, the quantitative test indicatedit is more likely than not that the fair value of each of theour reporting units was less thanexceeds the respective carrying amounts. As a result,amounts, except for one reporting unit. Accordingly, there was an indication of impairment, and the Company recorded a non-cashquantitative goodwill impairment charge of $31.8 million with respect totest was performed. The quantitative goodwill impairment test showed that there was no indication for impairment for the epay North America, epay U.K. and epay Middle Eastaffected reporting units.unit.
Other Intangible Assets- In accordance with ASC 350, intangible assets with finite lives are amortized over their estimated useful lives. Unless otherwise noted, amortization is calculated using the straight-line method over the estimated useful lives of the assets as follows:
Non-compete agreements2 - 5 years
Trademarks and trade names2 - 20 years
Software3 - 10 years
Customer relationships6 - 20 years


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The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such events or changes in circumstances are present, a loss is recognized if the carrying value of the asset is in excess of the sum of the undiscounted cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. During 2019, the company did not identify an impairment. During 2018, the Company recorded a non-cash impairment charge of $7.0 million related to certain trade names as a result of combining HiFX into xe in order to operate the businesses under one brand name, xe. During 2017, the Company recorded a non-cash impairment charge of $2.3 million related to certain customer relationships as a result of the closure of the Pure Commerce office in South Korea. No impairment of long-lived assets was recorded during 2016 or 2015.
See Note 8, Goodwill and Acquired Intangible Assets, Net, to the Consolidated Financial Statements for additional information regarding the impairment of goodwill and other intangible assets.
Other assets
Other assets include investments in unconsolidated affiliates, capitalized software development costs and capitalized payments for new or renewed contracts, contract renewals and customer conversion costs. Euronet capitalizes initial payments for new or renewed contracts to the extent recoverable through future operations, contractual minimums and/or penalties in the case of early termination. The Company's accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated ongoing net future cash flows related to the contract or the termination fees the Company would receive in the event of early termination of the contract by the customer.
ASC Topic 340, Other Assets and Deferred Costs (“ASC 340”) 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. Deferred contract costs are reported on our balance sheet within current or non-current other assets based on the expected life of the related contract. At December 31, 2019 and 2018, we had $43.7 million, and $32.1 million, respectively, of deferred contract costs related to the fulfillment of future contract obligations. For the years ended December 31, 2019, 2018 and 2017, we had $6.9 million , $6.3 million and $7.2 million of amortization related to these costs, respectively.
The Company accounts for investments in affiliates using the equity method of accounting when it has the ability to exercise significant influence over the affiliate, but does not have a controlling interest. Equity losses in affiliates are generally recognized until the Company's investment is zero. As of December 31, 20172019 and 2016,2018, the Company had no material investments in unconsolidated affiliates.
Convertible notes
The Company accounts for its convertible debt instruments that may be settled in cash upon conversion in accordance with ASC Topic 470, Debt (“ASC 470”), which requires the proceeds from the issuance of such convertible debt instruments to be allocated between debt and equity components so that debt is discounted to reflect the Company's nonconvertible debt borrowing rate. Further, the Company applies ASC 470-20-35-13, which requires the debt discount to be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense.
Noncontrolling interests
The Company accounts for noncontrolling interests in its consolidated financial statements according to ASC Topic 810, Consolidations (“ASC 810”), which requires noncontrolling interests to be reported as a component of equity.
Business combinations
The Company accounts for business combinations in accordance with ASC Topic 805, Business Combinations (“ASC 805”), which requires most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at “full fair value” at the acquisition date. Transaction-related costs are expensed in the period incurred.

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Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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In accordance with ASC Topic 740, Income Taxes (“ASC 740”), the Company's policy is to record estimated interest and penalties related to the underpayment of income taxes as income tax expense in the Consolidated Statements of Income. See Note 13, Taxes, to the Consolidated Financial Statements for further discussion regarding these provisions.
Presentation of taxes collected and remitted to governmental authorities
The Company presents taxes collected and remitted to governmental authorities on a net basis in the accompanying Consolidated Statements of Income.
Fair value measurements
The Company applies the provisions of ASC Topic 820, Fair Value Measurementsand Disclosures (“ASC 820”), regarding fair value measurements for assets and liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value and requires certain disclosures about fair value measurements. The provisions apply whenever other accounting pronouncements require or permit fair value measurements. See Note 17, Financial Instruments and Fair Value Measurements, to the Consolidated Financial Statements for the required fair value disclosures.
Accounting for derivative instruments and hedging activities
The Company accounts for derivative instruments and hedging activities in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”), which requires that all derivative instruments be recognized as either assets or liabilities on the balance sheet at fair value. Primarily in the Money Transfer Segment, the Company enters into foreign currency derivative contracts, mainly forward contracts, to offset foreign currency exposure related to money transfer settlement assets and liabilities in currencies other than the U.S. dollar, derivative contracts written to its customers arising from its cross-currency money transfer services and certain assets and liability positions denominated in currencies other than the U.S. dollar. These contracts are considered derivative instruments under the provisions of ASC 815; however, the Company does not designate such instruments as hedges for accounting purposes. Accordingly, changes in the value of these contracts are recognized immediately as a component of foreign currency exchange gain (loss), net in the Consolidated Statements of Income.
Cash flows resulting from derivative instruments are included in operating activities in the Company's Consolidated Statements of Cash Flows. The Company enters into derivative instruments with highly credit-worthy financial institutions and does not use derivative instruments for trading or speculative purposes. See Note 11, Derivative Instruments and Hedging Activities, to the Consolidated Financial Statements for further discussion of derivative instruments.
Revenue recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collection is reasonably assured. The majority of the Company's revenues are comprised of monthly recurring management fees and transaction-based fees. A description of the major components of revenue by business segment is as follows:
EFT Processing -Revenues in the EFT Processing Segment are primarily derived from transaction and management fees and foreign currency exchange margin from owned and outsourced ATM, POS and card processing networks and from the sale of EFT software solutions for electronic payment and transaction delivery systems, and fees or margin earned from value added services, including dynamic currency conversion.
Transaction-based fees include charges for cash withdrawals, debit or credit card transactions, balance inquiries, transactions not completed because the relevant card issuer does not give authorization and prepaid mobile airtime recharges. Outsourcing services are generally billed on the basis of a fixed monthly fee per ATM, plus a transaction-based fee. Transaction-based fees are recognized at the time the transactions are processed and outsourcing management fees are recognized ratably over the contract period.

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Certain of the Company's non-cancelable customer contracts provide for the receipt of up-front fees from the customer and/or decreasing or increasing fee schedules over the agreement term for substantially the same level of services to be provided by the Company. The Company recognizes revenue under these contracts based on proportional performance of services over the term of the contract. This generally results in “straight-line” (i.e., consistent value per period) revenue recognition of the contracts' total cash flows, including any up-front payment received from the customer.
Revenues from the sale of EFT software solutions represent software license fees, professional installation and customization fees, ongoing software maintenance fees, hardware sales and transaction fees. The Company recognizes professional service fee revenue in accordance with the provisions of ASC Topic 985, Software (“ASC 985”)and ASC Topic 605, Revenue Recognition (“ASC 605”). ASC 985 generally requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair values of those elements.
Revenues from software licensing agreement contracts are recognized over the professional services portion of the contract term using the percentage-of-completion method, following the guidance in ASC 605, as prescribed by ASC 985. Software maintenance revenue is recognized over the contractual period or as the maintenance-related service is performed. Revenues from the sale of hardware are generally recognized when title passes to the customer.
epay- Revenue generated in the epay Segment is primarily derived from commissions or processing fees associated with distribution and/or processing of prepaid mobile airtime and other electronic payment products. These fees and commissions are received from mobile phone and other telecommunication operators, top-up distributors, other product vendors or distributors or from retailers. In accordance with ASC 605, commissions received are recognized as revenue during the period in which the Company provides the service. The portion of the commission that is paid to retailers is generally recorded as a direct operating cost. However, in circumstances where the Company is not the primary obligor in the distribution of the electronic payment products, those commissions are recorded as a reduction of revenue. In selling certain products, the Company is the primary obligor in the arrangements; accordingly, the gross sales value of the products are recorded as revenue and the purchase cost as direct operating cost. Transactions are processed through a network of POS terminals and direct connections to the electronic payment systems of retailers. Transaction processing fees are recognized at the time the transactions are processed.
Money Transfer- In accordance with ASC 605, revenues for money transfer and other services represent a transaction fee in addition to a margin earned from purchasing currency at wholesale exchange rates and selling the currency to customers at retail exchange rates. Revenues and the associated direct operating cost are recognized at the time the transaction is processed. The Company has origination and distribution agents in place, which each earn a fee for the respective service. These fees are reflected as direct operating costs.
Share-based compensation
The Company follows the provisions of ASC Topic 718, Compensation - StockCompensation (“ASC 718”), for equity classified awards, which requires the determination of the fair value of the share-based compensation at the grant date and subsequent recognition of the related expense over the period in which the share-based compensation is earned (“requisite service period”).
The amount of future compensation expense related to awards of nonvested shares or nonvested share units (“restricted stock”) is based on the market price for Euronet Common Stock at the grant date. The grant date is the date at which all key terms and conditions of the grant have been determined and the Company becomes contingently obligated to transfer equity to the employee who renders the requisite service, generally the date at which grants are approved by the Company's Board of Directors or Compensation Committee thereof. Share-based compensation expense for awards with only service conditions is generally recognized as expense on a “straight-line” basis over the requisite service period. For awards that vest based on achieving periodic performance conditions, expense is recognized on a “graded attribution method.” The graded attribution method results in expense recognition on a straight-line basis over the requisite service period for each separately vesting portion of an award. The Company has elected to use the “with and without method” when calculating the income tax benefit associated with its share-based payment arrangements. See Note 15, Stock Plans, for further disclosure.

Revenue recognition
The Company recognizes revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales and usage-based taxes are excluded from revenues. A description of the major components of revenue by business segment is as follows:
EFT Processing -Revenues in the EFT Processing Segment are primarily derived from transaction and management fees and foreign currency exchange margin from owned and outsourced ATM, POS and card processing networks and from the sale of EFT software solutions for electronic payment and transaction delivery systems, and fees or margin earned from value added services, including dynamic currency conversion and domestic and international surcharge.

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Transaction-based fees include charges for cash withdrawals, debit or credit card transactions, balance inquiries, transactions not completed because the relevant card issuer does not give authorization and prepaid mobile airtime recharges. Outsourcing services are generally billed on the basis of a fixed monthly fee per ATM, plus a transaction-based fee. Transaction-based fees are recognized at the time the transactions are processed and outsourcing management fees are recognized ratably over the contract period. These fees can be variable based on transaction volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis.
Certain of the Company's non-cancelable customer contracts provide for the receipt of up-front fees from the customer and/or decreasing or increasing fee schedules over the agreement term for substantially the same level of services to be provided by the Company. The Company recognizes revenue under these contracts based on proportional performance of services over the term of the contract. This generally results in “straight-line” (i.e., consistent value per period) revenue recognition of the contracts' total cash flows, including any up-front payment received from the customer.
epay- Revenue generated in the epay Segment is primarily derived from commissions or processing fees associated with distribution and/or processing of prepaid mobile airtime and digital media products. These fees and commissions are received from mobile operators, content vendors or distributors or from retailers. In accordance with ASC 606, commissions are recognized as revenue during the period in which the Company provides the service. The portion of the commission that is paid to retailers is generally recorded as a direct operating cost. However, in circumstances where the Company is not the principle obligor in the distribution of the electronic payment products, those commissions are recorded as a reduction of revenue. In selling certain products, the Company is the principle obligor in the arrangements; accordingly, the gross sales value of the products are recorded as revenue and the purchase cost as direct operating cost. Transactions are processed through a network of POS terminals and direct connections to the electronic payment systems of retailers. Transaction processing fees are recognized at the time the transactions are processed.
Money Transfer- In accordance with ASC 606, revenues for money transfer and other services represent a transaction fee in addition to a margin earned from purchasing currency at wholesale exchange rates and selling the currency to customers at retail exchange rates. Revenues and the associated direct operating cost are recognized at the time the transaction is processed. The Company has origination and distribution agents in place, which each earn a fee for the respective service. These fees are reflected as direct operating costs.
Revenues
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”)
2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”), and subsequently modified the standard with
several ASUs. The Company adopted the standard on January 1, 2018 using the modified retrospective method applied to those
contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are
presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with historic
accounting under Topic 605.

The Company completed its review of customer contracts relative to the requirements of Topic 606 and concluded that revenues from certain customer contracts in the epay Segment should be recorded differently under the principal versus agent guidance of Topic 606. With respect to those contracts, the Company concluded that it earns a commission from content providers for distributing and processing their prepaid mobile airtime and other electronic payment products, but it is not the principal for the products themselves. As a result, the impact of the change in accounting principle was a reduction of $88.5 million in both revenues and direct operating expenses for the year ended December 31, 2018, with no impact on reported net income.

Deferred Revenues - The Company records deferred revenues when cash payments are received or due in advance of its performance. The decrease in the deferred revenue balance for the year ended December 31, 2019 is primarily driven by $41.4 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2018, largely offset by $40.7 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations.

Disaggregation of Revenues - The following table presents the Company's revenues disaggregated by segment and region. 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

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and region. The Company recognizes foreign exchange revenues from derivative instruments in its xe operations in accordance with ASC Topic 815 and not ASC Topic 606. These revenues are not significant to the Company's consolidated revenues and are included in the following tables.

 For the Year Ended December 31, 2019
(in thousands)
EFT
Processing
 epay 
Money
Transfer
 Total
Europe$724,163
 $524,907
 $373,302
 $1,622,372
North America35,461
 151,016
 573,016
 759,493
Asia Pacific129,060
 76,491
 124,934
 330,485
Other28
 16,915
 24,974
 41,917
Eliminations
 
 
 (4,158)
Total$888,712
 $769,329
 $1,096,226
 $2,750,109

 For the Year Ended December 31, 2018
(in thousands)
EFT
Processing
 epay 
Money
Transfer
 Total
Europe$608,993
 $491,282
 $328,592
 $1,428,867
North America32,306
 165,930
 569,005
 767,241
Asia Pacific112,294
 71,242
 127,057
 310,593
Other58
 15,330
 18,308
 33,696
Eliminations
 
 
 (3,768)
Total$753,651
 $743,784
 $1,042,962
 $2,536,629
(1) As noted above, prior period amounts have not been adjusted under the modified retrospective method.

 For the Year Ended December 31, 2017
(in thousands)EFT
Processing
 epay Money
Transfer
 Total
Europe$501,161
 $561,232
 $262,280
 $1,324,673
North America31,469
 63,148
 513,868
 608,485
Asia Pacific101,787
 91,516
 101,005
 294,308
Other142
 18,102
 9,705
 27,949
Eliminations
 
 
 (2,993)
Total$634,559
 $733,998
 $886,858
 $2,252,422
(1) As noted above, prior period amounts have not been adjusted under the modified retrospective method.

Recently issued accounting pronouncements
In January 2017, the FASB issuedThe Company adopted Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill(ASU) 2016-02, Leases (Topic 842), as amended, as of January 1, 2019, using the modified retrospective approach and Other (Topic 350): Simplifyingcomparative periods were not restated. The new standard provides a number of optional practical expedients in transition. The Company elected the Test“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 Consolidated Balance Sheets. In addition, the Company elected the hindsight practical expedient to determine the lease term for Goodwill Impairment.existing leases. The ASU simplifies how an entity is requiredelection 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 period from 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 test goodwill for impairment by eliminating Step 2 from the goodwill impairment test which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. As a result, an impairment charge will be recordedon January 1, 2019 and, thereafter, are included based on the excesslease’s commencement date and termination date. In the application of a reporting unit's carrying amount over its fair value. The amendmentshindsight, the Company evaluated the performance of this ASU are effective for reporting periods beginning after December 15, 2019all the leases and early adoption of this ASU is permitted. The Company elected to adopt this ASU effective with the year ended December 31, 2017 and applied the guidanceassociated markets in relation to the annual impairment test performedCompany’s operations, which resulted in the fourth quarterdetermination that the exercise of 2017.renewal options would not be reasonably certain in determining the expected lease term.
In January 2017,
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Adoption of the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements and related disclosures.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, which provides guidance on the presentation of restricted cash and restricted cash equivalentsnew standard resulted in the statementrecognition of cash flows. Restricted cashadditional operating right of use lease assets and restricted cash equivalents should now be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statementslease liabilities of cash flows. The amendmentsapproximately $269.9 million, as of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. Other than the revised statement of cash flows presentation of restricted cash, the adoption of this ASU is not expected to have an impact on the Company’s consolidated financial statements.January 1, 2019.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The amendments in this ASU state that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory, such as intellectual property and property and equipment, when the transfer occurs. This is a change from current GAAP, which requires companies to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (i.e., depreciation, amortization, or impairment). The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements and related disclosures.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific issues on how certain cash receipts and cash payments are presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect it to have a significant impact on its consolidated financial statements and related disclosures.
In June 2016, the FASBFinancial Accounting Standards Board ("FASB") issued ASU 2016-13,Financial Instruments-CreditInstruments - Credit Losses (Topic 326), 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 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 will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  The Company does not expect the adoption of this ASU tostandard did not have a significant impact on itsthe Company's consolidated financial statements and related disclosures.
In March 2016, FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which addresses how companies account for certain aspects of share-based payments to employees. This ASU requires all excess tax benefits and tax deficiencies be recognized in the statement of income as a component of income tax expense or benefit. The tax effects of exercised, expired or vested awards are treated as discrete items in the reporting period in which they occur and may result in increased volatility in the Company's effective tax rate. As part of the adoption of this standard during the first quarter of 2017, the Company was required to recognize previously unrecognized excess tax benefits on a modified retrospective basis and record an adjustment to deferred tax assets and retained earnings. Additionally, the Company applied the prospective transition method for the presentation of excess tax benefits from a financing activity to an operating activity in the Company’s Consolidated Statements of Cash Flows. Cash paid by the

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Company when directly withholding shares for tax withholding purposes is classified as a financing activity in the Consolidated Statements of Cash Flows. The Company made an accounting election to continue to estimate forfeitures when determining amortization expense of stock-based compensation.
For the year ended December 31, 2017, the adoption of the provisions of this ASU did not have a material impact on the Company’s Consolidated Statement of Income. A cumulative effect adjustment of $40.2 million for previously unrecognized excess tax benefits from prior fiscal years was recognized in beginning Retained earnings as of January 1, 2017. As a result of recognizing this excess tax benefit, the Company recorded a deferred tax asset of $40.2 million and an associated valuation allowance of $38.9 million to beginning Retained earnings. The offsetting deferred tax asset and valuation allowance resulted in a net increase of $1.3 million to beginning Retained earnings at adoption. 
Prior to 2017, excess tax benefits were recognized in additional paid-in capital and tax deficiencies were recognized either as an offset to accumulated excess tax benefits, if any, or in the Consolidated Statements of Income. Excess tax benefits were not recognized until the deduction reduced taxes payable. Additionally, excess tax benefits from stock-based compensation were included in financing activities within the Company’s Consolidated Statements of Cash Flows.
In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments. The new standard clarifies that an entity is required to assess whether the economic characteristics and risks of embedded put or call options are clearly and closely related to those of their debt hosts only in accordance with the four-step decision sequence in ASC 815, Derivatives and Hedging. For contingently exercisable put or call options, an entity does not have to assess whether the event that triggers the ability to exercise a put or call option is related to interest rates or credit risk of the entity. The ASU does not change the existing criteria for determining when bifurcation of an embedded put or call option in a debt instrument is required. The amendments of this ASU are effective for annual periods beginning after December 15, 2016, with early adoption permitted. Entities are required to apply the guidance to existing debt instruments using a modified retrospective transition method as of the period of adoption. The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements and related disclosures.
In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. The new standard specifies that liabilities within its scope are considered to be financial liabilities, and amends the guidance in ASC 405-20, Extinguishments of Liabilities, by directing entities to derecognize prepaid stored-value product liabilities based on expected breakage in proportion to the pattern of rights expected to be exercised by the consumer. Derecognition for breakage is permitted only to the extent that it is probable that a significant reversal of recognized breakage will not subsequently occur. The new standard is consistent with the breakage guidance in the new revenue standard. The ASU is effective for annual periods beginning after December 15, 2017, and is applied either using a modified retrospective transition method or retrospectively. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a significant impact on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases(Topic 842), which will update the existing guidance on accounting for leases and require new qualitative and quantitative disclosures about the Company’s leasing activities. The new standard requires lessees to account for all leases on the balance sheet, except for certain short-term leases that have a maximum possible lease term of 12 months. The accounting for lessors is largely unchanged from the previous accounting guidance, except for leverage lease accounting which is not permitted for leases entered into or modified after the effective date of the new standard. The new standard is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that the Company may elect to apply. The Company is currently evaluating the expected impact of the adoption of this standard on its consolidated financial statements and related disclosures.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect that the adoption of this standard will have a significant impact on its consolidated financial statements and related disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of the effective date of the new revenue recognition standard. The new standard became effective for the Company on January 1, 2018.The standard permits the use of either the full retrospective or modified retrospective transition method.

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In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) - Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow Scope Improvements and Practical Expedients. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (Topic 606). These ASUs clarify the implementation guidance on a few narrow areas, make minor corrections and adds some practical expedients to the guidance in Topic 606.
Lastly, in February 2017, the FASB issued ASU 2017-05, Other Income -Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which clarifies the scope of asset derecognition guidance and provides guidance on partial sales of nonfinancial assets. This ASU clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and defines the term, “in-substance nonfinancial asset.” This ASU must be adopted at the same time as ASC 606.
The Company has continued its review of the requirements of the new revenue standard and currently does not expect the new revenue standard will have a material impact on the timing of revenue recognition on its consolidated financial statements or a material impact from the recognition of costs to obtain and/or fulfill a contract. The implementation team has reported preliminary findings to management and the Audit Committee and will continue to assess all potential effects of the standard. The Company is finalizing the review of certain customer contracts, principally in the epay segment, and currently believes the principal versus agent guidance will affect the presentation and classification of revenue for certain arrangements and estimates its revenue would have been approximately $25 million lower in 2017 to $75 million greater in 2017 and will not have an impact on net income. The Company will finalize its assessment of the effect the new revenue standard will have on its consolidated financial statements and will adopt the new standard in the first quarter of 2018 using the modified retrospective transition method.
(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 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 the potential dilution of options to purchase the Company's Common Stock, assumed vesting of restricted stock and the assumed conversion of the Company's convertible debt.


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

 Year Ended December 31,
  2019 2018 2017
Computation of diluted weighted average shares outstanding:      
Basic weighted average shares outstanding 53,449,834
 51,487,557
 52,523,272
Incremental shares from assumed exercise of stock options and vesting of restricted stock 1,464,053
 1,499,713
 1,793,375
Incremental shares from assumed conversion of convertible debentures 
 1,640,477
 799,680
Diluted weighted average shares outstanding 54,913,887
 54,627,747
 55,116,327


 Year Ended December 31,
  2017 2016 2015
Computation of diluted weighted average shares outstanding:      
Basic weighted average shares outstanding 52,523,272
 52,276,951
 52,274,573
Incremental shares from assumed exercise of stock options and vesting of restricted stock 1,793,375
 1,705,224
 1,783,199
Incremental shares from assumed conversion of convertible debentures 799,680
 18,904
 18,904
Diluted weighted average shares outstanding 55,116,327
 54,001,079
 54,076,676


The table includes all stock options and restricted stock that are dilutive to the Company's weighted average common shares outstanding during the period. The calculation of diluted earnings per share excludes stock options or shares of restricted stock that are anti-dilutive to the Company's weighted average common shares outstanding for the years ended December 31, 20172019, 20162018 and 20152017 of approximately 798,000380,000, 616,000458,000 and 568,000798,000, respectively.
During 2017, 2016
The Company issued new Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019 and 2015,retired the Company hadexisting convertible notes outstanding("Retired Convertible Notes") that if converted, couldwould have a potentially dilutive effectmatured in 2044 on its Common Stock.May 28, 2019. The Company's convertible notesConvertible Notes currently have, and the Retired Convertible Notes had, a settlement featuresfeature requiring the Company upon conversion to settle the principal amount of the debt and theany 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. At issuance, theThe Company has stated its

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intent to settle any conversion of these notes by paying cash for the principal value and issuing Common Stockcommon stock for any conversion premium. Accordingly, the convertible notes areConvertible Notes and the Retired Convertible Notes were included in the calculation of diluted earnings per share if their inclusion iswas dilutive. The convertible notesdilutive effect increases the more the market price exceeds the conversion price. The Retired Convertible Notes had a dilutive effect for the years ended December 31, 2018 and 2017 as the $102.38 and $84.27 market price per share of Common Stock as of December 31, 2018 and 2017 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 $72.18$188.73 per share and the dilutive effect increases the more the market price exceeds the conversion price. As of December 31, 2017, and currently, the Company maintains the intent and ability to settle any conversion as stated. As of December 31, 2017, 2016 and 2015, the stock price exceeded the conversion price and these notes were dilutive to earnings per share. Further, as a result of the share price increasing from $72.43 as of December 31, 2016 and 2015 to $84.27 as of December 31, 2017, there was an increase in shares from the assumed conversion of convertible notes.
Accordingly, the convertible notes would only have a dilutive effect if the market price per share of Common Stock exceeds the conversion price per share of Common Stock. Therefore, according to ASC Topic 260, Earnings per Share (“ASC 260”), the there was no dilutive effect of the assumed conversion of the debentures as of December 31, 2019, whereas the dilutive effect was 1,640,477 and 799,680 shares for the year ended December 31, 2017 and 18,904 for the years ended December 31, 20162018 and 2015.2017, respectively. See Note 10, Debt Obligations, to the Consolidated Financial Statements for more information about the convertible notes.
Share repurchases
In January 2016, the Company announced that itsThe Company's Board of Directors has authorized a stock repurchase program ("2016 Program") allowing the Company to repurchase up to $100 million in value or 5.0 million shares of its common stock through December 10, 2017. For the year end December 31, 2016, the Company repurchased 1.1 million shares at a weighted average purchase price of $65.74 for a total value of $75.6 million under the 2016 Program.
In June 2016, the Board of Directors authorized an additional stock repurchase program ("Repurchase Program") with an effective date of July 28, 2016,, allowing Euronet to repurchase up to $125 million in value or 3.0 million shares of its common stock through June 14, 2018. In December 2017, the Board of Directors amended the Repurchase Program, allowing Euronet to repurchase up to $250 million in value or 6.0 million shares of its common stock through December 31, 2019. On February 27, 2018, the Repurchase Program was further amended to increase the amount of common stock that may be purchased to an aggregate of $375 million in value or 10.0 million shares of stock and extending the expiration date of the Repurchase Program tothrough March 31, 2020. On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of

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$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 five million shares of common stock through February 28, 2022. Repurchases under the Repurchase Programeither 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. No purchases were made under this plan during 2016 or 2017. The Company put a repurchase plan in place effective January 2, 2018 and as ofFor the date of this filing,year ended December 31, 2019, the Company has repurchased $125.0$70.9 million in value of Euronet Common Stock under the Repurchase Program. For the year ended December 31, 2018, the company repurchased $175 million in value of Euronet common stock under the Repurchase Program. No repurchases were made during 2017.
Preferred Stock
The Company has the authority to issue up to 10 million shares of preferred stock, of which no shares are currently issued or outstanding.
Accumulated other comprehensive loss
As of December 31, 20172019 and 20162018, accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. For the year ended December 31, 2017, theThe Company recorded a foreign currency translation loss of $13.9 million, a loss of $56.7 million and a gain of $116.4 million, and recorded losses of $45.2 million and $67.8 million for the years ended December 31, 20162019, 2018, and 2015,2017, respectively. There were no reclassifications of foreign currency translation into the Consolidated Statements of Income for the years endingended December 31, 20172019, 2018, and 2016. During 2015,2017.
Dividends
No dividends was paid on any class of the Company reclassified $0.8 million of foreign currency translation into the Consolidated Statements of Income.Company's stock during 2019, 2018, and 2017.


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(5) Acquisitions


In accordance with ASC 805, the Company allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired based on fair values. Any excess purchase price over those fair values is recorded as goodwill. The fair value assigned to intangible assets acquired is supported by valuations using estimates and assumptions provided by management. For certain large acquisitions, management engages an appraiser to assist in the valuation process.
2016 Acquisition2019 Acquisitions
YourCash
On October 3, 2016,November 30, 2019, the Company completed the acquisition of the capital stock of YourCash Europe Limited and its subsidiaries ("YourCash"), a U.K.North American based ATM operator with approximately 5,000 ATMs across the U.K., Netherlands, Belgium and Ireland. The acquisition provides the Company with additional experience and manpower in key Western European markets and a greater access to retailers in the U.K. and Netherlands.1,800 ATMs.

The purchase price for YourCash was approximately $62.6$92.5 million in cash. Approximately $7.2$10.1 million of the cash consideration was placed in escrow accounts to satisfy indemnification and working capital obligations of the seller, pursuant to the terms of the purchase agreement. In addition, the agreement calls for deferred consideration of $3.2 million payable over three years at a rate of one-third per year to employee shareholders of YourCash who remain employed with the Company. The deferred consideration is accounted for separately from the acquisition and will be recognized as compensation over the service period.

The purchase price was preliminarily allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the date of acquisition. The revenueacquisition has been accounted for as business combinations in accordance with U.S. GAAP and earningsthe results of YourCash foroperations have been included from the year ended December 31, 2016 were not material nor weredate of acquisition in the EFT Processing Segment. The historical revenue and earnings of YourCash materialwere not significant for the purpose of presenting pro forma information for the current or prior-year periods.



















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The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date.
(in thousands) As of October 3, 2016
Cash and cash equivalents $5,223
Restricted cash 12,351
Other current assets 2,394
Property and equipment 12,514
Intangible assets 24,571
Total assets acquired 57,053
   
Trade accounts payable (3,323)
Short-term borrowings (12,535)
Accrued expenses and other current liabilities (5,077)
Deferred tax liabilities (5,462)
Other long-term liabilities (475)
Total liabilities assumed (26,872)
   
Goodwill 32,429
   
Net assets acquired $62,610

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(in thousands) As of November 30, 2019
Cash and cash equivalents $5,325
Trade accounts receivable 2,167
Other current assets 798
Property and equipment 16,542
Intangible assets 39,000
Total assets acquired $63,832
   
Trade accounts payable $(6,790)
Accrued expenses and other current liabilities (80)
Total liabilities assumed $(6,870)
   
Goodwill 35,540
   
Net assets acquired $92,502

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The Company acquired customer relationship intangible assets with a preliminary fair value of YourCash$39.0 million, which are being amortized on a straight-line basis and the fair values consist of the following:over 20 years.
(in thousands) Fair Value 
Estimated
Useful Life
Customer relationships $23,506
 14 - 20 years
Trade names 428
 2 years
Non-compete agreements 637
 3 years
Total intangible assets $24,571
  

Goodwill, with a preliminary value of $32.4$35.5 million, arising from the acquisition was included in the EFT Processing Segment and was attributable to expected growth opportunities in Europe.the United States. Goodwill and intangible assets associated with this acquisition are not deductible for tax purposes.

Other
During the fourth quarter of 2016, theThe Company completed three acquisitions for immaterial amounts.

2018 Acquisitions
The Company completed the acquisitionacquisitions of Tuatara Management Limitedtwo small European businesses for an insignificantimmaterial amount of cash consideration.consideration, completing one acquisition in the first quarter of 2018 and completing the other acquisition in the second quarter of 2018. The acquisition hasacquisitions have been accounted for as a business combinationcombinations in accordance with U.S. GAAP and the results of operations have been included from the daterespective dates of acquisition in the Money TransferEFT Processing Segment.
2015 Acquisitions
xe Corporation
On July 2, 2015, the Company completed the acquisition of all of the capital stock of xe Corporation and its subsidiaries ("xe"). xe is a Canadian company which operates the xe.com and x-rates.com websites, providing currency-related data and international payments services. This acquisition provides Euronet an internationally recognized brand and a large Internet presence in which to offer its foreign currency products.
Under the terms of the agreement, the xe sellers received purchase consideration of $79.9 million in cash, including working capital adjustments, and 642,912 shares of Euronet common stock, with a fair value at date of acquisition of $40.1 million.
During the first quarter of 2016, the Company completed its valuation of the acquired assets and liabilities, which included an adjustment to goodwill of $3.9 million.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date.
(in thousands) As of July 2, 2015
Cash and cash equivalents $1,872
Other current assets 1,294
Intangible assets 19,269
Other long-term assets 341
Deferred tax assets 161
Total assets acquired 22,937
   
Trade accounts payable (26)
Accrued expenses and other current liabilities (11,824)
Other long-term liabilities (571)
Total liabilities assumed (12,421)
   
Goodwill 109,460
   
Net assets acquired $119,976


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The intangible assets of xe are being amortized on a straight-line basis, and the fair values consist of the following:

(in thousands) Fair Value 
Estimated
Useful Life
Proprietary software $2,051
 5 years
Customer relationships 13,765
 8 years
Trade names 3,237
 20 years
Non-compete agreements 216
 3 years
Total intangible assets $19,269
  
The intangible asset amounts are expected to be deductible for income tax purposes, but the goodwill amount is not. Pro-forma results of operations, assuming this acquisition was made at the beginning of the earliest period presented, have not been presented because the effect of this acquisition was not material to the Company's results of operations. The net assets of xe and its results of operations are included in the Money Transfer Segment's results.
IME
On June 17, 2015, the Company completed the acquisition of all of the capital stock of IME (M) Sdn Bhd and certain affiliated companies ("IME"). IME is a leading Malaysian-based money transfer provider and provided the Money Transfer Segment with immediate entry into the Asian and Middle East send markets.
Under the terms of the purchase agreement, the sellers received purchase consideration of $78.9 million in cash, including estimated working capital adjustments, and 49,941 shares of Euronet common stock, with a fair value at date of acquisition of $3.0 million. A portion of the purchase consideration was placed in escrow at closing as security for the sellers' indemnification and other obligations under the purchase agreement. Any purchase consideration remaining in escrow will be released to the sellers at various defined dates over five years following the closing date, net of any pending indemnification or other claims under the purchase agreement.
In the first quarter of 2016, the Company adjusted the purchase price allocation to included a net adjustment to goodwill of $1.3 million, which resulted from a working capital adjustment and the finalization of the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date.
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date.
(in thousands) As of June 17, 2015
Cash and cash equivalents $33,279
Other current assets 21,566
Intangible assets 36,250
Other long-term assets 5,327
Total assets acquired 96,422
   
Trade accounts payable (2,766)
Accrued expenses and other current liabilities (2,743)
Settlement obligations and customer deposits (30,540)
Deferred tax liabilities (9,063)
Other long-term liabilities (858)
Total liabilities assumed (45,970)
   
Goodwill 31,443
   
Net assets acquired $81,895


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The intangible assets of IME are being amortized on a straight-line basis, and the fair values consist of the following:

(in thousands) Fair Value 
Estimated
Useful Life
Customer relationships $35,360
 8 years
Trade names 450
 2 years
Non-compete agreements 440
 5 years
Total intangible assets $36,250
  
None of the goodwill or intangible asset amounts are expected to be deductible for income tax purposes. Pro-forma results of operations, assuming this acquisition was made at the beginning of the earliest period presented, have not been presented because the effect of this acquisition was not material to the Company's results of operations. Additionally, the cumulative effect of the IME acquisitions was not material to the Company's results of operations. The net assets of IME and its results of operations are included in the Money Transfer Segment's results.


(6) Restricted Cash


The restricted cash balances as of December 31, 20172019 and 20162018 were as follows:
  As of December 31,
(in thousands) 2019 2018
Cash held in trust and/or cash held on behalf of others $34,301
 $31,237
Restricted cash $34,301
 $31,237
     
Cash held in trust and/or cash held on behalf of others $44,366
 $35,926
Collateral on bank credit arrangements and other 4,802
 9,432
Restricted cash included within settlement assets $49,168
 $45,358
     
Total Restricted Cash $83,469
 $76,595



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  As of December 31,
(in thousands) 2017 2016
Cash held in trust and/or cash held on behalf of others $67,541
 $64,438
Collateral on bank credit arrangements and other 13,833
 13,236
Total $81,374
 $77,674


Cash held in trust and/or cash held on behalf of others is in connection with the administration of the customer collection and vendor remittance activities by certain subsidiaries within the Company's epay and EFT Processing Segments. Amounts collected on behalf of certain mobile phone operators and/or merchants are deposited into a restricted cash account. The bank credit arrangements primarily represent cash collateral on deposit with commercial banks to cover guarantees.


(7)    Property and Equipment, Net


The components of property and equipment, net of accumulated depreciation and amortization as of December 31, 20172019 and 20162018 are as follows:


  As of December 31,
(in thousands) 2019 2018
ATMs $474,611
 $378,009
POS terminals 38,235
 36,521
Vehicles and office equipment 64,970
 66,117
Computers and software 191,172
 183,150
Land and buildings 1,235
 1,252
  770,223
 665,049
Less accumulated depreciation (410,243) (373,180)
Total $359,980
 $291,869

  As of December 31,
(in thousands) 2017 2016
ATMs $329,159
 $222,183
POS terminals 41,218
 40,336
Vehicles and office equipment 68,231
 61,923
Computers and software 168,567
 138,249
Land and buildings 1,256
 1,924
  608,431
 464,615
Less accumulated depreciation and amortization (340,128) (262,470)
Total $268,303
 $202,145


Depreciation and amortization expense related to property and equipment, including property and equipment recorded under capitalfinance leases, for the years ended December 31, 20172019, 20162018 and 20152017 was $63.4$83.5 million, $48.575.1 million and $40.263.4 million, respectively.



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(8) Goodwill and Acquired Intangible Assets, Net


Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the underlying net tangible and intangible assets acquired. The following table summarizes intangible assets as of December 31, 20172019 and 2016:2018:


  As of December 31, 2019 As of December 31, 2018
(in thousands) 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Gross Carrying
Amount
 
Accumulated
Amortization
Customer relationships $240,027
 $(139,319) $199,581
 $(133,863)
Trademarks and trade names 45,347
 (28,123) 45,233
 (25,837)
Software 59,244
 (35,362) 58,515
 (29,420)
Non-compete agreements 2,082
 (2,049) 2,076
 (1,800)
Total $346,700
 $(204,853) $305,405
 $(190,920)



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  As of December 31, 2017 As of December 31, 2016
(in thousands) 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Gross Carrying
Amount
 
Accumulated
Amortization
Customer relationships $207,133
 $(124,967) $199,842
 $(107,820)
Trademarks and trade names 56,273
 (25,768) 53,396
 (21,598)
Software 62,384
 (25,142) 58,696
 (18,291)
Non-compete agreements 3,895
 (3,265) 3,744
 (2,638)
Total $329,685
 $(179,142) $315,678
 $(150,347)


The following table summarizes the goodwill and amortizable intangible assets activity for the years ended December 31, 20172019 and 2016:2018:
  (in thousands) 
Acquired
Intangible
Assets
 Goodwill 
Total
Intangible
Assets
Balance as of January 1, 2018 $150,543
 $717,386
 $867,929
Increases (decreases):  
  
  
Acquisitions 
 20,742
 20,742
Impairment (7,049) 
 (7,049)
Amortization (22,562) 
 (22,562)
Other (primarily changes in foreign currency exchange rates) (6,447) (33,931) (40,378)
Balance as of December 31, 2018 114,485
��704,197
 818,682
Increases (decreases):      
Acquisitions 46,246
 35,305
 81,551
Impairment 
 
 
Amortization (20,374) 
 (20,374)
Other (primarily changes in foreign currency exchange rates) 1,490
 4,321
 5,811
Balance as of December 31, 2019 $141,847
 $743,823
 $885,670

  (in thousands) 
Acquired
Intangible
Assets
 Goodwill 
Total
Intangible
Assets
Balance as of January 1, 2016 $167,972
 $685,178
 $853,150
Increases (decreases):  
  
  
Acquisitions 33,921
 29,871
 63,792
Amortization (25,503) 
 (25,503)
Other (primarily changes in foreign currency exchange rates) (11,059) (25,336) (36,395)
Balance as of December 31, 2016 165,331
 689,713
 855,044
Increases (decreases):      
Impairment (2,286) (31,770) (34,056)
Amortization (24,527) 
 (24,527)
Other (primarily changes in foreign currency exchange rates) 12,025
 59,443
 71,468
Balance as of December 31, 2017 $150,543
 $717,386
 $867,929
The Company performs its annual goodwill impairment test during the fourth quarter of each year. The annual goodwill impairment test completed during the fourth quarter of 20172019 resulted in no impairment charges of $31.8 million.
2017 Impairment Charges
The results from the fourth quarter 2017 goodwill impairment test reflected continuing declines in profitability for the epay reporting units in the U.S., the U.K. and the Middle East. The U.S. reporting unit has realized declining revenues in recent years which accelerated during 2017 due to unfavorable developments in the arrangements with a number of mobile operators. The U.K. reporting unit operates in a mature market for mobile airtime top-up services and has realized declining revenues from those services while only realizing modest compensating revenues from providing non-mobile products. The Middle East reporting unit has a few large customers and has realized declines in the number of transactions processed for them. While the reporting unit has introduced new non-mobile products in these markets, the growth of those products is not expected to compensate for the loss of transaction processing volumes. In light of these developments, duringcharges. During the fourth quarter of 2017,2018, the Company recorded goodwilla $7.0 million non-cash impairment charges of $13.7 million related to the U.S., $8.8 million related to the U.K. and $9.3 million related to the Middle East.
In performing the annual goodwill impairment test, management must apply judgment in determining the estimated fair value of a business and uses all available information to make these fair value determinations, including discounted projected future cash flow analysis using discount rates commensurate with the risks involved in the assets, together with comparable sales prices that the Company or another purchaser would likely paycharge for the respective assets.
Additionally, in the second quarter of 2017, the Company recorded an acquired intangible assets, impairment charge of $2.3 millionspecifically the HiFX trade name, related to certain customer relationships as a result ofrebranding the closure of the Pure Commerce office in South Korea within the EFT Processing Segment.HiFX business to xe.

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Of the total goodwill balance of $717.4$743.8 million as of December 31, 20172019, $490.4474.7 million relates to the Money Transfer Segment, $135.8128.9 million relates to the epay Segment and the remaining $91.2140.2 million relates to the EFT Processing Segment. Amortization expense for intangible assets with finite lives was $20.4 million, $22.6 million and $24.5 million, $25.5 million and $23.9 million for the years ended December 31, 20172019, 20162018 and 20152017, respectively. Estimated annual amortization expense, before income taxes, on intangible assets with finite lives as of December 31, 20172019, is expected to total $23.023.1 million for 2018, $22.02020, $22.2 million for 2019, 2021, $21.221.1 million for 2020, 2022, $20.216.3 million for 20212023 and $19.29.8 million for 2022.2024.


(9) Accrued Expenses and Other Current Liabilities


The balances as of December 31, 20172019 and 20162018 were as follows:


  As of December 31,
(in thousands) 2019 2018
Accrued expenses $246,699
 $210,997
Derivative liabilities 41,935
 36,102
Current portion of finance lease obligations 5,919
 5,458
Deferred income taxes 4
 
Total $294,557
 $252,557




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  As of December 31,
(in thousands) 2017 2016
Accrued expenses $301,390
 $210,275
Accrued amounts due to mobile operators and other content providers 92,291
 121,505
Money transfer settlement obligations 343,613
 219,601
Derivative liabilities 22,495
 63,772
Total $759,789
 $615,153



(10) Debt Obligations


Debt obligations consist of the following as of December 31, 20172019 and 20162018:
  As of December 31,
(in thousands) 2019 2018
Credit Facility:    
Revolving credit agreements $
 $215,725
Convertible Debt:    
0.75% convertible notes, unsecured, due 2049 436,965
 
1.50% convertible notes, unsecured, due 2044 
 379,859
     
1.375% Senior Notes, due 2026 673,440
 
     
Other obligations 6,215
 38,513
     
Total debt obligations $1,116,620
 $634,097
Unamortized debt issuance costs (19,592) (6,298)
Carrying value of debt $1,097,028
 $627,799
Short-term debt obligations and current maturities of long-term debt obligations (6,089) (38,017)
Long-term debt obligations $1,090,939
 $589,782

  As of December 31,
(in thousands) 2017 2016
Credit Facility:    
Term loan, due 2019 $51,094
 $60,000
Revolving credit agreements, due 2019 3,000
 159,963
  54,094
 219,963
Convertible Debt:    
1.50% convertible notes, unsecured, due 2044 369,259
 358,293
     
Other obligations 27,763
 23,892
     
Total debt obligations $451,116
 $602,148
Unamortized debt issuance costs (5,816) (8,324)
Carrying value of debt $445,300
 $593,824
Short-term debt obligations and current maturities of long-term debt obligations (41,288) (32,161)
Long-term debt obligations $404,012
 $561,663


As of December 31, 2017,2019, aggregate annual maturities of long-term debt are $13.6$6.1 million in 2018, $40.62020, $0.1 million due in 2019, $402.5 million in 20202021, no maturities between 2022 and none2024, and $1.2 billion thereafter. This maturity schedule reflects the term loan and revolving credit facilitiesfacility maturing in 2019 and2023 the convertible notesConvertible Notes maturing in 2020,2025, coinciding with the terms of the initial put option by holders of the notes.Convertible Notes. It also reflects the maturing of the 1.375% Senior Note of €600 million ($673.4 million) due in 2026.
Credit Facility
TheIn the early fourth quarter of 2018, the Company has aearly retired the senior secured revolving bank credit facility (the "Credit Facility") with a syndicate of financial institutions whichinstitutions. The Credit Facility was subsequently replaced by a new unsecured credit agreement for $1.0 billion that expires April 9, 2019. The senior secured credit facility (the "Credit Facility") provides an aggregate amount of $675 million, consisting of a $590 million five-year revolving credit facility, a $10 million five-year India revolving credit facility and a $75 million five-year term loan which has been reduced to $51.1 million as of December 31, 2017 through principal amortization payments. The revolving

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credit facility allows for borrowings in U.S. dollars, euro, British pound sterling, Australian dollars and/or Indian rupees. The revolving credit facility contains a $200 million sublimit for the issuance of letters of credit and a $25 million sublimit for swingline loans.
on October 17, 2023. Fees and interest on borrowings varyare based upon the Company's consolidated total leverage ratio (as defined in the amendedcorporate credit rating and restated credit agreement) and will beare 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 1.375%1.125% to 2.375%2.0% (or 0.375%0.175% to 1.375%1.0% for base rate loans). The unsecured credit agreement 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 U.S. Dollars. The revolving credit facility contains a $200 million sublimit for the issuance of letters of credit, a $50 million sublimit for U.S. Dollar swingline loans, and a $90 million sublimit for certain foreign currencies swingline loans.
The retired Credit Facility provided an aggregate amount of $675 million, consisting of a $590 million five-year revolving credit facility, a $10 million five-year India revolving credit facility and a $75 million five-year term loan. Fees and interest on borrowings varied based upon the Company's consolidated total leverage ratio (as defined in the amended and restated credit agreement) and were based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over LIBOR or a margin over the base rate, as selected by the Company, with the applicable margin ranging from 1.375% to 2.375% (or 0.375% to 1.375% for base rate loans). The base rate is the highest of (i) the Bank of America prime rate, (ii) the Federal Funds rate plus 0.50% or (iii) the Fixed LIBOR rate plus 1.00%. The term loan iswas subject to scheduled quarterly amortization payments, as set forth in the amended and restated credit agreement. The maturity date for the Credit Facility is April 9, 2019, at which time the outstanding principal balance and all accrued interest will be due and payable in full. The weighted average interest rates of the Company's borrowings under the term loan and revolving credit facility were 2.9% and 2.8%, respectively, as of December 31, 2017, and 2.1% and 2.4%, respectively as of December 31, 2016.
As of December 31, 20172019 and 2016,2018, the Company had stand-by letters of credit/bank guarantees outstanding against the revolving credit facilityfacilities of $57.3$53.0 million and $44.9$47.1 million,, respectively. Stand-by letters of credit/bank guarantees reduce the Company's borrowing capacity under the revolving credit facility and are generally used to secure trade credit and performance obligations. The Company pays an interest rate for stand-by letters of credit/bank guarantees at a rate that may adjust each quarter based upon the Company's consolidated total leverage ratio. As of December 31, 20172019 and 2016,2018, the stand-by letters of credit interest charges were 1.4%each 1.1% per annum.annum, respectively.

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The amended and restatedunsecured credit agreement contains customary affirmative and negative covenants, events of default and financial covenants, including: (i) as of the end of each fiscal quarter ended on March 31, September 30 and December 31, a Consolidated Total Leverage Ratio not to exceed 4.0be greater than 3.5 to1.0; (ii) as of the end of each fiscal quarter ended on June 30, a Consolidated Total Leverage Ratio not to 1.0;be greater than 4.0 to1.0; provided that, not more than two times prior to the expiration date, that a Material Acquisition has been consummated, for any period of four consecutive fiscal quarters following such Material Acquisition, the Consolidated Total Leverage Ratio will be not greater than 4.0 to1.0 for fiscal quarters ended on March 31, September 30 and December 31 and not greater than 4.5 to1.0 for fiscal quarters ended on June 30; provided, further, that following such four consecutive fiscal quarters for which the maximum Consolidated Total Leverage Ratio is increased, the maximum Consolidated Total Leverage Ratio shall revert to the levels set forth in clauses (i) and (ii) above for not fewer than two fiscal quarters before a subsequent Increase Notice is delivered to the syndicate of financial institutions; and (iii) a Consolidated Fixed ChargeInterest Coverage Ratio of not less than 1.54.0 to 1.0. Subject to meeting certain leverage ratio and liquidity requirements as contained in the amended and restatedunsecured credit agreement, the Company is permitted to pay dividends, repurchase common stock and repurchase subordinated debt. The Company was in compliance with all debt covenants, as of December 31, 2019.
The Company and certain subsidiaries have guaranteed the repayment of obligations under the Credit Facility and have granted pledgescredit agreement.
Uncommited Line of the shares of certain subsidiaries along with a security interest in certain other personal property collateral ofCredit
During 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 certain subsidiaries.the agreement expires September 4, 2020. As of December 31, 2019, no amounts were outstanding under the line of credit.
Convertible Debt
On October 30, 2014,March 18, 2019, the Company completed the sale of $402.5$525.0 million of Convertible Senior Notes due 2044 (“("Convertible Notes”Notes"). The Convertible Notes have an interest rate of 1.5% per annum payable semi-annuallymature in April and October,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 $72.18$188.73 per share if certain conditions are met (relating to the closing pricesprice of Euronet Common Stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require the Company to purchase their notes on each of March 15, 2025, March 15, 2029, March 15, 2034, March 15, 2039 and March 15, 2044 at par on October 1, 2020, and have additional optionsa repurchase price equal to require the Company to purchase their notes at par on October 1, 2024, 2029, 2034, and 2039, or upon a change in control100% of the Company.principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In connection with the issuance of the Convertible Notes, the Company recorded $10.7$12.8 million in debt issuance costs, which are being amortized through OctoberMarch 1, 2025.

The Company may not redeem the Notes prior to September 20, 2022. The Company may redeem for cash all or any portion 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. In addition, if a fundamental change, as defined in the Indenture, occurs prior to 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 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of December 31, 2019 the conversion threshold was not met and the Convertible Notes were not convertible during the first quarter of 2020.

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 inpaid-in capital of $66.1 million.$99.7 million for the Convertible Notes.

The Company used $94.2 million of the net proceeds from the issuance of the new debt to repurchase $49 million aggregate principal amount of the Company's 1.5% Convertible Senior Notes due 2044 (the "Retired Convertible Notes") from a limited number of holders in privately negotiated transactions.

On March 18, 2019, the Company provided a notice of redemption to the trustee of the indenture governing the Retired Convertible Notes (the "Existing Indenture"), 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

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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 December 31, 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 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 for the year ended December 31, 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. The Company is using the remainder of the net proceeds from the issuance of the Convertible Notes to finance the further growth of the business.

Contractual interest expense for the Retired Convertible Notes was $1.5 million and $6.0 million for each of the yearsyear ended December 31, 2017, 20162019 and 2015. Discount accretion2018, respectively. Accretion expense was $11.0 million, $10.4 million and $9.9$4.6 million for the yearsyear ended December 31, 2017, 20162019 and 2015, respectively. As of$11.5 million for the year ended December 31, 2017 and 2016,2018.

Contractual interest expense for the unamortized discounts were $33.2Convertible Notes was $3.1 million and $44.2for the year ended December 31, 2019. Accretion expense was $11.6 million respectively. The discount will be amortized through October 1, 2020.for the year ended December 31, 2019. The effective interest rate was 4.7%4.4% for the yearsyear ended December 31, 20172019. As of December 31, 2019, the unamortized discount was $88.0 million and 2016.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 December 31, 2019, the Company has outstanding €600 million ($673.4 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 December 31, 20172019 and 2016,2018, borrowings under these arrangements were $27.8$6.2 million and $23.9$38.5 million, respectively. As of December 31, 2017,2019, there was $27.7$6.2 million due in 20182020 under these other obligation arrangements.



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(11) Derivative Instruments and Hedging Activities


The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) certain foreign currency denominated other asset and liability positions. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC 815, primarilydue to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates are reflected concurrently in earnings for both the derivative instrument and the transaction and have an offsetting effect.
Foreign currency exchange contracts - Ria Operations and Corporate
In the United States, the Company uses short-duration foreign currency forward contracts, generally with maturities up to 14 days, to offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction and its settlement. Due to the short duration of these contracts and the Company’s credit profile, the Company is generally not required to post collateral with respect to these foreign currency forward contracts. Most derivative contracts

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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 December 31, 2017,2019 and 2018, the Company had foreign currency forward contracts outstanding in the U.S. with a notional value of $132.0$159.0 million and $251.1 million, respectively. 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 short-term borrowings that are payable in currencies other than the U.S dollar. As of December 31, 2017,2019 and 2018, the Company had foreign currency forward contracts outstanding with a notional value of $39.5$43 million and $64.3 million, respectively, primarily in British pounds, euros and Polish zloty.euros.


Foreign currency exchange contracts - HiFXxe Operations
HiFXxe, 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. HiFXxe aggregates its foreign currency exposures arising from customer contracts and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from HiFX'sxe's total portfolio of positions were $72.5$18.9 million, $66.0$69.2 million and $62.8$72.5 million for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, respectively. All of the derivative contracts used in the Company' s HiFXxe operations are economic hedges and are not designated as hedges under ASC 815. The duration of these derivative contracts is generally less than one year.
The fair value of HiFX'sxe'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. HiFXxe 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. HiFXxe 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 HiFXxe operations as of December 31, 20172019 and 2018, was approximately $1.3 billion.$1.2 billion and $1.8 billion, respectively. The significant majority of customer contracts are written in major currencies such as the euro, U.S. dollar, British pound, Australian dollar and New Zealand dollar.


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Balance Sheet Presentation


The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the dates below:


  Asset Derivatives Liability Derivatives
    Fair Value   Fair Value
(in thousands) Balance Sheet Location December 31, 2019 December 31, 2018 Balance Sheet Location December 31, 2019 December 31, 2018
Derivatives not designated as hedging instruments            
Foreign currency exchange contracts Other current assets $54,765
 $44,637
 Other current liabilities $(41,935) $(36,102)

  Asset Derivatives Liability Derivatives
    Fair Value   Fair Value
(in thousands) Balance Sheet Location December 31, 2017 December 31, 2016 Balance Sheet Location December 31, 2017 December 31, 2016
Derivatives not designated as hedging instruments            
Foreign currency exchange contracts Other current assets $36,574
 $75,307
 Other current liabilities $(22,495) $(63,772)


The following tables summarize the gross and net fair value of derivative assets and liabilities as of December 31, 20172019 and 20162018 (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 December 31, 2017 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 December 31, 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
Derivatives subject to a master netting arrangement or similar agreement $36,574
 $
 $36,574
 $(15,050) $(7,603) $13,921
 $54,765
 $
 $54,765
 $(34,935) $(7,362) $12,468
                        
As of December 31, 2016            
As of December 31, 2018            
Derivatives subject to a master netting arrangement or similar agreement $75,307
 $
 $75,307
 $(49,752) $(7,562) $17,993
 $44,637
 $
 $44,637
 $(25,187) $(9,918) $9,532
Offsetting of Derivative Liabilities
        Gross Amounts Not Offset in the Consolidated Balance Sheet  
As of December 31, 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
Derivatives subject to a master netting arrangement or similar agreement $(41,935) $
 $(41,935) $34,935
 $827
 $(6,173)
             
As of December 31, 2018            
Derivatives subject to a master netting arrangement or similar agreement $(36,102) $
 $(36,102) $25,187
 $2,048
 $(8,867)

        Gross Amounts Not Offset in the Consolidated Balance Sheet  
As of December 31, 2017 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 $(22,495) $
 $(22,495) $15,050
 $2,716
 $(4,729)
             
As of December 31, 2016            
Derivatives subject to a master netting arrangement or similar agreement $(63,772) $
 $(63,772) $49,752
 $1,106
 $(12,914)


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Income Statement Presentation
The following tables summarize the location and amount of gains on derivatives in the Consolidated Statements of Income for the years ended December 31, 2017, 20162019, 2018 and 2015:2017:
 Amount of Gain 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 Year Ended December 31, Location of Gain (Loss) Recognized in Income on Derivative Contracts Year Ended December 31,
(in thousands) 2017 2016 2015 2019 2018 2017
Foreign currency exchange contracts - Ria Operations Foreign currency exchange gain, net $175
 $143
 $1,026
 Foreign currency exchange gain, net $62
 $173
 $175
(a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its HiFXxe 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 17, Financial Instruments and Fair Value Measurements, for the determination of the fair values of derivatives.


(12) Leases


Capital leases

The Company enters into operating leases certainfor ATM sites, office spaces, retail stores and equipment. The Company's finance leases are immaterial. Right of its ATMs, computer equipmentuse assets and vehicles under capital lease agreements that expire betweenliabilities are recognized at the yearslease commencement date based on the present value of 2018 and 2022 and bear interestthe lease payments over the lease terms.
The present value of lease payments is determined using the incremental borrowing rate based on information available at rates between 0.7% and 12.8%.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 lessorsCompany recognizes lease expense for these leases holdon a security intereststraight-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 most of the ATM site leases. Since the Company is not reasonably certain to exercise the renewal or 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 equipment leased underlease agreement on which those payments are assessed occurs and are excluded from the respective capital lease agreements. Lease installments are paid on a monthly, quarterly or semi-annual basis. Certain leases contain a bargain purchase option at the conclusionright of the lease period.

The gross amount of theuse assets and related accumulated amortization recorded within property and equipment and subject to capital leases as of December 31, 2017 and 2016 were as follows:
  As of December 31,
(in thousands) 2017 2016
ATMs $23,969
 $15,838
Other 2,268
 2,038
Subtotal 26,237
 17,876
Less accumulated amortization (9,395) (5,892)
Total $16,842
 $11,984

Non-cash financing and investing activities for the years ended December 31, 2017, 2016 and 2015 represented capital lease obligations of $7.9 million, $5.8 million and $6.4 million, respectively, incurred when the Company entered into leases primarily for new ATMs, to upgrade ATMsliabilities balances. The lease agreements do not contain any material residual value guarantees or for data center computer equipment.

Operating leases

The Company has non-cancelable operating leases that expire between the years of 2018 and 2031. Certain of these leases contain renewal options and escalation provisions. The Company recognizes rent expense under the straight-line method over the term of the lease. Rent expense for the years ended December 31, 2017, 2016 and 2015 amounted to $105.0 million, $80.0 million and $63.0 million, respectively.

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material restrictive covenants.
Future minimum lease payments


Future minimum lease payments under the capitaloperating leases andas of December 31, 2019 are:
 As of December 31, 2019
Maturity of Lease Liabilities (in thousands)
Operating Leases
2020$125,231
202190,330
202264,279
202344,113
202425,467
Thereafter43,105
Total lease payments$392,525
Less: imputed interest(23,195)
Present value of lease liabilities$369,330

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Future minimum lease payments under the non-cancelable operating leases (with initial lease terms in excess of one year) as of December 31, 2017 are:

2018 were:
(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

(in thousands) 
Capital
Leases
 
Operating
Leases
Year ending December 31,    
2018 $6,369
 $63,685
2019 5,135
 52,145
2020 3,470
 42,916
2021 2,008
 27,373
2022 271
 20,113
Thereafter 
 26,560
Total minimum lease payments 17,253
 $232,792
Less amounts representing interest (2,131)  
Present value of net minimum capital lease payments 15,122
  
Less current portion of obligations under capital leases (5,369)  
Obligations under capital leases, less current portion $9,753
  
Lease expense recognized in the Consolidated Statements of Income is summarized as follows:

Lease Expense (in thousands)
Income Statement Classification Year ended December 31, 2019
Operating lease expenseSelling, general and administrative and Direct operating costs $130,487
Variable lease expense
Selling, general and administrative and Direct operating costs

 43,907
Total lease expense  $174,394


Other information about lease amounts recognized in the consolidated financial statements is summarized as follows:
Lease Term and Discount Rate of Operating LeasesAs of December 31, 2019
Weighted- average remaining lease term (years)4.4
Weighted- average discount rate3.1%


The following table presents supplemental cash flow and non-cash information related to leases:
Other Information (in thousands)
 Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities (a)
 $129,609
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets:  
ROU assets obtained in exchange for new operating lease liabilities $229,107

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


(13) Income Taxes


The sources of income before income taxes for the years ended December 31, 20172019, 20162018 and 20152017 are presented as follows:


  Year Ended December 31,
(in thousands) 2019 2018 2017
Income before taxes: 
 
 
United States $44,290
 $35,467
 $55,117
Foreign 389,517
 259,449
 201,218
Total income before income taxes $433,807
 $294,916
 $256,335

  Year Ended December 31,
(in thousands) 2017 2016 2015
Income before taxes: 
 
 
United States $55,117
 $41,804
 $10,686
Foreign 201,218
 191,089
 130,408
Total income before income taxes $256,335
 $232,893
 $141,094


The Company's income tax expense for the years ended December 31, 20172019, 20162018 and 20152017 consisted of the following:


  Year Ended December 31,
(in thousands) 2019 2018 2017
Current tax expense (benefit): 
 
 
U.S. $(4,885) $(8,711) $29,620
Foreign 83,792
 70,244
 79,475
Total current 78,907
 61,533
 109,095
Deferred tax expense (benefit): 

 

 

U.S. (8,424) 6,871
 14,056
Foreign 16,629
 (5,619) (23,756)
Total deferred 8,205
 1,252
 (9,700)
Total tax expense $87,112
 $62,785
 $99,395

  Year Ended December 31,
(in thousands) 2017 2016 2015
Current tax expense (benefit): 
 
 
U.S. $29,620
 $(2,886) $1,277
Foreign 79,475
 59,515
 45,150
Total current 109,095
 56,629
 46,427
Deferred tax expense (benefit): 

 

 

U.S. 14,056
 9,908
 2,037
Foreign (23,756) (7,742) (5,862)
Total deferred (9,700) 2,166
 (3,825)
Total tax expense $99,395
 $58,795
 $42,602



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The following is a reconciliation of the federal statutory income tax raterates of 21% for the years ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017 to the effective income tax rate for the years ended December 31, 2017, 2016 and 2015:same years:


  Year Ended December 31,
(dollar amounts in thousands) 2019 2018 2017
U.S. federal income tax expense at applicable statutory rate $91,099
 $61,932
 $89,684
Tax effect of: 

 

 

State income tax expense (benefit) at statutory rates 5,101
 1,680
 968
Non-deductible expenses 2,896
 3,457
 5,648
Share-based compensation (2,875) (13,750) (4,845)
Other permanent differences (864) (6,141) 8,458
Difference between U.S. federal and foreign tax rates 12,281
 9,843
 (24,270)
Provision in excess of statutory rates 3,565
 3,737
 8,426
Change in federal and foreign valuation allowance 2,144
 3,075
 (30,224)
Impairment of goodwill and acquired intangibles assets 
 83
 8,248
GILTI, net of tax credits 6,471
 14,111
 
U.S. Tax Reform - transition tax and rate change (25,728) (12,262) 41,597
Tax credits (4,500) 
 
Other (2,478) (2,980) (4,295)
Total income tax expense $87,112
 $62,785
 $99,395
Effective tax rate 20.1% 21.3% 38.8%

  Year Ended December 31,
(dollar amounts in thousands) 2017 2016 2015
U.S. federal income tax expense at applicable statutory rate $89,684
 $81,513
 $49,383
Tax effect of: 

 

 

State income tax expense (benefit) at statutory rates 968
 1,341
 894
Non-deductible expenses 5,648
 3,482
 4,947
Share-based compensation (4,845) (1) (684)
Other permanent differences 8,458
 (4,929) (5,505)
Difference between U.S. federal and foreign tax rates (24,270) (18,432) (13,615)
Provision in excess of statutory rates 8,426
 2,490
 2,400
Change in federal and foreign valuation allowance (30,224) (8,163) 1,724
Impairment of goodwill and acquired intangibles assets 8,248
 
 
Tax Cuts and Jobs Act of 2017 41,597
 
 
Other (4,295) 1,494
 3,058
Total income tax expense $99,395
 $58,795
 $42,602
Effective tax rate 38.8% 25.2% 30.2%


Tax Cuts and Jobs Act of 2017
We calculatedcalculate our provision for federal, state and international income taxes based on current tax law. On December 22, 2017, the U.S. enacted into law what is informally called the Tax Cuts and Jobs Act of 2017 (the "Act"("U.S. Tax Reform"). The most significant provisions of the ActU.S. Tax Reform are the transition tax on previously undistributed foreign earnings of foreign subsidiaries, the reduction inof the U.S. corporate statutory income tax rate from 35% to 21% beginning on January 1, 2018, and new taxes on certain foreign sourced earnings.

Under the accounting rules, companies are required to recognize the effects of changes in tax laws and tax rates on deferred tax assets and liabilities in the period in which the new legislation is enacted. The SEC staff issued Staff Accounting Bulletin ("SAB") 118, which provides guidance on accounting for the tax effects of the Act. SAB 118 provides a measurement period of up to one year from the Act's enactment date for companies to complete their accounting. In accordance with SAB 118, we are providing provisional amounts where appropriate which we believe represents a reasonable estimate based on available information and our interpretations of the Act. We will continue to evaluate the Act and adjust the provisional amounts as additional information becomes available. The Company expects to complete its detailed analysis no later than the fourth quarter of 2018.


In the fourth quarter of 2017, the Company initially recorded a net provisional tax expense of $41.6 million resulting from the enactment of U.S. Tax Reform. In the Act. Includedfourth quarter of 2018, the Company adjusted its accounting for the tax effects of U.S. Tax Reform. The net provisional tax expense was decreased in that period by approximately $12.3 million to $29.3 million largely due to changes in the transition tax calculations. In the fourth quarter of 2019 after additional regulatory guidance was issued by applicable taxing authorities, the Company elected to claim U.S. tax credits on foreign tax paid on foreign source income, which reduced the net tax expense is a current tax expense of approximately $28.1 million primarily related to the Act's transition tax on previously undistributed foreign earnings of foreign subsidiaries. The Company expects to utilize its U.S. federal net operating losses to partially offset the transition tax and release the associated valuation allowance. The transition tax is payable over 8 years at the election of the taxpayer. The remaining tax expense of approximately $13.5 million is the required remeasurement of the Company's U.S. deferred tax assets and liabilities considering the Act's newly enacted tax rates and certain other impacts. The recorded impact of the Act is provisional and the final amount may differ, possibly materially, due to, among other things, the issuance of new guidance, legislative actions, changes in IRS interpretations, changes in accounting standards or related interpretations in response to the Act, and future actions by states within the U.S. that have not currently adopted the Act which is the basis for our estimates, interpretations and assumptions of the tax effects of the Act on the Company. Any tax impacts for these items will be recorded in subsequent quarters, as discrete adjustments to our income tax provision, once complete.$25.7 million.


The Company continues to analyze the Act including the tax impacts on its indefinite reinvestment assertion. This includes the potential tax impact of the global intangible low-taxed income ("GILTI") provision. The FASB issued guidance that allows for either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such


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taxes as current period expenses when incurred. Due to the complexity of calculating GILTI and management's current assertion that foreign earnings are indefinitely reinvested, we have not determined which method we will apply.


The tax effect of temporary differences and carryforwards that give rise to deferred tax assets and liabilities from continuing operations are as follows:


  As of December 31,
(in thousands) 2019 2018
Deferred tax assets: 
 
Tax loss carryforwards $34,357
 $30,689
Share-based compensation 7,366
 7,395
Accrued expenses 19,048
 17,242
Property and equipment 8,602
 16,377
Goodwill and intangible amortization 8,143
 10,619
Intercompany notes 5,977
 6,913
Accrued revenue 24,721
 36,273
Tax credits 65,063
 
Lease accounting 89,965
 
Other 15,379
 11,876
Gross deferred tax assets 278,621
 137,384
Valuation allowance (83,184) (21,857)
Net deferred tax assets 195,437
 115,527
Deferred tax liabilities: 

 

Intangible assets related to purchase accounting (16,379) (22,877)
Goodwill and intangible amortization (20,806) (16,115)
Accrued expenses (29,084) (28,274)
Intercompany notes (10,498) (14,034)
Accrued interest (27,902) (32,372)
Capitalized research and development (6,048) (8,299)
Property and equipment (15,467) (8,408)
Accrued revenue (4,727) (4,388)
Lease accounting (89,965) 
Other (8,997) (5,841)
Total deferred tax liabilities (229,873) (140,608)
Net deferred tax liabilities $(34,436) $(25,081)

  As of December 31,
(in thousands) 2017 2016
Deferred tax assets: 
 
Tax loss carryforwards $25,494
 $34,858
Share-based compensation 7,244
 9,252
Accrued expenses 14,621
 16,970
Property and equipment 14,984
 10,947
Goodwill and intangible amortization 13,866
 15,635
Intercompany notes 9,596
 12,654
Accrued revenue 32,947
 21,005
Other 9,631
 12,517
Gross deferred tax assets 128,383
 133,838
Valuation allowance (20,257) (37,255)
Net deferred tax assets 108,126
 96,583
Deferred tax liabilities: 

 

Intangibles related to purchase accounting (29,361) (27,974)
Goodwill and intangible amortization (11,537) (14,457)
Accrued expenses (33,728) (24,124)
Intercompany notes (7,348) (2,559)
Accrued interest (27,449) (37,514)
Capitalized research and development (7,020) (9,520)
Property and equipment (4,717) (2,029)
Accrued revenue (5,027) (4,668)
Other (3,227) (4,180)
Total deferred tax liabilities (129,414) (127,025)
Net deferred tax liabilities $(21,288) $(30,442)


Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 20172019 are expected to be allocated to income taxes in the Consolidated Statements of Income.


As of December 31, 20172019, and 20162018, the Company's U.S. federal and foreign tax loss carryforwards were $90.2$119.1 million and $231.9109.8 million, respectively, and U.S. state tax loss carryforwards were $59.197.6 million and $88.191.8 million, respectively. In 2019, the Company has recognized $59.1 million in U.S. foreign tax credits which are largely not expected to be utilized in future periods.


In assessing the Company's ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will only realize the benefits of these deductible differences, net of the existing valuation allowances, as of December 31, 20172019.




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As of December 31, 20172019, the Company had foreign tax net operating loss carryforwards of $90.2$119.1 million,, which will expire as follows:
(in thousands) Gross Tax Effected
Year ending December 31,    
2020 $1,274
 $315
2021 3,790
 934
2022 2,800
 720
2023 2,577
 605
2024 8,713
 2,152
Thereafter 39,040
 9,851
Unlimited 60,935
 14,427
Total $119,129
 $29,004

(in thousands) Gross Tax Effected
Year ending December 31,    
2018 $343
 $85
2019 2,459
 604
2020 6,053
 1,386
2021 5,992
 1,348
2022 5,033
 1,178
Thereafter 42,582
 10,452
Unlimited 27,769
 6,189
Total $90,231
 $21,242


In addition, the Company's state tax net operating loss carryforwards of $59.197.6 million will expire periodically from 20182020 through 2037.2039, U.S. foreign tax credit carryforwards of $59.1 million that will expire periodically from 2021 through 2027, U.S. research and expenditure credit carryforwards of $3.2 million that will expire over an indefinite number of years, and foreign tax credits of $2.8 million that will expire over an indefinite number of years.
While U.S. tax expense has been recognized as a result of the transition tax provisionand Global Intangible Low-Taxed Income ("GILTI") provisions of the Act,U.S. Tax Reform, the Company has not provided additional deferred taxes if any, on undistributed earnings attributable to foreign subsidiaries that have been considered to be reinvested indefinitely. Gross undistributed earnings reinvested indefinitely in foreign subsidiaries aggregated approximately $1,196.7 million as of December 31, 2017. Other than the transition tax provision of the Act, no deferred tax liabilities with respect to items such as certain foreign exchange gains or losses, foreign withholding taxes or additional state taxes, have been recognizedif any, on undistributed earnings attributable to foreign subsidiaries and it is not practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely. Gross undistributed earnings reinvested indefinitely in foreign subsidiaries aggregated approximately $1,810 million as of December 31, 2019.


Accounting for uncertainty in income taxes
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 20172019 and 20162018 is as follows:
  Year Ended December 31,
(in thousands) 2019 2018
Beginning balance $30,915
 $28,537
Additions based on tax positions related to the current year 15,569
 4,787
Additions for tax positions of prior years 6
 966
Reductions for tax positions of prior years (1,703) (1,705)
Settlements 
 (807)
Statute of limitations expiration (252) (863)
Ending balance $44,535
 $30,915

  Year Ended December 31,
(in thousands) 2017 2016
Beginning balance $17,988
 $16,370
Additions based on tax positions related to the current year 8,364
 5,847
Additions for tax positions of prior years 3,157
 
Reductions for tax positions of prior years 
 (255)
Settlements (321) (642)
Statute of limitations expiration (651) (3,332)
Ending balance $28,537
 $17,988


As of December 31, 20172019 and 20162018, approximately $26.742.7 million and $15.128.0 million, respectively, of the unrecognized tax benefits would impact the Company's provision for income taxes and effective income tax rate, if recognized. Total estimated accrued interest and penalties related to the underpayment of income taxes was $3.55.2 million and $2.14.4 million as of December 31, 20172019 and 20162018, respectively. The following income tax years remain open in the Company's major jurisdictions as of December 31, 20172019:
JurisdictionsPeriods
U.S. (Federal)2014 through 20172019
Germany2016 through 2019
Greece2014 through 2019
Spain20092014 through 2017
Australia2010 through 20172019
U.K.2009 through 2017
Germany2013 through 20172019





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It is reasonably possible that the balance of gross unrecognized tax benefits could significantly change within the next twelve months as a result of the resolution of audit examinations and expirations of certain statutes of limitations and, accordingly, materially affect the Company's operating results. At this time, it is not possible to estimate the range of change due to the uncertainty of potential outcomes.


(14) Valuation and Qualifying Accounts


AccountsTrade accounts receivable balances and accounts receivable included within the settlement assets are stated net of allowance for doubtful accounts. Historically, the Company has not experienced significant write-offs. The Company records allowances for doubtful accounts when it is probable that the accounts receivable balance will not be collected. The following table provides a summary of the allowance for doubtful accounts balances and activity for the years ended December 31, 20172019, 20162018 and 20152017:


  Year Ended December 31,
(in thousands) 2019 2018 2017
Beginning balance-allowance for doubtful accounts $24,287
 $20,958
 $18,369
Additions-charged to expense 10,095
 8,653
 6,631
Amounts written off (6,179) (4,079) (5,944)
Other (primarily changes in foreign currency exchange rates) (265) (1,245) 1,902
Ending balance-allowance for doubtful accounts $27,938
 $24,287
 $20,958

  Year Ended December 31,
(in thousands) 2017 2016 2015
Beginning balance-allowance for doubtful accounts $18,369
 $19,140
 $20,546
Additions-charged to expense 6,631
 6,556
 8,209
Amounts written off (5,944) (6,839) (7,862)
Other (primarily changes in foreign currency exchange rates) 1,902
 (488) (1,753)
Ending balance-allowance for doubtful accounts $20,958
 $18,369
 $19,140


(15) Stock Plans


The Company has share-based compensation plans (“SCP”) that allow it to grant restricted shares, or options to purchase shares, of Common Stock to certain current and prospective key employees, directors and consultants of the Company. These awards generally vest over periods ranging from three to five years from the date of grant, are generally exercisable during the shorter of a ten-year term or the term of employment with the Company. With the exception of certain awards made to the Company's employees in Germany, Singapore and Singapore,Malaysia, awards under the SCP are settled through the issuance of new shares under the provisions of the SCP. For Company employees in Germany, Singapore and Singapore,Malaysia, certain awards are settled through the issuance of treasury shares, which also reduces the number of shares available for future issuance under the SCP. As of December 31, 20172019, the Company has approximately 3.42.1 million in total shares remaining available for issuance under the SCP.


Share-based compensation expense was $21.4 million, $16.8 million and $15.6 million, $15.0 million and $12.8 million for the years ended December 31, 20172019, 20162018 and 20152017, respectively, and was recorded in salaries and benefits expense in the accompanying Consolidated Statements of Income. The Company recorded a tax benefit of $2.34.9 million, $1.0$2.7 million and $0.7$2.3 million during the years ended December 31, 20172019, 20162018 and 20152017, respectively, for the portion of this expense that relates to foreign tax jurisdictions in which an income tax benefit is expected to be derived.



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Stock options


Summary stock options activity is presented in the table below:
  
 
 
 
Number of
Shares
 
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term (years)
 
 
Aggregate
Intrinsic
Value
(thousands)
Balance at December 31, 2018 (1,637,801 shares exercisable) 2,562,570
 $57.10
    
Granted 795,274
 $145.92
    
Exercised (295,420) $44.22
    
Forfeited/Canceled (46,287) $89.67
    
Expired (362)      
Balance at December 31, 2019 3,015,775
 $81.29
 6.2 $230,052
Exercisable at December 31, 2019 1,653,340
 $46.36
 4.1 $183,846
Vested and expected to vest at December 31, 2019 2,383,821
 $66.65
 5.4 $216,739

  
 
 
 
Number of
Shares
 
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term (years)
 
 
Aggregate
Intrinsic
Value
(thousands)
Balance at December 31, 2016 (2,154,790 shares exercisable) 3,310,976
 $36.20
    
Granted 309,553
 $91.99
    
Exercised (360,949) $26.26
    
Forfeited/Canceled (28,087) $63.54
    
Balance at December 31, 2017 3,231,493
 $42.42
 5.4 $137,624
Exercisable at December 31, 2017 2,206,415
 $27.13
 4.0 $126,066
Vested and expected to vest at December 31, 2017 3,061,733
 $40.42
 5.3 $136,136


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Options outstanding that are expected to vest are net of estimated future forfeitures. The Company received cash of $9.513.1 million, $4.1$17.1 million and $7.8$9.5 million in connection with stock options exercised in the years ended December 31, 20172019, 20162018 and 20152017, respectively. The intrinsic value of these options exercised was $23.230.6 million, $12.3$73.0 million and $22.8$23.2 million in the years ended December 31, 20172019, 20162018 and 20152017, respectively. As of December 31, 20172019, unrecognized compensation expense related to nonvested stock options that are expected to vest totaled $20.523.9 million and will be recognized over the next 5 years, with an overall weighted-average period of 3.73.4 years. The following table provides the fair value of options granted under the SCP during 20172019, 20162018 and 20152017, together with a description of the assumptions used to calculate the fair value using the Black-Scholes-Merton option-pricing model:
  Year ended December 31,
  2019 2018 2017
Volatility 29.3% 29.8% 28.8%
Risk-free interest rate - weighted average 2.1% 2.8% 2.2%
Risk-free interest rate - range (a)
 (a)
 .022
Dividend yield % % %
Assumed forfeitures 8.0% 8.0% 8.0%
Expected lives 5.2 years
 5.6 years
 5.5 years
Weighted-average fair value (per share) $43.96
 $37.16
 $28.59
  Year ended December 31,
  2017 2016 2015
Volatility 28.8% 33.3% 32.7%
Risk-free interest rate - weighted average 2.2% 2.0% 1.7%
Risk-free interest rate - range (a)
 1.29% to 2.01%
 1.71% to 1.75%
Dividend yield % % %
Assumed forfeitures 8.0% 8.0% 8.0%
Expected lives 5.5 years
 5.5 years
 5.4 years
Weighted-average fair value (per share) $28.59
 $25.29
 $24.29

(a) At the date of grant, the risk fee rate for stock options awarded in 20172019 and 2018 was 2.2%.1.7% and 2.8%, respectively.


Restricted stock


Restricted stock awards vest based on the achievement of time-based service conditions and/or performance-based conditions. For certain awards, vesting is based on the achievement of more than one condition of an award with multiple time-based
and/or performance-based conditions.



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Summary restricted stock activity is presented in the table below:
  
 
 
Number of
Shares
 
Weighted
Average Grant
Date Fair
Value Per Share
Nonvested at December 31, 2018 371,841
 $85.78
Granted 254,631
 $145.93
Vested (115,740) $78.77
Forfeited (16,784) $92.44
Nonvested at December 31, 2019 493,948
 $118.20

  
 
 
Number of
Shares
 
Weighted
Average Grant
Date Fair
Value Per Share
Nonvested at December 31, 2016 494,868
 $59.90
Granted 106,481
 $91.28
Vested (151,414) $47.07
Forfeited (17,599) $60.72
Nonvested at December 31, 2017 432,336
 $72.09


The fair value of shares vested in the years ended December 31, 20172019, 20162018 and 20152017 was $13.116.6 million, $13.3$14.2 million and $19.9$13.1 million, respectively. As of December 31, 20172019, there was $10.411.4 million of total unrecognized compensation cost related to unvested time-based restricted stock, which is expected to be recognized over a weighted-average period of 3.63.3 years. As of December 31, 20172019, there was $9.111.2 million of total unrecognized compensation costs related to unvested performance-based restricted stock, which is expected to be recognized based on Company performance over a weighted-average period of 1.8 years. The weighted average grant date fair value of restricted stock granted during the years ended December 31, 20172019, 20162018 and 20152017 was $145.93, $107.88 and $91.28, $73.86 and $72.52 per share, respectively.


Employee stock purchase plan


The Company has a qualified Employee Stock Purchase Plan (the “ESPP”), which allows qualified employees (as defined by the plan documents) to participate in the purchase of rights to purchase designated shares of the Company's Common Stock at a price equal to the lower of 85% of the closing price at the beginning or end of each quarterly offering period. The Company reserved 1,000,000 shares of Common Stock for purchase under the ESPP. Pursuant to the ESPP, during the years ended December 31, 20172019, 20162018 and 20152017, the Company issued 21,547, 34,65816,713, 21,872 and 54,42121,547 rights, respectively, to purchase shares of Common Stock at a weighted average price per share of $69.06, $59.69$110.37, $71.08 and $52.62,$69.06, respectively. The grant date fair value of

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the option to purchase shares at the lower of the closing price at the beginning or end of the quarterly period, plus the actual total discount provided, are recorded as compensation expense. Total compensation expense recorded was $0.4 million, $0.5$0.4 million, and $0.7$0.4 million for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, respectively. The following table provides the weighted-average fair value of the ESPP stock purchase rights during the years ended December 31, 20172019, 20162018 and 20152017 and the assumptions used to calculate the fair value using the Black-Scholes-Merton option-pricing model:


  Year Ended December 31,
  2019 2018 2017
Volatility - weighted average 24.3% 30.1% 18.4%
Volatility - range 20.3% to 28.1%
 23.5% to 36.7%
 14.6% to 27.2%
Risk-free interest rate - weighted average 2.07% 2.01% 0.89%
Risk-free interest rate - range 1.55% to 2.44%
 1.73% to 2.45%
 0.51% to 1.39%
Dividend yield % % %
Expected lives 3 months
 3 months
 3 months
Weighted-average fair value (per share) $25.87
 $17.22
 $15.81

  Year Ended December 31,
  2017 2016 2015
Volatility - weighted average 18.4% 36.3% 30.6%
Volatility - range 14.6% to 27.2%
 20.0% to 50.1%
 25.9% to 41.9%
Risk-free interest rate - weighted average 0.89% 0.24% 0.01%
Risk-free interest rate - range 0.51% to 1.39%
 0.22% to 0.29%
 0.00% to 0.03%
Dividend yield % % %
Expected lives 3 months
 3 months
 3 months
Weighted-average fair value (per share) $15.81
 $14.42
 $12.44



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(16) Business Segment Information


Euronet’s reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting (“ASC 280”). The Company currently operates in the following three reportable operating segments:
1)Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East and Asia 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.

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integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.
2)Through the epay Segment, the Company provides distribution, processing and collection services for prepaid mobile airtime and other electronic payment products in Europe, the Middle East, Asia Pacific, the U.S. and South America.
3)Through the Money Transfer Segment, the Company provides global money transfer services under the brand names, Ria, HiFX, IME, and xe. Ria, AFEX and IME provide global consumer-to-consumer money transfer services through a network of sending agents, Company-owned stores and Company-owned websites, disbursing money transfers through a worldwide correspondent network. HiFXxe 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 CompanyFurthermore, 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, 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.


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The following tables present the Company’s reportable segment results for the years ended December 31, 2017, 20162019, 2018 and 20152017:
  For the Year Ended December 31, 2019
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $888,712
 $769,329
 $1,096,226
 $(4,158) $2,750,109
Operating expenses:          
Direct operating costs 397,132
 576,757
 586,730
 (4,136) 1,556,483
Salaries and benefits 87,603
 61,540
 208,792
 36,809
 394,744
Selling, general and administrative 35,518
 35,054
 133,068
 8,304
 211,944
Acquired intangible assets impairment 
 
 
 
 
Depreciation and amortization 71,819
 6,774
 32,846
 305
 111,744
Total operating expenses 592,072
 680,125
 961,436
 41,282
 2,274,915
Operating income (expense) $296,640
 $89,204
 $134,790
 $(45,440) $475,194
Other income (expense)          
Interest income         1,969
Interest expense         (36,237)
Loss from unconsolidated affiliates         
Loss on early retirement of debt         
Foreign currency exchange loss, net         2,701
Other gains, net         (9,820)
Total other expense, net         (41,387)
Income before income taxes         $433,807
Segment assets as of December 31, 2019 $1,914,144
 $962,671
 $1,560,136
 $220,715
 $4,657,666
Property and equipment, net as of December 31, 2019 $266,872
 $41,539
 $51,519
 $50
 $359,980

  For the Year Ended December 31, 2017
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $634,559
 $733,998
 $886,858
 $(2,993) $2,252,422
Operating expenses:          
Direct operating costs 318,875
 564,032
 476,322
 (2,979) 1,356,250
Salaries and benefits 61,683
 54,459
 168,371
 26,274
 310,787
Selling, general and administrative 33,158
 36,014
 108,022
 13,108
 190,302
Goodwill and acquired intangible assets impairment 2,286
 31,770
 
 
 34,056
Depreciation and amortization 55,660
 9,622
 29,598
 150
 95,030
Total operating expenses 471,662
 695,897
 782,313
 36,553
 1,986,425
Operating income (expense) $162,897
 $38,101
 $104,545
 $(39,546) $265,997
Other income (expense)          
Interest income         2,443
Interest expense         (32,571)
Income from unconsolidated affiliates         48
Foreign currency exchange gain, net         20,300
Other gains         118
Total other expense, net         (9,662)
Income before income taxes         $256,335
Segment assets as of December 31, 2017 $1,040,135
 $695,990
 $1,255,765
 $148,139
 $3,140,029
Property and equipment, net as of December 31, 2017 $196,451
 $28,135
 $43,564
 $153
 $268,303




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  For the Year Ended December 31, 2018
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $753,651
 $743,784
 $1,042,962
 $(3,768) $2,536,629
Operating expenses:          
Direct operating costs 366,977
 564,252
 560,930
 (3,753) 1,488,406
Salaries and benefits 75,791
 57,748
 194,808
 32,085
 360,432
Selling, general and administrative 46,925
 35,749
 125,647
 8,486
 216,807
Goodwill and acquired intangible assets impairment 
 
 7,049
 
 7,049
Depreciation and amortization 66,713
 7,038
 32,002
 268
 106,021
Total operating expenses 556,406
 664,787
 920,436
 37,086
 2,178,715
Operating income (expense) $197,245
 $78,997
 $122,526
 $(40,854) $357,914
Other income (expense)          
Interest income         1,320
Interest expense         (37,573)
Income from unconsolidated affiliates         (117)
Foreign currency exchange gain, net         (26,655)
Other gains, net         27
Total other expense, net         (62,998)
Income before income taxes         $294,916
Segment assets as of December 31, 2018 $1,220,141
 $780,220
 $1,310,775
 $10,019
 $3,321,155
Property and equipment, net as of December 31, 2018 $215,106
 $31,172
 $45,517
 $74
 $291,869

  For the Year Ended December 31, 2016
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $464,254
 $693,986
 $801,919
 $(1,544) $1,958,615
Operating expenses:          
Direct operating costs 224,793
 528,774
 422,508
 (1,530) 1,174,545
Salaries and benefits 51,822
 51,378
 155,471
 29,749
 288,420
Selling, general and administrative 30,399
 34,517
 93,219
 7,213
 165,348
Depreciation and amortization 40,084
 11,075
 29,195
 175
 80,529
Total operating expenses 347,098
 625,744
 700,393
 35,607
 1,708,842
Operating income (expense) $117,156
 $68,242
 $101,526
 $(37,151) $249,773
Other income (expense)          
Interest income         1,696
Interest expense         (28,332)
Foreign currency exchange loss, net         (10,200)
Other gains         19,956
Total other expense, net         (16,880)
Income before income taxes         $232,893
Segment assets as of December 31, 2016 $786,166
 $733,514
 $1,136,722
 $56,470
 $2,712,872
Property and equipment, net as of December 31, 2016 $139,161
 $23,939
 $38,954
 $91
 $202,145






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  For the Year Ended December 31, 2017
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $634,559
 $733,998
 $886,858
 $(2,993) $2,252,422
Operating expenses:          
Direct operating costs 318,875
 564,032
 476,322
 (2,979) 1,356,250
Salaries and benefits 61,683
 54,459
 168,371
 26,274
 310,787
Selling, general and administrative 33,158
 36,014
 108,022
 13,108
 190,302
Goodwill impairment 2,286
 31,770
 
 
 34,056
Depreciation and amortization 55,660
 9,622
 29,598
 150
 95,030
Total operating expenses 471,662
 695,897
 782,313
 36,553
 1,986,425
Operating income (expense) $162,897
 $38,101
 $104,545
 $(39,546) $265,997
Other income (expense)          
Interest income         2,443
Interest expense         (32,571)
Income from unconsolidated affiliates         48
Foreign currency exchange loss, net         20,300
Other gains, net         118
Total other expense, net         (9,662)
Income before income taxes         $256,335
Segment assets as of December 31, 2017 $1,040,135
 $695,990
 $1,255,765
 $148,139
 $3,140,029
Property and equipment, net as of December 31, 2017 $196,451
 $28,135
 $43,564
 $153
 $268,303

  For the Year Ended December 31, 2015
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $379,523
 $708,373
 $685,635
 $(1,269) $1,772,262
Operating expenses:          
Direct operating costs 182,136
 542,747
 358,154
 (1,188) 1,081,849
Salaries and benefits 45,364
 49,752
 137,077
 26,969
 259,162
Selling, general and administrative 25,822
 38,272
 85,096
 7,195
 156,385
Depreciation and amortization 31,807
 11,163
 26,650
 405
 70,025
Total operating expenses 285,129
 641,934
 606,977
 33,381
 1,567,421
Operating income (expense) $94,394
 $66,439
 $78,658
 $(34,650) $204,841
Other income (expense)          
Interest income         2,170
Interest expense         (24,814)
Foreign currency exchange loss, net         (41,418)
Other gains, net         315
Total other expense, net         (63,747)
Income before income taxes         $141,094
Segment assets as of December 31, 2015 $469,351
 $646,000
 $1,040,737
 $36,626
 $2,192,714
Property and equipment, net as of December 31, 2015 $99,798
 $24,834
 $32,591
 $145
 $157,368






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Total revenues for the years ended December 31, 20172019, 20162018 and 20152017, and property and equipment and total assets as of December 31, 20172019 and 20162018, summarized by geographic location, were as follows:


  Revenues Property and Equipment, net Total Assets
  For the year ended December 31, as of December 31, as of December 31,
(in thousands) 2019 2018 2017 2019 2018 2019 2018
United States $716,576
 $721,977
 $572,383
 $49,904
 $29,499
 $717,894
 $493,428
Germany 518,146
 476,122
 495,778
 35,824
 25,302
 660,730
 508,062
Spain 189,104
 155,619
 115,473
 55,240
 39,238
 371,882
 198,082
United Kingdom 135,006
 133,132
 136,977
 22,420
 20,525
 520,549
 519,918
Italy 130,929
 103,691
 89,276
 20,663
 15,238
 210,910
 157,314
Poland 130,104
 126,513
 128,672
 42,916
 50,359
 222,582
 155,821
India 113,146
 92,468
 82,389
 27,281
 19,554
 163,125
 89,923
France 94,352
 75,466
 56,027
 1,508
 1,037
 96,636
 76,687
Greece 79,716
 71,007
 71,197
 11,753
 11,267
 111,339
 58,419
Malaysia 74,948
 76,380
 56,287
 2,629
 2,802
 114,796
 103,043
Australia 51,686
 58,039
 77,777
 1,992
 2,051
 62,844
 61,215
New Zealand 47,611
 48,881
 47,091
 3,137
 2,718
 237,076
 196,869
Other 468,785
 397,334
 323,095
 84,713
 72,279
 1,167,303
 702,374
Total foreign 2,033,533
 1,814,652
 1,680,039
 310,076
 262,370
 3,939,772
 2,827,727
Total $2,750,109
 $2,536,629
 $2,252,422
 $359,980
 $291,869
 $4,657,666
 $3,321,155

  Revenues Property and Equipment, net Total Assets
  For the year ended December 31, as of December 31, as of December 31,
(in thousands) 2017 2016 2015 2017 2016 2017 2016
United States $572,383
 $548,877
 $529,467
 $28,465
 $25,837
 $592,187
 $373,303
Germany 495,778
 409,590
 377,170
 20,668
 16,852
 435,687
 404,733
United Kingdom 136,977
 131,826
 124,485
 20,104
 15,279
 532,421
 422,298
Poland 128,672
 115,269
 105,129
 61,636
 60,027
 176,766
 187,686
Spain 115,473
 82,921
 62,086
 29,881
 13,796
 152,841
 95,304
Italy 89,276
 72,591
 56,896
 12,078
 7,285
 123,218
 110,888
India 82,389
 75,243
 78,783
 13,090
 7,907
 82,513
 66,741
Australia 77,777
 77,198
 77,643
 2,704
 3,153
 76,370
 82,377
Greece 71,197
 44,361
 31,568
 10,012
 6,435
 62,552
 50,666
Malaysia 56,287
 53,787
 28,518
 3,161
 3,471
 124,522
 129,023
France 56,027
 43,247
 33,766
 1,104
 1,153
 65,366
 49,550
New Zealand 47,091
 40,890
 56,735
 2,574
 2,810
 185,459
 203,300
Other 323,095
 262,815
 210,016
 62,826
 38,140
 530,127
 537,003
Total foreign 1,680,039
 1,409,738
 1,242,795
 239,838
 176,308
 2,547,842
 2,339,569
Total $2,252,422
 $1,958,615
 $1,772,262
 $268,303
 $202,145
 $3,140,029
 $2,712,872


Revenues are attributed to countries based on location of the customer, with the exception of software sales made by the Company's software subsidiary, which are attributed to the U.S.


(17) Financial Instruments and Fair Value Measurements


Concentrations of credit risk
The Company's credit risk primarily relates to trade accounts receivable and cash and cash equivalents. The EFT Processing Segment's customer base includes the most significant international card organizations and certain banks in its markets. The epay Segment's customer base is diverse and includes several major retailers and/or distributors in markets that they operate. The Money Transfer Segment trade accounts receivable are primarily due from independent agents that collect cash from customers on the Company's behalf and generally remit the cash within one week. The Company performs ongoing evaluations of its customers' financial condition and limits the amount of credit extended, or purchases credit enhancement protection, when deemed necessary, but generally requires no collateral. See Note 14, Valuation and Qualifying Accounts, for further disclosure.
The Company invests excess cash not required for use in operations primarily in high credit quality, short-term duration securities that the Company believes bear minimal risk.


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Index to Consolidated Financial Statements




Fair value measurements
Fair value measurements used in the 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 measured and recorded at fair value on a recurring basis:
 As of December 31, 2017 As of December 31, 2019
(in thousands)Balance Sheet Classification Level 1 Level 2 Level 3 TotalBalance Sheet Classification Level 1 Level 2 Level 3 Total
Assets                
Foreign currency exchange contractsOther current assets $
 $36,574
 $
 $36,574
Other current assets $
 $54,765
 $
 $54,765
Liabilities                
Foreign currency exchange contractsOther current liabilities $
 (22,495) $
 $(22,495)Other current liabilities $
 (41,935) $
 $(41,935)
   As of December 31, 2018
(in thousands)Balance Sheet Classification Level 1 Level 2 Level 3 Total
Assets         
Foreign currency exchange contractsOther current assets $
 $44,637
 $
 $44,637
Liabilities         
Foreign currency exchange contractsOther current liabilities $
 $(36,102) $
 $(36,102)

   As of December 31, 2016
(in thousands)Balance Sheet Classification Level 1 Level 2 Level 3 Total
Assets         
Foreign currency exchange contractsOther current assets $
 $75,307
 $
 $75,307
Liabilities         
Foreign currency exchange contractsOther current liabilities $
 $(63,772) $
 $(63,772)


The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term debt obligations approximate fair values due to their short maturities. The carrying values of the Company’s term loan due 2019 and revolving credit agreements approximate fair values because interest is based on LIBOR that resets at various intervals of less than one year. The Company estimates the fair value of the convertible notesConvertible Notes using quoted prices in inactive markets for identical liabilities (Level 2). As of December 31, 2017 and 20162019 , the fair values of the convertible notesConvertible Notes and Senior Notes were $503.7$569.4 million and $475.1$668.2 million, respectively, with carrying values of $369.3$437 million and $358.3$673.4 million, respectively.


(18) Litigation and Contingencies


From time to time, the Company is a party to legal and 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 upon the consolidated financial statements of the Company. 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.






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Index to Consolidated Financial Statements




(19) Commitments


As of December 31, 2017,2019, the Company had $85.3$79.6 million of stand-by letters of credit/bank guarantees issued on its behalf, of which $3.5$3.7 million are collateralized by cash deposits held by the respective issuing banks.
Under certain circumstances, the Company grants guarantees in support of obligations of subsidiaries. As of December 31, 2017,2019, the Company granted off balance sheet guarantees for cash in various ATM networks amounting to $17.1$12.5 million over the terms of the cash supply agreements and performance guarantees amounting to approximately $21.7$49.6 million over the terms of the agreements with the customers.
Once each of Euronet's subsidiaries reaches a certain size, it is required under the Credit Facility to provide a guarantee of all or a portion of the outstanding obligations under the Credit Facility depending upon whether the subsidiary is a domestic or foreign entity.
From time to time, the Company enters into agreements with unaffiliated partiescommercial 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, generally, is not recorded on the Company’s Consolidated Balance Sheets. As of December 31, 2017,2019, the balance of such cash used in the Company's ATM networks for which the Company was responsible was approximately $385.9$489 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 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 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 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 December 31, 20172019 or 2016.2018.



113

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Index to Consolidated Financial Statements

(20) Related Party Transactions


The Company leases airplanesan airplane from companies partiallya company owned by Mr. Michael J. Brown, Euronet's Chief Executive Officer, President and Chairman of the Board of Directors. The airplanes areairplane is leased for business use on a per flight hour basis at competitive commercial rates with no minimum usage requirement. Euronet incurred expenses of $0.4$0.3 million,, $0.3 million and $0.3$0.4 million during the years ended December 31, 2017, 20162019, 2018 and 20152017, respectively, for the use of these airplanes.this airplane.


In June 2014, the Company signed an ATM operating agreement with Rontec Ltd., a U.K. company in which Gerald Ronson holds a majority of the shares. Mr. Ronson is the father-in-law of Paul Althasen, one of the Company's directors. This is a commercial agreement under which the Company leases ATM sites from Rontec Ltd. at rates which it considers to be competitive commercial rates. The Company paid $49$50 thousand, $106$38 thousand and $124$49 thousand under this agreement in each of 2017, 20162019, 2018 and 2015,2017, respectively.


(21) Selected Quarterly Data (Unaudited)

102

Table of Contents
Index to Consolidated Financial Statements


(in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter
For the Year Ended December 31, 2017 
 
 
 
Revenues $473,380
 $536,563
 $637,834
 $604,645
Operating income $41,286
 $66,691
 $116,901
 $41,119
Net income (loss) $28,069
 $51,347
 $100,353
 $(22,829)
Net income (loss) attributable to Euronet Worldwide, Inc. $28,123
 $51,365
 $100,290
 $(22,933)
Earnings (loss) per common share: 

 

 

 

Basic $0.54
 $0.98
 $1.91
 $(0.44)
Diluted $0.51
 $0.93
 $1.80
 $(0.44)
For the Year Ended December 31, 2016 

 

 

 

Revenues $437,894
 $476,867
 $524,025
 $519,829
Operating income $41,889
 $59,310
 $90,468
 $58,106
Net income $29,084
 $55,577
 $60,782
 $28,655
Net income attributable to Euronet Worldwide, Inc. $29,094
 $55,677
 $60,733
 $28,911
Earnings per common share: 

 

 

 

Basic $0.55
 $1.07
 $1.16
 $0.55
Diluted $0.53
 $1.04
 $1.11
 $0.54

(in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter
For the Year Ended December 31, 2018 

 

 

 

Revenues $550,515
 $622,224
 $714,505
 $649,385
Operating income $45,472
 $90,369
 $150,913
 $71,160
Net income (loss) $26,344
 $43,636
 $102,257
 $59,894
Net income (loss) attributable to Euronet Worldwide, Inc. $26,413
 $43,724
 $102,723
 $59,991
Earnings (loss) per common share: 

 

 

 

Basic $0.51
 $0.85
 $2.01
 $1.16
Diluted $0.49
 $0.82
 $1.89
 $1.10
For the Year Ended December 31, 2019        
Revenues $577,509
 $691,867
 $786,986
 $693,747
Operating income $56,094
 $117,897
 $193,990
 $107,213
Net income $34,579
 $68,005
 $137,541
 $106,570
Net income attributable to Euronet Worldwide, Inc. $34,543
 $68,153
 $137,607
 $106,446
Earnings per common share:        
Basic $0.67
 $1.28
 $2.53
 $1.96
Diluted $0.62
 $1.25
 $2.46
 $1.91




Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


None.


Item 9A. Controls and Procedures


Evaluation of Disclosure 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 December 31, 20172019. 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.


Changes in Internal Controls Over Financial Reporting


There has been no change in our internal control over financial reporting during the fourth quarter of 20172019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Management's Report On Internal Control Over Financial Reporting


To the Stockholders of Euronet Worldwide, Inc.:


Management is responsible for establishing and maintaining an effective internal control over financial reporting as this term is defined under Rule 13a-15(f) of the Securities Exchange Act of 1934 and has made organizational arrangements providing appropriate divisions of responsibility and has established communication programs aimed at assuring that its policies, procedures and principles of business conduct are understood and practiced by its employees. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.


Management of Euronet Worldwide, Inc. assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 20172019. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in InternalControl-Integrated Framework (2013). Based on these criteria and our assessment, we have determined that, as of December 31, 2017,2019, the Company's internal control over financial reporting was effective.


The effectiveness of the Company's internal control over financial reporting as of December 31, 2017,2019, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their audit report, included herein.


/s/ Michael J. Brown 
Michael J. Brown 
Chief Executive Officer 
  
/s/ Rick L. Weller 
Rick L. Weller 
Chief Financial Officer and Chief Accounting Officer 


March 1, 2018February 28, 2020



Item 9B. Other Information


None.On February 26, 2020, the Board of Directors of the Company authorized a stock repurchase plan providing for the repurchase of up to $250 million in value of Euronet common stock, but not more than five million shares, through February 28, 2022. Repurchases 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. The program may be discontinued or amended at any time.


Part III
Item 10. Directors, Executive Officers and Corporate Governance


The information under “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance”Reports” and “Meetings and Committees of the Board of Directors” in the Delinquent Proxy Statement for the 20182020 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange CommissionSEC no later than 120 days after December 31, 20172019, is incorporated herein by reference. Information concerning our Code of Business Conduct and Ethics for our employees, including our Chief Executive Officer and Chief Financial Officer, is set forth under “Availability of Reports, Certain Committee Charters, and Other Information” in Part I of this annual reportAnnual Report on Form 10-K and incorporated herein by reference. Information concerning executive officers is set forth under “Executive Officers of the Registrant”“Information about our Executive Officers” in Part I of this Annual Report on Form 10-K and incorporated herein by reference.


We intend to satisfy the requirement under Item 5.05 of Form 8-K to disclose any amendments to our Code of Business Conduct and Ethics and any waiver from a provision of our Code of Ethics by disclosing such information on a Form 8-K or on our Website at www.euronetworldwide.com under Investor Relations/For Investors/Corporate Governance.




Item 11. Executive Compensation


The information under “Compensation Tables,” “Compensation Discussion and Analysis,” “Director Compensation,” “Report of Compensation Committee” and “Compensation Committee Interlocks and Insider Participation” in the Proxy Statement for the 20182020 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange CommissionSEC no later than 120 days after December 31, 20172019, is incorporated herein by reference.




Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


The information under “Beneficial Ownership of Common Stock” and, “Election of Directors”and "Equity Compensation Plan Information" in the Proxy Statement for the 20182020 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange CommissionSEC no later than 120 days after December 31, 20172019, is incorporated herein by reference. The information in Part II, Item 5, "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities - Equity Compensation Plan Table" is incorporated herein by reference.




Item 13. Certain Relationships and Related Transactions, and Director Independence


The information under “Certain Relationships and Related Transactions and Director Independence” in the Proxy Statement for the 20182020 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange CommissionSEC no later than 120 days after December 31, 20172019, is incorporated herein by reference.




Item 14. Principal Accounting Fees and Services


The information under “Audit Matters - Fees of the Company's Independent Auditors” and - "Audit Matters - Audit Committee Pre-Approval Policy" in the Proxy Statement for the 20182020 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange CommissionSEC no later than 120 days after December 31, 20172019, is incorporated herein by reference.





Part IV


Item 15. Exhibits and Financial Statement Schedules


(a)List of Documents Filed as Part of this Report.


1. Financial Statements


The Consolidated Financial Statements and relatedaccompanying notes, together with the report of KPMG LLP, appear in Part II, Item 8 - Financial Statements and Supplementary Data, of this Form 10-K.


2. Schedules


None.


3. Exhibits


The exhibits that are required to be filed or incorporated by reference herein are listed in the Exhibit Index below.


Exhibits
Exhibit Index
Exhibit Description
   
3.1 
   
3.2 
   
3.3 
   
3.4 
   
4.1 
4.2
4.3
4.4

4.5
   
4.24.6 
   
10.1 
   
10.2 
   

10.3 
   
10.4 
   
10.5 
   
10.6 
   
10.7 
   
10.8 
   
10.9 
   
10.10 
   
10.11.1 
   
10.11.2 
   
10.12 

   
10.13 
   
10.14 
   

10.15 
   
10.16 
10.17
10.18
10.19
   
10.2010.17 
12.1
   
21.1 
   
23.1 
   
31.1 
   
31.2 
   
32.1 
   
32.2 
   
101 The following materials from Euronet Worldwide, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017,2018, formatted ininline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 20172018 and 2016,2017, (ii) Consolidated Statements of Income for the years ended December 31, 2018, 2017 2016 and 2015,2016, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 2016 and 2015,2016, (iv) Consolidated Statements of Changes in Equity for the years ended December 31, 2018, 2017 2016 and 2015,2016, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 2016 and 2015,2016, and (vi) Notes to the Consolidated Financial Statements.
104Cover Page Interactive Data File (contained in Exhibit 101)
___________________________
(1)Filed herewith.

(2)Management contracts and compensatory plans and arrangements required to be filed as Exhibits pursuant to Item 15(a) of this report.
(3)Pursuant to Item 601(b)(32) of Regulation S-K, this Exhibit is furnished rather than filed with this Form 10-K.


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 Annual Report on Form 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.






None.

Signatures


Pursuant to the requirements of Section 13 or 15(d) 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.


Euronet Worldwide, Inc.


Date: March 1, 2018February 28, 2020
  /s/ Michael J. Brown 
  Michael J. Brown 
  Chairman of the Board of Directors, Chief Executive 
   Officer, President and Director (principal executive officer) 


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


SignatureTitle
  
/s/ Michael J. Brown
Michael J. Brown
March 1, 2018February 28, 2020
Chairman of the Board of Directors, Chief Executive Officer, President and Director (principal executive officer)
  
/s/ Rick L. Weller
Rick L. Weller
March 1, 2018February 28, 2020
Chief Financial Officer and Chief Accounting Officer (principal financial officer and principal accounting officer)
  
/s/ Paul S. Althasen
Paul S. Althasen
March 1, 2018February 28, 2020
Director
  
/s/ Andrzej Olechowski
Andrzej Olechowski
March 1, 2018February 28, 2020
Director
  
/s/ Eriberto R. Scocimara
Eriberto R. Scocimara
March 1, 2018February 28, 2020
Director
  
/s/ Thomas A. McDonnell
Thomas A. McDonnell
March 1, 2018February 28, 2020
Director
  
/s/ Andrew B. Schmitt
Andrew B. Schmitt
March 1, 2018February 28, 2020
Director
  
/s/ M. Jeannine Strandjord
M. Jeannine Strandjord
March 1, 2018February 28, 2020
Director
  
___________________/s/ Mark R. Callegari
Mark R. Callegari

February 28, 2020
Director


121110