UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2007~~March 31, 2008


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-31648

EURONET WORLDWIDE, INC.

(Exact name of the registrant as specified in its charter)


Delaware		74-2806888
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

4601 COLLEGE BOULEVARD, SUITE 300
LEAWOOD, KANSAS 66211
(Address of principal executive offices)

(913) 327-4200
(Registrant’s telephone number, including area code)

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. Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a ~~non-accelerated filer.~~smaller reporting company. See ~~definition~~the definitions of ‘‘“large accelerated filer,” “accelerated filer” and ~~large accelerated filer’’~~“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Large accelerated filer~~þ ~~Accelerated filer~~o


Large accelerated filerþ	Accelerated filero	Non-accelerated filero	Smaller reporting companyo
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares of the issuer’s common stock, $0.02 par value, outstanding as of ~~October 31, 2007~~April 30, 2008 was ~~48,711,295~~49,035,026 shares.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)


							As of
	As of September			As of						December 31,
	30, 2007			December 31,			March 31, 2008			2007
	(unaudited)			2006			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	251,435		$	321,058		$	237,097		$	267,591
Restricted cash		107,538			80,703			87,594			140,222
Inventory — PINs and other		41,071			49,511			50,654			50,265
Trade accounts receivable, net of allowances for doubtful accounts of $6,023 at September 30, 2007 and $2,137 at December 31, 2006		312,075			212,631
Trade accounts receivable, net of allowances for doubtful accounts of $7,289 at March 31, 2008 and $6,248 at December 31, 2007								273,272			290,378
Deferred income taxes, net		27,686			9,356			14,298			13,570
Prepaid expenses and other current assets		25,656			15,212			48,391			40,458

Total current assets		765,461			688,471			711,306			802,484
Property and equipment, net of accumulated depreciation of $116,359 at September 30, 2007 and $91,883 at December 31, 2006		76,864			55,174
Property and equipment, net of accumulated depreciation of $133,796 at March 31, 2008 and $119,742 at December 31, 2007								97,623			88,984
Goodwill		756,173			297,134			798,731			762,723
Acquired intangible assets, net of accumulated amortization of $39,316 at September 30, 2007 and $23,073 at December 31, 2006		162,043			50,649
Acquired intangible assets, net of accumulated amortization of $53,750 at March 31, 2008 and $45,561 at December 31, 2007								155,889			156,751
Deferred income taxes, net		19,718			19,004			36,879			30,822
Other assets, net of accumulated amortization of $13,431 at September 30, 2007 and $10,542 at December 31, 2006		24,644			19,208
Other assets, net of accumulated amortization of $14,682 at March 31, 2008 and $13,270 at December 31, 2007								22,393			44,392

Total assets	$	1,804,903		$	1,129,640		$	1,822,821		$	1,886,156

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	274,163		$	269,212		$	235,538		$	307,108
Accrued expenses and other current liabilities		186,818			99,039			194,552			169,246
Current installments on capital lease obligations		5,514			6,592
Current portion of capital lease obligations								5,414			5,079
Short-term debt obligations and current maturities of long-term debt obligations		5,498			4,378			1,900			1,910
Income taxes payable		20,415			9,463			12,589			15,619
Deferred income taxes		6,954			4,108			7,991			7,609
Deferred revenue		12,327			11,318			16,262			16,603

Total current liabilities		511,689			404,110			474,246			523,174
Debt obligations, net of current portion		501,633			349,073			479,987			539,303
Capital lease obligations, excluding current installments		12,260			13,409
Capital lease obligations, net of current portion								11,169			11,520
Deferred income taxes		75,825			44,094			87,323			74,641
Other long-term liabilities		2,639			1,811			8,894			4,641
Minority interest		9,171			8,350			10,323			8,975

Total liabilities		1,113,217			820,847			1,071,942			1,162,254

Stockholders’ equity:
Preferred Stock, $0.02 par value. Authorized 10,000,000 shares; none issued		—			—			—			—
Common Stock, $0.02 par value. 90,000,000 shares authorized; 48,823,598 and 37,647,782 issued at September 30, 2007 and December 31, 2006, respectively		972			749
Common Stock, $0.02 par value. 90,000,000 shares authorized; 49,210,963 issued at March 31, 2008 and 49,159,968 issued at December 31, 2007								984			983
Additional paid-in-capital		653,087			338,216			661,530			658,047
Treasury stock, at cost, 205,919 and 207,755 shares at September 30, 2007 and December 31, 2006, respectively		(387	)		(196	)
Subscriptions receivable		(39	)		(170	)
Treasury stock, at cost, 210,298 shares at March 31, 2008 and 207,065 shares at December 31, 2007								(493	)		(379	)
Accumulated deficit		(25,531	)		(59,409	)		(12,741	)		(5,905	)
Restricted reserve		953			780			1,001			957
Accumulated other comprehensive income		62,631			28,823			100,598			70,199

Total stockholders’ equity		691,686			308,793			750,879			723,902

Total liabilities and stockholders’ equity	$	1,804,903		$	1,129,640		$	1,822,821		$	1,886,156

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Statements of ~~Income~~Operations and Comprehensive Income
(Unaudited, in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2007			2006			2007			2006			2008			2007
Revenues:
EFT Processing Segment	$	48,113		$	40,539		$	135,844		$	116,166		$	50,506		$	42,047
Prepaid Processing Segment		144,631			120,240			414,442			343,957			144,225			127,581
Money Transfer Segment		53,573			874			103,581			2,303			52,332			789


Total revenues		246,317			161,653			653,867			462,426			247,063			170,417


Operating expenses:
Direct operating costs		165,079			112,488			446,154			319,602			165,953			120,664
Salaries and benefits		32,437			18,676			82,155			56,164			32,933			18,929
Selling, general and administrative		16,889			9,971			45,104			27,684			21,621			10,802
Depreciation and amortization		13,478			7,512			34,333			21,575			14,450			8,105


Total operating expenses		227,883			148,647			607,746			425,025			234,957			158,500

Operating income														12,106			11,917

Operating income		18,434			13,006			46,121			37,401

Other income (expense):
Interest income		4,053			3,682			12,494			9,791			3,826			4,345
Interest expense		(7,474	)		(3,802	)		(18,837	)		(11,055	)		(6,867	)		(3,581	)
Income from unconsolidated affiliates		(9	)		197			867			555			243			240
Impairment loss on investment securities														(17,502	)		—
Loss on early retirement of debt		(411	)		—			(411)			—			(155	)		—
Foreign currency exchange gain, net		8,561			1,090			10,302			5,420			13,073			433


Other income, net		4,720			1,167			4,415			4,711
Total other income (expense)														(7,382	)		1,437


Income from continuing operations before income taxes and minority interest		23,154			14,173			50,536			42,112			4,724			13,354
Income tax expense		(6,634	)		(3,599	)		(15,451	)		(10,712	)		(10,997	)		(3,884	)
Minority interest		(599	)		(243	)		(1,551	)		(716	)		(563	)		(353	)

Income (loss) from continuing operations														(6,836	)		9,117
Gain from discontinued operations														—			344

Income from continuing operations		15,921			10,331			33,534			30,684
Gain from discontinued operations, net		—			—			344			—

Net income		15,921			10,331			33,878			30,684
Net income (loss)														(6,836	)		9,461
Translation adjustment		22,395			5,321			34,390			14,047			31,722			2,615
Unrealized loss on interest rate swaps		(553	)		—			(582	)		—			(751	)		—
Impairment loss on investment securities														(572	)		—

Comprehensive income	$	37,763		$	15,652		$	67,686		$	44,731		$	23,563		$	12,076


Earnings per share — basic:
Earnings (loss) per share — basic:
Continuing operations	$	0.33		$	0.28		$	0.76		$	0.83		$	(0.14	)	$	0.24
Discontinued operations		—			—			0.01			—			—			0.01

Total													$	(0.14	)	$	0.25

Basic weighted average shares outstanding														48,956,945			38,434,178


Earnings (loss) per share — diluted:
Continuing operations													$	(0.14	)	$	0.22
Discontinued operations														—		$	0.01

Total	$	0.33		$	0.28		$	0.77		$	0.83		$	(0.14	)	$	0.23


Basic weighted average shares outstanding		48,523,643			37,230,518			44,222,453			36,938,652

Earnings per share — diluted:
Continuing operations	$	0.31		$	0.26		$	0.72		$	0.78
Discontinued operations		—			—			0.01			—


Total	$	0.31		$	0.26		$	0.73		$	0.78


Diluted weighted average shares outstanding		54,439,296			42,525,511			49,905,599			42,463,401			48,956,945			43,688,014

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited, in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2007			2006			2008			2007

Net income	$	33,878		$	30,684

Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(6,836	)	$	9,461
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		34,333			21,575			14,450			8,105
Share-based compensation		6,138			5,832			2,907			1,874
Unrealized foreign exchange gain, net		(8,825	)		(4,841	)
Loss (gain) on disposal of property and equipment		37			(165	)
Gain on discontinued operations		(344	)		—
Deferred income tax benefit		524			(3,271	)
Foreign exchange (gain) loss, net								(13,073	)		1,044
Non-cash impairment of investment securities								17,502			—
Gain from discontinued operations								—			(344	)
Deferred income tax expense (benefit)								4,657			(348	)
Income assigned to minority interest		1,551			716			563			353
Income from unconsolidated affiliates		(867	)		(555	)		(243	)		(240	)
Amortization of debt obligations issuance expense		1,769			1,581			725			283

Changes in working capital, net of amounts acquired:
Income taxes payable, net		(777	)		2,916			(1,579	)		2,677
Restricted cash		17,198			(8,997	)		27,484			(1,564	)
Inventory — PINs and other		12,177			(8,793	)		1,821			1,567
Trade accounts receivable		(33,931	)		10,945			25,987			12,267
Prepaid expenses and other current assets		(5,837	)		3,318			(3,531	)		(3,995	)
Trade accounts payable		(26,454	)		(10,741	)		(75,877	)		(28,253	)
Deferred revenue		493			1,750			(624	)		1,201
Accrued expenses and other current liabilities		28,529			9,336			19,368			3,318
Other, net		(285	)		(670	)		892			84


Net cash provided by operating activities		59,307			50,620			14,593			7,490


Cash flows from investing activities:
Acquisitions, net of cash acquired		(352,573	)		(2,312	)		(1,786	)		(14,959	)
Acquisition escrow		(26,000	)		—			26,000			(26,000	)
Proceeds from sale of property and equipment		127			732
Purchases of property and equipment		(21,781	)		(15,586	)		(10,001	)		(3,384	)
Purchases of other long-term assets		(3,420	)		(3,106	)		(938	)		(2,008	)
Other, net		596			—			182			51


Net cash used in investing activities		(403,051	)		(20,272	)
Net cash provided (used) by investing activities								13,457			(46,300	)


Cash flows from financing activities:
Proceeds from issuance of shares		165,389			12,456			462			160,432
Borrowings from short-term debt obligations and revolving credit agreements		639,119			12,523
Payments on short-term debt obligations and revolving credit agreements		(687,515	)		(18,464	)
Proceeds from long-term debt obligations		190,000			—
Repayment of long-term debt		(25,000	)		—
Repayment of capital lease obligations		(7,603	)		(4,639	)
Debt issuance costs		(3,827	)		—
Proceeds received from minority interest stockholders		188			—
Net repayments of short-term debt obligations and revolving credit agreements classified as current liabilities								(215	)		—
Borrowings from revolving credit agreements classified as non-current liabilities								23,500			9,000
Repayments of revolving credit agreements classified as non-current liabilities								(74,143	)		(28,157	)
Repayments of long-term debt obligations								(10,000	)		—
Repayments of capital lease obligations								(2,263	)		(2,839	)
Cash dividends paid to minority interest stockholders		(1,572	)		—			—			(1,572	)
Other, net		115			(196	)		67			11


Net cash provided by financing activities		269,294			1,680

Net cash provided (used) by financing activities								(62,592	)		136,875

Effect of exchange differences on cash		4,827			3,406			4,048			366


Increase in cash and cash equivalents		(69,623	)		35,434
Increase (decrease) in cash and cash equivalents								(30,494	)		98,431
Cash and cash equivalents at beginning of period		321,058			219,932			267,591			321,058


Cash and cash equivalents at end of period	$	251,435		$	255,366		$	237,097		$	419,489


Interest paid during the period	$	15,102		$	7,366		$	4,149		$	1,153
Income taxes paid during the period		13,428			8,862			6,881			2,075

See accompanying notes to the consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL

Organization

Euronet Worldwide, Inc. and its subsidiaries (the “Company” or “Euronet”) is an industry leader in processing secure electronic financial transactions. Euronet’s Prepaid Processing Segment is one of the world’s largest providers of “top-up” services for prepaid products, primarily prepaid mobile airtime. The EFT Processing Segment provides end-to-end solutions relating to operations of automated teller machine (“ATM”) and Point of Sale (“POS”) networks, and debit and credit card processing in Europe, the Middle East and Asia. The Money Transfer Segment, comprised primarily of the Company’s ~~subsidiary,~~ RIA Envia, Inc. (“RIA”), subsidiary and its operating subsidiaries, is the third-largest global money transfer company based upon revenues and volumes and provides services through a sending network of agents and Company-owned stores in the U.S., the Caribbean, Europe and Asia, disbursing money transfers through a worldwide payer network.

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting of normal interim closing procedures) necessary to present fairly the financial position of the Company as of ~~September 30, 2007,~~March 31, 2008, and the results of its operations ~~for the three- and nine-month periods ended September 30, 2007 and 2006~~ and cash flows for the ~~nine-month~~three-month periods ended ~~September 30, 2007~~March 31, 2008 and ~~2006.~~2007.

The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Euronet for the year ended December 31, ~~2006,~~2007, including the notes thereto, set forth in the Company’s 2007 Annual Report on Form 10-K.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The results of operations for the ~~three- and nine-month periods~~three-month period ended ~~September 30, 2007~~March 31, 2008 are not necessarily indicative of the results to be expected for the full year ending December 31, ~~2007.~~2008. Certain amounts in prior years have been reclassified to conform to current period presentation.

Goodwill and acquired intangible translation adjustment

During the third quarter 2007, the Company corrected an immaterial error related to foreign currency translation adjustments for goodwill and acquired intangible assets recorded in connection with acquisitions completed induring periods prior to December 31, 2006. The impact of this ~~adjustment increased goodwill~~correction on the Company’s Unaudited Statements of Operations and Comprehensive Income was to increase depreciation and amortization expense by ~~$18.4~~$0.2 million, ~~acquired intangible assets by $3.1 million, deferred income tax liabilities by $1.0 million and accumulated other comprehensive~~decrease operating income by ~~$21.4~~$0.2 million, ~~as of December 31, 2006. Additionally, the adjustment increased intangible amortization expense~~reduce net income by $0.1 million and ~~$0.3~~decrease diluted earnings per share by $0.01 for the three months ended March 31, 2007. Due primarily to the impact of the correction on the Company’s foreign currency translation adjustment, total comprehensive income increased by $1.3 million for the ~~three- and nine-month periods~~three months ended ~~September 30, 2006, respectively, and increased comprehensive income by $3.0 million and $10.1 million for the three- and nine-month periods ended September 30, 2006, respectively.~~March 31, 2007. This correction did not impact the Company’s cash flows from operating, financing or investing activities.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Fair Value Measurements

Effective January 1, 2008, the Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” for financial assets and liabilities. This Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Statement applies whenever other accounting pronouncements require or permit fair value measurements. Accordingly, this Statement does not require any new fair value measurements. Additionally, FASB Staff Position No. 157-2, “Effective Date of FASB Statement No. 157,” delayed the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for certain nonfinancial assets and liabilities. Beginning January 1, 2009, the Company will adopt the provisions for those nonfinancial assets and liabilities, which include those measured at fair value in goodwill impairment testing, indefinite-lived intangible assets measured at fair value for impairment assessment, nonfinancial long-lived assets measured at fair value for impairment assessment and investments in unconsolidated subsidiaries. The Company does not expect the provisions of SFAS No. 157 related to these items to have a material impact on its consolidated financial statements. See Note 9, Fair Value Measurements, for the required fair value disclosures.

Investment in MoneyGram International, Inc.

The Company’s investment in MoneyGram International, Inc. (“MoneyGram”) was classified as available-for-sale as of December 31, 2007 and was recorded in other assets on the Company’s Consolidated Balance Sheet. During the first quarter 2008, the Company decided not to pursue the acquisition of MoneyGram. Also, during the first quarter 2008, the value of the Company’s investment in MoneyGram declined and the Company determined the decline to be other than temporary. Accordingly, the Company recognized $17.5 million in

impairment losses associated with the investment and reversed the $0.6 million gain recorded during 2007 in other comprehensive income. Because of the Company’s decision not to submit a proposal to acquire MoneyGram, the investment was reclassified to other current assets on the Company’s Unaudited Consolidated Balance Sheet as of March 31, 2008. During the first quarter 2008, the Company also recorded acquisition related expenses totaling $3.0 million, which are included in selling, general and administrative expenses.

Money transfer settlement obligations

Money transfer settlement obligations are recorded in accrued expenses and other current liabilities on the Company’s ~~unaudited consolidated balance sheet~~Unaudited Consolidated Balance Sheets and consist of amounts owed by Euronet to money transfer recipients. As of ~~September 30, 2007,~~March 31, 2008, the Company’s money transfer settlement obligations were ~~$43.0~~$39.8 million.

Accounting for derivative instruments and hedging activities

The Company accounts for derivative instruments and hedging activities in accordance with ~~Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”)~~SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (“SFAS No. 133”), which requires that all derivative instruments be recognized as either assets or liabilities on the balance sheet at fair value. During the second quarter 2007, the Company entered into derivative instruments to manage exposure to interest rate risk that are considered cash flow hedges under the provisions of SFAS No. 133. To qualify for hedge accounting under SFAS No. 133, the details for the hedging relationship must be formally documented at the inception of the arrangement, including the Company’s hedging strategy, risk management objective, the specific risk being hedged, the derivative instrument being used, the item being hedged, an assessment of hedge effectiveness and how effectiveness will continue to be assessed and measured. For the effective portion of a cash flow hedge, changes in the value of the hedge instrument are recorded temporarily in stockholders’ equity as a component of other comprehensive income and then recognized as an adjustment to interest expense over the term of the hedging instrument.

In the Money Transfer Segment, the Company enters into foreign currency forward contracts to offset foreign currency exposure related to the notional value of money transfer transactions collected or paid in currencies other than the U.S. dollar. These forward contracts are considered derivative instruments under the provisions of SFAS No. 133, however, the Company does not designate such instruments as hedges. Accordingly, changes in the value of these contracts are recognized immediately as a component of foreign currency exchange gain, net in the ~~unaudited consolidated statement~~Unaudited Consolidated Statements of ~~income~~Operations and ~~comprehensive income.~~Comprehensive Income. The impact of changes in value of these forward contracts, together with the impact of the change in value of the related foreign currency denominated receivable or payable, on the Company’s ~~unaudited consolidated statement~~Unaudited Consolidated Statements of ~~income~~Operations and ~~comprehensive income~~Comprehensive Income is not significant.

Cash flows resulting from derivative instruments are classified as cash flows from operating activities in the Company’s ~~unaudited consolidated statement~~Unaudited Consolidated Statements of ~~cash flows.~~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 9,6, Derivative Instruments and Hedging Activities, for further discussion of derivative instruments.

~~Presentation of taxes collected and remitted to governmental authorities~~

During 2006, the Emerging Issues Task Force (“EITF”) issued EITF 06-3, “How Taxes Collected and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation).” The Company presents taxes collected and remitted to governmental authorities on a net basis in the accompanying consolidated statements of income.

~~Accounting for uncertainty in income taxes~~

Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of SFAS No. 109, “Accounting for Income Taxes.” FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the measurement and recognition related to accounting for income taxes.

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 14, Income Taxes, for further discussion regarding the adoption of FIN 48.

Recent accounting pronouncements

In ~~February 2007,~~March 2008, the FASB issued SFAS No. ~~159, “The Fair Value Option~~161, “Disclosures about Derivative Instruments and Hedging Activities,” which requires enhanced disclosures about an entity’s derivative and hedging activities, including: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for ~~Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115” (“~~under SFAS No. ~~159”). SFAS No. 159 expands the use of fair value accounting~~133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not ~~affect existing standards which~~ require, ~~assets or liabilities to be carried~~comparative disclosures for earlier periods at fair value. Under SFAS No. 159, a company may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantorinitial adoption. Management of the Company is ~~permitted to pay a third party to provide~~still evaluating the ~~warranty goods or services. If the use~~impact of fair value is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, such as deferred financing costs. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings. Subsequent to the adoption of SFAS No. 159, changes in fair value are recognized in earnings. SFAS No. 159 is effective for Euronet beginning in the first quarter 2008. Euronet is currently determining whether fair value accounting is appropriate for any of its eligible items and cannot estimate161; however, the impact ~~if any, which SFAS No. 159 will have on its consolidated results of operations and financial condition.~~is not expected to be material.

(3) EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted-average shares outstanding during the respective period, after adjusting for the potential dilution of the assumed conversion of the Company’s convertible debentures, shares issuable in connection with acquisition obligations, restricted stock and options to purchase the Company’s common ~~stock and restricted~~ stock. The following table provides a reconciliation of net income to earnings available to common stockholders and the computation of diluted weighted average number of common shares outstanding:

Estimated
(dollar amounts in thousands) Life
Current assets $ 78,220
Property and equipment various 10,854
Customer relationships 3 - 8 years 73,280
Trademarks and trade names 20 years 36,760
Software 5 years 1,610
Non-compete agreements 3 years 270
Other non-current assets 1,396
Goodwill Indefinite 403,523

Assets acquired 605,913

Current liabilities (85,190 )
Non-current liabilities (1,574 )
Deferred income tax liability (14,852 )

Net assets acquired $ 504,297

Pursuant to the terms of the Stock Purchase Agreement in the RIA acquisition (as amended, the “Stock Purchase Agreement”), $35.0 million in cash and 276,382 shares of Euronet Common Stock valued at $7.4 million are being held in escrow to secure certain obligations of the sellers under the Stock Purchase Agreement. These amounts have been reflected in the purchase price because the Company has determined beyond a reasonable doubt that the obligations will be met. The 3,685,098 CVRs mature on October 1, 2008 and will result in the issuance of up to $20 million of additional shares of Euronet Common Stock or payment of additional cash, at the Company’s option, if the price of Euronet Common Stock is less than $32.56 on the maturity date. The 3,685,098 SARs entitle the sellers to acquire additional shares of Euronet Common Stock at an exercise price of $27.14 at any time through October 1, 2008. Combined, the CVRs and SARs entitle the sellers to additional consideration of at least $20 million in Euronet Common Stock or cash. Management has initially estimated the total fair value of the CVRs and SARs at approximately $32.1 million using a Black Scholes pricing model. These and other terms and conditions applicable to the CVRs and SARs are set forth in the agreements governing these instruments.

Additionally, in April 2007, the Company combined its previous money transfer business with RIA and incurred total exit costs of approximately $0.9 million during the second quarter 2007. These costs were recorded as operating expenses and represent the accelerated depreciation and amortization of property and equipment, software and leasehold improvements that were disposed of during the second quarter 2007; the write off of marketing materials and trademarks that have been discontinued or will not be used; the write off of accounts receivable from agents that did not meet RIA’s credit requirements; and severance and retention payments made to certain employees. Additional costs incurred in association with exiting the Company’s previous money transfer business, if any, are not expected to be significant.

~~Other acquisitions:~~

During the nine-months ended September 30, 2007, the Company completed three other acquisitions described below for an aggregate purchase price of $26.5 million, comprised of $18.1 million in cash, 275,429 shares of Euronet Common Stock valued at $7.6 million and notes payable of $0.8 million. In connection with one of these acquisitions, the Company agreed to certain contingent consideration arrangements based on the value of Euronet Common Stock and the achievement of certain performance criteria. Upon the achievement of certain performance criteria, during 2009 and 2010, the Company may have to pay a total of $2.5 million in cash or 75,489 shares of Euronet Common Stock, at the option of the seller.

	•		During January 2007, EFT Services Holding BV and Euronet Adminisztracios Kft, both wholly-owned subsidiaries of Euronet, completed the acquisition of a total of 100% of the share capital of Brodos SRL in Romania (“Brodos Romania”). Brodos Romania is a leading electronic prepaid mobile airtime processor that expanded the Company’s Prepaid Processing Segment business to Romania.

	•		During February 2007, e-pay Holdings Limited, a wholly-owned subsidiary of Euronet, completed the acquisition of all of the share capital of Omega Logic, Ltd. (“Omega Logic”). Omega Logic is a prepaid top-up company based, and primarily operating, in the U.K. This acquisition enhanced our Prepaid Processing Segment business in the U.K.

	•		During April 2007, PaySpot, Inc. (a wholly-owned subsidiary of Euronet) acquired customer relationships from Synergy Telecom, Inc. (“Synergy”) and Synergy agreed not to compete with PaySpot in the prepaid mobile phone top-up business in the U.S. for a period of five years. This acquisition enhances the Company’s Prepaid Processing Segment business in the U.S.

As of September 30, 2007, 75,743 shares of Euronet Common Stock issued in connection with these acquisitions remains in escrow subject to the achievement of certain performance criteria. These shares have been reflected in the purchase price because the Company has determined beyond a reasonable doubt that the performance criteria will be met.

~~Agreement to acquire La Nacional~~

During January 2007, the Company signed a stock purchase agreement to acquire Envios de Valores La Nacional Corp. and its U.S. based affiliates (“La Nacional”), a money transfer company originating transactions through a network of sending agents and company-owned stores. See Note 12, Commitments, Litigation and Contingencies, for further disclosure regarding the agreement to acquire La Nacional.

~~2006 Acquisition:~~

In January 2006, the Company completed the acquisition of the assets of Essentis Limited (“Essentis”) for approximately $2.9 million, which was comprised of $0.9 million in cash and approximately $2.0 million in assumed liabilities. Essentis is a U.K. company that owns and develops software packages that enhance Euronet’s outsourcing and software offerings to banks. Essentis is reported with our software business in the Company’s EFT Processing Segment. There are no potential additional purchase price or escrow arrangements associated with the acquisition of Essentis.

~~Pro Forma and Condensed Statements of Net Income:~~

The following unaudited pro forma financial information presents the condensed combined results of operations of Euronet for the three-months ended September 30, 2006 and nine-months ended September 30, 2007 and 2006, as if the acquisition of RIA described above had occurred January 1, 2006. Adjustments were made to reflect the impact of events that are a direct result of the acquisition and are expected to have a continuing impact on the Company’s combined results of operations, including amortization of purchased intangible assets that would have been recorded if the acquisition had occurred at the beginning of the periods presented. The pro forma financial information is not intended to represent, or be indicative of, the consolidated results of operations or financial condition of Euronet that would have been reported had the acquisitions been completed as of the beginning of the periods presented. Moreover, the pro forma financial information should not be considered as representative of the future consolidated results of operations or financial condition of Euronet.

Pro Forma
Three Months Ended Nine Months Ended September 30,
(in thousands, except per share data) September 30, 2006 2007 2006
Revenues $ 207,961 $ 700,056 $ 595,033
Operating income $ 15,771 $ 47,156 $ 42,766
Net income $ 6,578 $ 26,703 $ 17,004

Per share data:
Net income per share-basic $ 0.16 $ 0.59 $ 0.41
Net income per share-diluted $ 0.15 $ 0.56 $ 0.39

~~(5) PROPERTY AND EQUIPMENT, NET~~

~~The components of property and equipment, net of accumulated depreciation and amortization, as of September 30, 2007 and December 31, 2006 are as follows:~~

September 30, December 31,
(in thousands) 2007 2006
ATMs $ 87,797 $ 75,568
POS terminals 29,688 25,473
Vehicles and office equipment 23,664 8,990
Computers and software 52,074 37,026

193,223 147,057
Less accumulated depreciation and amortization (116,359 ) (91,883 )

Total $ 76,864 $ 55,174

~~(6)~~ GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

A summary of acquired intangible assets and goodwill activity for the ~~nine-month~~three-month period ended ~~September 30, 2007~~March 31, 2008 is presented below:

Amortizable Total
Intangible Intangible
(in thousands): Assets Goodwill Assets
Balance as of December 31, 2006 (Adjusted — See Note 1) $ 50,649 $ 297,134 $ 347,783
Increases (decreases):
Acquisition of RIA 111,920 403,523 515,443
Other 2007 acquisitions 8,366 21,553 29,919
Adjustment to 2006 acquisition (116 ) — (116 )
Amortization (14,394 ) — (14,394 )
Other (primarily changes in foreign currency exchange rates) 5,618 33,963 39,581

Balance as of September 30, 2007 $ 162,043 $ 756,173 $ 918,216


	Acquired
	Intangible					Total Intangible
(in thousands)	Assets			Goodwill		Assets
Balance as of December 31, 2007	$	156,751		$	762,723	$	919,474
Increases (decreases):
Adjustment to acquisition of RIA		—			132		132
Amortization		(6,354	)		—		(6,354	)
Other (primarily changes in foreign currency exchange rates)		5,492			35,876		41,368


Balance as of March 31, 2008	$	155,889		$	798,731	$	954,620

Estimated annual amortization expense on intangible assets with finite lives, before income taxes, as of ~~September 30, 2007,~~March 31, 2008, is expected to total ~~$20.7 million for 2007, $24.9~~$25.6 million for 2008, ~~$24.8~~$25.5 million for 2009, ~~$24.5~~$25.0 million for 2010, ~~$19.2~~$19.9 million for 2011, ~~and $16.5~~$17.3 million for ~~2012.~~2012 and $12.2 million for 2013.

The Company’s annual goodwill impairment test is performed during the fourth quarter. ~~For~~The Company’s annual impairment test for the year ended December 31, ~~2006, the results of the Company’s goodwill impairment test~~2007 indicated that there were no impairments. Determining the fair value of reporting units ~~for the purpose of the goodwill impairment test~~ requires significant management judgment in estimating future cash flows and assessing potential market and economic conditions. It is reasonably possible that the Company’s operations will not perform as expected, or that estimates or assumptions could change, which may result in the Company recording material non-cash impairment charges during the year in which these changes take place.

~~(7) OTHER ASSETS~~

During the third quarter 2007, the Company recognized $0.3 million of equity losses related to e-pay Malaysia’s unsuccessful expansion efforts into Indonesia. The Company has a 40% minority investment in e-pay Malaysia.

During October 2007, e-pay Malaysia reported that it was ceasing operations in Indonesia. It is uncertain whether this business development will adversely impact the Company’s share of equity earnings in this minority investment. As of September 30, 2007, the Company’s investment in e-pay Malaysia was $2.6 million. Based on the performance of e-pay Malaysia’s core business, management of the Company does not believe that the amount recorded as investment in e-pay Malaysia is impaired.

~~(8)~~(5) DEBT OBLIGATIONS

A summary of debt obligation activity for the ~~nine-month~~three-month period ended ~~September 30, 2007~~March 31, 2008 is presented below:

1.625% 3.50%
Revolving Convertible Convertible
Credit Other Debt Capital Debentures Debentures
(in thousands) Facilities Obligations Leases Due 2024 Due 2025 Term Loan Total
Balance at January 1, 2007 $ 34,073 $ 4,378 $ 20,001 $ 140,000 $ 175,000 $ — $ 373,452
Increases (decreases):
Net borrowings (repayments) (10,762 ) (1,045 ) (5,051 ) — — 165,000 148,142
Capital lease interest — — 1,301 — — — 1,301
Foreign exchange gain (loss) 222 265 1,523 — — — 2,010

Balance at September 30, 2007 23,533 3,598 17,774 140,000 175,000 165,000 524,905

Less — current maturities — (3,598 ) (5,514 ) — — (1,900 ) (11,012 )

Long-term obligations at September 30, 2007 $ 23,533 $ — $ 12,260 $ 140,000 $ 175,000 $ 163,100 $ 513,893

In connection with the completion of the acquisition of RIA during April 2007, the Company entered into a $290 million secured syndicated credit facility consisting of a $190 million seven-year term loan, which was fully-drawn at closing, and a $100 million five-year revolving credit facility (the “Credit Facility”) that replaced an existing $50 million revolving credit facility. The $190 million seven-year term loan bears interest at LIBOR plus 200 basis points or prime plus 100 basis points and contains a 1% per annum principal amortization requirement, payable quarterly, with the remaining balance outstanding due at the end of year seven. The $100 million five-year revolving line of credit bears interest at LIBOR or prime plus a margin that adjusts each quarter based upon the Company’s consolidated total leverage ratio. The weighted average interest rate of the Company’s borrowings under the revolving credit facility was 8.2% as of September 30, 2007.

The term loan may be expanded by up to an additional $150 million and the revolving credit facility may be expanded by up to an additional $25 million, subject to satisfaction of certain conditions including pro-forma debt covenant compliance. The agreements for the credit facility contain certain mandatory prepayments, customary events of default and financial covenants, including leverage ratios. The leverage ratios step down on various dates through September 2008. Financing costs of $4.8 million have been deferred and are being amortized over the terms of the respective loans.


										1.625%		3.50%
	Revolving									Convertible		Convertible
	Credit			Other Debt			Capital			Debentures		Debentures
(in thousands)	Facilities			Obligations			Leases			Due 2024		Due 2025		Term Loan			Total
Balance at December 31, 2007	$	62,203		$	10		$	16,599		$	140,000	$	175,000	$	164,000		$	557,812
Increases (decreases):
Net repayments		(50,643	)		(215	)		(1,612	)		—		—		(10,000	)		(62,470	)
Capital lease interest		—			—			387			—		—		—			387
Foreign exchange gain		1,327			205			1,209			—		—		—			2,741

Balance at March 31, 2008		12,887			—			16,583			140,000		175,000		154,000			498,470

Less — current maturities		—			—			(5,414	)		—		—		(1,900	)		(7,314	)


Long-term obligations at March 31, 2008	$	12,887		$	—		$	11,169		$	140,000	$	175,000	$	152,100		$	491,156

During the ~~nine-months~~three months ended ~~September 30, 2007,~~March 31, 2008, the Company repaid ~~$25.0~~$10.0 million of the term loan, of which ~~$1.0~~$0.5 million was a scheduled ~~repayments.~~repayment. The remaining ~~$24.0~~$9.5 million represents prepayment of amounts not yet due and resulted in the Company recognizing a ~~$0.4~~$0.2 million pre-tax loss on early retirement of debt.

~~(9)~~(6) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

During ~~the second quarter~~ 2007, the Company entered into interest rate swap agreements for a total notional amount of $50 million to manage interest rate exposure related to a portion of the term loan, which currently bears interest at LIBOR plus 200 basis points. The interest rate swap agreements are determined to be cash flow hedges and effectively convert $50 million of the term loan to a fixed interest rate of 7.3% through the May 2009 maturity date of the swap agreements. As of ~~September 30, 2007,~~March 31, 2008, the Company has recorded a liability of ~~$0.6~~$1.7 million in the other long-term liabilities caption on the Company’s ~~consolidated balance sheets~~Unaudited Consolidated Balance Sheet to recognize the fair value of the swap agreements. The ~~offset is recorded in~~impact to accumulated other comprehensive ~~income.~~income for the first quarter 2008 was a loss of $0.8 million. The fair value of swap agreements is based on the London Inter-Bank Offered Rate ("LIBOR") swap rate, credit spreads and other relevant market ~~quotes received from the agreement counterparties and represents the net amount the Company would have been required to pay to terminate the positions.~~conditions.

As of ~~September 30, 2007,~~March 31, 2008, the Company had foreign currency forward contracts outstanding with a notional value of ~~$41.0~~$52.9 million, primarily in euros, which were not designated as hedges and had a weighted average maturity of six days.

~~(10) EQUITY PRIVATE PLACEMENT~~(7) STOCK PLANS

During ~~March 2007,~~the first quarter 2008, the Company ~~entered into a securities purchase agreement with certain accredited investors to issue and sell 6,374,528~~granted 147,402 shares of ~~Common Stock in~~performance-based restricted stock to executives, having a ~~private placement.~~total value of $2.9 million on the grant date. The ~~offering price for~~shares shall vest during the years 2009 through 2013 upon the attainment of certain financial performance goals, combined with continued employment on the vesting date. Additionally, 22,651 shares of restricted stock were granted or accelerated during the first quarter 2008, having a value of $0.5 million on the date the shares ~~was $25.00 per share and the gross proceeds~~were granted or accelerated, in connection with severance benefits due to an executive officer of the ~~offering were approximately $159.4 million. The net proceeds from~~Company who resigned during the ~~sale, after deducting commissions and expenses, were approximately $154.3 million.~~first quarter 2008.

~~(11)~~(8) SEGMENT INFORMATION

Euronet’s reportable operating segments have been determined in accordance with SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information.” Effective January 1, 2007, the Company began reporting and managing the operations of the EFT Processing Segment and the former Software Solutions Segment on a combined basis. Additionally, as a result of the acquisition of RIA in April 2007, the Company began reporting the Money Transfer Segment. The ~~Company’s former money transfer business was~~

	2)		Through the Prepaid Processing Segment, the Company provides distribution of prepaid mobile airtime and other prepaid products and collection services in the U.S., Europe, Africa, Asia Pacific and ~~Asia Pacific.~~the Middle-East.

	3)		Through the Money Transfer Segment, the Company provides global money transfer and bill payment services through a sending network of agents and Company-owned stores primarily in North America, the Caribbean, Europe and Asia Pacific, disbursing money transfers through a worldwide payer network.

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

The following tables present the segment results of the Company’s operations for the ~~three- and nine-month~~three-month periods ended ~~September 30, 2007~~March 31, 2008 and ~~2006:~~2007:


	For the Three Months Ended September 30, 2007											For the Three Months Ended March 31, 2008
							Corporate											Corporate
							Services,											Services,
	EFT		Prepaid		Money		Eliminations					EFT		Prepaid		Money		Eliminations
(in thousands)	Processing		Processing		Transfer		and Other			Consolidated		Processing		Processing		Transfer		and Other			Consolidated
Total revenues	$	48,113	$	144,631	$	53,573	$	—		$	246,317	$	50,506	$	144,225	$	52,332	$	—		$	247,063

Operating expenses:
Direct operating costs		18,644		118,038		28,397		—			165,079		21,752		117,856		26,345		—			165,953
Salaries and benefits		10,616		7,081		10,784		3,956			32,437		10,147		6,568		11,757		4,461			32,933
Selling, general and administrative		3,981		4,879		6,777		1,252			16,889		4,450		5,275		7,452		4,444			21,621
Depreciation and amortization		4,641		4,230		4,205		402			13,478		5,137		4,192		4,827		294			14,450


Total operating expenses		37,882		134,228		50,163		5,610			227,883		41,486		133,891		50,381		9,199			234,957


Operating income (loss)	$	10,231	$	10,403	$	3,410	$	(5,610	)	$	18,434	$	9,020	$	10,334	$	1,951	$	(9,199	)	$	12,106

For the Nine Months Ended September 30, 2007
Corporate
Services,
EFT Prepaid Money Eliminations
(in thousands) Processing Processing Transfer and Other Consolidated
Total revenues $ 135,844 $ 414,442 $ 103,581 $ — $ 653,867

Operating expenses:
Direct operating costs 53,335 337,516 55,303 — 446,154
Salaries and benefits 30,427 20,486 21,207 10,035 82,155
Selling, general and administrative 12,933 14,845 14,047 3,279 45,104
Depreciation and amortization 12,733 11,976 9,101 523 34,333

Total operating expenses 109,428 384,823 99,658 13,837 607,746

Operating income (loss) $ 26,416 $ 29,619 $ 3,923 $ (13,837 ) $ 46,121

Total assets as of September 30, 2007 $ 182,735 $ 712,695 $ 682,197 $ 227,276 $ 1,804,903

(9) FAIR VALUE MEASUREMENTS

For the Nine Months Ended September 30, 2006
Corporate
Services,
EFT Prepaid Money Eliminations
(in thousands) Processing Processing Transfer and Other Consolidated
Total revenues $ 116,166 $ 343,957 $ 2,303 $ — $ 462,426

Operating expenses:
Direct operating costs 41,531 276,708 1,363 — 319,602
Salaries and benefits 26,643 17,038 1,570 10,913 56,164
Selling, general and administrative 11,513 12,048 1,128 2,995 27,684
Depreciation and amortization 10,649 10,523 259 144 21,575

Total operating expenses 90,336 316,317 4,320 14,052 425,025

Operating income (loss) $ 25,830 $ 27,640 $ (2,017 ) $ (14,052 ) $ 37,401

Total assets as of December 31, 2006 $ 172,191 $ 694,437 $ 18,387 $ 244,625 $ 1,129,640

The Company’s assets and liabilities recorded at fair value on a recurring basis are set forth in the following table:


	Fair Value Measurements as of
	March 31, 2008 Using
	Quoted Prices in Active
	Markets for Identical		Signifcant Other
(in thousands)	Assets		Observable Inputs
Available for sale investment securities	$	2,488	$	—
Interest rate swaps related to floating rate debt		—		(1,745	)
Foreign currency derivative contracts		—		(258	)

The Company values available for sale investment securities using quoted prices from the securities’ primary exchange. Interest rate swaps are valued using present value measurements based on the LIBOR swap rate, credit spreads and other relevant market conditions. Foreign currency derivative contracts are valued using foreign currency quotes for similar assets and liabilities.

~~(12) COMMITMENTS, LITIGATION~~(10) NONCASH FINANCING AND ~~CONTINGENCIES~~INVESTING ACTIVITIES

~~Future minimum~~Capital lease ~~payments~~

~~Future minimum lease payments under noncancelable operating leases (with remaining lease terms in excess~~obligations of ~~one year) as of September 30, 2007 are:~~

(in thousands)
Year ending December 31,
2007 (three months) $ 4,666
2008 15,689
2009 15,210
2010 12,754
2011 7,420
thereafter 3,325

Total minimum lease payments $ 59,064

~~Litigation~~

~~During 2005, a former cash supply contractor in Central Europe (the “Contractor”) claimed that the Company owed it approximately $2.0~~$0.7 million ~~for the provision of cash during the fourth quarter 1999~~ and first quarter 2000 that had not been returned. This claim was made after the Company terminated its business with the Contractor and established a cash supply agreement with another supplier. In the first quarter 2006, the Contractor initiated legal action in Budapest, Hungary regarding the claim. In April 2007, an arbitration tribunal awarded the Contractor $1.0$1.5 million ~~plus $0.2 million in interest, under the claim, which was recorded as selling, general and administrative expenses of the Company’s EFT Processing Segment~~were incurred during the first quarter 2008 and 2007, ~~and paid in~~respectively. The Company issued Euronet common stock valued at $7.6 million for an acquisition completed during the ~~second~~first quarter 2007.

~~Contingencies~~(11) CONTINGENCIES

~~In connection with~~On January 12, 2007, the Company signed a stock purchase agreement to acquire La Nacional inand certain of its affiliates (“La Nacional”), subject to regulatory approvals and other customary closing conditions. In connection with this agreement, on January 16, 2007, the Company deposited $26 million in an escrow account created for the proposed ~~acquisition, which can only~~acquisition. The escrowed funds were not permitted to be released byexcept upon mutual agreement of the Company and La ~~Nacional~~Nacional’s stockholder or through legal remedies available ~~under~~in the agreement. ~~On February 6, 2007, two employees of La Nacional working in different La Nacional stores were arrested for allegedly violating federal money laundering laws and certain state statutes.~~

On April 5, 2007, the Company gave notice to the stockholder of La Nacional of the termination of the stock purchase agreement, alleging certain breaches of the terms thereof by La Nacional and requested the release of the ~~escrowed funds~~$26 million held in escrow under the terms of the ~~stock purchase~~ agreement. La ~~Nacional is contesting the Company’s~~Nacional’s stockholder denied such breaches occurred, contested such termination and did not consent to our request for release of the escrowed funds. While pursuing all legal remedies available ~~the Company is also~~to us, we engaged in negotiations with La Nacional and its stockholder to determine whether the dispute ~~can~~could be resolved through revised terms for the ~~acquisition.~~acquisition or some other mutually agreeable method.

~~In addition, from time to time,~~On January 10, 2008, the Company isentered into a ~~party~~settlement agreement with La Nacional and its stockholder evidencing the parties’ mutual agreement not to ~~litigation arising~~consummate the acquisition of La Nacional, in ~~the ordinary course~~exchange for payment by Euronet of ~~its business. Currently, there are no legal proceedings that management believes, either individually or in the aggregate, would have~~ a ~~material adverse effect upon the consolidated results of operations or financial condition~~portion of the ~~Company. The Company expenses~~ legal ~~costs~~fees incurred by La Nacional. Among other terms and conditions, the settlement agreement contains mutual releases in connection with ~~loss contingencies when incurred.~~litigation and provided for the release to the Company in the first quarter 2008 of the $26 million held in escrow, plus interest earned on the escrowed funds.

(12) FEDERAL EXCISE TAX REFUND

During 2006, the Internal Revenue Service (“IRS”) announced that Internal Revenue Code Section 4251 (relating to communications excise tax) will no longer apply to, among other services, prepaid mobile airtime services such as those offered by the Company’s Prepaid Processing Segment’s U.S. operations. Additionally, companies that paid this excise tax during the period beginning on March 1, 2003 and ending on July 31, 2006, are entitled to a credit or refund of amounts paid in conjunction with the filing of 2006 federal income tax returns. ~~The Company has claimed a refund for amounts paid during this period and has been informed by~~During the fourth quarter 2007, the IRS ~~that~~completed an initial field examination confirming the amount of the claim and, therefore, the Company recorded $12.2 million for the amount of the refund ~~is currently being examined. Therefore, no benefit for any potential recovery has been~~claimed as a reduction to operating expenses of the Prepaid Processing Segment and as an other current asset. In addition, the Company will receive approximately $1.2 million in interest on the amount claimed, which was recorded as interest income in the Consolidated Financial Statements, and no such amounts will be recorded until such time as the refund is considered “realizable” as stipulated under SFAS No. 5, “Accounting for Contingencies.”first quarter 2008.

(13) GUARANTEES

As of ~~September 30, 2007,~~March 31, 2008, the Company had ~~$36.7~~$33.5 million of stand-by letters of credit/bank guarantees issued on its behalf, of which ~~$1.7~~$1.8 million are collateralized by cash deposits held by the respective issuing ~~banks and $35.5 million are supported by stand-by letters of credit issued against the Company’s revolving credit facility.~~banks.

Euronet regularly grants guarantees in support of ~~the~~ obligations of ~~its wholly-owned~~ subsidiaries. As of ~~September 30, 2007,~~March 31, 2008, the Company ~~had~~ granted off balance sheet guarantees for cash in various ATM networks amounting to $25.9 million over the ~~following amounts:~~

	•		~~Cash in various ATM networks — $24.6 million over the terms of the cash supply agreements.~~

	•		~~Performance guarantees — $26.7~~terms of the cash supply agreements and performance guarantees amounting to approximately $28.1 million over the terms of the agreements with the customers.

From time to time, Euronet enters into agreements with unaffiliated parties 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. Our 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 that supply cash to ATMs in the EFT Processing Segment, the Company is responsible for the loss of network cash that, generally, is not recorded on the Company’s consolidated balance sheet, because the cash remains the property of the financial institutions while in the ATMs. As of September 30, 2007, In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for damages to ATMs and theft of ATM network cash that, generally, is not recorded on the Company’s Consolidated Balance Sheet. As of March 31, 2008, the balance of ATM network cash for which the Company was responsible was approximately $300 million. The Company maintains insurance policies to mitigate this exposure;

	•		In connection with the license of proprietary systems to customers, Euronet 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 our 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 made by Euronet, the Company has agreed to indemnify the seller against third party claims made against the seller relating to the subject subsidiary, 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;


	•		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 the carrying out of their respective duties under such agreements; and

	•		~~The Company has issued surety bonds in compliance with money transfer licensing requirements of certain states.~~

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;

Since the Company is in a net operating loss position for its U.S. operations, valuation allowances have been recorded in instances where the Company determines that it is more likely than not that a tax benefit will not be realized. Accordingly, tax benefit or expense associated with foreign currency gains or losses incurredpre-tax income generated by the Company’s U.S. ~~entities have historically been offset through an adjustment to the valuation allowance. During the quarter ended September 30, 2007, the Company’s U.S.~~ operations recognized significant realized and unrealized foreign currency gains. The impact of these gains, as well as the above-mentioned reversal of $2.7 million of valuation allowances for tax-planning strategies, reduced the Company’s remaining valuation allowances related to its U.S. operations to $0.1 million. Consequently, should the Company’s U.S. operations generate pre-tax book income, including income from ~~the recognition of additional~~ foreign currency gains ~~the Company would be required~~and interest income earned on loans to ~~recognize tax expense on such income.~~foreign subsidiaries. For U.S. federal income tax purposes, however, the Company has ~~approximately $114 million in~~significant net operating losses ~~as of September 30, 2007~~ that will offset ~~future~~ taxable income generated in future periods from pre-tax income produced by our U.S. operations and ~~result in little or no cash taxes paid in~~ the ~~U.S. until~~recognition of the ~~net operating losses have been fully utilized.~~

(15) SUBSEQUENT EVENTS

During April 2008, the ~~value~~Company entered into an amendment to its secured syndicated credit facility to change, among other items, the definition of deferred tax assets, such as those related to the Company’s net operating loss carryforwards. It is reasonably possible that amounts reserved for potential exposure could significantly change as a resultone of the ~~conclusion~~financial covenants contained in the original agreement. Euronet incurred costs of ~~tax examinations and, accordingly, materially affect our operating results. During~~$0.6 million in connection with the ~~nine-months ended September 30, 2007,~~amendment, which will be recognized as additional interest expense over the ~~Company’s unrecognized tax benefits increased by $0.7 million and the amount that would impact the Company’s provision for income taxes, if recognized, increased by $0.5 million.~~

~~(15) GAIN FROM DISCONTINUED OPERATIONS~~

~~In July 2002, the Company sold substantially all~~remaining 48 month term of the non-current assets and related capital lease obligations of its ATM processing business in France to Atos S.A. During the first quarter 2007, the Company received a binding French Supreme Court decision relating to a lawsuit in France that resulted in a cash recovery and gain to the Company of $0.3 million, net of legal costs. There were no assets or liabilities held for sale at September 30, 2007 or December 31, 2006.

~~(16) RELATED PARTY TRANSACTIONS~~

The Company leases an airplane from a company owned by Mr. Michael J. Brown, Euronet’s Chief Executive Officer and Chairman of the Board of Directors, and Mr. Daniel R. Henry, a member of Euronet’s Board of Directors. The airplane is leased for business use on a per flight hour basis with no minimum usage requirement. During the nine-months ended September 30, 2007, Euronet incurred less than $0.1 million in expenses for the use of this airplane. Euronet did not incur any expense for the use of this plane during the nine-months ended September 30, 2006.credit facility.

1713

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

OVERVIEW

COMPANY OVERVIEW, GEOGRAPHIC LOCATIONS AND PRINCIPAL PRODUCTS AND SERVICES

Euronet Worldwide, Inc. (together with our subsidiaries, “we,” “us,” “Euronet” or the “Company”) is a leading electronic ~~transaction processor,~~payments provider, offering automated teller machine (“ATM”) and ~~Point of Sale~~point-of-sale (“POS”) and card outsourcing services, card issuing and merchant acquiring services, integrated electronic financial transaction (“EFT”) software, network gateways, ~~and~~ electronic ~~prepaid~~distribution of top-up services ~~to financial institutions,~~for prepaid mobile ~~operators~~airtime and ~~retailers and~~other prepaid products, electronic consumer money transfer and bill payment ~~services. The EFT Processing Segment provides end~~services to ~~end solutions relating to operations~~financial institutions, mobile operators, retailers and individual customers. As of ATMs and POS networks, and debit and credit card processing in Europe, the Middle East, and Asia. We are one of the largest providers of prepaid mobile airtime processing. Based on revenues and volumes, the current year acquisition of RIA Envia, Inc. (“RIA”) also makes us the third-largest global money transfer company.

Effective January 1, 2007, we began reporting and managing the operations of the EFT Processing Segment and the former Software Solutions Segment on a combined basis. Additionally, as a result of the acquisition of RIA in April 2007, we commenced reporting of the Money Transfer Segment. Previously reported amounts have been adjusted to reflect these changes, which did not impact our consolidated financial statements. As a result of these changes,March 31, 2008, we operate in the following three principal business segments.

	•	An EFT Processing Segment, which processes transactions for a network of ~~10,516~~11,917 ATMs and ~~more than 48,000~~approximately 51,000 POS terminals across Europe, Asia and ~~Africa.~~the Middle-East. We provide comprehensive electronic payment solutions consisting of ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing and electronic recharge services for prepaid mobile airtime. Through this segment, we also offer a suite of integrated EFT software solutions for electronic payment, merchant acquiring, card issuing and transaction delivery systems.

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	•	A Prepaid Processing Segment, which provides distribution of prepaid mobile airtime and other prepaid products and collection services for various prepaid products, cards and services. Including terminals operated by unconsolidated subsidiaries, we operate a network of approximately ~~370,000~~394,000 POS terminals providing electronic processing of prepaid mobile airtime top-up services in the U.S., Europe, Africa, Asia Pacific and ~~Asia Pacific.~~the Middle-East.

	•	A Money Transfer Segment, which provides global money transfer and bill payment services through a sending network of agents and Company-owned stores primarily in North America, the Caribbean, Europe and Asia-Pacific, disbursing money transfers through a worldwide payer network. Bill payment services are offered primarily in the U.S. The Money Transfer Segment originates and terminates transactions through a network of more than 68,000 locations, which include sending agents and Company-owned stores, and an extensive payer network across 100 countries.

We have six processing centers in Europe, two in Asia and two in the U.S.~~, and we~~ We have 2422 principal offices in Europe, five in the Asia-Pacific region, ~~four~~three in the U.S. and one each in the Middle East and Latin America. Our executive offices are located in Leawood, Kansas, USA.

SOURCES OF REVENUES AND CASH FLOW

Euronet earns revenues and income based on ATM management fees, transaction fees and commissions, professional services, software licensing fees and software maintenance agreements. Each business segment’s sources of revenue are described below.

EFT Processing Segment–— Revenue in the EFT Processing Segment, which represented approximately 21% of total consolidated revenue for the ~~nine-months ended September 30, 2007,~~first quarter 2008, is derived from fees charged for transactions effected by cardholders on our proprietary network of ATMs, as well as fixed management fees and transaction fees we charge to banks for operating ATMs and processing credit cards under outsourcing agreements. Through our proprietary network, we generally charge fees for four types of ATM transactions: i) cash withdrawals, ii) balance inquiries, iii) transactions not completed because the relevant card issuer does not give authorization, and iv) prepaid telecommunication recharges. Revenue in this segment is also derived from ~~licensing,~~license fees, professional services and maintenance fees for software and sales of related ~~hardware, primarily~~hardware. Software license fees are the fees we charge to ~~financial institutions around~~license our proprietary application software to customers. Professional service fees consist of charges for customization, installation and consulting services to customers. Software maintenance revenue represents the ~~world.~~ongoing fees charged for maintenance and support for customers’ software products. Hardware sales are derived from the sale of computer equipment necessary for the respective software solution.

Prepaid Processing Segment–— Revenue in the Prepaid Processing Segment, which represented approximately ~~63%~~58% of total consolidated revenue for the ~~nine-months ended September 30, 2007,~~first quarter 2008, is primarily derived from commissions ~~and~~or processing fees received from ~~mobile and other telecommunication operators, or from distributors of prepaid wireless products~~telecommunications service providers for the sale and distribution ~~and/or processing~~ of prepaid mobile airtime. We also generate revenue from commissions earned from the distribution of other prepaid products. Due to certain provisions in our mobile phone operator agreements, the operators have the ability to reduce the overall commission paid on each top-up transaction. However, by virtue of our agreements with retailers (distributors where POS terminals are located) in certain markets, not all of these reductions are absorbed by us because we are able to pass a significant portion of the reductions to retailers. Accordingly, under certain retailer agreements, the effect is to reduce revenues and reduce our direct operating costs resulting in only a small impact on gross margin and operating income. In some markets, reductions in commissions can significantly impact our results as it may not be possible, either contractually or commercially in the concerned market, to pass a reduction in commissions to the retailers. In Australia, certain retailers negotiate directly with the mobile phone operators for their own commission rates, which also limits our ability to pass through reductions in commissions. Agreements with mobile operators are important to the success of our business. These agreements permit us to distribute prepaid mobile airtime to the mobile operators’

Europe and Asia-Pacific and a worldwide network of distribution agents, consisting primarily of financial institutions in the transfer destination countries. Origination and distribution agents each earn fees for cash collection and distribution services. These fees are recognized as direct operating costs at the time of sale.

OPPORTUNITIES AND CHALLENGES

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;

	•		the ability to develop products or services to drive increases in transactions;

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

	•		the entrance into additional card acceptance and ATM management agreements with banks;

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

	•		the availability of financing for expansion;

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

	•		the successful entry into the cross-border merchant processing and acquiring business;

	•		the successful entry into the card issuing and outsourcing business; and

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

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. We have been able to enter into agreements under which we use our software in lieu of cash as our initial capital contributions to new transaction processing joint ventures. Such contributions sometimes permit us to enter new markets without significant capital investment.

We have entered the cross-border merchant processing and acquiring business through the execution of an agreement with a large petrol retailer in Central Europe. Since the beginning of 2007, we have devoted significant resources to the development of the necessary processing systems and capabilities to enter this business, which involves the purchase and design of hardware and software. Merchant acquiring involves processing credit and debit card transactions that are made on POS terminals, including authorization, settlement, and processing of settlement files. It may involve the assumption of credit risk, as the principal amount of transactions may be settled to merchants before settlements are received from card associations.

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

	•		the ability to negotiate new agreements in additional markets with mobile phone operators, agent financial institutions and retailers;

	•		the ability to use existing expertise and relationships with mobile operators and retailers to our advantage;

	•		the continuation of the trend towards conversion from scratch card solutions to electronic processing solutions for prepaid mobile airtime among mobile phone users and the continued use of third party providers such as ourselves to supply this service;

	•		the development of mobile phone networks in these markets and the increase in the number of mobile phone users;

	•		the overall pace of growth in the prepaid mobile phone market;

	•		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;

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

	•		the ability to take advantage of cross-selling opportunities with our Money Transfer Segment, including providing money transfer services through our prepaid locations;

	•		the availability of financing for further expansion; and

	•		our ability to successfully integrate newly acquired operations with our existing operations.

During the first quarter 2007, we completed the acquisitions of the stock of Omega Logic, Ltd. (“Omega Logic”) and Brodos SRL in Romania (“Brodos Romania”). Omega Logic is a prepaid top-up company based, and primarily operating, in the U.K. that enhanced our Prepaid Processing Segment business in the U.K. Brodos Romania is a leading electronic prepaid mobile airtime processor in Romania.

Money Transfer Segment –—We completed the acquisition of RIA in April 2007, which expanded our money transfer and bill payment services business and makes Euronet the third-largest global money transfer company based upon revenues and volumes. RIA processes approximately $4.5 billion in money transfers annually, originates transactions through a network of approximately 11,000 sending agents, including Company-owned stores, located throughout 13 countries in North America, the Caribbean, Europe and Asia-Pacific.

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

	•		the ability to take advantage of cross-selling opportunities with our Prepaid Processing Segment, including providing prepaid services through RIA’s stores and agents worldwide;

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

	•		our ability to continue to successfully integrate RIA with our existing operations.

Like other participants in the money transfer industry, as a result of immigration developments, downturns in certain labor markets and/or other economic factors, growth rates in money transfers from the U.S. to Mexico have slowed. This slowing of growth began during the middle of 2006 and continues to impact money transfer revenues for transactions from the U.S. to Mexico. Despite recent improvement in this trend, we believe that it is too early to conclude on the impact, if any, to our results of operations.

Corporate Services, Eliminations and Other-— In addition to operating in our principal business segments described above, our “Corporate Services, Elimination and Other” division includes non-operating activity, certain inter-segment eliminations and the cost of providing corporate and other administrative services to the business segments, including share-based compensation expense related to most stock option and restricted stock grants. These services are not directly identifiable with our business segments. The impact of share-based compensation is recorded as an expense of the Corporate Services division.

2016

SEGMENT SUMMARY RESULTS OF OPERATIONS

Revenue and operating income by segment for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ are summarized in the tables below:

Revenues for the Three
Months Ended Revenues for the Nine Months
September 30, Year-over-Year Change Ended September 30, Year-over-Year Change
Increase Increase Increase Increase
(in thousands) 2007 2006 Amount Percent 2007 2006 Amount Percent
EFT Processing $ 48,113 $ 40,539 $ 7,574 19 % $ 135,844 $ 116,166 $ 19,678 17 %
Prepaid Processing 144,631 120,240 24,391 20 % 414,442 343,957 70,485 20 %
Money Transfer 53,573 874 52,699 6030 % 103,581 2,303 101,278 4398 %

Total $ 246,317 $ 161,653 $ 84,664 52 % $ 653,867 $ 462,426 $ 191,441 41 %


	Operating Income for the												Operating Income for the											Revenues for the Three									Operating Income (Loss) for the
	Three Months Ended												Nine Months Ended											Months Ended March 31,				Year-over-Year Change					Three Months Ended March 31,						Year-over-Year Change
	September 30,						Year-over-Year Change						September 30,						Year-over-Year Change									Increase		Increase									Increase			Increase
							Increase			Increase									Increase		Increase
							(Decrease)			(Decrease)									(Decrease)		(Decrease)
(in thousands)	2007			2006			Amount			Percent			2007			2006			Amount		Percent
(dollar amounts in thousands)																								2008		2007		Amount		Percent			2008			2007			Amount			Percent
EFT Processing	$	10,231		$	9,140		$	1,091			12	%	$	26,416		$	25,830		$	586		2	%	$	50,506	$	42,047	$	8,459		20	%	$	9,020		$	6,938		$	2,082			30	%
Prepaid Processing		10,403			9,561			842			9	%		29,619			27,640			1,979		7	%		144,225		127,581		16,644		13	%		10,334			9,516			818			9	%
Money Transfer		3,410			(838	)		4,248			n/m			3,923			(2,017	)		5,940		n/m			52,332		789		51,543		6533	%		1,951			(867	)		2,818			n/m

Total		24,044			17,863			6,181			35	%		59,958			51,453			8,505		17	%		247,063		170,417		76,646		45	%		21,305			15,587			5,718			37	%

Corporate services		(5,610	)		(4,857	)		(753	)		16	%		(13,837	)		(14,052	)		215		(2	%)		—		—		—					(9,199	)		(3,670	)		(5,529	)		151	%


Total	$	18,434		$	13,006		$	5,428			42	%	$	46,121		$	37,401		$	8,720		23	%	$	247,063	$	170,417	$	76,646		45	%	$	12,106		$	11,917		$	189			2	%

COMPARISON OF OPERATING RESULTS FOR THE THREE- ~~AND NINE-MONTH~~MONTH PERIODS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2008 AND 2007 ~~AND 2006~~

EFT PROCESSING SEGMENT

The following table presents the results of operations for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ for our EFT Processing Segment:

Results for the Three Results for the Nine
Months Ended September 30, Year-over-Year Change Months Ended September 30, Year-over-Year Change
Increase Increase
Increase Increase (Decrease) (Decrease)
(dollar amounts in thousands) 2007 2006 Amount Percent 2007 2006 Amount Percent
Total revenues $ 48,113 $ 40,539 $ 7,574 19 % $ 135,844 $ 116,166 $ 19,678 17 %

Operating expenses:
Direct operating costs 18,644 14,674 3,970 27 % 53,335 41,531 11,804 28 %
Salaries and benefits 10,616 8,964 1,652 18 % 30,427 26,643 3,784 14 %
Selling, general and administrative 3,981 3,970 11 0 % 12,933 11,513 1,420 12 %
Depreciation and amortization 4,641 3,791 850 22 % 12,733 10,649 2,084 20 %

Total operating expenses 37,882 31,399 6,483 21 % 109,428 90,336 19,092 21 %

Operating income $ 10,231 $ 9,140 $ 1,091 12 % $ 26,416 $ 25,830 $ 586 2 %

Transactions processed (in millions) 156.4 119.1 37.3 31 % 434.0 335.9 98.1 29 %
ATMs as of September 30 10,516 8,491 2,025 24 % 10,516 8,491 2,025 24 %
Average ATMs 10,296 8,351 1,945 23 % 9,664 7,837 1,827 23 %

As discussed previously, effective January 1, 2007, we began reporting and managing the operations of the EFT Processing Segment and the former Software Solutions Segment on a combined basis. Previously reported amounts have been adjusted to reflect these changes.


	Three Months Ended
	March 31,				Year-over-Year Change
					Increase			Increase
					(Decrease)			(Decrease)
(dollar amounts in thousands)	2008		2007		Amount			Percent
Total revenues	$	50,506	$	42,047	$	8,459			20	%


Operating expenses:
Direct operating costs		21,752		16,923		4,829			29	%
Salaries and benefits		10,147		9,254		893			10	%
Selling, general and administrative		4,450		4,864		(414	)		(9	%)
Depreciation and amortization		5,137		4,068		1,069			26	%


Total operating expenses		41,486		35,109		6,377			18	%


Operating income	$	9,020	$	6,938	$	2,082			30	%


Transactions processed (millions)		168.4		130.7		37.7			29	%
ATMs as of March 31		11,917		9,182		2,735			30	%
Average ATMs		11,771		9,040		2,731			30	%

Revenues

Our ~~revenues~~revenue for the ~~nine-months ended September 30, 2007~~first quarter 2008 increased when compared to the ~~nine-months ended September 30, 2006~~first quarter 2007 primarily due to increases in the number of ATMs operated and, for owned ATMs, the number of transactions ~~processed as well as the impact of foreign currency translations to the U.S. dollar.~~processed. These increases were attributable to ~~most~~many of our operations, but primarily our operations in Poland ~~India~~ and ~~Greece~~India. Additionally, for the first quarter 2008, the U.S. dollar has weakened compared to the first quarter 2007 relative to the currencies of most of the countries in which we operate. Because our revenues are recorded in the functional currencies of our operating entities, amounts we earn in foreign currencies are positively impacted by the weakening of the U.S. dollar. Partially offsetting these improvements were decreases in revenue associated with our operations in Romania and our software ~~operations.~~

~~Partially offsetting these increases was a~~business. The reduction in ~~revenues associated~~Romania is due to a decrease in the per transaction fee structure of a contract with ~~the extension of certain~~a customer ~~contracts for several years beyond their original terms. In~~which we granted in exchange for these extensions, we paid or received up-front payments, and agreed on gradually declining fee structures. As prescribed by U.S. GAAP, revenue under these contracts is recognized based on proportional performancean extension of ~~services over~~ the term of the contract, which generally results in “straight-line” (i.e., consistent value per period) revenue recognition of the contracts’ total cash flows, including any up-front payment. This straight-line revenue recognition resultscontract. The decrease in revenue associated with our software business was primarily due to heavy implementation activity on two major contracts that ~~is less than contractual invoices and cash receipts in~~generated significant revenue during the early periods of the agreement and revenue that is greater than the contractual invoices and cash receipts in the later years of the agreement. As a result of the revenue recognition under these contracts, amounts invoiced under the contracts exceeded the amount of revenue that we recognized by about $1.8 million for the nine-months ended September 30,first quarter 2007. ~~We may decide to enter into similar arrangements with other EFT Processing Segment customers.~~

Average monthly ~~revenues~~revenue per ATM was ~~$1,558~~$1,430 for the ~~third~~first quarter 2008, compared to $1,550 for the first quarter 2007 and ~~$1,562 for the nine-months ended September 30, 2007 compared to $1,618 for the third quarter 2006 and $1,647 for the nine-months ended September 30, 2006. Revenues~~revenue per transaction was ~~$0.31~~$0.30 for ~~both~~ the ~~third~~first quarter ~~2007 and nine-months ended September 30, 2007~~2008, compared to ~~$0.34~~$0.32 for the ~~third~~first quarter ~~2006 and $0.35 for the nine-months ended September 30, 2006.~~2007. The decrease in revenues per ATM and revenues per transaction was due to the addition of ATMs ~~where related revenue has not yet developed to mature levels, the impact of the contract extensions discussed above~~in India and ~~the addition of ATMs in India~~China, where revenues per ATM have been historically lower than Central and Eastern Europe generally due to lower labor ~~costs.~~costs, and the reduction of revenue in Romania and our software business discussed above.

Direct operating costs

Direct operating costs consist primarily of site rental fees, cash delivery costs, cash supply costs, maintenance, insurance, telecommunications and the cost of data center operations-related personnel, as well as the ~~cost of facilities for our~~ processing ~~centers~~centers’ facility related costs and other processing center related expenses. The increase in direct operating cost for the ~~nine-months ended September 30, 2007~~first quarter 2008, compared to the ~~nine-months ended September 30, 2006~~first quarter 2007, is attributed to the increase in the number of ATMs under ~~operation, the number of transactions processed and foreign currency translations to the U.S. dollar.~~operation.

Gross margin

Gross margin, which is calculated as revenues less direct operating costs, increased to ~~$29.5~~$28.8 million for the ~~third~~first quarter ~~2007 and $82.5~~2008 from $25.1 million for the ~~nine-months ended September 30, 2007 from $25.9 million for~~first quarter 2007. This increase is attributable to the ~~third quarter 2006 and $74.6 million for the nine-months ended September 30, 2006.~~increase in revenues discussed above. Gross margin as a percentage of revenues was ~~61%~~57% for the ~~nine-months ended September 30, 2007~~first quarter 2008 compared to ~~64%~~60% for the ~~nine-months ended September 30, 2006.~~first quarter 2007. The slight decrease in gross margin as a percentage of revenues is due to the impact of ~~accounting for certain~~the contract ~~renewals~~extension in Romania and ~~other fluctuations in revenues~~software business discussed above, as well as the

increased contributions of our ~~subsidiary~~subsidiaries in India and China, which ~~has~~have historically earned a lower gross margin than our other operations.

Salaries and benefits

The increase in salaries and benefits for the ~~nine-months ended September 30, 2007~~first quarter 2008 compared to the ~~nine-months ended September 30, 2006~~first quarter 2007 was due to staffing costs to ~~expand~~support growth in ~~emerging markets, such as India, China~~ATMs managed and ~~new European markets,~~transactions processed and ~~additional~~for new products, such as POS, card processing and cross-border merchant processing and acquiring. Salaries and benefits also increased as a result of general merit increases awarded to ~~employees and certain additional staffing requirements due to the larger number of ATMs under operation and transactions processed.~~employees. As a percentage of revenue, however, these costs ~~remained relatively flat at 22%~~decreased to 20% of revenues for the ~~nine-months ended September 30, 2007~~first quarter 2008 compared to ~~23%~~22% for the ~~nine-months ended September 30, 2006.~~first quarter 2007.

Selling, general and administrative

The ~~increase~~decrease in selling, general and administrative expenses for the ~~nine-months ended September 30, 2007,~~first quarter 2008 compared to ~~the nine-months ended September 30, 2006, is primarily due to the $1.2 million loss recorded in~~ the first quarter 2007 ~~under an arbitral award granted~~is due primarily to the first quarter 2007 $1.2 million arbitration loss awarded by a tribunal in Budapest, Hungary arising from a claim by a former cash supply contractor in Central Europe. The cash supply contractor claimed it provided us with cash during the fourth quarter 1999 and first quarter 2000 that was not returned. Excluding this loss, the $0.7 million increase in selling, general and administrative expenses was to support segment growth. Excluding the impact of the arbitration loss, as a percentage of ~~revenues, these costs decreased slightly to~~revenue, selling, general and administrative expenses were flat at 9% ~~of revenues~~ for both the ~~nine-months ended September 30, 2007 from 10% of revenues for the nine-months ended September 30, 2006.~~first quarter 2008 and first quarter 2007.

Depreciation and amortization

The increase in depreciation and amortization expense for the ~~nine-months ended September 30, 2007~~first quarter 2008 compared to the ~~nine-months ended September 30, 2006~~first quarter 2007 is due primarily to additional ATMs in Poland, India and China, additional equipment and software for the expansion of our Hungarian processing center ~~incurred during 2006, additional ATMs in Poland and India~~ and additional software amortization recorded byrelated to our Essentis software product. As a percentage of revenue, these expenses ~~remained~~were flat at ~~9% of revenues~~10% for ~~both~~ the ~~nine-months ended September 30, 2007~~first quarters 2008 and ~~2006.~~2007.

Operating income

Operating income increased slightly for the nine-months ended September 30, 2007 compared to the nine-months ended September 30, 2006. This increase includes the arbitration loss described under selling, general and administrative expenses above. Excluding the arbitration loss: theThe increase in operating income ~~for~~was primarily due to the ~~segment is generally the result of increased~~increases in revenues ~~and gross margin~~ described above ~~combined with leveraging certain management cost structures;~~ and the impact of the first quarter 2007 arbitration loss. Excluding the impact of the arbitration loss from the first quarter 2007, operating income as a percentage of revenues ~~was 20%~~ for the ~~nine-months ended September 30, 2007~~first quarter 2008 was 18%, compared to ~~22%~~19% for the ~~nine-months ended September 30, 2006~~first quarter 2007, and operating income per transaction was $0.05 for the first quarter 2008, compared to $0.06 per transaction for the nine-months ended September 30, 2007 compared to $0.08 per transaction for the nine-months ended September 30, 2006. Also excluding the arbitration loss, average monthly operating income per ATM was $318 for the nine-months ended September 30, 2007 compared to $366 for the nine-months ended September 30, 2006.first quarter 2007. The decreases in operating income as a ~~percentage~~percent of ~~revenue,~~revenues and operating income per transaction are due to the contract extension in Romania and ~~average monthly~~the reduced revenues recorded by our software business discussed above. Additionally, the first quarter 2008 includes approximately $0.4 million in operating ~~income per~~losses incurred to develop processing systems and capabilities in preparation for our entry into the cross-border merchant acquiring business.

Expiration of contract

In January 2003, we sold 100% of our shares in our U.K. subsidiary, Euronet Services (U.K.) Ltd. (“Euronet U.K.”), to Bridgepoint Capital Limited (“Bridgepoint”), which subsequently became Bank Machine Limited (“Bank Machine”). Simultaneous with this transaction, Euronet and Bank Machine signed an ATM ~~were generally~~and Gateway Services Agreement (the “Services Agreement”) under which a wholly-owned subsidiary of Euronet provided ATM operating, monitoring, and transaction processing services to Bank Machine through December 31, 2007. Management allocated $4.5 million of the total sale proceeds to the Services Agreement, which was recorded as revenues on a straight-line basis over the five-year contract term. During the first quarter 2008, the Service Agreement expired and was not renewed. As a result of this development, beginning in the ~~decreases in gross margin, revenues per ATM and revenues per transaction described above.~~

~~For~~second quarter 2008, the nine-months ended September 30, 2007 and 2006, operating income includes $0.9 million and $1.0 million, respectively, in losses associated with expanding operations for the Company’s 75% owned joint venture in China. As of September 30, 2007, we have deployed and are providing all of the day-to-day outsourcing services for over 100 ATMs. Under current agreements, we expect that the total number of ATMs ~~in China deployed~~operated, quarterly revenue and quarterly operating income for ~~which we~~the EFT Processing Segment will ~~be providing day-to-day outsourcing services will increase to over 800 during the next 12 to 18 months.~~decrease by approximately 2,400 ATMs, $0.8 million and $0.8 million, respectively.

2319

~~Software sales backlog~~

As of September 30, 2007, we had a software contract backlog of approximately $7.0 million compared to approximately $10.3 million as of September 30, 2006. Such backlog represents software sales based on signed contracts under which we continue to have performance milestones before the sale will be completed. We recognize revenue on a percentage of completion method, based on certain milestone conditions, for our software solutions. As a result, we have not recognized all the revenues associated with these sales contracts. We cannot give assurances that the milestones under the contracts will be completed or that we will be able to recognize the related revenue within the next year.

PREPAID PROCESSING SEGMENT

The following table presents the results of operations for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ for our Prepaid Processing Segment:

Results for the Three Results for the Nine
Months Ended September Months Ended September
30, Year-over-Year Change 30, Year-over-Year Change
Increase Increase Increase Increase
(dollar amounts in thousands) 2007 2006 Amount Percent 2007 2006 Amount Percent
Total revenues $ 144,631 $ 120,240 $ 24,391 20 % $ 414,442 $ 343,957 $ 70,485 20 %

Operating expenses:
Direct operating costs 118,038 97,294 20,744 21 % 337,516 276,708 60,808 22 %
Salaries and benefits 7,081 5,488 1,593 29 % 20,486 17,038 3,448 20 %
Selling, general and administrative 4,879 4,338 541 12 % 14,845 12,048 2,797 23 %
Depreciation and amortization 4,230 3,559 671 19 % 11,976 10,523 1,453 14 %

Total operating expenses 134,228 110,679 23,549 21 % 384,823 316,317 68,506 22 %

Operating income $ 10,403 $ 9,561 $ 842 9 % $ 29,619 $ 27,640 $ 1,979 7 %

Transactions processed (in millions) 162.4 121.7 40.7 33 % 462.1 325.8 136.3 42 %

Effective in the second quarter 2007, as a result of the acquisition of RIA, the Company established the Money Transfer Segment. The Company’s previous money transfer business was relatively insignificant and was reported and managed as part of the Company’s Prepaid Processing Segment. We have adjusted previously reported amounts to reflect the reclassification of the money transfer business from the Prepaid Processing Segment to Money Transfer Segment for all periods presented.


	Three Months Ended
	March 31,				Year-over-Year Change
					Increase		Increase
(dollar amounts in thousands)	2008		2007		Amount		Percent
Total revenues	$	144,225	$	127,581	$	16,644		13	%


Operating expenses:
Direct operating costs		117,856		103,230		14,626		14	%
Salaries and benefits		6,568		6,385		183		3	%
Selling, general and administrative		5,275		4,577		698		15	%
Depreciation and amortization		4,192		3,873		319		8	%


Total operating expenses		133,891		118,065		15,826		13	%


Operating income	$	10,334	$	9,516	$	818		9	%


Transactions processed (millions)		167.3		139.4		27.9		20	%

Revenues

The increase in revenues for ~~the nine-months ended September 30, 2007~~2008 compared to ~~the nine-months ended September 30, 2006~~2007 was generally attributable ~~to: (i)~~to the increase in total transactions processed across all of our Prepaid Processing Segment operations, ~~(ii)~~particularly Australia and Poland, and additional revenue from Omega Logic Ltd. (“Omega Logic”) which was acquired in February 2007. Additionally, for the first quarter 2008 the U.S. dollar has weakened compared to the first quarter 2007 ~~acquisitions of Omega Logic and Brodos Romania, and (iii) foreign currency translations~~relative to the currencies of most of the countries in which we operate. Because our revenues are recorded in the functional currencies of our operating entities, amounts we earn in foreign currencies are positively impacted by the weakening of the U.S. dollar. The acquisitions of Omega Logic and Brodos Romania contributed revenues of $13.6 million for the third quarter 2007 and $32.3 million for the nine-months ended September 30, 2007. Revenue growth was partially offset by reduced revenues in Spain resulting from the second quarter 2006 expiration of a preferential commission arrangement with a Spanish mobile operator. Additionally, in

In certain more mature markets, such as the U.K., ~~Australia,~~ New Zealand and Spain, our revenue growth has slowed substantially and, in some cases, revenues have decreased because conversion from scratch cards to electronic top-up is substantially complete and certain mobile operators and retailers are driving competitive reductions in pricing and margins. We expect most of our future revenue growth to be derived from: (i) developing markets or markets in which there is organic growth in the prepaid sector overall, (ii) from continued conversion from scratch cards to electronic top-up in less mature markets, (iii) from additional products sold over the base of prepaid processing terminals, and (iv) possibly from acquisitions.

Revenues per transaction decreased to ~~$0.89~~$0.86 for the ~~third~~first quarter ~~2007 and $0.90~~2008 from $0.92 for the ~~nine-months ended September 30,~~first quarter 2007 ~~from $0.99 for the third quarter 2006 and $1.06 for the nine-months ended September 30, 2006~~ due primarily to the growth in revenues and transactions recorded by our ATX subsidiary, which is 51% Euronet-owned. In accordance with U.S. GAAP, ATX is consolidated and the amounts in our financial statements and in the table above reflect 100% of ATX. Results attributable to the 49% minority owner are reflected in the minority interest line of our consolidated statements of income and comprehensive income.subsidiary. ATX provides only transaction processing services without significant direct costs and other operating costs generally associated with installing and managing terminals; therefore, the revenue we recognize from these transactions is a fraction of that recognized on average transactions but with very low cost. Transaction volumes atfor ATX ~~have~~in the first quarter 2008 increased ~~by approximately 140% for the nine-months ended September 30, 2007~~over 50% compared to ~~the same period in 2006. The expiration of preferential commission arrangements in Spain discussed above also contributed to the decrease in revenues per transaction.~~first quarter 2007. Partially offsetting ~~the decreases described above~~this decrease was the growth in both volumes

first quarter 2007 ~~compared to 20% for the nine-months ended September 30, 2006. Gross~~and gross margin per transaction ~~was~~also decreased slightly to $0.16 for the ~~third~~first quarter ~~2007 and~~2008 compared to $0.17 for the ~~nine-months ended September 30, 2007 compared to $0.19 for the third~~first quarter ~~2006 and $0.21 for the nine-months ended September 30, 2006. Most~~2007. The primary cause of the reduction in gross margin per transaction is due to the growth of revenues and transactions at our ATX subsidiary ~~the expiration of preferential commission arrangements in Spain discussed above~~ and the general maturity of the prepaid mobile airtime business in many of our markets.

Salaries and benefits

The increase in salaries and benefits for ~~the nine-months ended September 30, 2007~~first quarter 2008 compared to the ~~nine-months ended September 30, 2006~~first quarter 2007 is primarily the result of ~~the acquisitions of Brodos Romania and Omega Logic, as well as~~ additional overhead to support development in ~~other~~ new and growing ~~markets.~~markets, particularly in Italy. As a percentage of revenue, salaries and benefits ~~have~~ decreased ~~slightly~~ to ~~4.9%~~4.6% for ~~the nine-months ended September 30, 2007,~~first quarter 2008 from 5.0% for ~~the same period in 2006.~~first quarter 2007.

Selling, general and administrative

The increase in selling, general and administrative expenses for the ~~nine-months ended September 30, 2007~~first quarter 2008 compared to the ~~nine-months ended September 30, 2006~~first quarter 2007 is the result of ~~the acquisitions of Brodos Romania and Omega Logic, as well as~~ additional overhead to support development in other new and growing markets. As a percentage of revenues, these ~~selling, general and administrative~~ expenses ~~increased slightly~~remained relatively flat at 3.7% for first quarter 2008 compared to 3.6% for the ~~nine-months ended September 30, 2007 from 3.5% for the nine-months ended September 30, 2006.~~first quarter 2007.

Depreciation and amortization

Depreciation and amortization expense primarily represents amortization of acquired intangibles and the depreciation of POS terminals we install in retail stores. ~~The increase in depreciation~~Depreciation and amortization expense remained relatively flat for the ~~nine-months ended September 30, 2007~~first quarter 2008, compared to the ~~nine-months ended September 30, 2006 was primarily due to the acquisitions of Brodos Romania~~first quarter 2007 and, ~~Omega Logic. As~~as a percentage of revenues, ~~depreciation and amortization~~ decreased slightly to 2.9% for the ~~nine-months ended September 30, 2007~~first quarter 2008 from ~~3.1%~~3.0% for the ~~nine-months~~first quarter 2007.

Goodwill and acquired intangible translation adjustment

During the third quarter 2007, we corrected an immaterial error related to foreign currency translation adjustments for goodwill and acquired intangible assets recorded in connection with acquisitions completed during periods prior to 2007. The impact of this correction on the Prepaid Processing Segment was to increase depreciation and amortization expense and decrease operating income by $0.2 million for the three months ended ~~September 30, 2006.~~March 31, 2007.

Operating income

The improvement in operating income for the ~~nine-months ended September 30, 2007~~first quarter 2008 compared to the ~~nine-months ended September 30, 2006~~first quarter 2007 was due to the significant growth in revenues and transactions processed and the benefit of foreign currency translations to the U.S. dollar, partially offset by the ~~impact of the events in Spain discussed above and the~~ costs of development in Italy and other new and growing markets.

Operating income as a percentage of revenues was 7.2% for the ~~third~~first quarter ~~2007 and 7.1%~~2008 compared to 7.5% for the ~~nine-months ended September 30, 2007 compared to 8.0% for both the third~~first quarter ~~2006 and the nine-months ended September 30, 2006.~~2007. The ~~decreases are~~decrease is primarily due to the ~~events~~decreases in ~~Spain~~gross margin described above and operating expenses incurred to support development in new and growing markets. Operating income per transaction was $0.06 for ~~both~~ the ~~third~~first quarter ~~2007 and nine- months ended September 30, 2007~~2008 compared to ~~$0.08~~$0.07 for ~~both~~ the ~~third~~first quarter ~~2006 and nine-months ended September 30, 2006.~~2007. The decrease in operating income per transaction is due to the ~~events~~decreases in ~~Spain~~gross margins described above and the growth in revenues and transactions at our ATX ~~subsidiary, partially offset by the benefit of foreign currency translations to the U.S. dollar.~~subsidiary.

2521

MONEY TRANSFER SEGMENT

The Money Transfer Segment was established during April 2007 with the acquisition of ~~RIA, which is more fully described in Note 4 — Acquisitions, to the unaudited consolidated financial statements included in this report.~~RIA. To assist ~~in better~~with understanding the results of the Money Transfer Segment, unaudited pro forma results have been provided as if RIA’s results were included in our consolidated results of operations beginning January 1, ~~2006.~~2007. Because our results of operations for the ~~three- and nine-month periods~~three months ended ~~September 30, 2006~~March 31, 2007 were insignificant, and fluctuations when compared to the ~~three- and nine-month periods~~three months ended ~~September 30, 2007~~March 31, 2008 are nearly entirely due to the acquisition of RIA, the following discussion and analysis will focus on pro forma results of operations. The pro forma financial information is not intended to represent, or be indicative of, the consolidated results of operations or financial condition that would have been reported had the RIA acquisition been completed as of the beginning of the periods presented. Moreover, the pro forma financial information should not be considered as representative of our future consolidated results of operations or financial condition. The following tables present the actual and pro forma results of operations for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ for the Money Transfer Segment:


	As Reported
	Results for the Three					Year-over-		Results for the Nine					Year-over-		As Reported
	Months Ended September 30,					Year Change		Months Ended September 30,					Year Change		Three Months Ended March 31,					Year-over-
						Increase							Increase							Year
(dollar amounts in thousands)	2007		2006			Amount		2007		2006			Amount		2008		2007			Increase
Total revenues	$	53,573	$	874		$	52,699	$	103,581	$	2,303		$	101,278	$	52,332	$	789		$	51,543


Operating expenses:
Direct operating costs		28,397		520			27,877		55,303		1,363			53,940		26,345		511			25,834
Salaries and benefits		10,784		631			10,153		21,207		1,570			19,637		11,757		590			11,167
Selling, general and administrative		6,777		455			6,322		14,047		1,128			12,919		7,452		451			7,001
Depreciation and amortization		4,205		106			4,099		9,101		259			8,842		4,827		104			4,723


Total operating expenses		50,163		1,712			48,451		99,658		4,320			95,338		50,381		1,656			48,725


Operating income (loss)	$	3,410	$	(838	)	$	4,248	$	3,923	$	(2,017	)	$	5,940	$	1,951	$	(867	)	$	2,818


Transactions processed (in millions)		4.0		0.1			3.9		7.9		0.2			7.7
Transactions processed (millions)																3.8		0.1			3.7

~~Comparison of pro forma operating results~~

During the second quarter 2007, we combined our previous money transfer business with RIA and incurred total exit costs of $0.9 million. These costs represented the accelerated depreciation and amortization of property and equipment, software and leasehold improvements that were disposed of during the second quarter 2007; the write off of marketing materials and trademarks that have been discontinued or will not be used; the write off of accounts receivable from agents that did not meet RIA’s credit requirements; and severance and retention payments made to certain employees. These exit costs are not included in pro-forma operating expenses in the above table.


n/m		- Not meaningful.

Revenues

Revenues from the Money Transfer Segment include a transaction fee for each transaction as well as the difference between purchasing currency at wholesale exchange rates and selling the currency to customers at retail exchange rates. OnPro forma revenue per transaction increased to $13.77 for the first quarter 2008 from $13.09 for the first quarter 2007. The growth rate of revenues exceeded the transaction growth rate largely as a ~~historical basis, about 75%~~result of ~~our Money Transfer Segment revenues are derived~~the strong increase in transfers from ~~transaction fees, about 25% is derived from the foreign currency spread and other small amounts of~~ non-U.S. locations which generally have higher-than-average

revenue ~~are derived from sources such as fees for cashing checks, issuing money orders and processing bill payments.~~per transaction. For the ~~nine-months ended September 30, 2007, 74%~~first quarter 2008, 70% of our money transfers were initiated in the U.S., ~~22%~~28% in Europe and 4%2% in other countries, such as Canada ~~Australia~~ and ~~the Dominican Republic. For the nine-months ended September 30, 2006,~~Australia. This compares to 80% ~~of our money transfers were~~ initiated in the U.S., ~~15%~~19% initiated in Europe and 5%1% initiated in other ~~countries.~~countries for the first quarter 2007. We expect that the U.S. will continue to represent our highest volume market; however, significant future growth is expected to be derived from non-U.S. initiated sources.

The increase in pro forma revenues for ~~2007~~the first quarter 2008 compared to ~~2006~~the first quarter 2007 is primarily due to an increase in the number of transactions ~~processed of 15% for~~processed. For the ~~third~~first quarter ~~2007 compared to the third quarter 2006 and an increase of 11% for the nine-months ended September 30, 2007 compared to the nine-months ended September 30, 2006. On a year-to-date basis,~~2008, money transfers to Mexico, which represented ~~approximately 40%~~33% of total money transfers, decreased by ~~1.6%~~9%, while transfers to all other countries increased 22% when compared to the ~~prior year.~~first quarter 2007 due to the expansion of our operations and continued growth in immigrant worker populations. The decline in transfers to Mexico was largely the result of immigration developments, downturns in certain labor markets and other economic factors impacting the U.S. market. These issues have also resulted in certain competitors lowering transaction fees and foreign currency exchange spreads in certain markets where we do business in an attempt to limit the impact on money transfer volumes. ~~During the third quarter 2007, however, total money transfers to Mexico slightly exceeded total money transfers to Mexico during the third quarter 2006.~~

Direct operating costs

Direct operating costs in the Money Transfer Segment primarily represent commissions paid to agents that originate money transfers on our behalf and distribution agents that disburse funds to the customers’ destination beneficiary, together with less significant costs, such as telecommunication and bank fees to collect money from originating agents. Direct operating costs generally increase or decrease by a similar percentage as ~~revenues.~~transactions.

Gross margin

Pro forma gross margin, which represents revenues less direct costs, was ~~$25.2~~$26.0 million for the ~~third~~first quarter ~~2007 and $69.7~~2008 compared to $20.4 million for the ~~nine-months ended September 30, 2007 compared to $22.3 million for the third~~first quarter ~~2006 and $62.9 million for the nine-months ended September 30, 2006.~~2007. This improvement is primarily due to the growth in money transfer transactions and revenues discussed above. Despite the decrease in money transfers to Mexico, the related gross margin slightly increased as we largely avoided lowering prices. Pro forma gross margin as a percentage of revenues was ~~47%~~50% for ~~both~~ the ~~nine-months ended September 30, 2007 and 2006.~~first quarter 2008 compared to 46% for the first quarter 2007.

Salaries and benefits

Salaries and benefits include salaries and commissions paid to employees, the cost of providing employee benefits, amounts paid to contract workers and accruals for incentive compensation. ~~Pro forma salaries and benefits expense for the nine-months ended September 30, 2007 increased as compared to the nine-months ended September 30, 2006 primarily due to overall Company growth. Pro~~The increase in pro forma salaries and benefits for ~~2006 also include costs associated with our previous money transfer business that generally have been eliminated from our cost structure beginning in~~ the ~~second~~first quarter ~~2007.~~2008 compared to the first quarter 2007 is primarily to support expansion of the Company’s operations, primarily internationally.

Selling, general and administrative

Selling, general and administrative expenses include operations support costs, such as rent, utilities, professional fees, indirect telecommunications, advertising and other miscellaneous overhead costs. Pro forma selling, general and administrative expenses for the nine-months ended September 30, 2007 were relatively flat compared to the nine-months ended September 30, 2006. However, the prior year pro forma results include costs associated with our previous money transfer business, which generally have been eliminated from our cost structure beginning in the second quarter 2007. Excluding the impact of these costs, theThe increase in pro forma selling, general and administrative expenses for ~~2007~~the first quarter 2008 compared to ~~2006~~the first quarter 2007 is ~~due~~ primarily to ~~overall Company growth.~~support expansion of the Company’s operations, primarily internationally.


n/m		- Not meaningful.

Interest income

~~Interest income was $12.5 million for the nine-months ended September 30, 2007 compared to $9.8 million for the nine-months ended September 30, 2006.~~ The ~~increase~~decrease in interest income for the first quarter 2008 from the first quarter 2007 was primarily due to the $154.3 million of net proceeds from the private equity placement that was completed during March 2007 and cash generated from operations. We have also benefited from higher average interest rates during 2007 compared to 2006 due to the general risea decline in short-term interest rates ~~as well as~~and a ~~shift~~decrease in average cash balances on hand during the respective periods. Partly offsetting this decrease was the recognition of ~~a portion of our investments from money market accounts~~$1.2 million in the first quarter 2008 for interest related to ~~commercial paper.~~the federal excise tax refund recorded in the fourth quarter 2007.

Interest expense

~~Interest expense was $18.8 million for the nine-months ended September 30, 2007 compared to $11.1 million for the nine-months ended September 30, 2006.~~ The increase in interest expense isfor the first quarter 2008 over the first quarter 2007 was primarily related to the additional borrowings to finance the April 2007 acquisition of ~~RIA and~~RIA. We also incurred additional borrowings under the revolving credit facility to finance the working capital requirements of ~~RIA, which comprises our new~~the Money Transfer Segment. ~~The RIA acquisition was completed~~We generally borrow amounts under the revolving credit facility several times each month to fund the correspondent network in advance of collecting remittance amounts from the agency network. These borrowings are repaid over a very short period of time, generally within a few days. Additionally, the effective interest rate on ~~April 4, 2007.~~our debt obligations increased in the first quarter 2008 compared to the first quarter 2007 as the interest rates on the term loan and revolving credit facility are substantially higher than the interest rates on the $315 million in outstanding convertible debentures.

Income from unconsolidated affiliates

Income from unconsolidated affiliates increased for the nine-months ended September 30, 2007 compared to the nine-months ended September 30, 2006 because we recognized a gain of $0.4 million from the sale of our 8% ownership interest in CashNet Telecommunications Egypt SAE during the second quarter 2007. The remainder of income from unconsolidated affiliates represents the equity in income of our 40% equity investment in e-pay ~~Malaysia.~~Malaysia which remained flat for the first quarter 2008 compared to the first quarter 2007.

Impairment loss on investment securities

During the first quarter 2008, the value of our investment in MoneyGram declined and the decline was determined to be other than temporary. Accordingly, we recognized a $17.5 million impairment loss.

Loss on early retirement of debt

Loss on early retirement of debt of ~~$0.4~~$0.2 million for the ~~nine-months ended September 30, 2007~~first quarter 2008 represents the pro-rata write-off of deferred financing costs associated with the portion of the $190 million term loan that was prepaid during ~~2007.~~the first quarter 2008. We expect to continue to prepay amounts outstanding under the term loan through available cash flows and, accordingly, ~~recognizing~~recognize losses on early retirement of debt for the pro-rata portion of unamortized deferred financing costs.

~~Foreign~~Net foreign currency exchange gain ~~net~~

~~The re-measurement of assets~~Assets and liabilities denominated in currencies other than the ~~functional~~local currency of each of our subsidiaries ~~gives~~give rise to foreign currency exchange gains and losses. Exchange gains and losses that result from re-measurement of these assets and liabilities are recorded in determining net income. We recorded a net foreign currency exchange gain of $13.1 million in the first quarter 2008 and $0.4 million in the first quarter 2007. The foreign currency exchange gains recorded are a result of ~~$10.3 million~~the impact of fluctuations in foreign currency exchange rates on the recorded value of these assets and ~~$5.4 million during~~liabilities. For the ~~nine-months ended September 30, 2007 and 2006, respectively. The increase for the nine-months ended September 30, 2007~~first quarter 2008, compared to the ~~nine-months ended September 30, 2006 is generally due to the weakening of~~first quarter 2007, the U.S. dollar weakened against ~~many of~~most European-based currencies, primarily the ~~currencies of the countries in which we operate.~~euro and British pound, creating realized and unrealized foreign currency exchange gains.

INCOME TAX EXPENSE

Results for the Three Months Results for the Nine Months
Ended September 30, Ended September 30,
(dollar amounts in thousands) 2007 2006 2007 2006
Income from continuing operations before income taxes and minority interest $ 23,154 $ 14,173 $ 50,536 $ 42,112
Minority interest (599 ) (243 ) (1,551 ) (716 )

Income from continuing operations before income taxes 22,555 13,930 48,985 41,396
Income tax expense 6,634 3,599 15,451 10,712

Income from continuing operations $ 15,921 $ 10,331 $ 33,534 $ 30,684

Effective income tax rate 29.4 % 25.8 % 31.5 % 25.9 %

Income from continuing operations before income taxes $ 22,555 $ 13,930 $ 48,985 $ 41,396
Adjust: Foreign exchange gain, net 8,561 1,090 10,302 5,420

Income from continuing operations before income taxes and foreign exchange gain, net $ 13,994 $ 12,840 $ 38,683 $ 35,976

Effective income tax rate, excluding foreign exchange gain, net 47.4 % 28.0 % 39.9 % 29.8 %

~~We calculate our~~The effective tax rate, ~~by dividing income tax expense by pre-tax book income including the effect~~after consideration of minority ~~interest. Our~~interest, was 264.3% and 29.9% for the three-month periods ended March 31, 2008 and 2007, respectively. The net loss for the first quarter 2008 reflects an unrealized capital loss of $17.5 million recorded in connection with our investment in MoneyGram, for which an associated tax benefit was not recorded because of the uncertainty surrounding our future ability to have offsetting capital gains.

Excluding the impact of this unrealized capital loss, the effective income tax rate was ~~31.5%~~50.8% for the ~~nine-months ended September 30, 2007~~first quarter 2008, compared to ~~25.9%~~29.9% for the nine-months ended September 30, 2006. We are in a net operating loss position for our U.S. operations and, accordingly, have valuation allowances to reserve for deferred tax assets that are not considered more likely than not of realization. Therefore, we do not currently recognize the tax benefit or expense associated with foreign currency gains or losses incurred by our U.S. operations. Excluding foreign currency exchange translation results from pre-tax income, our effective tax rate was 39.9% for the nine-months ended September 30, 2007 and 29.8% for the nine-months ended September 30, 2006.

~~During the third~~first quarter 2007, our U.S. operations recognized significant realized and unrealized foreign currency gains. The impact of these gains, as well as the reversal of $2.7 million of valuation allowances for tax-planning strategies, reduced our remaining valuation allowances related to our U.S. operations to $0.1 million as of September 30, 2007. Consequently, should our U.S. operations generate pre-tax income for financial reporting purposes, including income from the recognition of additional foreign currency gains, we would be required to recognize tax expense on such income. For income tax purposes, however, the Company has approximately $114 million in net operating losses as of September 30, 2007 that will offset future taxable income and result in little or no cash taxes paid in the U.S. until the net operating losses have been fully utilized.

~~The~~This increase in the effective tax rate ~~for the three- and nine-months ended September 30, 2007 compared~~primarily relates to the ~~same periods~~recognition of deferred income tax expense in ~~2006, excluding~~the U.S. attributable to pre-tax income generated by our U.S. operations from foreign currency gains and interest income earned on loans to foreign subsidiaries. For U.S. federal income tax purposes, however, we have significant net operating losses ~~primarily relates to~~that will offset taxable income generated in future periods from pre-tax income produced by our U.S. operations and the recognition of the future tax effects of temporary differences recorded as deferred tax liabilities. The first quarter 2008 effective tax rate was also unfavorably impacted by the acquisition of RIA, which operates in jurisdictions that have tax rates that are higher than our historical effective tax ~~rate, and the recognition of significant deferred tax benefits for net operating losses in certain countries during 2006.~~

During the nine-months ended September 30, 2007, we recognized $3.7 million of non-cash deferred income tax expense related to the deduction of goodwill amortization expense for U.S. income tax purposes, a substantial portion of which relates to the acquisition of RIA. Goodwill arising from certain business combinations involving our U.S. operations is amortized for tax purposes over 15 years but not for financial reporting purposes. Accordingly, we are required to record deferred income tax expense and a deferred tax liability for the tax effect of the amortization expense deducted for U.S. tax purposes. Consistent with the associated goodwill, the deferred tax liability is deemed to have an indefinite life and will remain on the consolidated balance sheet unless there is an impairment of goodwill for financial reporting purposes or the related business entity is disposed. Because we have significant tax net operating losses in the U.S., SFAS No. 109, “Accounting for Income Taxes,” does not allow the deferred income tax expense and related deferred tax liability to be offset by the tax benefit generated from tax assets with definite lives when we have significant unrecognized tax net operating losses. Moreover, during the nine-months ended September 30, 2007, we reversed $2.7 million in valuation allowances on deferred tax assets related to U.S. Federal and state net operating losses. We concluded that it is more likely than not that the net deferred tax asset will be realized because we would employ tax-planning strategies to utilize our net operating losses prior to expiration in the event they were to expire.rate.

We determine income tax expense and remit income taxes based upon enacted tax laws and regulations applicable in each of the taxing jurisdictions where we conduct business. Based on our interpretation of such laws and regulations, and considering the evidence of available facts and circumstances and baseline operating forecasts, we have accrued the estimated tax effects of certain transactions, business ventures, contractual and organizational structures, projected business unit performance, and the estimated future reversal of timing differences. Should a taxing jurisdiction change its laws and regulations 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 onto our ~~consolidated financial statements.~~Consolidated Financial Statements.

DISCONTINUED OPERATIONS

In July 2002, we sold substantially all of the non-current assets and related capital lease obligations of our ATM processing business in France to Atos S.A. During the first quarter 2007, we received a binding French Supreme Court decision relating to a lawsuit in France that resulted in a cash recovery and gain of $0.3 million, net of legal costs. There were no related assets or liabilities held for sale at ~~September 30, 2007~~March 31, 2008 or December 31, ~~2006.~~2007.

NET INCOME (LOSS)

We recorded a net loss of $6.8 million for the first quarter 2008 compared to net income of ~~$33.9~~$9.5 million for the ~~nine-months ended September 30, 2007 compared to $30.7 million for the nine-months ended September 30, 2006.~~first quarter 2007. As more fully discussed above, the ~~increase~~decrease of ~~$3.2~~$16.3 million was primarily the result of the $17.5 million first quarter 2008 impairment loss on investment securities along with a $7.1 million increase in income tax expense, an increase in ~~operating income~~net interest expense of ~~$8.7 million, an increase in the net foreign currency exchange gain of $4.9 million, an increase in income from unconsolidated affiliates of $0.3~~$3.8 million and ~~a gain from discontinued operations of $0.3~~

other items totaling $0.7 million. These ~~increases~~decreases to net income were partially offset by an increase in ~~net interest expense~~foreign currency gains of ~~$5.1 million, an increase in income tax expense of $4.7 million, a loss on early retirement of debt of $0.8~~$12.6 million and an increase in operating income ~~attributable to minority interest~~ of ~~$0.8~~$0.2 million.

LIQUIDITY AND CAPITAL RESOURCES

Working capital

As of ~~September 30, 2007,~~March 31, 2008, we had working capital, which is calculated as the difference between total current assets and total current liabilities, of ~~$253.8~~$237.1 million, compared to working capital of ~~$284.4~~$279.3 million as of December 31, ~~2006.~~2007. Our ratio of current assets to current liabilities was 1.50 at ~~September 30, 2007,~~March 31, 2008, compared to ~~1.70~~1.53 as of December 31, ~~2006.~~2007. The decrease in working capital ~~and the reduction in the ratio of current assets to current liabilities were~~was due primarily to the ~~reduction in~~use of cash of approximately $168.3 million for the acquisition of RIA, mostly offset by the proceeds from the private equity offering that we completed during March 2007. As of September 30, 2007, the net proceeds from the offering remained unused and included in unrestricted cash.to reduce debt outstanding.

We require substantial working capital to finance operations. ~~RIA traditionally~~The Money Transfer Segment funds the correspondent distribution network before receiving the benefit of amounts ~~are~~ collected from customers by agents. Working capital needs increase due to weekends and international banking holidays. As a result, we may ~~require~~report more or less working capital for ~~RIA~~the Money Transfer Segment based solely upon the fiscal period ending on a particular day. As of ~~September 30, 2007, RIA’s~~March 31, 2008, working capital in the Money Transfer Segment was ~~$30.9~~$55.0 million. We expect that ~~RIA’s~~ working capital needs will increase as we expand this business.

Operating cash flow

Cash flows provided by operating activities were ~~$59.3~~$14.6 million for the ~~nine-months ended September 30, 2007~~first quarter 2008 compared to ~~$50.6~~$7.5 million for the ~~nine-months ended September 30, 2006.~~first quarter 2007. The increase was primarily due to increased profitability and the increase in depreciation and amortization expense, which is a non-cash expense and added back to net income to reconcile to net cash provided by operating activities. This increase was partially offset due to fluctuations in working capital associated with the timing of the settlement process with mobile operators in the Prepaid Processing ~~Segment and other net working capital changes.~~Segment.

Investing activity cash flow

Cash flows ~~used in~~provided by investing activities were ~~$403.1 million for nine-months ended September 30, 2007, compared to $20.3~~$13.5 million for the ~~nine-months ended September 30, 2006.~~first quarter 2008, compared to cash flows used of $46.3 million for the first quarter 2007. Our investing activities for the ~~nine-months ended September 30, 2007 consisted~~first quarter 2008 include the return of ~~$352.6 million in cash paid related to acquisitions, primarily RIA. We placed~~ $26 million that was placed in escrow in the first quarter 2007 in connection with the agreement to acquire Envios de Valores La Nacional Corp. (“La Nacional”). ~~See further discussion under “Other trends~~On January 10, 2008, we entered into a settlement agreement with La Nacional and ~~uncertainties — Agreement~~its stockholder evidencing the parties’ mutual agreement not to ~~acquire~~consummate the acquisition, in exchange for payment by Euronet of a portion of the legal fees incurred by La ~~Nacional” below. We~~Nacional. Investing activities also ~~incurred $24.5~~include $10.9 million and $5.4 million for purchases of property and equipment ~~software development~~ and other long-term assets in the first quarter 2008 and 2007, respectively. Additionally, first quarter 2008 investing ~~activities. Our~~cash flows included a working capital settlement of $1.8 million paid to the sellers of RIA, compared to $15.0 million in investing ~~activities~~cash flows used for the ~~nine-months ended September 30, 2006 include $2.3 million in cash paid for~~ acquisitions of Omega Logic and ~~$18.0 million for purchases of property and equipment, software development and other investing activities.~~Brodos SRL Romania during the first quarter 2007.

Financing activity cash ~~flows~~flow

Cash flows ~~from~~used by financing activities were ~~$269.3~~$62.6 million during the ~~nine-months ended September 30, 2007~~first quarter 2008 compared to ~~$1.7~~cash provided of $136.9 million during the ~~nine-months ended September 30, 2006.~~first quarter 2007. Our financing activities for the ~~nine-months ended September 30, 2007~~first quarter of 2008 consisted primarily of $190.0 million in proceeds from borrowings under our term loan agreement that were used to finance a portion of the acquisition of RIA and proceeds from the equity private placement and stock option exercises totaling $165.4 million. Partially offsetting these increases were net repayments ~~and early retirements~~ of debt obligations, including capital lease obligations, of ~~$73.4 million, dividends paid to minority interest stockholders of $1.6 million and debt issuance costs associated with our new syndicated credit facility of $3.8~~$63.1 million. To support the short-term cash needs of our Money Transfer Segment, we generally borrow amounts under the revolving credit facility several times each month to fund the correspondent network in advance of collecting remittance amounts from the agency network. These borrowings are repaid over a very short period of time, generally within a few days. Primarily as a result of this, during the ~~nine-months ended September 30, 2007,~~first quarter 2008 we had a total of ~~$639.1~~$23.5 million in borrowings and ~~$687.5~~$74.1 million in repayments under our revolving credit facility. Additionally, we paid $0.5 million of scheduled repayments and $9.5 million of early repayments on our term loan in the first quarter 2008. We financed these net repayments through the release of escrow cash in connection with the agreement to acquire La Nacional discussed above, cash available from operations and cash on hand. Our financing activities for the ~~nine-months ended September 30, 2006~~first quarter 2007 consisted primarily of proceeds from the ~~exercise~~equity private placement of ~~stock options and employee share purchase of $12.5~~$159.4 million, ~~partially~~partly offset by $22.0 million of net repayments of ~~short-term borrowings, payments on~~obligations under revolving credit and capital lease ~~obligations~~arrangements and ~~other~~$1.6 million of dividends paid to minority interest stockholders.

Expected future financing ~~activities totaling $10.8 million.~~and investing cash requirements primarily depend on our acquisition activity and the related financing needs.

Other sources of capital

Credit Facility — ~~In connection with completing~~To finance the acquisition of RIA ~~discussed under “Opportunities and Challenges” above,~~in the second quarter 2007, we entered into a $290 million secured credit facility consisting of a $190 million seven-year term loan, which was fully drawn at closing, and a $100 million five-year revolving credit facility (together, the “Credit Facility”). The $190 million seven-year term loan bears interest at LIBOR plus 200 basis points or prime plus 100 basis points and requires that we repay 1% of the outstanding balance each year, with the remaining balance payable after seven years. We estimate that we will be able to repay the $190 million term loan prior to its maturity date through cash flows available from operations, provided our operating cash flows are not required for future business developments. Financing costs of $4.8 million have been deferred and are being amortized over the terms of the respective loans.

The $100 million five-year revolving credit facility replaced the ~~previously~~previous existing revolving credit facility and bears interest at LIBOR or prime plus a margin that adjusts each quarter based upon our consolidated total debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio. We intend to use the revolving credit facility primarily to fund working capital requirements, which are expected to increase as ~~a result of our recent acquisitions.~~we expand the Money Transfer business. Based on our current projected working capital requirements, we anticipate that our revolving credit facility will be sufficient to fund our working capital needs.

We may be required to repay our obligations under the Credit Facility six months before any potential repurchase date under our $140 million 1.625% Convertible Senior Debentures Due 2024 or our $175 million 3.5% Convertible Debentures Due 2025, unless we are able to demonstrate that either: (i) we could borrow unsubordinated funded debt equal to the principal amount of the applicable convertible debentures while remaining in compliance with the financial covenants in the Credit Facility or (ii) we will have sufficient liquidity (as determined by the administrative agent and the lenders). The Credit Facility contains three financial covenants that become more restrictive through September 30, 2008: (1) total debt to EBITDA ratio, (2) senior secured debt to EBITDA ratio and (3) EBITDA to fixed charge coverage ratio. Because of the change to these covenants over time, in order to remain in compliance with our debt covenants we will be required to increase our EBITDA, repay debt, or both. These and other material terms and conditions applicable to the Credit Facility are described in the agreement governing the Credit Facility.

The term loan may be expanded by up to an additional $150 million and the revolving credit facility can be expanded by up to an additional $25 million, subject to satisfaction of certain conditions including pro-forma debt covenant compliance.

As of ~~September 30, 2007,~~March 31, 2008, after making required repayments on the term loan of ~~$1.0~~$1.9 million and voluntary prepayments of ~~$24.0~~$34.1 million, we had borrowings of ~~$165.0~~$154.0 million outstanding against the term loan. We had borrowings of ~~$23.5~~$12.9 million and stand-by letters of credit of ~~$35.5~~$27.3 million outstanding against the revolving credit facility. The remaining ~~$41.0~~$59.8 million under the revolving credit facility ($~~66.0~~84.8 million if the facility were increased to $125 million) was available for borrowing. Borrowings under the revolving credit facility are being used to fund short-term working capital requirements in the U.S. and India. Our weighted average interest rate under the revolving credit facility as of ~~September 30, 2007~~March 31, 2008 was ~~8.2%~~9.1%.

Short-term debt obligations — Short-term debt obligations at March 31, 2008 consist ~~primarily~~only of the ~~current portion of~~$1.9 million annual repayment requirement under the term ~~loan,~~loan. Certain of our subsidiaries also have available credit lines and overdraft facilities ~~and short-term loans~~ to ~~support ATM cash needs and~~ supplement short-term working capital ~~requirements.~~requirements, when necessary. As of ~~September 30, 2007, we had $5.5 million in short-term debt obligations, comprised~~March 31, 2008, there were no borrowings outstanding against any of ~~$3.6 million being used to fund short-term working capital requirements in the Czech Republic and Spain and $1.9 million for the 1% annual repayment under the term loan.~~

Our Prepaid Processing Segment subsidiaries in Spain enter into agreements with financial institutions to receive cash in advance of collections on customers’ accounts. These arrangements can be with or without recourse and the financial institutions charge the Spanish subsidiaries transaction fees and/or interest in connection with these advances. Cash received can be up to 40 days prior to the customer invoice due dates. Accordingly, the Spanish subsidiaries remain obligated to the banks on the cash advances until the underlying account receivable is ultimately collected. Where the risk of collection remains with Euronet, the receipt of cash continues to be carried on the consolidated balance sheet in each of trade accounts receivable and accrued expenses and other current liabilities. Amounts outstanding under these arrangements are generally $2 million or less.facilities.

We believe that the short-term debt obligations can be refinanced aton terms acceptable to us. However, if acceptable refinancing options are not available, we believe that amounts due under these obligations can be funded through cash generated from operations, together with cash on hand or borrowings under our revolving credit facility.

Convertible debt-— We have $175 million in principal amount of 3.50% Convertible Debentures Due 2025 that are convertible into 4.3 million shares of Euronet Common Stock at a conversion price of $40.48 per share upon the occurrence of certain events (relating to the closing prices of Euronet Common Stock exceeding certain thresholds for specified periods). We will pay contingent interest for the six-month period from October 15, 2012 through April 14, 2013 and for each six-month period thereafter from April 15 to October 14 or October 15 to April 14 if the average trading price of the debentures for the applicable five trading-day period preceding such applicable six-month interest period equals or exceeds 120% of the principal amount of the debentures. Contingent interest will equal 0.35% per annum of the average trading price of a debenture for such five trading-day periods. The debentures may not be redeemed by us until October 20, 2012 but are redeemable at par at any time thereafter. Holders of the debentures have the option to require us to purchase their debentures at par on October 15, 2012, 2015 and 2020, or upon a change in control of the Company. When due, these debentures can be settled in cash or Euronet Common Stock, at our option, at predetermined conversion rates.

We also have $140 million in principal amount of 1.625% Convertible Senior Debentures Due 2024 that are convertible into 4.2 million shares of Euronet Common Stock at a conversion price of $33.63 per share upon the occurrence of certain events (relating to the closing prices of Euronet Common Stock exceeding certain thresholds for specified periods). We will pay contingent interest for the six-month period from December 20, 2009 through June 14, 2010 and for each six-month period thereafter from June 15 to December 14 or December 15 to June 14 if the average trading price of the debentures for the applicable five trading-day period preceding such applicable six-month interest period equals or exceeds 120% of the principal amount of the debentures. Contingent interest will equal 0.30% per annum of the average trading price of a debenture for such five trading-day periods. The debentures may not be redeemed by us until December 20, 2009 but are redeemable at any time thereafter at par. Holders of the debentures have the option to require us to purchase their debentures at par on December 15, 2009, 2014 and 2019, and upon a change in control of the Company. When due, these debentures can be settled in cash or Euronet Common Stock, at our option, at predetermined conversion rates.

These terms and other material terms and conditions applicable to the convertible debentures are set forth in the indenture agreements governing these debentures.

~~Proceeds from issuance of shares and other capital contributions~~- We have established, and shareholders have approved, share compensation plans that allow the Company to make grants of restricted stock, or options to purchase shares of Common Stock, to certain current and prospective key employees, directors and consultants. During the nine-months ended September 30, 2007, 283,884 stock options were exercised at an average exercise price of $15.68, resulting in proceeds to us of approximately $4.5 million.

Other uses of capital

Payment obligations related to acquisitions-— As partial consideration for the acquisition of RIA, we granted the sellers of RIA 3,685,098 contingent value rights (“CVRs”) and 3,685,098 stock appreciation rights (“SARs”). The 3,685,098 CVRs mature on October 1, 2008 and will result in the issuance of up to $20 million of additional shares of Euronet Common Stock or payment of additional cash, at our option, if the price of Euronet Common Stock is less than $32.56 on the maturity date. The 3,685,098 SARs entitle the sellers to acquire additional shares of Euronet Common Stock at an exercise price of $27.14 at any time through October 1, 2008. Combined, the CVRs and SARs, ~~entitle~~ the sellers are entitled to additional consideration of at least $20 million in Euronet Common Stock or cash. The SARS also provide potential additional value to the sellers for situations in which Euronet Common Stock appreciates beyond $32.56 per share prior

to October 1, 2008, which is to be settled through the issuance of additional shares of Euronet Common Stock. These and other terms and conditions applicable to the CVRs and SARs are set forth in the agreements governing these instruments.

We have potential contingent obligations to the former owner of the net assets of Movilcarga. Based upon presently available information, we do not believe any additional payments will be required. The seller has disputed this conclusion and has initiated arbitration as provided for in the purchase agreement. A global public accounting firm has been engaged as an independent expert to review the results of the computation. Any additional payments, if ultimately determined to be owed the seller, will be recorded as additional goodwill and could be made in either cash of a combination of cash and Euronet Common Stock at our option.

In connection with the acquisition of Brodos Romania, we agreed to contingent consideration arrangements based on the achievement of certain performance criteria. If the criteria are achieved, during 2009 and 2010, we would have to pay a total of $2.5 million in cash or 75,489 shares of Euronet Common Stock, at the option of the seller.

~~Leases~~- We lease ATMs and other property and equipment under capital lease arrangements and as of September 30, 2007 we owed $17.8 million under these arrangements. The majority of these lease agreements are entered into in connection with long-term outsourcing agreements where, generally, we purchase a bank’s ATMs and simultaneously sell the ATMs to an entity related to the bank and lease back the ATMs for purposes of fulfilling the ATM outsourcing agreement with the bank. We fully recover the related lease costs from the bank under the outsourcing agreements. Generally, the leases may be canceled without penalty upon reasonable notice in the unlikely

~~event the bank or we were to terminate the related outsourcing agreement. We expect that, if terms were acceptable, we would acquire more ATMs from banks under such outsourcing and lease agreements.~~

Capital expenditures and needs-— Total capital expenditures for the ~~nine-months ended September 30, 2007~~first quarter 2008 were ~~$27.0 million, of which $1.7 million were funded through capital leases.~~$11.7 million. These capital expenditures were primarily for the purchase of ATMs to meet contractual requirements in Poland, India and ~~India,~~China, the purchase and installation of ATMs in key under-penetrated markets, the purchase of POS terminals for the Prepaid Processing and Money Transfer Segments, and office, ~~and~~ data center and company store computer equipment and ~~software. We also incurred $3.0 million for a company-wide, three-year Microsoft license during the third quarter 2007. Included in capital expenditures for office and data center equipment and~~ software, ~~for the nine-months ended September 30, 2007 is approximately $3.3 million in~~including capital expenditures for the purchase and development of the necessary processing systems and capabilities to enter the cross-border merchant processing and acquiring business. Total capital expenditures for ~~2007~~2008 are estimated to be approximately ~~$30~~$35 million to ~~$35~~$45 million.

In the Prepaid Processing Segment, approximately ~~93,000~~95,000 of the approximately ~~370,000~~394,000 POS devices that we operate are Company-owned, with the remaining terminals being operated as integrated cash register devices of our major retail customers or owned by the retailers. As our Prepaid Processing Segment expands, we will continue to add terminals in certain independent retail locations at a price of approximately $300 per terminal. We expect the proportion of owned terminals to total terminals operated to remain relatively constant.

At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts available under our ~~recently amended~~ revolving credit facility and other existing and potential future financing will be sufficient to meet our debt, leasing, contingent acquisition and capital expenditure obligations. If our capital resources are insufficient to meet these obligations, we will seek to refinance our debt 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.

~~Litigation~~ — During 2005, a former cash supply contractor in Central Europe (the “Contractor”) claimed that we owed approximately $2.0 million for the provision of cash during the fourth quarter 1999 and first quarter 2000 that had not been returned. This claim was made after the Company terminated its business with the Contractor and established a cash supply agreement with another supplier. In the first quarter 2006, the Contractor initiated legal action in Budapest, Hungary regarding the claim. In April 2007, an arbitration tribunal awarded the Contractor $1.0 million, plus $0.2 million in interest, under the claim, which was recorded as selling, general and administrative expenses of the Company’s EFT Processing Segment during the first quarter 2007 and paid in the second quarter 2007.

~~Contingencies~~

In addition to the La Nacional matter described below, from time to time we are a party to litigation arising in the ordinary course of its business. Currently, there are no legal proceedings arising in the ordinary course of our business that management believes, either individually or in the aggregate, would have a material adverse effect upon our consolidated results of operations or financial condition.

During 2006, the Internal Revenue Service announced that Internal Revenue Code Section 4251 (relating to telecommunications excise tax) will no longer apply to, among other services, prepaid mobile airtime such as the services offered by our Prepaid Processing Segment’s U.S. operations. Additionally, companies that paid this excise tax during the period beginning on March 1, 2003 and ending on July 31, 2006, are entitled to a credit or refund of amounts paid in conjunction with the filing of 2006 federal income tax returns. We have claimed a refund for amounts paid during this period and have been informed by the IRS that the refund is currently being examined.. Therefore, no amounts have been recorded for any potential recovery in the Consolidated Financial Statements, and no such amounts will be recorded until such time as the refund is considered “realizable” as stipulated under SFAS No. 5, “Accounting for Contingencies.”

Other trends and uncertainties

~~Agreement to acquire La Nacional~~ — During January 2007, we signed a stock purchase agreement to acquire La Nacional, subject to regulatory approvals and other customary closing conditions. In connection with this agreement, in January 2007 we deposited $26 million in an escrow account created for the proposed acquisition. The escrowed funds can only be released by mutual agreement of the Company and La Nacional or through legal remedies available in the agreement.

On February 6, 2007, two employees of La Nacional working in different La Nacional stores were arrested for allegedly violating federal money laundering laws and certain state statutes. On April 5, 2007, we gave notice to the stockholders of La Nacional of the termination of the stock purchase agreement and requested the release of the $26 million held in escrow under the terms of the stock purchase agreement. La Nacional is contesting our request for release of the escrowed funds. While pursuing all legal remedies available to us, we are also engaged in negotiations to determine whether the dispute can be resolved through revised terms for the acquisition. We cannot predict when this dispute will be resolved or what the resolution may be.

Cross border merchant processing and acquiring -— In our EFT Processing Segment, we have entered the cross-border merchant processing and acquiring business, through the execution of an agreement with a large petrol retailer in Central Europe. Since the beginning of 2007, we have devoted significant resources, including capital expenditures of approximately ~~$3.3~~$5.6 million, to the ongoing investment in development of the necessary processing systems and capabilities to enter this business, which involves the purchase and design of hardware and software. ~~Merchant~~The cross-border merchant processing and acquiring business involves processing credit and debit card transactions that are made on POS terminals, including authorization, settlement, and processing of settlement files. It will involve the assumption of credit risk, as the principal amount of transactions will be settled to merchants before settlements are received from card associations. We expect to incur an additional ~~$2.0~~$0.5 million to ~~$2.5~~$1.0 million in capital expenditures associated with the development of the necessary systems and capabilities to enter this ~~business~~business. We expect that ~~are expected~~the necessary systems and capabilities will be completed and we will be processing transactions during the second quarter 2008. Additionally, we expect to ~~be funded through cash generated from operations or, if necessary, amounts available on our revolving credit facility.~~incur approximately $5.0 million to $5.5 million in operating losses related to this product for the full year 2008.

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 regularly grant guarantees of the obligations of our wholly-owned subsidiaries and we sometimes enter into agreements with unaffiliated third parties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. Our liability under such indemnification provisions may be subject to time and materiality limitations, monetary caps and other conditions and defenses. As of ~~September 30, 2007, other than the item listed below,~~March 31, 2008, there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, ~~2006.~~2007. 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 ~~September 30, 2007.~~

In connection with contracts with financial institutions that supply cash to ATMs in the EFT Processing Segment, the Company is responsible for the loss of network cash that, generally, is not recorded on the Company’s consolidated balance sheet, because the cash remains the property of the financial institutions while in the ATMs. As of September 30, 2007, the balance of ATM network cash for which the Company was responsible was $300 million. The Company maintains insurance policies to mitigate this exposure;

~~CONTRACTUAL OBLIGATIONS~~

~~The following table summarizes our contractual obligations as of September 30, 2007:~~

Payments due by period
Less than 1 More than 5
(in thousands) Total year 1-3 years 4-5 years years
Long-term debt obligations, less current maturities, including interest $ 624,841 $ 22,089 $ 186,176 $ 43,427 $ 373,149
Short-term debt obligations and current maturities of long-term debt obligations, including interest 5,924 5,924 — — —
Estimated contingent acquisition obligations 22,500 — 21,250 1,250 —
Obligations under capital leases 19,884 6,790 9,743 3,082 269
Obligations under operating leases 59,064 14,900 26,518 13,222 4,424
Vendor purchase obligations 7,105 5,732 872 488 13

Total $ 739,318 $ 55,435 $ 244,559 $ 61,469 $ 377,855

For the purposes of the above table, our $140 million convertible debentures issued in December 2004 are considered due during 2009, and our $175 million convertible debentures issued in October 2005 are considered due during 2012, representing the first years in which holders have the right to exercise their put option. Additionally, the above table only includes interest on these convertible debentures up to these dates.

Estimated contingent acquisition obligations as of September 30, 2007 include: 1) $20 million in cash and/or Euronet Common Stock to be provided to the sellers of RIA upon the assumed settlement of the CVRs and SARs during October 2008; and 2) additionalMarch 31, 2008.

3528

~~consideration~~CONTRACTUAL OBLIGATIONS

As of March 31, 2008, there were no material changes from the disclosure relating to ~~be settled~~contractual obligations contained in ~~cash or Euronet Common Stock that~~our Annual Report on Form 10-K for the year ended December 31, 2007.

SUBSEQUENT EVENTS

During April 2008, we ~~may have~~entered into an amendment to ~~pay during 2009 and 2010~~the Credit Facility to change, among other items, the definition of one of the financial covenants contained in the original agreement. We incurred costs of $0.6 million in connection with the ~~acquisition~~amendment, which will be recognized as additional interest expense over the remaining 48 month term of ~~Brodos, totaling up to $2.5 million. See Note 4 — Acquisitions to~~ the ~~unaudited consolidated financial statements included elsewhere in this report for a more complete description of these acquisitions.~~

Purchase obligations include contractual amounts for ATM maintenance, cleaning, telecommunication and cash replenishment operating expenses. While contractual payments may be greater or less based on the number of ATMs and transaction levels, the purchase obligations listed above are estimated based on the current levels of such business activity.

Our total liability for uncertain tax positions under FIN 48 was $3.5 million as of September 30, 2007. We are not able to reasonably estimate the amount by which the liability will increase or decrease over time; however, at this time, the Company does not expect a significant payment related to these obligations within the next year. See Note 14 — Income Taxes to the unaudited consolidated financial statements included elsewhere in this report for additional information.Credit Facility.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

~~During 2005,~~In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“~~FASB”~~SFAS”) ~~issued~~No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” which requires enhanced disclosures about an ~~exposure draft that would amend~~entity’s derivative and hedging activities, including: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. ~~141, “Business Combinations.” During redeliberations, the FASB has reaffirmed certain decisions including, among other things: 1) measuring~~133 and ~~recognizing contingent consideration at fair value as of the acquisition date~~its related interpretations, and ~~recording adjustments to liabilities as adjustments in earnings; 2) identifiable intangible assets acquired in a business combination should be measured at a current exchange value rather than at~~(c) how derivative instruments and related hedged items affect an ~~entity-specific value; 3) the acquiring company should measure~~entity’s financial position, financial performance, and recognize the acquiree’s identifiable assets and liabilities and goodwill in a step or partial acquisition at 100 percent of their acquisition date fair values; and 4) accounting for transaction related costs as expenses in the period incurred, rather than capitalizing these costs as a component of the respective purchase price. The FASB has not yet reaffirmed decisions on other items. The FASB expects to issue the final statement during the fourth quarter 2007, which will becash flows. This Statement is effective for usfinancial statements issued for fiscal years and interim periods beginning ~~in 2009. If adopted, the changes described above, as well as other possible changes, would likely have a significant impact on the accounting treatment for acquisitions occurring on or~~ after ~~January 1, 2009.~~

~~In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB~~November 15, 2008, with early application encouraged. This Statement ~~No. 115” (“SFAS 159”). SFAS 159 expands the use of fair value accounting~~encourages, but does not ~~affect existing standards which~~ require, ~~assets or liabilities to be carried~~comparative disclosures for earlier periods at fair value. Under SFAS 159, a company may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantor is permitted to pay a third party to provideinitial adoption. We are still evaluating the ~~warranty goods or services. If the use~~impact of fair value is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, such as deferred financing costs. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings. Subsequent to the adoption of SFAS 159, changes in fair value are recognized in earnings. SFAS 159 will be effective beginning in our first quarter 2008. We are currently determining whether fair value accounting is appropriate for any of our eligible items and cannot estimateNo. 161; however, the impact ~~if any, which SFAS 159 will have on our consolidated results of operations and financial condition.~~is not expected to be material.

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. All statements other than statements of historical facts included in this document are forward-looking statements, including statements regarding the following:

~~trends affecting our business plans, 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;~~

~~business strategy;~~

~~government regulatory action;~~

~~technological advances; and~~

~~projected costs and revenues.~~

•		trends affecting our business plans, 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;

•		business strategy;

•		government regulatory action;

•		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. Forward-looking statements are typically identified by the words believe, expect, anticipate, intend, estimate and similar expressions.

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, those referred to above and as set forth and more fully described in Part I, Item 1A — Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2006 and Part II, Item 1A — Risk Factors of this report.~~2007.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

As of March 31, 2008, our total debt outstanding was $498.5 million. Of this amount, $315 million, or 63% of our total debt obligations, relates to contingent convertible debentures having fixed coupon rates. Our $175 million contingent convertible debentures, issued in October 2005, accrue interest at a rate of 3.50% per annum. The $140 million contingent convertible debentures, issued in December 2004 accrue interest at a rate of 1.625% per annum. Based on quoted market prices, as of March 31, 2008, the fair value of our fixed rate convertible debentures was $276.8 million, compared to a carrying value of $315 million.

rate debt totals approximately $13.8 million per year, or a weighted average interest rate of 3.8% annually. Additionally, approximately $16.6 million, or 3% of our total debt obligations, relate to capitalized leases with fixed payment and interest terms that expire between 2008 and 2013.

The remaining $116.9 million, or 23% of our total debt obligations, relates to debt that accrues interest at variable rates. If we were to maintain these borrowings for one year, and maximize the potential borrowings available under the revolving credit facility for one year, including the $25.0 million in potential additional expanded borrowings, a 1% increase in the applicable interest rate would result in additional interest expense to the Company of approximately $2.0 million. This computation excludes the $50.0 million relating to the interest rate swap discussed above and the potential $150.0 million in potential expanded term loan because of the limited circumstances under which the additional amounts would be available to us for borrowing.

Our excess cash is invested in instruments with original maturities of three months or less; 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 ~~nine-months ended September 30, 2007, 76%~~first quarter 2008, 75% of our revenues were generated in non-U.S. dollar countries compared to ~~84%~~83% for the ~~nine-months ended September 30, 2006.~~first quarter 2007. The decrease in the percentage of revenues from non-U.S. dollar countries, compared to the prior year is due primarily to the second quarter 2007 acquisition of RIA, as well as increased revenues of our U.S.-based Prepaid Processing Segment operations. 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. WeAs of March 31, 2008, we estimate that ~~depending on the net foreign currency working capital position at a selected point in time,~~ a 10% fluctuation in these foreign currency exchange rates would have the combined annualized effect on reported net income and working capital of ~~up to~~ approximately ~~$15~~$25 million to ~~$20~~$30 million. This effect is estimated by ~~segregating revenues, expenses and working capital by currency and~~ applying a 10% ~~currency depreciation and appreciation~~adjustment factor to ~~the~~our non-U.S. dollar ~~amounts.~~pre-tax results from operations, as well as all balance sheet, including intercompany accounts receivable or payable, items that require remeasurement into the respective functional currency. 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 have been positively impacted by the weakening 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 are also exposed to foreign currency exchange rate risk in our Money Transfer Segment. A majority of the money transfer business involves 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. This spread provides some protection against currency fluctuations that occur while we are holding the foreign currency. Our exposure to changes in foreign currency exchange rates is limited by the fact that disbursement occurs for the majority of transactions shortly after they are initiated. Additionally, we enter into foreign currency forward contracts to help offset foreign currency exposure related to the notional value of money transfer transactions collected in currencies other than the U.S. dollar. As of ~~September 30, 2007,~~March 31, 2008, we had foreign currency forward contracts outstanding with a notional value of ~~$41.0~~$52.9 million, primarily in euros that were not designated as hedges and mature in a weighted average of 6six days. The fair value of these forward contracts as of ~~September 30, 2007~~March 31, 2008 was an unrealized loss of approximately ~~$0.6~~$0.3 million, which was partially offset by the unrealized gain on the related foreign currency receivables.

~~Interest rate risk~~

In connection with completing the acquisition of RIA during the second quarter, we entered into a $290 million secured syndicated credit facility consisting of a $190 million seven-year term loan, which was fully drawn at closing, and a $100 million five-year revolving credit facility, which accrue interest at variable rates. This revolving credit facility replaces our $50 million revolving credit facility. The credit facility may be expanded by up to an additional $150 million in term loan and up to an additional $25 million for the revolving line of credit, subject to satisfaction of certain conditions including pro forma debt covenant compliance. This facility substantially increases our interest rate risk.

As of September 30, 2007, our total outstanding debt was $524.9 million. Of this amount, $315 million, or 60% of our total debt obligations, relates to contingent convertible debentures having fixed coupon rates. Our $175 million contingent convertible debentures, issued in October 2005, accrue interest at a rate of 3.50% per annum. The $140 million contingent convertible debentures, issued in December 2004 accrue interest at a rate of 1.625% per annum. Based on quoted market prices, as of September 30, 2007 the fair value of our fixed rate convertible debentures was $328.1 million, compared to a carrying value of $315 million.

Through the use of interest rate swap agreements covering the period from June 1, 2007 to May 29, 2009, $50.0 million of our variable rate term debt has been effectively converted to a fixed rate of 7.3%. As of September 30, 2007, the unrealized loss on the interest rate swap agreements was less than $0.6 million. Interest expense, including amortization of deferred debt issuance costs, for our total $365.0 million in fixed rate debt totals approximately $13.7 million per year, or a weighted average interest rate of 3.8% annually. Additionally, approximately $17.8 million, or 3% of our total debt obligations, relate to capitalized leases with fixed payment and interest terms that expire between 2007 and 2011.

The remaining $142.1 million, or 27% of our total debt obligations, relates to debt that accrues interest at variable rates. If we were to maintain these borrowings for one year, and maximize the potential borrowings available under the revolving credit facility for one year, including the $25.0 million in potential additional expanded borrowings, a 1% increase in the applicable interest rate would result in

additional interest expense to the Company of approximately $2.1 million. This computation excludes the $50.0 million relating to the interest rate swap discussed above and the potential $150.0 million in potential expanded term loan because of the limited circumstances under which the additional amounts would be available to us for borrowing.

ITEM 4. CONTROLS AND PROCEDURES

Our executive management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of ~~September 30, 2007.~~March 31, 2008. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of these disclosure controls and procedures were effective as of such date to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

CHANGE IN INTERNAL CONTROLS

There has been no change in our internal control over financial reporting during the ~~third~~first quarter ~~2007~~2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is from time to time a party to litigation arising in the ordinary course of its business.

The discussion in Part I, Item 1. Financial Statements, Note 12 — Commitments, Litigation and Contingencies to the unaudited consolidated financial statements included elsewhere in this report, regarding litigation is incorporated herein by reference.

Currently, there are no legal proceedings that management believes, either individually or in the aggregate, would have a material adverse effect upon the consolidated results of operations or financial condition of the Company.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described in Part I, Item 1A. Risk Factors in our Annual Report onForm 10-K for the fiscal year ended December 31, ~~2006~~2007 as updated in our subsequent filings with the SEC ~~including this Quarterly Report on Form 10-Q,~~ before making an investment decision. The risks and uncertainties described in our Annual Report onForm 10-K, as updated by any subsequent Quarterly Reports onForm 10-Q, are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

If any of the risks identified in our Annual Report onForm 10-K, as updated by any subsequent Quarterly Reports onForm 10-Q, actually occurs, our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of our Common Stock could decline substantially.

This Quarterly Report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described ~~below and elsewhere~~ in ~~this Quarterly Report.~~our Form 10-K.

~~Other than as set forth below, there~~There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report onForm 10-K for the year ended December 31, ~~2006,~~2007, as filed with the SEC.

~~Risks Related to Our Business~~

~~We may be required to prepay our obligations under the $290 million secured syndicated credit facility.~~

Prepayment in full of the obligations under the $290 million secured syndicated credit facility (the “Credit Facility”) may be required six months prior to any required repurchase date under our $140 million 1.625% Convertible Senior Debentures Due 2024 or our $175 million 3.5% Convertible Debentures Due 2025, unless we are able to demonstrate that either: (i) we could borrow unsubordinated funded debt equal to the principal amount of the applicable convertible debentures while remaining in compliance with the financial covenants in the Credit Facility or (ii) we will have sufficient liquidity (as determined by the administrative agent and the lenders). Holders of the $140

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million 1.625% debentures have the option to require us to purchase their debentures at par on December 15, 2009, 2014 and 2019, and upon a change in control of the Company. Holders of the $175 million 3.50% debentures have the option to require us to purchase their debentures at par on October 15, 2012, 2015 and 2020, or upon a change in control of the Company.

The Credit Facility contains three financial covenants that become more restrictive between now and September 30, 2008, including: (1) total debt to EBITDA ratio, (2) senior secured debt to EBITDA ratio and (3) EBITDA to fixed charge coverage ratio. Because these covenant thresholds will become more restrictive through September 30, 2008, to remain in compliance with our debt covenants we will be required to increase 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.

~~Increases in interest rates will adversely impact our results from operations.~~

We have entered into interest rate swap agreements covering the period from June 1, 2007 through May 29, 2009 for a notional amount of $50 million that effectively converts a portion of our $190 million variable rate term loan to a fixed interest rate of 7.3% per annum. For the remaining outstanding balance of the term loan, as well as borrowings incurred under our revolving credit facility and other variable rate borrowing arrangements, 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 from operations.

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

Our money transfer based revenue is primarily generated through our agent network. Transaction volumes at existing agent locations may increase over time and new agents provide us with additional revenue. If agents decide to leave our network or if we are unable to sign new agents, our revenue and profit growth rates may be adversely affected. Our agents 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 our agent network 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 are third parties that may sell products and provide services in addition to our money transfer services, our agents may encounter business difficulties unrelated to the provision of our services, which may cause the agents 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, our business may be adversely affected.~~

Our money transfer business relies on consumer confidence in our brands and our ability to provide efficient and reliable money transfer services. A decline in consumer 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.

~~Our money transfer service offerings are dependent on financial institutions to provide such offerings.~~

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.

We are subject to the risks of liability for fraudulent bankcard and other card transactions involving a breach in our security systems, breaches of our information security policies or safeguards, as well as for ATM theft and vandalism.

We capture, transmit, handle and store sensitive information in conducting and managing electronic, financial and mobile transactions, such as card information and PIN numbers. 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 or by our own employees. 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 decrease 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 and electronic financial transaction networks.

Any breach in our security systems could result in the perpetration of fraudulent financial transactions for which we may be found liable. We are insured against various risks, including theft and negligence, but such insurance coverage is subject to deductibles, exclusions and limitations that may leave us bearing some or all of any losses arising from security breaches.

We also collect, transfer and retain consumer data as part of our money transfer business. These activities are subject to certain consumer 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 consumer information. Breaches of our security policies or applicable legal requirements resulting in a compromise of consumer 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 information security policies and safeguards, the possible theft and vandalism of ATMs present risks for our ATM business. We install ATMs at high-traffic sites and consequently our ATMs are exposed to theft and vandalism. 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. In addition, we have experienced increases in claims under our insurance, which has increased our insurance premiums.

~~Our money transfer and prepaid mobile airtime top-up businesses may be susceptible to fraud and/or credit risks occurring at the retailer and/or consumer level.~~

In our Prepaid Processing 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 mobile phone operators. In the event a retailer does not transfer to us payments that it receives for mobile airtime, we are responsible to the mobile phone operator for the cost of the airtime credited to the customer’s mobile phone. We can provide no assurance that retailer fraud will not increase in the future or that any proceeds we receive under our credit enhancement 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, our business is primarily conducted through our agent network, which provides money transfer services directly to consumers at retail locations. Our agents collect funds directly from the consumers and in turn we collect from the agents the proceeds due us resulting from the money transfer transactions. Therefore, we have credit exposure to our agents. The failure of agents owing us significant amounts to remit funds to us or to repay such amounts could adversely affect our business, financial condition and results of operations.

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

A recessionary economic environment or other outside factors could have a negative impact on mobile phone operators, retailers and our customers and could reduce the level of transactions, which could, in turn, negatively impact our financial results. If mobile phone operators 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 revenue. 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. Transaction levels have consistently been much higher in the fourth quarter of the fiscal year due to increased use of ATMs, prepaid mobile airtime top-ups 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. Additionally, in the Money Transfer Segment, we experience increased transaction levels during the April through September timeframe coinciding with 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, civil unrest, terrorism 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.

Our operating results in the money transfer business depend in part on continued worker immigration patterns, our ability to expand our share of the existing electronic market and to expand into new markets and our ability to continue complying with regulations issued by the Office of Foreign Assets Control (“OFAC”), Bank Secrecy Act (“BSA”), Financial Crimes Enforcement Network (“FINCEN”), PATRIOT Act regulations or any other existing or future regulations 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. Our ability to continue complying with the requirements of OFAC, BSA, FINCEN, the PATRIOT 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. Changes in U.S. and foreign government policies or enforcement toward immigration may have a negative affect on immigration in the U.S. and other countries, which could also have an adverse impact on our money transfer revenues.

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 integrate RIA into our existing operations, to 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.

~~Developments in electronic financial transactions could materially reduce our transaction levels and revenues.~~

Certain developments in the field of electronic financial transactions may reduce the need for ATMs, prepaid mobile phone POS terminals and money transfer agents. 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 methods or services, may affect the demand for other services in a dramatic way. The development of any new technology that reduces the need or demand for prepaid mobile phone time could materially and adversely affect our business.

Because our business is highly dependent on the proper operation of our computer network and telecommunications connections, significant technical disruptions to these systems would adversely affect our revenues and financial results.

Our business involves the operation and maintenance of a sophisticated computer network and telecommunications connections with financial institutions, mobile operators, 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. Our ATM segment also uses a satellite-based system that is susceptible to the risk of satellite failure. 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 and software errors. Excluding Germany, transactions in the EFT Processing Segment are processed through our Budapest, Belgrade, Athens, Beijing and Mumbai operations centers. Transactions in the Prepaid Processing Segment are processed through our Basildon, Martinsried, Madrid and Leawood, Kansas operations centers. Transactions in our Money Transfer Segment are processed through our Cerritos, California operations center. 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.

Our competition in the EFT Processing Segment, Prepaid Processing Segment and Money Transfer Segment include large, well financed companies and financial institutions larger than us with earlier entry into the market. As a result, we may lack the financial resources and access to capital needed to capture increased market share.

~~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, 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.

For our ITM product line, we are a leading supplier of electronic financial transaction processing software for the IBM iSeries platform in a largely fragmented market, which is made up of competitors that offer a variety of solutions that compete with our products, ranging from single applications to fully integrated electronic financial processing software. Additionally, for ITM, other industry suppliers service the software requirements of large mainframe systems and UNIX-based platforms, and accordingly are not considered competitors. We have specifically targeted customers consisting of financial institutions that operate their back office systems with the IBM iSeries. For Essentis, we are a strong supplier of electronic payment processing software for card issuers and merchant acquirers on a mainframe platform. Our competition includes products owned and marketed by other software companies as well as large, well financed companies that offer outsourcing and credit card services to financial institutions. We believe our Essentis offering is one of the few software solutions in this product area that has been developed as a completely new system, as opposed to a re-engineered legacy system, taking full advantage of the latest technology and business strategies available.

Our software solutions business has multiple types of competitors that compete across all EFT software components in the following areas: (i) ATM, network and POS software systems, (ii) Internet banking software systems, (iii) credit card software systems, (iv) mobile banking systems, (v) mobile operator solutions, (vi) telephone banking and (vii) full EFT software. Competitive factors in the software solutions business include price, technology development and the ability of software systems to interact with other leading products.

~~Prepaid Processing Segment~~— We face competition in the prepaid 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, which may compress our margins.~~

~~Money Transfer Segment~~— Our primary competitors in the money transfer and bill payment business include other independent processors and electronic money transmitters, as well as certain major national and regional banks, financial institutions and independent sales organizations. Our competitors include Western Union, MoneyGram, Global Payments and others, some of which are larger than we are and have greater resources and access to capital for expansion than we have. 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 services 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 and web-based services. Our continued growth depends upon our ability to compete effectively with these alternative technologies.

~~Because we derive our revenues from a multitude of countries with different currencies, our business is affected by local inflation and foreign currency exchange rates and policies.~~

We attempt to match any assets denominated in a currency with liabilities denominated in the same currency. Nonetheless, substantially all of our indebtedness is denominated in U.S. dollars, Euros and British pounds. While a significant amount of our cash outflows, including the acquisition of ATMs, executive salaries, certain long-term contracts and a significant portion of our debt obligations, are made in U.S. dollars, most of our revenues are denominated in other currencies. As exchange rates among the U.S. dollar, the euro, and other currencies fluctuate, the translation effect of these fluctuations may have a material adverse effect on our results of operations or financial condition as reported in U.S. dollars. Moreover, exchange rate policies have not always allowed for the free conversion of currencies at the market rate. Future fluctuations in the value of the dollar could have an adverse effect on our results.

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 and we typically deliver funds denominated in a different, destination country currency. Although we use foreign currency forward 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.

An additional 12.5 million shares of Common Stock, representing 26% of the shares outstanding as of September 30, 2007, could be added to our total Common Stock outstanding through the exercise of options or the issuance of additional shares of our Common Stock pursuant to existing convertible debt and other agreements. Once issued, these shares of Common Stock could be traded into the market and result in a decrease in the market price of our Common Stock.

As of September 30, 2007, we had an aggregate of 3.0 million options and restricted stock awards outstanding held by our directors, officers and employees, which entitles these holders to acquire an equal number of shares of our Common Stock upon exercise. Of this amount, 1.4 million options are vested and exercisable as of September 30, 2007. Approximately 0.3 million additional shares of our Common Stock may be issued in connection with our employee stock purchase plan. Another 8.5 million shares of Common Stock could be issued upon conversion of the Company’s Convertible Debentures issued in December 2004 and October 2005. Additionally, based on current trading prices for our Common Stock, we expect to issue approximately 0.7 million shares of our Common Stock to the sellers of RIA in settlement of the contingent value and stock appreciation rights.

Accordingly, based on current trading prices of our Common Stock, approximately 12.5 million shares could potentially be added to our total current Common Stock outstanding through the exercise of options or the issuance of additional shares, which could adversely impact the trading price for our stock. The actual number of shares issuable could be higher depending upon our stock price at the time of payment (i.e. more shares could be issuable if our share price declines).

Of the 3.0 million total options and restricted stock awards outstanding, an aggregate of 1.4 million options and restricted shares 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 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.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITES AND USE OF PROCEEDS~~

~~Stock repurchases~~

The following table sets forth information with respect to shares of Company Common Stock purchased by us during the three months ended September 30, 2007 (all purchases occurred during September 2007).

Total Number of Maximum Number of
Average Shares Purchased Shares that May Yet
Total Number Price Paid as Part of Publicly Be Purchased Under
of Shares Per Share Announced Plans the Plans or
Period Purchased (1) (2) or Programs Programs
September 1 - September 30 136 $ 26.19 — —

Total 136 $ 26.19 — —


~~(1)~~		For the three months ended September 30, 2007, the Company purchased, in accordance with the 2006 Stock Incentive Plan (Amended and Restated) 136 shares of its common stock for participant income tax withholding in conjunction with the lapse of restrictions on stock awards, as requested by the participants.

~~(2)~~		~~The price paid per share is the closing price of the shares on the vesting date.~~

ITEM 6. EXHIBITS

a) Exhibits

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

EXHIBITS

Exhibit Index


Exhibit		Description

3.1		Amended and Restated Bylaws (filed as Exhibit 3.1A to Euronet’s Form 8-K filed on February 26, 2008 and incorporate by reference herein)

10.1		Amendment No. 1 to the Credit Agreement dated April 23, 2008 (1)

10.2		Amended and Restated Employment Agreement executed in March 2008 and effective April 25, 2008 between Euronet Worldwide, Inc. and Miro Bergman, Executive Vice President and Chief Operations Officer, Prepaid Processing Segment (1)(2)

10.3		Amended and Restated Employment Agreement dated April 10, 2008 between Euronet Worldwide, Inc. and Michael J. Brown, Chairman and Chief Executive Officer (1)(2)

10.4		Amended and Restated Employment Agreement dated April 10, 2008 between Euronet Worldwide, Inc. and Rick L. Weller, Executive Vice President and Chief Financial Officer (1)(2)

10.5		Amended and Restated Employment Agreement dated April 10, 2008 between Euronet Worldwide, Inc. and Jeffrey B. Newman, Executive Vice President and General Counsel (1)(2)

10.6		Amended and Restated Employment Agreement dated April 10, 2008 between Euronet Worldwide, Inc. and Juan C. Bianchi, Executive Vice President and Managing Director, Money Transfer Segment (1)(2)

12.1		Computation of Ratio of Earnings to Fixed Charges (1)

31.1		Section 302 — Certification of Chief Executive Officer (1)

31.2		Section 302 — Certification of Chief Financial Officer (1)

32.1		Section 906 Certification of Chief Executive Officer and Chief Financial Officer (1)

(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.

4332

~~EXHIBITS~~

~~Exhibit Index~~


~~Exhibit~~		~~Description~~

~~4.1~~		Form of Contingent Value Rights Agreement, entered into April 4, 2007 with each of the Irving Barr Living Trust and the Fred Kunik Family Trust, granting each contingent value rights associated with 1,842,549 shares of common stock (with an “Initial FMV” of $27.136333, a “Target FMV” of $32.563599 and “Nasdaq Cap” of 7,420,990 shares) (filed as Exhibit B to the Stock Purchase Agreement attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 28, 2006 and incorporated by reference herein).

~~4.2~~		Form of Stock Appreciation Rights Agreement, entered into April 4, 2007 with each of the Irving Barr Living Trust and the Fred Kunik Family Trust, granting each stock appreciation rights with respect to 1,842,549 shares of common stock (with an “Initial Fair Market Value” of $27.136333 and “Nasdaq Cap” of 7,420,990 shares) (filed as Exhibit C to the Stock Purchase Agreement attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 28, 2006 and incorporated by reference herein).

~~12.1(1)~~		~~Computation of Ratio of Earnings to Fixed Charges~~

~~31.1(1)~~		~~Section 302 — Certification of Chief Executive Officer~~

~~31.2(1)~~		~~Section 302 — Certification of Chief Financial Officer~~

~~32.1(1)~~		~~Section 906 — Certifications of Chief Executive Officer and Chief Financial Officer~~


~~(1)~~		~~Filed herewith.~~


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended
(dollar amounts in thousands)	2007		2006		2007		2006		March 31, 2007
Reconciliation of net income to earnings available to earnings available to common stockholders:
Reconciliation of net income to earnings available to common stockholders:
Net income	$	15,921	$	10,331	$	33,878	$	30,684	$	9,461
Add: interest expense of 1.625% convertible debentures		836		797		2,370		2,391
Add: interest expense related to 1.625% convertible debentures										737


Earnings available to common stockholders	$	16,757	$	11,128	$	36,248	$	33,075	$	10,198


Computation of diluted weighted average shares outstanding:
Basic weighted average shares outstanding		48,523,643		37,230,518		44,222,453		36,938,652		38,434,178
Additional shares from assumed conversion of 1.625% convertible debentures		4,163,488		4,163,488		4,163,488		4,163,488		4,163,488
Weighted average shares issuable in connection with acquisition obligations (See Note 4 - Acquisitions)		714,644		—		467,672		48,685
Incremental shares from assumed conversion of stock options and restricted stock		1,037,521		1,131,505		1,051,986		1,312,576		1,090,348


Diluted weighted average shares outstanding		54,439,296		42,525,511		49,905,599		42,463,401
Potentially diluted weighted average shares outstanding										43,688,014


~~Poland~~		~~1999 through 2006~~
~~U.S. (Federal)~~		~~2000 through 2006~~
~~Spain~~		~~2002 through 2006~~
~~Australia~~		~~2003 through 2006~~
~~U.K.~~		~~2004 through 2006~~
~~Germany~~		~~2004 through 2006~~


PART I—FINANCIAL INFORMATION			3
ITEM 1. FINANCIAL STATEMENTS			3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			1814
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			3729
ITEM 4. CONTROLS AND PROCEDURES			3830
PART II—OTHER INFORMATION			3831
ITEM 1. LEGAL PROCEEDINGS			3831
ITEM 1A. RISK FACTORS			38
~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITES AND USE OF PROCEEDS~~			4231
ITEM 6. EXHIBITS			4332


	Estimated
(dollar amounts in thousands)	Life
Current assets		$	78,220
Property and equipment	various		10,854
Customer relationships	3 - 8 years		73,280
Trademarks and trade names	20 years		36,760
Software	5 years		1,610
Non-compete agreements	3 years		270
Other non-current assets			1,396
Goodwill	Indefinite		403,523

Assets acquired			605,913

Current liabilities			(85,190	)
Non-current liabilities			(1,574	)
Deferred income tax liability			(14,852	)

Net assets acquired		$	504,297


	Pro Forma
	Three Months Ended		Nine Months Ended September 30,
(in thousands, except per share data)	September 30, 2006		2007		2006
Revenues	$	207,961	$	700,056	$	595,033
Operating income	$	15,771	$	47,156	$	42,766
Net income	$	6,578	$	26,703	$	17,004

Per share data:
Net income per share-basic	$	0.16	$	0.59	$	0.41
Net income per share-diluted	$	0.15	$	0.56	$	0.39


	Amortizable					Total
	Intangible					Intangible
(in thousands):	Assets			Goodwill		Assets
Balance as of December 31, 2006 (Adjusted — See Note 1)	$	50,649		$	297,134	$	347,783
Increases (decreases):
Acquisition of RIA		111,920			403,523		515,443
Other 2007 acquisitions		8,366			21,553		29,919
Adjustment to 2006 acquisition		(116	)		—		(116	)
Amortization		(14,394	)		—		(14,394	)
Other (primarily changes in foreign currency exchange rates)		5,618			33,963		39,581

Balance as of September 30, 2007	$	162,043		$	756,173	$	918,216

	1)		Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, Asia and Africa. The Company provides comprehensive electronic payment solutions consisting of ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing and electronic recharge services for prepaid mobile airtime. Through this segment, the Company also offers a suite of integrated electronic financial transaction (“EFT”) software solutions for electronic payment, merchant acquiring, card issuing and transaction delivery systems.


(in thousands)
Year ending December 31,
2007 (three months)	$	4,666
2008		15,689
2009		15,210
2010		12,754
2011		7,420
thereafter		3,325

Total minimum lease payments	$	59,064

	•		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 the immigration developments ~~occurring~~ in the U.S. ~~during~~that started in 2006 and ~~2007;~~changes in the economic sectors in which immigrants work;

	•		the continuation of the trend of increased use of electronic money transfer and bill payment services among immigrant workers and the unbanked population in our markets;

	•		the ability to maintain our agent and correspondent networks;

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

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

	•		the ability to strengthen our brands;

	•		our ability to fund working capital requirements;


	Revenues for the Three
	Months Ended									Revenues for the Nine Months
	September 30,				Year-over-Year Change					Ended September 30,				Year-over-Year Change
					Increase		Increase							Increase		Increase
(in thousands)	2007		2006		Amount		Percent			2007		2006		Amount		Percent
EFT Processing	$	48,113	$	40,539	$	7,574		19	%	$	135,844	$	116,166	$	19,678		17	%
Prepaid Processing		144,631		120,240		24,391		20	%		414,442		343,957		70,485		20	%
Money Transfer		53,573		874		52,699		6030	%		103,581		2,303		101,278		4398	%


Total	$	246,317	$	161,653	$	84,664		52	%	$	653,867	$	462,426	$	191,441		41	%


	Results for the Three									Results for the Nine
	Months Ended September									Months Ended September
	30,				Year-over-Year Change					30,				Year-over-Year Change
					Increase		Increase							Increase		Increase
(dollar amounts in thousands)	2007		2006		Amount		Percent			2007		2006		Amount		Percent
Total revenues	$	144,631	$	120,240	$	24,391		20	%	$	414,442	$	343,957	$	70,485		20	%


Operating expenses:
Direct operating costs		118,038		97,294		20,744		21	%		337,516		276,708		60,808		22	%
Salaries and benefits		7,081		5,488		1,593		29	%		20,486		17,038		3,448		20	%
Selling, general and administrative		4,879		4,338		541		12	%		14,845		12,048		2,797		23	%
Depreciation and amortization		4,230		3,559		671		19	%		11,976		10,523		1,453		14	%


Total operating expenses		134,228		110,679		23,549		21	%		384,823		316,317		68,506		22	%


Operating income	$	10,403	$	9,561	$	842		9	%	$	29,619	$	27,640	$	1,979		7	%


Transactions processed (in millions)		162.4		121.7		40.7		33	%		462.1		325.8		136.3		42	%


	Results for the Three Months						Results for the Nine Months
	Ended September 30,						Ended September 30,
(dollar amounts in thousands)	2007			2006			2007			2006
Income from continuing operations before income taxes and minority interest	$	23,154		$	14,173		$	50,536		$	42,112
Minority interest		(599	)		(243	)		(1,551	)		(716	)

Income from continuing operations before income taxes		22,555			13,930			48,985			41,396
Income tax expense		6,634			3,599			15,451			10,712

Income from continuing operations	$	15,921		$	10,331		$	33,534		$	30,684

Effective income tax rate		29.4	%		25.8	%		31.5	%		25.9	%


Income from continuing operations before income taxes	$	22,555		$	13,930		$	48,985		$	41,396
Adjust: Foreign exchange gain, net		8,561			1,090			10,302			5,420

Income from continuing operations before income taxes and foreign exchange gain, net	$	13,994		$	12,840		$	38,683		$	35,976

Effective income tax rate, excluding foreign exchange gain, net		47.4	%		28.0	%		39.9	%		29.8	%


			Payments due by period
			Less than 1						More than 5
(in thousands)	Total		year		1-3 years		4-5 years		years
Long-term debt obligations, less current maturities, including interest	$	624,841	$	22,089	$	186,176	$	43,427	$	373,149
Short-term debt obligations and current maturities of long-term debt obligations, including interest		5,924		5,924		—		—		—
Estimated contingent acquisition obligations		22,500		—		21,250		1,250		—
Obligations under capital leases		19,884		6,790		9,743		3,082		269
Obligations under operating leases		59,064		14,900		26,518		13,222		4,424
Vendor purchase obligations		7,105		5,732		872		488		13


Total	$	739,318	$	55,435	$	244,559	$	61,469	$	377,855


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

By:		/s/ RICK L. WELLER

		Rick L. Weller
		Chief Financial Officer