EURONET WORLDWIDE, INC. - Annual Report: 2009 (Form 10-K)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

EURONET WORLDWIDE, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)		74-2806888 (I.R.S. Employer Identification No.)
4601 COLLEGE BOULEVARD, SUITE 300
LEAWOOD, KANSAS		66211
(Address of principal executive offices)		(Zip Code)

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, $0.02 par value		Nasdaq Stock Market, LLC
Preferred Stock Purchase Rights		Nasdaq Stock Market, LLC

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

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

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

As of June 30, 2009, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $927.2 million. The aggregate market value was determined based on the closing price of the Common Stock on June 30, 2009.

At February 25, 2010, the registrant had 50,912,446 shares of common stock (the “Common Stock”) outstanding.

Portions of the registrant’s Proxy Statement for its 2010 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2009, are incorporated by reference into Part III of this Annual Report on Form 10-K.

 

 

Table of Contents

PART I					3
ITEM 1.		BUSINESS			3
ITEM 1A.		RISK FACTORS			17
ITEM 1B.		UNRESOLVED STAFF COMMENTS			29
ITEM 2.		PROPERTIES			29
ITEM 3.		LEGAL PROCEEDINGS			29
ITEM 4.		[RESERVED]			29
PART II					30
ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			30
ITEM 6.		SELECTED FINANCIAL DATA			32
ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			33
ITEM 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			63
ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			65
ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			100
ITEM 9A.		CONTROLS AND PROCEDURES			100
ITEM 9B.		OTHER INFORMATION			101
PART III					102
ITEM 10.		DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE			102
ITEM 11.		EXECUTIVE COMPENSATION			102
ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			102
ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE			102
ITEM 14.		PRINCIPAL ACCOUNTING FEES AND SERVICES			102
PART IV					102
ITEM 15.		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES			102

PART I

ITEM 1. BUSINESS

OVERVIEW

General Overview

Euronet Worldwide, Inc. (“Euronet,” the “Company,” “we” or “us”) is a leading global electronic payments provider. We offer payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Our primary product offerings include comprehensive automated teller machine (“ATM”), point-of-sale (“POS”) and card outsourcing services; electronic distribution of prepaid mobile airtime and other prepaid products, and global consumer money transfer services.

Core Business Segments

We operate in the following three principal business segments as of December 31, 2009:

•		An EFT Processing Segment, which processes transactions for a network of 9,720 ATMs and approximately 53,000 POS terminals across Europe, the Middle East and Asia Pacific. We provide comprehensive electronic payment solutions consisting of ATM network participation; outsourced ATM and POS management solutions; credit and debit card outsourcing; card issuing and merchant acquiring services. Through this segment, we also offer a suite of integrated electronic financial transaction (“EFT”) software solutions for electronic payment and transaction delivery systems.
•		A Prepaid Processing Segment, which provides electronic distribution of prepaid mobile airtime and other prepaid products and collection services for various payment products, cards and services. Including terminals operated by unconsolidated subsidiaries, we operate a network of approximately 498,000 POS terminals providing electronic processing of prepaid mobile airtime top-up services in Europe, the Middle East, Asia Pacific and North America. Through this segment, we are one of the largest international providers of prepaid mobile airtime processing.
•		A Money Transfer Segment, which provides global consumer-to-consumer money transfer services. We offer this service through a network of sending agents and Company-owned stores primarily in Europe and North America, disbursing money transfers through a worldwide payer network. Bill payment and check cashing services are offered primarily in the U.S. Based on revenues and volumes, through this segment, we are the third-largest global money transfer company.

We have five processing centers in Europe, two in Asia Pacific and two in North America. We have 25 principal offices in Europe, one in the Middle East, six in Asia Pacific and seven in North America. Our executive offices are located in Leawood, Kansas, USA.

Historical Perspective

The first company in the Euronet group was established in 1994 as Euronet Bank Access Kft., a Hungarian limited liability company. We began operations in 1995, setting up a processing center in Budapest, Hungary and installing our first ATMs in Hungary, followed by Poland and Germany. The Euronet group was reorganized on March 6, 1997 in connection with its initial public offering, and at that time the operating entities of the Euronet group became wholly-owned subsidiaries of Euronet Services Inc., a Delaware corporation. We changed our name from Euronet Services, Inc. to Euronet Worldwide, Inc. in 2001.

Until December 1998, we devoted substantially all of our resources to establishing and expanding the EFT Processing Segment’s ATM network and outsourced ATM management services business in Europe: including Hungary, Poland, the Czech Republic, Croatia and Germany. We subsequently expanded our presence to the Middle East, Greece, Slovakia, India, Romania, Bulgaria, Serbia, Ukraine and China. We further expanded the product offerings of the EFT Processing Segment through the 2005 acquisition of Instreamline S.A., a Greek company that provides credit card and POS outsourcing services in addition to debit card and transaction gateway switching services in Greece and the Balkan region.

In December 1998, we acquired Arkansas Systems, Inc. (now known as “Euronet USA”), a U.S.-based company that produces electronic payment and transaction delivery systems software for retail banks internationally. In 2007, we combined our EFT and Software segments as both businesses are strategically aligned wherein our software segment is working primarily on supporting our EFT service offerings and processing centers across Europe, the Middle East and Asia Pacific. This has resulted in significant cost savings for us in comparison to using third-party licensing and maintenance options.

In 2003, Euronet complemented its existing EFT and Software business by acquiring a third business, epay Limited (“epay”), which had offices in the U.K. and Australia. epay processes transactions and acts as a cash collection network for prepaid services, primarily prepaid mobile airtime. We started reporting epay’s results in a new segment called the Prepaid Processing Segment. The Prepaid

Processing Segment subsequently expanded as a result of acquisitions in Germany, Romania, Spain, the U.K. and the U.S. and the establishment of new offices in France, New Zealand, Poland, India and Italy.

During 2007, we established the Money Transfer Segment after completing the acquisition of Los Angeles-based RIA, the third-largest global money transfer company. Established in 1987, RIA originates and terminates transactions through a network of sending agents and Company-owned stores located throughout Europe and North America and an extensive payer network located in more than 100 countries. During 2008 and 2009, the Money Transfer Segment focused on increasing its non-U.S. market share, particularly in Europe where we are consistently seeing double-digit growth in volumes and profits, and expanding our payer network in specific fast-moving money transfer corridors. The segment made significant strides in expanding its product portfolio to offer complementary non-money transfer products such as bill payment and check cashing, and prepaid services in conjunction with the Prepaid Processing Segment.

2009 Developments

In July 2009, our Prepaid Processing Segment launched a new global brand identity under the name “epay,” uniting all of our existing prepaid subsidiaries in Australia, Germany, Italy, Spain, New Zealand, Poland, Romania, the U.K. and the U.S. The unified branding strategy reflects a stronger, more diversified business supporting our goal of transforming the Prepaid Processing Segment from being one of the largest international distributors of prepaid mobile airtime to becoming a leading provider of e-payment services and technology. In the last few years, the Prepaid Processing Segment has made significant strides in diversifying its product portfolio beyond prepaid mobile airtime and the process of transformation continued in 2009. Today, our epay portfolio extends across a wide range of products and services, including prepaid debit cards, e-wallets, bill payment, gift cards, digital content, lottery and transport payment solutions, including road tolls and public transport.

In November 2009, we obtained a payment services license from the U.K. Financial Services Authority (“FSA”). Following the expiration of a transition period in 2011, a payment services license will be required in order to perform certain services in Europe involving the facilitation of payments, including money transfer and certain payment card services. Under European law, a payment services license obtained in a European country may be “passported” to any other European country, and we have passported our U.K. license to 10 countries to date. This feature of the payment services regime will permit us to replace multiple, national money transfer and other permits with a single permit, and thereby to be regulated by a single regulator rather than several, national regulators. The new payment services regime has also facilitated expansion of our money transfer business by permitting us to become licensed more quickly in new European countries through passporting and allowing us to broaden our sales of money transfers through agents in certain European countries in which use of agents was not previously permitted.

In April 2009, we completed the acquisition of Rapide Cheque, a small check cashing business in Montreal, Canada.

In December 2009, we completed the acquisition of Serbia-based Mellon Transaction Services (“MTS”), a member of the Greece-based Mellon Group of Companies. MTS provides integrated card issuing and acquiring solutions to financial institutions in Serbia, Egypt, Cyprus and Albania. The acquisition of MTS is of strategic importance to Euronet, as it positions us as the leading processor in Serbia and opens up new business development opportunities in the region.

BUSINESS SEGMENT OVERVIEW

For a discussion of operating results by segment, please see Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 19, Business Segment Information, to the Consolidated Financial Statements.

EFT PROCESSING SEGMENT

Overview

Our EFT Processing Segment provides outsourcing and network services to financial institutions, primarily in the developing markets of Central, Eastern and Southern Europe (Hungary, Poland, the Czech Republic, Croatia, Romania, Slovakia, Serbia, Greece, Bulgaria and Ukraine), the Middle East and Asia Pacific (India and China), as well as in certain developed countries of Western Europe and North America. We provide these services either through our Euronet-owned ATMs or through contracts under which we operate ATMs on behalf of financial institutions. Although all of these markets present opportunities for expanding the sales of our services, we believe opportunities for growth in the ATM services business are greater in our developing markets.

The major source of revenue generated by our ATM network is recurring monthly management fees and transaction-based fees. We receive fixed monthly fees under many of our outsourced management contracts. The EFT Processing Segment also has revenues from POS operations and merchant management, card network management (for credit, debit, prepaid and loyalty cards), prepaid

mobile phone recharge on ATMs and ATM advertising. The number of ATMs we operate decreased to 9,720 at December 31, 2009 from 10,128 at December 31, 2008. The reduction in ATMs was largely due to the expiration or termination of ATM services contracts in the first quarter of 2009. Most of the ATM reductions resulted from bank customers shifting their processing to related processing subsidiaries in contemplation of selling the subsidiaries to raise capital, rather than the loss of contracts to competitors. The reduction in the number of ATMs from contract terminations or expirations was partially offset in 2009 by increases in ATMs driven under new contracts, expansion of ATMs under existing contracts and the deployment of ATMs in markets where we operate Euronet-branded ATMs.

We monitor the number of transactions made by cardholders on our ATM network. These include cash withdrawals, balance inquiries, deposits, mobile phone airtime recharge purchases and certain denied (unauthorized) transactions. We do not bill certain transactions on our network to financial institutions, and we have excluded these transactions for reporting purposes. The number of transactions processed over our entire ATM network has increased over the last five years at a compound annual growth rate (“CAGR”) of approximately 19% as indicated in the following table:

(in millions)		2005				2006				2007				2008				2009
EFT processing transactions per year			352.5				455.5				582.5				672.2				703.0

Our processing centers for the EFT Processing Segment are located in Budapest, Hungary; Athens, Greece; Mumbai, India; Belgrade, Serbia; and Beijing, China. They are staffed 24 hours a day, seven days a week and consist of production IBM iSeries computers, which run the Euronet GoldNet ATM software package.

EFT Processing Products and Services

Outsourced Management Solutions

Euronet offers outsourced management services to financial institutions, retailers, mobile operators and other organizations using our processing centers’ electronic financial transaction processing software. Our outsourced management services include management of existing ATM networks, development of new ATM networks, management of POS networks, management of bunch note accepters, management of credit and debit card databases and other financial processing services. These services include 24-hour monitoring of each ATM’s status and cash condition, coordinating the cash delivery and management of cash levels in each ATM and providing automatic dispatches for necessary service calls. We also provide real-time transaction authorization, advanced monitoring, network gateway access, network switching, 24-hour customer service, maintenance, cash settlement and reconciliation, forecasting and reporting. Since our infrastructure can support a significant increase in transactions, any new outsourced management services agreements should provide additional revenue with lower incremental cost.

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

Euronet-Branded ATM Transaction Processing

Our Euronet-branded ATM networks in Western, Central and Eastern Europe are primarily managed by a processing center that uses our internally developed Integrated Transaction Management^® (“ITM”) core software solution. The ATMs in our network are able to process transactions for holders of credit and debit cards issued by or bearing the logos of financial institutions and international card organizations such as American Express^®, Diners Club International^®, Visa^®, MasterCard^®/Europay, Discover^® and China Union Pay as well as international ATM networks such as PULSE^®. This ability is accomplished through our agreements and relationships with these institutions, international credit and debit card issuers and international associations of card issuers.

In a typical ATM transaction, the transaction is routed from the ATM to our processing center and then to the card issuer for authorization. Once authorization is received, the authorization message is routed back to the ATM and the transaction is completed. The card issuer is responsible for authorizing ATM transactions processed on our ATMs. This process normally takes less than 30 seconds.

When a bank cardholder conducts a transaction on a Euronet-owned ATM, we receive a fee from the cardholder’s bank for that transaction. The bank pays us this fee either directly or indirectly through a central switching and settlement network. When paid indirectly, this fee is referred to as the “interchange fee.” All of the banks in a shared ATM and POS switching system establish the amount of the interchange fee by agreement. We receive transaction-processing fees for successful transactions and, in certain circumstances, for transactions that are not completed because they fail to receive authorization. The fees paid to us by the card issuers are independent of any fees charged by the card issuers to cardholders in connection with the ATM transactions. We do not charge cardholders a transaction or access fee for using our ATMs.

We generally receive fees from our customers for four types of ATM transactions:

	•		cash withdrawals,
	•		balance inquiries,
	•		transactions not completed because the relevant card issuer does not give authorization, and
	•		prepaid telecommunication recharges.

Card Acceptance or Sponsorship Agreements

Our agreements with financial institutions and international card organizations generally provide that all credit and debit cards issued by the customer financial institution or organization may be used at all ATMs that we operate in a given market. In most markets, we have agreements with a financial institution under which we are designated as a service provider (which we refer to as “sponsorship agreements”) for the acceptance of cards bearing international logos, such as Visa and MasterCard. These card acceptance or sponsorship agreements allow us to receive transaction authorization directly from the card issuing institution or international card organization. Our agreements generally provide for a term of three to seven years and are automatically renewed unless either party provides notice of non-renewal prior to the termination date. In some cases, the agreements are terminable by either party upon six months notice. We are generally able to connect a financial institution to our network within 30 to 90 days of signing a card acceptance agreement. Generally, the financial institution provides the cash needed to complete transactions on the ATM, with the exception of those in the Czech Republic where we provide the cash for the ATMs. Regardless of the source, Euronet is generally liable for the cash in the ATM networks. Under our card acceptance agreements, the ATM transaction fees we charge vary depending on the type of transaction and the number of transactions attributable to a particular card issuer. Our agreements generally provide for payment in local currency. Transaction fees are sometimes denominated in euros or U.S. dollars or are adjusted for inflation. Transaction fees are billed to financial institutions and card organizations with payment terms typically no longer than one month.

Other Products and Services

Our network of owned or operated ATMs allows for the sale of financial and other products or services at a low incremental cost. We have developed value-added services in addition to basic cash withdrawal and balance inquiry transactions. These value added services include electronic bill payment, ATM advertising, money transfer payout on ATMs and the sale of prepaid mobile airtime recharge services from ATMs or mobile phone devices. We are committed to the ongoing development of innovative new products and services to offer our EFT processing customers and intend to implement additional services as markets develop.

In Poland, Hungary, Croatia, Romania, Czech Republic, Slovakia and India, we have established electronic connections to some or all of the major mobile phone operators. These connections permit us to transmit to them electronic requests to recharge mobile phone accounts. We operate networks of ATMs in these markets to offer customers of the mobile operators the ability to credit their prepaid mobile phone accounts.

We have expanded our outsourced management solutions beyond ATMs to include credit and debit card and POS terminal management services. We support these services using our proprietary software products. Since 1996, we have sold advertising on our ATM network. Clients can display their advertisements on our ATM video screens, on the ATM receipts and on coupons dispensed with cash from the ATMs.

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

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

EFT Processing Segment Strategy

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

We continually strive to make our own ATM networks more efficient by eliminating underperforming ATMs and installing ATMs in more desirable locations. Moreover, we will make selective additions to our own ATM network if we see market demand and profit opportunities.

The EFT Processing Segment’s ATM and Mobile Recharge line of services are strengthened through complementary services offered by our Prepaid Processing Segment, where we provide top-up services through POS terminals. We intend to expand our technology and business methods into other markets where we operate and expect to leverage our relationships with mobile operators and financial institutions to facilitate expansion.

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

Euronet’s card issuing processing product line has seen steady growth in the last three years. We now have card outsourcing clients in Bulgaria and Romania. We are committed to grow both the geographical coverage and to sell more services in the existing markets. As a part of the card outsourcing proposition, we are selling chargeback handling and fraud systems priced on a transaction basis.

Additionally, our software products are an integral part of the EFT Processing Segment product lines, and our investment in research, development, delivery and customer support reflects our ongoing commitment to an expanded customer base both internally and externally. Our ITM software is used by our Budapest, Mumbai, Beijing and Belgrade processing centers in our EFT Processing Segment, including our Euronet Middle East joint venture processing center in Bahrain, resulting in cost savings and added value compared to third-party license and maintenance options. Furthermore, we have identified opportunities to provide processing services to our software solutions customers and we believe our ability to develop, adapt and control our own software gives us credibility with our processing services customers. We have been able to enter into agreements under which we contribute the right to use our ITM software in lieu of cash as our initial capital contributions to new transaction processing joint ventures. Such contributions permit us to enter new markets without significant cash outlays.

Seasonality

Our business is significantly impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels after the holiday season. We have estimated that, absent significant fluctuations in foreign currency exchanges rates or unusual circumstances, such as the impact of new acquisitions or unusually high levels of growth due to market factors, the overall revenue realized in the EFT Processing Segment is likely to be approximately 5% to 10% lower during the first quarter of each year than in the fourth quarter of the year. We have historically experienced minimal differences between the second and third quarters of each year.

Significant Customers and Government Contracts

No individual customer of the EFT Processing Segment makes up greater than 10% of consolidated total revenue. We do not have any government contracts in the EFT Processing Segment.

Competition

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

Discontinued Operations

During the fourth quarter 2009, the Company sold Euronet Essentis Limited (“Essentis”), a U.K. software entity, in order to focus our investments and resources on our transaction processing businesses.

PREPAID PROCESSING SEGMENT

Overview

We currently offer prepaid mobile phone top-up services and certain other prepaid and payment products on a network of approximately 498,000 POS terminals across approximately 237,000 retailer locations in Europe, the Middle East, Asia Pacific and North America. We are one of the largest international providers of prepaid processing, or “top-up,” services for prepaid mobile airtime. Our processing centers for the Prepaid Processing Segment are located in Basildon, U.K.; Martinsried, Germany; and Leawood, Kansas, U.S.

Since 2003, we have continually expanded our prepaid business and plan to further expand our operations in our existing markets and other markets by taking advantage of our expertise together with relationships with mobile operators and retailers. In addition to prepaid airtime, we offer a wide range of products across our retail networks, including prepaid debit cards, gift cards, prepaid vouchers, transport payments, lottery payments, prepaid content such as music and games, prepaid long distance and bill payment.

Sources of Revenue

The major source of revenue generated by our Prepaid Processing Segment is commissions or processing fees received from telecommunications service providers for the sale and distribution of prepaid mobile airtime. We also generate revenue from commissions earned from the distribution of other prepaid products.

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

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

Although mobile operators in the U.S. and certain European countries have provided service principally through postpaid accounts, the trend in many other countries in Europe and the rest of the world is to offer wireless service on a prepaid basis. It is believed that this shift is driven by customers’ perception that prepaid products better meet their needs and enable them to better control their monthly wireless expenditures.

Currently, two principal methods are available to credit prepaid accounts (referred to as “top-up” of accounts). The first is through the purchase of “scratch cards” bearing a PIN (personal identification number) that, when entered into a customer’s mobile phone account, credits the account by the value of airtime purchased. Scratch cards are sold predominantly through retail outlets. The second is through various electronic means of crediting accounts using POS terminals. Electronic top-up (or “e-top-up”) methods have several advantages over scratch cards, primarily because electronic methods do not require the cost of creation, distribution and management of a physical inventory of cards or involve the risk of losses stemming from fraud, theft and mismanagement. Prior to 2004, scratch cards were the predominant method of crediting mobile phone accounts in most developed markets. However, since 2004, a shift has occurred in these markets away from usage of scratch cards and e-top-up is now the predominant method.

Our Prepaid Processing Segment processes the sale of prepaid mobile phone minutes to consumers through networks of POS terminals and direct connections to the electronic payment systems of retailers. In some markets, we enter into agreements with mobile phone operators and connect directly to their back-office systems. In other markets, we distribute mobile phone time by connecting directly to the mobile operators or by purchasing PINs that enable airtime top-up. We then distribute the mobile phone time electronically through POS terminals either via a direct credit from the mobile operator to the mobile phone or via the sales of PINs. The business has grown rapidly over the past few years as new retailers have been added and prepaid airtime distribution has switched from scratch cards to electronic means.

In our prepaid markets, we expand our distribution networks through the signing of new contracts with retailers, and in some markets, through the acquisition of existing networks. We also seek to improve the results of our existing networks through the addition of new mobile operators in markets where we do not already distribute all of the available prepaid time and the addition of other prepaid products not necessarily related to the mobile operators. In addition, in the U.S. we are expanding our sales presence in all sales segments. We are continuing to focus on our growing network of distributors, generally referred to as Independent Sales Organizations (“ISOs”), that contract with retailers in their network to distribute PINs from their terminals. We continue to increase our focus on direct relationships with chains of independent convenience stores and other larger scale retailers, where we can negotiate agreements with the merchant on a multiyear basis.

To distribute PINs, we establish an electronic connection with the POS terminals and maintain systems that monitor transaction levels at each terminal. As sales to customers of mobile airtime are completed, the customer pays the retailer and the retailer becomes obligated to make settlement to us of the principal amount of the phone time sold. We maintain systems that enable us to monitor the payment practices of each retailer.

Prepaid Processing Products and Services

Prepaid Mobile Airtime Transaction Processing

We process prepaid mobile airtime top-up transactions on our POS network across Europe, the Middle East, Asia Pacific and North America for two types of clients: distributors and retailers. Both types of client transactions start with a consumer in a retail store. The retailer uses a specially programmed POS terminal in the store or the retailer’s electronic cash register (“ECR”) system that is connected to our network to buy prepaid airtime. The customer will select a predefined amount of prepaid airtime from the carrier of choice, and the retailer enters the selection into the POS terminal. The consumer will pay that amount to the retailer (in cash or other payment methods accepted by the retailer). The POS device then transmits the selected transaction to our processing center. Using the electronic connection we maintain with the mobile operator or drawing from our inventory of PINs, the purchased amount of airtime will be either credited to the consumer’s account or delivered via a PIN printed by the terminal and given to the consumer. In the case of PINs printed by the terminal, the consumer must then call a mobile operator’s toll-free number to activate the purchased airtime to this consumer’s mobile account.

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

We monitor the number of transactions made on our prepaid networks. The number of transactions processed on our entire POS network has increased over the last five years at a CAGR of approximately 22% as indicated in the following table:

(in millions)		2005				2006				2007				2008				2009
Prepaid processing transactions per year			348.0				457.8				634.8				713.1				777.1

Retailer and Distributor Contracts

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

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

Other Products and Services

Our POS network can be used for the distribution of other products and services. Although prepaid mobile airtime is the primary product distributed through our Prepaid Processing Segment, additional products include prepaid long distance calling card plans, prepaid Internet plans, prepaid debit cards, prepaid gift cards, prepaid vouchers, transport payments, lottery payments, bill payment, money transfer and prepaid content such as music and games. In certain locations, the terminals used for prepaid services can also be used for electronic funds transfer to process credit and debit card payments for retail merchandise. For 2009, gross profit from products other than prepaid mobile airtime comprised approximately 10% – 15% of the Prepaid Processing Segment’s gross profit.

Prepaid Processing Segment Strategy

We plan to expand our prepaid processing business in our existing markets and new markets by taking advantage of our expansive distribution network and existing relationships with mobile phone operators and retailers. Although all of these markets present opportunities for expanding the sales of our services, we believe opportunities for transaction growth in the Prepaid Processing Segment are greater in Poland, Germany, Italy, Romania and India, where there is organic growth of prepaid products in the prepaid markets.

Seasonality

Our prepaid business is significantly impacted by seasonality during the fourth quarter and first quarter of each year due to the higher transaction levels during the holiday season and lower levels following the holiday season. We expect that, absent significant fluctuations in foreign currency exchanges rates or unusual circumstances, such as the impact of new acquisitions or unusually high levels of growth due to market factors, the overall revenue realized is likely to be 5% to 10% lower during the first quarter than in the fourth quarter of the year. We have historically experienced minimal differences between the second and third quarters of each year.

Significant Customers and Government Contracts

No individual customer of our Prepaid Processing Segment makes up greater than 10% of consolidated total revenue. In 2009, we implemented our first government contracts with the Transport for London in the U.K. and Queensland Motorways in Australia.

Competition

We face competition in the prepaid business in all of our markets. We compete with a few multinational companies that operate in several of our markets. In other markets, our competition is from smaller, local companies. The mobile operators in all of our markets have retail distribution networks of their own through which they offer top-up of their own products. None of these companies is dominant in any of the markets where we do business.

We believe, however, that we currently have a competitive advantage due to various factors. First, in the U.K., Germany and Australia, our acquired subsidiaries have been concentrating on the sale of electronic prepaid mobile airtime for longer than most of our competitors and have significant market presence in those markets. In addition, we offer complementary ATM and mobile recharge solutions through our EFT processing centers. We believe this improves our ability to solicit the use of networks of devices owned by third parties (for example, banks and switching networks) to deliver recharge services. In selected developing markets, we expect to establish a first to market advantage by rolling out terminals rapidly before competition is established. We also have an extremely flexible technical platform that enables us to tailor POS solutions to individual merchant and mobile operator requirements where appropriate. The GPRS (wireless) technology, designed by our epay Germany subsidiary, will also give us an advantage in remote areas where landline phone lines are of lesser quality or are nonexistent.

The principal competitive factors in this area include price (that is, the level of commission paid to retailers for each recharge transaction), breadth of mobile operator product and up-time offered on the system. Major retailers with high volumes are in a position to demand a larger share of the commission, which increases the amount of competition among service providers. Recently, we are seeing signs that mobile operators may wish to take over and expand their own distribution networks of prepaid time, and in doing so, they may become our competitors. Additionally, mobile top-up is now being performed online or via mobile devices which provides other alternatives for consumers to use.

MONEY TRANSFER SEGMENT

Overview

We began reporting the results of this segment in the second quarter 2007 after we completed the acquisition of RIA, which established Euronet as the third-largest global money transfer company. Our Money Transfer segment processed approximately $5.8 billion in money transfers in 2009. We originate transfers through a network of sending agents and Company-owned stores located in Europe and North America and disburse money transfers through an extensive payer network in more than 100 countries.

Our sending agent network includes a variety of agents, including large/medium size regional retailers, convenience stores, bodegas, multi-service shops and phone centers, which are predominantly found in areas with a large immigrant population. Each money transfer transaction is processed using the Company’s proprietary software system and checked for security, completeness and compliance with federal regulations at every step of the process. The sender can track the progress of their transfer through RIA’s customer service representatives, and funds are delivered quickly to their beneficiary via our extensive payout network, which includes large banks and non-bank financial institutions, post offices and large retailers. As of December 31, 2009, we provided consumer-to-consumer money transfer services through a network of approximately 82,200 locations. Our processing center for the Money Transfer Segment is located in Cerritos, California and we operate call centers in Cerritos, California, El Salvador and Spain and provide multi-lingual customer service for both our agents and consumers.

Our money transfer sending network is also used to offer other products and services. Additional product offerings include bill payment services enabling over-the-counter payments for utilities, wireless and cable bills; money orders; prepaid mobile airtime: prepaid debit cards; comprehensive check cashing service for a wide variety of issued checks; and foreign currency exchange services. These services are all offered through our Company-owned stores while select services are offered through our agents in certain markets.

Money Transfer Services

We offer consumer-to-consumer money transfer services primarily through three channels at agent locations and Company-owned stores: by phone (“TeleRIA”), via computer (“RIA Online”) and card-based over a POS terminal (“Rialink”). All three types of transactions start with a consumer in an agent location or one of our stores. Through our TeleRIA service, customers connect to our call center from a telephone available at an agent location or RIA store and a representative collects the information over the telephone and enters it directly into our secure proprietary system. As soon as the data capture is complete, our central system automatically faxes a confirmation receipt to the agent location for the customer to review and sign and the customer pays the agent the money to be transferred, together with a fee. The agent then faxes the signed receipt back to RIA to complete the transaction. In an online transaction, customers provide the required information to the agent who enters the data into our online platform via a computer using a unique username and password. The real-time online connection we maintain with the agent enables the agent to generate a receipt and complete the transaction. Transactions through our newest channel, Rialink, are similar to online transactions, but are initiated over a POS terminal once the customer has completed a one-time enrollment over the phone with our customer service representative. After completing a successful pilot, Rialink has become a part of our main product offering and has shown great results in high volume stores and agent locations in our select send markets due to the speed, efficiency and ease of use of the POS transfer method, resulting in increased customer retention. We intend to roll out our Rialink money transfer product across more markets and locations. We will continue to enhance this product offering by adding a loyalty program to the card and combining it with prepaid debit technology.

Sources of Revenue

Revenue in the Money Transfer Segment is primarily derived through the charging of a transaction fee, as well as the difference between purchasing foreign currency at wholesale exchange rates and selling the foreign currency to consumers at retail exchange rates. We have an origination network in place comprised of agents and Company-owned stores in Europe and North America and a worldwide network of correspondent agents, consisting primarily of financial institutions in the transfer destination countries. Origination and correspondent agents each earn fees for cash collection and distribution services. These fees are recognized as direct operating costs at the time of sale.

Money Transfer Segment Strategy

Through RIA, we have established high-potential money transfer corridors from the U.S. and internationally beyond the traditional U.S. to Mexico corridor. For 2010 and beyond, we intend to increase the volume of money transfers processed by leveraging our banking and merchant/retailer relationships to expand our agent and payer networks and by entering new markets. Additionally, we plan to sell more complementary products and services such as prepaid debit cards and bill payment and check cashing services. Further, we expect to continue to take advantage of cross-selling opportunities with our Prepaid and EFT Segments by providing prepaid services through RIA’s stores and agents and offering our money transfer services at select prepaid retail locations in key markets. We will continue to make investments in our systems to support this growth.

Seasonality

Our money transfer business is significantly impacted by seasonality that varies by region. In most of our markets we experience increased money transfer transaction levels during the month of May and in the fourth quarter of each year, coinciding with various holidays. Additionally, in the U.S. to Mexico corridor, we usually experience our heaviest volume during the May through October timeframe, coinciding with the increase in worker migration patterns, and our lowest volumes during the first quarter. During the first quarter of each year we have historically experienced a 5% to 10% decrease in overall transactions when compared to the fourth quarter.

Significant Customers and Government Contracts

No individual customer of our Money Transfer Segment makes up greater than 10% of consolidated total revenue. There are no government contracts with any country within the Money Transfer Segment.

Competition

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 The Western Union Company, MoneyGram International Inc. 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, agents or correspondents, which may result in a loss of our current or potential customers or could force us to lower our prices. In addition to traditional money payment services, new technologies are emerging that may effectively compete with traditional money payment services, such as stored-value cards, debit networks and Web-based services. Our continued growth also depends upon our ability to compete effectively with these alternative technologies.

PRODUCT RESEARCH, DEVELOPMENT AND ENHANCEMENT

In the EFT Processing Segment, development has historically focused on expanding the range of services offered to our bank customers from ATM and POS outsourcing to card processing and software services. In 2007, we made significant investments to develop new cross-border merchant acquiring capabilities that we are now offering to multinational merchants.

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

We have made an ongoing commitment to the maintenance and improvement of our software products. We regularly engage in software product development and enhancement activities aimed at the development and delivery of new products, services and processes to our customers. Our research and development costs for software products to be sold, leased or otherwise marketed totaled $3.3 million, $3.4 million and $3.1 million in 2009, 2008 and 2007, respectively. Development costs that were capitalized totaled $1.3 million, $2.0 million and $1.4 million for the years ended December 31, 2009, 2008 and 2007, respectively.

FINANCIAL INFORMATION BY GEOGRAPHIC AREA

For information on results from operations, property and equipment, and total assets by geographic location, please see Note 19, Business Segment Information, to the Consolidated Financial Statements. Additionally, see Item 1A — Risk Factors, for risk factors related to foreign operations.

EMPLOYEES

We had approximately 2,700 employees as of December 31, 2009 and 2,500 employees as of December 31, 2008 and 2007. We believe our future success will depend in part on our ability to continue to recruit, retain and motivate qualified management, technical and administrative employees. Currently, no union represents any of our employees, except in our Spanish subsidiary. We experienced no work stoppages or strikes by our workforce in 2009 and we consider relations with our employees to be good.

GOVERNMENT REGULATION

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

Under German law, we currently may not operate our own ATM network in Germany without a sponsor, which is Bankhaus August Lenz (“BAL”). In that market, we act only as a subcontractor providing certain ATM-related services to BAL. As a result, our activities in the German market currently are entirely dependent upon the continuance of our agreement with BAL, or the ability to enter into a similar agreement with another institution in the event of the termination of such agreement. While we believe, based on our experience, that we should be able to find a replacement for BAL if the agreement with BAL were to be terminated for any reason, the inability to maintain the BAL agreement or to enter into a similar agreement with another institution upon a termination of the BAL agreement could have a material adverse effect on our operations in Germany. For further information, see Item 1A — Risk Factors. We are considering bringing our German and other ATM Networks under a payment services license, which would enable us to operate independently of a sponsor bank.

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

Commencing in November 2009, a new regulatory initiative, the Payment Services Directive (“PSD”), has been applicable to certain of our businesses, including in particular, our money transfer services, merchant acquiring, certain card services and bill payment. The PSD initiative requires a license to be obtained to perform such services in a European country, following the expiration of a two-year transition period in November 2011, and such license may be extended throughout the EU through “passporting.” Conditions of obtaining the license include minimum capital requirements, establishment of procedures for safeguarding of funds, and certain governance and reporting requirements. In addition, certain regulations relating to the conduct of business, in particular, consumer

disclosure requirements and certain rules regarding the timing and settlement of payments must be met. As of November 2009, we obtained a payment services license in the U.K. and have begun complying with these requirements.

Money Transfer and Payment Instrument Licensing

Licensing requirements in the U.S. are generally driven by the various state banking departments regulating the businesses of money transfers and issuance of payment instruments. Typical requirements include the meeting of minimum net worth requirements, maintaining permissible investments (e.g., cash, agent receivables, and government -backed securities) at levels commensurate with outstanding payment obligations and the filing of a security instrument (typically in the form of a surety bond) to offset the risk of default of trustee obligations by the license holder. We are required by many regulators to file interim reports of licensed activity, most often on a quarterly basis, that address changes to agent and branch locations, operating and financial performance, permissible investments and outstanding transmission liabilities. These periodic reports are utilized by the regulator to monitor ongoing compliance with state licensing laws. A number of major state regulators also conduct periodic examinations of license holders and their authorized delegates, generally with a frequency of every one to two years. Examinations are most often comprehensive in nature, addressing both the safety and soundness and overall compliance by the license holder with regard to state and federal regulations. Such examinations are typically performed on-site at the license holder’s headquarters or operations center; however, a number of states will choose to perform examinations off-site.

Money transmitters, issuers of payment instruments and their agents are required to comply with U.S. federal, state and/or foreign anti-money laundering laws and regulations. In summary, our Money Transfer Segment, as well as our agent network, is subject to regulations issued by the different state and foreign national regulators who license us, Office of Foreign Assets Control (“OFAC”), the Bank Secrecy Act as amended by the USA PATRIOT ACT (“BSA”), the Financial Crimes Enforcement Network (“FINCEN”), as well as any existing or future regulations that impact any aspect of our money transfer business.

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

Regulatory bodies in the U.S. and abroad may impose additional rules on the conduct of our Money Transfer Segment that could have a significant impact on our operations and our agent network.

Escheat Regulations

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

Privacy and Information Security Regulations

Our Money Transfer Segment operations involve the collection and storage of certain types of personal customer data that are subject to privacy and security laws in the U.S. and abroad. In the United States, we are subject to the Gramm-Leach-Bliley Act (“GLBA”), which requires that financial institutions have in place policies regarding the collection, processing, storage and disclosure of information considered nonpublic personal information. Laws in other countries include those adopted by the member states of the European Union under Directive 95/46 EC of the European Parliament and of the Council of 24 October 1995 (the “Directive”), as well as the laws of other countries. The Directive prohibits the transfer of personal data to non-European Union member nations that do not provide adequate protection for personal data. In some cases, the privacy laws of an EU member state may be more restrictive than the Directive and may impose additional requirements that we must comply with to operate in the respective country. Generally, these laws restrict the collection, processing, storage, use and disclosure of personal information and require that we safeguard personal customer data to prevent unauthorized access.

We comply with the GLBA and any state privacy provision by posting a privacy notice on the receipts provided to the consumers upon completion of a transaction. In addition, we comply with the Directive using the safe harbor permitted by the Directive by filing with the U.S. Department of Commerce, publicly declaring our privacy policy for information collected outside of the U.S., posting our privacy policy on our Web site and requiring our agents in the European Union to notify customers of the privacy policy.

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

Money Transfer Compliance Policies and Programs

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

INTELLECTUAL PROPERTY

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

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

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

With respect to our Prepaid Processing Segment, we rolled out our new branding for “epay” in 2009. As part of this global branding strategy, we filed trademark applications for the new “epay” brand in the U.S., U.K., the European Union (“E.U.”) through a Community Trademark application, Malaysia, India, Australia and New Zealand. The new trademark has issued to registration in the U.K. and the E.U. The trademark applications in the other jurisdictions are still pending. We also hold trademarks for our prepaid operating subsidiaries in other jurisdictions, including PaySpot, Inc. (“PaySpot”) in the U.S. We cannot be certain that we will be entitled to use the epay trademark in any markets other than those in which we have registered the trademark. In 2003, we filed a series of patent applications for our POS recharge and certain other products in support of epay and PaySpot technology. As of the date of this report, these patents are still pending. We also hold a patent license covering certain of PaySpot’s operations in the U.S.

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

EXECUTIVE OFFICERS OF THE REGISTRANT

The name, age, period of service and position held by each of our Executive Officers as of February 26, 2010 are as follows:

Name		Age				Served Since		Position Held
Michael J. Brown			53			July 1994		Chairman and Chief Executive Officer
Kevin J. Caponecchi			43			July 2007		President
Rick L. Weller			52			November 2002		Executive Vice President — Chief Financial Officer
Jeffrey B. Newman			55			December 1996		Executive Vice President — General Counsel
Juan C. Bianchi			39			April 2007		Executive Vice President — Managing Director, Money Transfer Segment
Nikos Fountas			46			September 2009		Senior Vice President — Managing Director, Europe EFT Processing Segment
Gareth Gumbley			37			May 2008		Senior Vice President — Managing Director, Prepaid Processing Segment

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

KEVIN J. CAPONECCHI, President. Mr. Caponecchi joined Euronet as President in July 2007. Prior to joining Euronet, Mr. Caponecchi served in various capacities with subsidiaries of General Electric Company for 17 years. From 2003 until June 2007, Mr. Caponecchi served as President of GE Global Signaling, a provider of products and services to freight, passenger and mass transit systems. From 1998 through 2002, Mr. Caponecchi served as General Manager — Technology for GE Consumer & Industrial, a provider of consumer appliances, lighting products and electrical products. Mr. Caponecchi holds degrees in physics from Franklin and Marshall College and industrial engineering from Columbia University.

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

JEFFREY B. NEWMAN, Executive Vice President, General Counsel. Mr. Newman has been Executive Vice President and General Counsel of Euronet since January 2000. He joined Euronet in December 1996 as Vice President and General Counsel. Prior to this, he practiced law with the Washington D.C. based law firm of Arent Fox Kintner Plotkin & Kahn and the Paris based law firm of Salans Hertzfeld & Heilbronn. He is a member of the District of Columbia, California and Paris, France bars. He received a B.A. in Political Science and French from Ohio University in 1976 and law degrees from Ohio State University and the University of Paris.

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

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

GARETH GUMBLEY, Senior Vice President, Managing Director — Prepaid Processing Segment. Mr. Gumbley joined Euronet in 2004 as managing director for the Company’s prepaid businesses in Australia and New Zealand. In May 2008, Mr. Gumbley took

over his current responsibility as managing director of Euronet’s Prepaid Processing Segment. Prior to joining Euronet, he served as chief executive officer of Dialect Solutions (a News Corporation company), a global Internet payments processor. Mr. Gumbley is a member of the Chartered Institute of Management Accountants and a member of the Australian Institute of Company Directors.

Departure of Directors or Certain Officers

In September, 2009, Roger Heinz, formerly Managing Director — Europe EFT Processing Segment, was replaced in that position by Nikos Fountas.

AVAILABILITY OF REPORTS, CERTAIN COMMITTEE CHARTERS AND OTHER INFORMATION

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

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

We will also provide printed copies of these materials to any stockholders, upon request, to Euronet Worldwide, Inc., 4601 College Boulevard, Suite 300, Leawood, Kansas, U.S.A. 66211, Attention: Investor Relations.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described below 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 following risks 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 Annual 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 Annual Report.

Risks Related to Our Business

We have a substantial amount of debt and other contractual commitments, and the cost of servicing those obligations could adversely affect our business, and such risk could increase if we incur more debt. We may be required to prepay our obligations under the secured syndicated credit facility.

We have a substantial amount of indebtedness. As of December 31, 2009, total liabilities were $846.2 million, of which $320.3 million represents long-term debt obligations, and total assets were $1,412.7 million. Of our total long-term debt obligations, $155.2 million is comprised of contingently convertible debentures that, in certain situations, could be settled in stock. We may not have sufficient funds to satisfy all such obligations as a result of a variety of factors, some of which may be beyond our control. If the opportunity of a strategic acquisition arises or if we enter into new contracts that require the installation or servicing of infrastructure, such as processing centers, ATM machines or POS terminals on a faster pace than anticipated, we may be required to incur additional debt for these purposes and to fund our working capital needs, which we may not be able to obtain. The level of our indebtedness could have important consequences to investors, including the following:

	•		our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements or other purposes may be limited or financing may be unavailable;
	•		a substantial portion of our cash flows must be dedicated to the payment of principal and interest on our indebtedness and other obligations and will not be available for use in our business;
	•		our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate;
	•		our high degree of indebtedness will make us more vulnerable to changes in general economic conditions and/or a downturn in our business, thereby making it more difficult for us to satisfy our obligations; and
	•		because a portion of our debt bears interest at a variable rate of interest, our actual debt service obligations could increase as a result of adverse changes in interest rates.

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

Prepayment in full of the obligations under our Credit Facility may be required six months prior to any required repurchase date under our $175 million principal amount 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 3.5% 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.

Restrictive covenants in our credit facilities may adversely affect us. The Credit Facility contains four financial covenants that we must meet as defined in the agreement: (1) total debt to EBITDA ratio, (2) senior secured debt to EBITDA ratio, (3) EBITDA to fixed charge coverage ratio and (4) minimum Consolidated Net Worth. To remain in compliance with our debt covenants, we may 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.

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

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

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

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

For the $129.0 million 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.

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

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

	•		The integration plans for our acquisitions are based on benefits that involve assumptions as to future events, including leveraging our existing relationships with mobile phone operators and retailers, as well as general business and industry conditions, many of which are beyond our control and may not materialize. Unforeseen factors may offset components of our integration plans in whole or in part. As a result, our actual results may vary considerably, or be considerably delayed, compared to our estimates;
	•		The integration process could disrupt the activities of the businesses that are being combined. The combination of companies requires, among other things, coordination of administrative and other functions. In addition, the loss of key employees, customers or vendors of acquired businesses could materially and adversely impact the integration of the acquired business;
	•		The execution of our integration plans may divert the attention of our management from other key responsibilities;
	•		We may assume unanticipated liabilities and contingencies; or
	•		Our acquisition targets could fail to perform in accordance with our expectations at the time of purchase.

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

We may be required to recognize additional impairment charges related to long-lived assets and goodwill recorded in connection with our acquisitions.

Our total assets include approximately $617.6 million, or 44% of total assets, in goodwill and acquired intangible assets recorded as a result of acquisitions. We assess our goodwill, intangible assets and other long-lived assets as and when required by accounting principles generally accepted in the U.S. to determine whether they are impaired. In 2008, we determined that certain goodwill and intangible assets of our Spanish prepaid business and our RIA money transfer business were impaired and we recorded a total of $230.0 million of non-cash impairment charges, including the adjustment in first quarter 2009 when the measurement was completed. If operating results in any of our key markets, including the U.S., U.K., Germany, Spain and Australia, deteriorate or our plans do not progress as expected when we acquired these entities or if capital markets depress our value or that of similar companies, we may be required to record an additional impairment write-down of goodwill, intangible assets or other long-lived assets. This could have a material adverse effect on our results of operations and financial condition.

Like other participants in the money transfer industry, as a result of downturns in certain labor markets, the current recessionary economic environment and immigration developments, our volume of money transfers from the U.S. to Mexico have declined as have related revenues. 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. For 2009, money transfer transactions to Mexico, which represented approximately 25% of total money transfer transactions, decreased by 19%. If this trend continues or worsens, or we experience similar trends in our international business, we may be required to record an additional impairment write-down of our goodwill, intangible assets or other long lived assets associated with the Money Transfer Segment.

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

Our expansion plans and opportunities are focused on four separate areas: (i) our network of owned and operated ATMs; (ii) outsourced ATM management contracts; (iii) our prepaid mobile airtime services; and (iv) our money transfer and bill payment services. The continued expansion and development of our ATM business will depend on various factors including the following:

	•		the demand for our ATM services in our current target markets;
	•		the ability to locate appropriate ATM sites and obtain necessary approvals for the installation of ATMs;
	•		the ability to install ATMs in an efficient and timely manner;
	•		the expansion of our business into new countries as currently planned;
	•		entering into additional card acceptance and ATM outsourcing agreements with banks;
	•		the ability to renew existing agreements with customers;
	•		the ability to obtain sufficient numbers of ATMs on a timely basis; and
	•		the availability of financing for the expansion.

We cannot predict the increase or decrease in the number of ATMs we manage under outsourcing agreements because this depends largely on the willingness of banks to enter into or maintain outsourcing contracts with us. Banks are very deliberate in negotiating these agreements, and the process of negotiating and signing outsourcing agreements typically takes six to twelve months or longer. Moreover, banks evaluate a wide range of matters when deciding to choose an outsource vendor and generally this decision is subject to extensive management analysis and approvals. The process is also affected by the legal and regulatory considerations of local countries, as well as local language complexities. These agreements tend to cover large numbers of ATMs, so significant increases and decreases in our pool of managed ATMs could result from entry into or termination of these management contracts. In this regard, the timing of both current and new contract revenues is uncertain and unpredictable. Increasing consolidation in the banking industry could make this process less predictable.

We currently offer prepaid mobile airtime top-up and other prepaid services in Europe, the Middle East, Asia Pacific and North America. We plan to expand in these and other markets by taking advantage of our existing relationships with mobile phone operators, banks and retailers and by offering additional prepaid products. This expansion will depend on various factors, including the following:

	•		the ability to negotiate new agreements, and renew existing agreements, in these markets with mobile phone operators, banks and retailers;
	•		the acceptance and popularity of additional prepaid products such as prepaid gift and debit cards, prepaid vouchers, transport payments, lottery payments and bill payment;
	•		the continuation of the trend of increased use of electronic prepaid mobile airtime among mobile phone users;
	•		the continuation of the trend of increased use of electronic money transfer and bill payment among immigrant workers;
	•		the increase in the number of prepaid mobile phone users; and
	•		the availability of financing for the expansion.

In addition, our continued expansion may involve acquisitions that could divert our resources and management time and require integration of new assets with our existing networks and services and could require financing that we may not be able to obtain. Our ability to manage our rapid expansion effectively will require us eventually to expand our operating systems and employee base. An inability to do this could have a material adverse effect on our business, growth, financial condition or results of operations.

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

The current 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, the 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 May through October 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.

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

A prolonged economic downturn or recession could materially impact our results from operations. A recessionary economic environment could have a negative impact on mobile phone operators, retailers and our other customers and could reduce the level of transactions processed on our networks, which would, in turn, negatively impact our financial results. If 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.

The growth and profitability of our prepaid business is dependent on certain factors that vary from market to market.

Our Prepaid Processing Segment derives revenues based on processing fees and commissions from mobile and other telecommunication operators and distributors of prepaid wireless products. Growth in our prepaid business in any given market is driven by a number of factors, including the extent to which conversion from scratch cards to electronic distribution solutions is occurring or has been completed, the overall pace of growth in the prepaid mobile phone market, our market share of the retail distribution capacity and the level of commission that is paid to the various intermediaries in the prepaid mobile airtime distribution chain. In mature markets, such as the U.K., Australia, Germany, New Zealand and Spain, the conversion from scratch cards to electronic forms of distribution is either complete or nearing completion. Therefore, these factors will cease to provide the organic increases in the number of transactions per terminal that we have experienced historically. Also, competition among prepaid distributors results in retailer churn and the reduction of commissions paid by mobile operators, although a portion of such reductions can be passed along to retailers. In the last year, processing fees and commissions per transaction have declined in most markets, and we expect that trend to continue. We have been able to improve our results despite that trend due to substantial growth in the number of transactions, driven by acquisitions and organic growth. We do not expect to continue this rate of growth. If we cannot continue to increase our transaction levels and per-transaction fees and commissions continue to decline, the combined impact of these factors could adversely impact our financial results.

Our prepaid mobile airtime top-up and money transfer 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, whether as a result of fraud, insolvency, billing delays or otherwise, 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 or insolvency 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 consumers and in turn we collect from the agents the proceeds due to us resulting from the money transfer transactions. Therefore, we have credit exposure to our agents. Additionally, our Company-owned stores transact a significant amount of business in cash. Although we have safeguards in place, cash transactions have a higher exposure to fraud and theft than other types of transactions. The failure of agents owing us significant amounts to remit funds to us or to repay such amounts, or the loss of cash in our stores could have a material adverse effect our business, financial condition and results of operations.

Because we typically enter into short-term contracts with mobile phone operators and retailers, our top-up business is subject to the risk of non-renewal of those contracts, or renewal under less favorable terms.

Our contracts with mobile phone operators to process prepaid mobile airtime recharge services typically have terms of less than three years. Many of those contracts may be canceled by either party upon three months’ notice. Our contracts with mobile phone operators are not exclusive, so these operators may enter into top-up contracts with other service providers. In addition, our top-up service contracts with major retailers typically have terms of one to three years, and our contracts with smaller retailers typically may be canceled by either party upon three to six months’ notice. The cancellation or non-renewal of one or more of our significant mobile phone operator or retail contracts, or of a large enough group of our contracts with smaller retailers, could have a material adverse effect on our business, financial condition and results of operations. The renewal of contracts under less favorable payment terms, commission terms or other terms could have a material adverse impact on our working capital requirements and/or results from

operations. In addition, our contracts generally permit operators to reduce our fees at any time. Commission revenue or fee reductions by any of the mobile phone operators could also have a material adverse effect on our business, financial condition or results of operations.

The processes and systems we employ may be subject to patent protection by other parties.

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

The stability and growth of our EFT Processing Segment depend on maintaining our current card acceptance and ATM management agreements with banks and international card organizations, and on securing new arrangements for card acceptance and ATM management.

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

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

Retaining the founder and key executives of our company, and of companies that we acquire, and finding and retaining qualified personnel is important to our continued success.

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

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

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

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

	•		the increased issuance of credit and debit cards;
	•		the increased acceptance of our ATM processing and management services in our target markets;
	•		the maintenance of the level of transaction fees we receive;
	•		the installation of larger numbers of ATMs; and
	•		the continued use of our ATMs by credit and debit cardholders.

The amount of fees we receive per transaction is set in various ways in the markets in which we do business. We have card acceptance agreements or ATM management agreements with some banks under which fees are set. However, we derive the bulk of our revenues in most markets from “interchange fees” that are set by the central ATM processing switch. The banks that participate in these switches set the interchange fee, and we are not in a position in any market to greatly influence these fees, which may increase or decrease over time. A significant decrease in the interchange fee in any market could adversely affect our results in that market.

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

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. Changes in U.S. and foreign government policies or enforcement toward immigration may have a negative effect on immigration in the U.S. and other countries, which could also have an adverse impact on our money transfer revenues.

Both U.S. and foreign regulators have become increasingly aggressive in the enforcement of the various regulatory regimes applicable to our businesses and the imposition of fines and penalties in the event of violations. Our ability to continue complying with the requirements of OFAC, BSA, FINCEN, the 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. Anti-money laundering regulations require us to be responsible for the compliance by agents with such regulations. Although we have training and compliance programs in place, we cannot be certain our agents will comply with such regulations and we may be held responsible for their failure to comply, resulting in fines and penalties.

Future growth and profitability depend upon expansion within the markets in which we currently operate and the development of new markets for our money transfer services. Our expansion into new markets is dependent upon our ability to successfully 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.

Changes in state, federal or foreign laws, rules and regulations could impact the money transfer industry, making it more difficult for our customers to initiate money transfers.

We are subject to regulation by the U.S. states in which we operate, by the U.S. federal government and by the governments of the other countries in which we operate. Changes in the laws, rules and regulations of these governmental entities could have a material adverse impact on our results of operations, financial condition and cash flow.

Changes in banking industry regulation and practice could make it more difficult for us and our agents to maintain depository accounts with banks.

The banking industry, in light of increased regulatory oversight, is continually examining its business relationships with companies who offer money transfer services and with retail agents who collect and remit cash collected from end consumers. Should banks decide to not offer depository services to companies engaged in processing money transfer transactions, or to retail agents who collect and remit cash from end customers, our ability to administer and collect fees from money transfer transactions could be adversely impacted.

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.

In some cases, we are dependent upon international card organizations and national transaction processing switches to provide assistance in obtaining settlement from card issuers of funds relating to transactions on our ATMs.

Our ATMs dispense cash relating to transactions on credit and debit cards issued by banks. We have in place arrangements for the settlement to us of all of those transactions, but in some cases, we do not have a direct relationship with the card-issuing bank and rely for settlement on the application of rules that are administered by international card associations (such as Visa or MasterCard) or national transaction processing switching networks. If a bankcard association fails to settle transactions in accordance with those rules, we are dependent upon cooperation from such organizations or switching networks to enforce our right of settlement against such banks or card associations. Failure by such organizations or switches to provide the required cooperation could result in our inability to obtain settlement of funds relating to transactions and adversely affect our business.

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 Athens, Budapest, Belgrade, Beijing and Mumbai processing centers. Transactions in the Prepaid Processing Segment are processed through our Basildon, Martinsried and Leawood, Kansas processing centers. Transactions in our Money Transfer Segment are processed through our Cerritos, California processing 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.

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; and the use of fraudulent cards on our network of owned or outsourced ATMs and POS devices. We incorporate industry-standard encryption technology and processing methodology into our systems and software, and maintain controls and procedures regarding access to our computer systems by employees and others, to maintain high levels of security. Although this technology and methodology 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. In addition, the cost and timeframes required for implementation of new technology may result in a time lag between availability of such technology and our adoption of it. Further, our controls, procedures and technology may not be able to detect when there is a breach, causing a delay in our ability to mitigate it. The recent economic crisis increases the risk that criminals will attempt such data theft.

Any breach in our security systems could result in the perpetration of fraudulent financial transactions for which we may bear the liability. We are insured against various risks, including theft and negligence, but such insurance coverage is subject to deductibles, exclusions and 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.

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

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

We are required under German law and the rules of financial transaction switching networks in all of our markets to have “sponsors” to operate ATMs and switch ATM transactions. Our failure to secure “sponsor” arrangements in Germany or any other market could prevent us from doing business in that market.

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

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

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

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

If consumer confidence in our money transfer business or brands declines, 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.

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.

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 or to negotiate directly with the mobile operators, 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 The Western Union Company, MoneyGram International Inc. 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.

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

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

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

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

For example, currently there are no limitations on the repatriation of profits from any of the countries in which we have subsidiaries (although U.S. tax laws discourage repatriation), but foreign currency exchange control restrictions, taxes or limitations may be imposed or increased in the future with regard to repatriation of earnings and investments from these countries. If exchange control restrictions, taxes or limitations are imposed, our ability to receive dividends or other payments from affected subsidiaries could be reduced, which may have a material adverse effect on us.

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

Transmittal of data by electronic means and telecommunications is subject to specific regulation in most Central European countries. Although these regulations have not had a material impact on our business to date, changes in these regulations, including taxation or limitations on transfers of data across national borders, could have a material adverse effect on our business, growth, financial condition or results of operations.

We conduct business in many international markets with complex and evolving tax rules, including value added tax rules, which subjects us to international tax compliance risks.

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

As allowable under the Internal Revenue Code (the “Code”), the interest deduction from our convertible debentures is based on a comparable interest rate for a traditional, nonconvertible, fixed rate debt instrument with similar terms. This allowable deduction is in excess of the stated interest rate. This deduction may be deferred, limited or eliminated under certain conditions.

The U.S Treasury regulations contain an anti-abuse regulation, set forth in Section 1.1275-2(g), that grants the Commissioner of the Internal Revenue Service authority to depart from the regulations if a result is achieved which is unreasonable in light of the original issue discount provisions of the Code, including Section 163(e). The anti-abuse regulation further provides that the Commissioner may, under this authority, treat a contingent payment feature of a debt instrument as if it were a separate position. If such an analysis were applied to our convertible debentures and ultimately sustained, our deductions attributable to the convertible debentures could be

limited to the stated interest thereon. The scope of application of the anti-abuse regulations is unclear. However, we are of the view that application of the contingent payment debt instrument regulations to our convertible debentures is a reasonable result such that the anti-abuse regulation should not apply. If a contrary position was asserted and ultimately sustained, our tax deductions would be severely diminished with a resulting adverse effect on our cash flow and ability to service the convertible debentures.

Under the Code, no deduction is allowed for interest expense in excess of $5 million on convertible subordinated indebtedness incurred to acquire stock or assets of another corporation reduced by any interest paid on other obligations which have provided consideration for an acquisition of stock in another corporation. If a significant portion of the proceeds from the issuance of the convertible debentures, either alone or together with other debt proceeds, was used for a domestic acquisition and the convertible debentures and other debt, if any, were deemed to be corporate acquisition indebtedness as defined in Section 279 of the Code, interest deductions for tax purposes in excess of $5 million on such debt reduced by any interest paid on other obligations which have provided consideration for an acquisition of stock in another corporation would be disallowed. This would adversely impact our cash flow and our ability to pay down the convertible debentures. We previously applied a significant portion of the proceeds from our December 2004 issuance of 1.625% Convertible Senior Debentures Due 2024 to acquisitions of foreign corporations. In prior years, the interest expense attributable to these acquisitions exhausted all of the $5 million annual interest expense deduction permitted under the Code for certain convertible subordinated debt incurred for corporation acquisitions. In 2009, the repurchase of the 1.625% Convertible Senior Debentures Due 2024 significantly reduced interest expense for federal income tax purposes and, consequently, a larger portion of the annual interest expense subject to limitation was able to be deducted. Although the portion of interest expense able to be deducted increased, significant interest deductions would be disallowed with respect to our October 2005 3.5% Convertible Debentures Due 2025 if Section 279 of the Code applied. We do not currently anticipate that this limitation will apply but there can be no assurance of that fact.

In the past, the U.S. Senate has drafted proposed tax relief legislation that contained a provision that would eliminate the comparable interest rate deduction on future issuances of convertible debentures such as ours. Legislation containing this provision has not been passed, however, we cannot predict if there will be future tax legislation proposed and approved that would eliminate the comparable interest rate deduction.

Increases in taxes could negatively impact our operating results.

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

Because we are a multinational company conducting a complex business in many markets worldwide, we are subject to legal and operational risks related to staffing and management, as well as a broad array of local legal and regulatory requirements.

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

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. However, 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, while 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 U.S. 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.

We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate our stockholders’ ability to sell their shares for a premium in a change of control transaction.

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

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

We have also approved a stockholders’ rights agreement (the “Rights Agreement”) between Euronet and EquiServe Trust Company, N.A., (subsequently renamed Computershare Limited) as Rights Agent. Pursuant to the Rights Agreement, holders of our common stock are entitled to purchase one one-thousandth (1/1,000) of a share (a “Unit”) of Junior Preferred Stock at a price of $57.00 per Unit upon certain events. The purchase price is subject to appropriate adjustment for stock splits and other similar events. Generally, in the event a person or entity acquires, or initiates a tender offer to acquire, at least 15% of Euronet’s then-outstanding common stock, the Rights will become exercisable for common stock having a value equal to two times the exercise price of the Right, or effectively at one-half of Euronet’s then-current stock price. The existence of the Rights Plan may discourage, delay or prevent a change of control or takeover attempt of our company by a third party that is opposed to by our management and board of directors.

Our directors and officers, together with the entities with which they are associated, owned approximately 9% of our Common Stock as of December 31, 2009, giving them significant control over decisions related to our Company.

This control includes the ability to influence the election of other directors of our Company and to cast a large block of votes with respect to virtually all matters submitted to a vote of our stockholders. This concentration of control may have the effect of delaying or preventing transactions or a potential change of control of our Company.

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

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

An additional 9.8 million shares of Common Stock, representing 19% of the shares outstanding as of December 31, 2009, 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 December 31, 2009, we had an aggregate of 5.4 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, 1.3 million options are vested and exercisable as of December 31, 2009. Approximately 0.1 million additional shares of our Common Stock may be issued in connection with our employee stock purchase plan. Another 4.3 million shares of Common Stock could be issued upon conversion of the Company’s Convertible Debentures issued in October 2005.

Accordingly, based on current trading prices of our Common Stock, approximately 9.8 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 5.4 million total options and restricted stock awards outstanding, an aggregate of 2.6 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 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our executive offices are located in Leawood, Kansas. As of December 31, 2009, we also maintain principal operational offices in Little Rock, Arkansas; Leawood, Kansas; Cerritos, California; San Juan, Puerto Rico; Budapest, Hungary; Warsaw, Poland; Zagreb, Croatia; Prague, Czech Republic; Berlin and Martinsried, Germany; Bucharest, Romania; Bratislava, Slovakia; Athens, Greece; Madrid, Spain; Belgrade, Serbia; Sofia, Bulgaria; Basildon and London, U.K.; Kiev, Ukraine; Rome and Milan, Italy; Paris, France; Geneva, Switzerland; Stockholm, Sweden; Brussels, Belgium; Dublin, Ireland; Cairo, Egypt; Mumbai and Pune, India; Sydney and Liverpool, Australia; Auckland, New Zealand; Beijing, China; Montreal, Canada; Antiguo Cuscatlan, El Salvador; and Mexico City, Mexico. Our office leases generally provide for initial terms ranging from two to twelve years.

Our processing centers for the EFT Processing Segment are located in Budapest, Hungary; Belgrade, Serbia; Athens, Greece; Beijing, China; and Mumbai, India. Our processing centers for the Prepaid Processing Segment are located in Basildon, U.K.; Martinsried, Germany; and Leawood, Kansas. Our processing center for the Money Transfer Segment is located in Cerritos, California.

Our processing centers in Budapest, Belgrade, Athens, Beijing, Mumbai, Basildon, Martinsried, Leawood and Cerritos have off-site real time backup processing centers that are capable of providing full or partial processing capability in the event of failure of the primary processing centers.

ITEM 3. 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 II, Item 8 — Financial Statements and Supplementary Data and Note 22, Litigation and Contingencies, to the Consolidated Financial Statements included elsewhere in this report, regarding litigation is incorporated herein by reference.

Currently, there are no other 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 4. [RESERVED]

PART II

ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

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

		2009								2008
For the quarters ended		High				Low				High				Low
December 31		$	25.30			$	20.71			$	16.68			$	6.87
September 30		$	25.09			$	17.73			$	20.36			$	15.36
June 30		$	20.43			$	12.59			$	20.14			$	16.28
March 31		$	13.65			$	7.57			$	30.57			$	19.07

DIVIDENDS

Since our inception, no dividends have been paid on our Common Stock or Preferred Stock. We do not intend to distribute dividends for the foreseeable future. Certain of our credit facilities contain restrictions on the payment of dividends without lender consent.

HOLDERS

At December 31, 2009, we had 84 stockholders of record of our Common Stock, and none of our Preferred Stock was outstanding.

PRIVATE PLACEMENTS AND ISSUANCES OF EQUITY

During 2009, we did not issue any equity securities that were not registered under the Securities Act of 1933, which have not been previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

STOCK PERFORMANCE GRAPH

Set forth below is a graph comparing the total cumulative return on the Common Stock from December 31, 2004 through December 31, 2009 with the Total Returns Index for U.S. companies traded on the NASDAQ Global Select Market (the “Market Group”) and an index group of peer companies, the Total Returns Index for U.S. NASDAQ Financial Stocks (the “Peer Group”). Returns are based on monthly changes in price and assume reinvested dividends. These calculations assume the value of an investment in the Common Stock, the Market Group and the Peer Group was $100 on December 31, 2004.

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

NOTE: Derived from CRSP NASDAQ Stock Market, Center for Research in Security Prices (CRSP^®), Booth School of Business, The University of Chicago. Used with permission. All rights reserved. Graph copyright 2010 Zacks Investment Research, Inc.

EQUITY COMPENSATION PLAN INFORMATION

The table below sets forth information with respect to shares of Common Stock that may be issued under our equity compensation plans as of December 31, 2009.

Number of

securities

remaining

available for

future issuance

Number of

under equity

securities to be

compensation

issued upon

Weighted average

plans (excluding

exercise of

exercise price of

securities

outstanding

outstanding

reflected in

options and rights

options and rights

column (a))

Plan category

(a)

(b)

(c)

Equity compensation plans approved by security holders:

4,068,228

Stock option awards

3,934,549

$

13.76

Restricted stock unit awards

1,295,179

—

Equity compensation plans not approved by security holders

—

—

—

Total

5,229,728

10.35

4,068,228

ITEM 6. SELECTED FINANCIAL DATA

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

		Year Ended December 31,
(dollar amounts in thousands, except as noted)		2009				2008				2007				2006				2005
Consolidated statements of operations data:
Revenues		$	1,032,694			$	1,045,665			$	902,666			$	615,376			$	531,159
Operating expenses (1)			904,406				1,138,435				779,435				536,014				461,007
Depreciation and amortization			56,023				56,251				46,997				28,590				22,800
Operating income (loss) (1)			72,265				(149,021	)			76,234				50,772				47,352
Other expenses, net			(17,026	)			(52,896	)			(6,277	)			(1,272	)			(16,458	)
Income from unconsolidated affiliates			1,934				1,250				908				660				1,185
Income (loss) from continuing operations before income taxes			57,173				(200,667	)			70,865				50,160				32,079
Income tax (expense) benefit			(25,836	)			7,337				(34,038	)			(15,676	)			(12,672	)
Income (loss) from continuing operations		$	31,337			$	(193,330	)		$	36,827			$	34,484			$	19,407
Earnings (loss) per share from continuing operations:
Basic		$	0.59			$	(3.91	)		$	0.77			$	0.90			$	0.53
Diluted		$	0.58			$	(3.91	)		$	0.74			$	0.87			$	0.50
Consolidated balance sheet data:
Assets		$	1,412,679			$	1,405,644			$	1,850,449			$	1,107,674			$	905,785
Debt obligations, long-term portion			320,283				294,355				491,923				289,795				244,768
Capital lease obligations, long-term portion			1,997				6,356				11,520				13,305				12,229
Summary network data:
Number of operational ATMs at end of period			9,720				10,128				11,347				8,885				7,211
EFT processing transactions during the period (millions)			703.0				672.2				582.5				455.5				352.5
Number of operational prepaid processing POS terminals at end of period (rounded)			498,000				430,000				396,000				296,000				237,000
Prepaid processing transactions during the period (millions)			777.1				713.1				634.8				457.8				348.0
Money transfer transactions during the period (millions)			17.6				16.7				12.0				0.3				0.1

Note: We believe that the period-to-period comparisons of our financial results are not necessarily meaningful due to certain significant transactions, including numerous acquisitions (See Note 6, Acquisitions, to the Consolidated Financial Statements).

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

COMPANY OVERVIEW, GEOGRAPHIC LOCATIONS AND PRINCIPAL PRODUCTS AND SERVICES

Euronet Worldwide, Inc. (“Euronet,” the “Company,” “we” or “us”) is a leading global electronic payments provider. We offer payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Our primary product offerings include comprehensive automated teller machine (“ATM”), point-of-sale (“POS”) and card outsourcing services; electronic distribution of prepaid mobile airtime and other prepaid products, and global consumer money transfer services. As of December 31, 2009, we operate in the following three principal business segments:

	•		An EFT Processing Segment, which processes transactions for a network of 9,720 ATMs and approximately 53,000 POS terminals across Europe, the Middle East and Asia Pacific. 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 electronic financial transaction (“EFT”) software solutions for electronic payment and transaction delivery systems.
	•		A Prepaid Processing Segment, which provides electronic 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 498,000 POS terminals providing electronic processing of prepaid mobile airtime top-up services in Europe, the Middle East, Asia Pacific and North America.
	•		A Money Transfer Segment, which provides global consumer-to-consumer money transfer services through a sending network of agents and Company-owned stores primarily in North America and Europe, disbursing money transfers through a worldwide payer network. The Money Transfer Segment originates and terminates transactions through a network of approximately 82,200 locations, which include sending agents and Company-owned stores, and an extensive payer network in more than 100 countries.

We have five processing centers in Europe, two in Asia Pacific and two in North America. We have 25 principal offices in Europe, one in the Middle East, six in Asia Pacific, and seven in North America. Our executive offices are located in Leawood, Kansas, USA. With approximately 76% of our revenues denominated in currencies other than the U.S. dollar, any significant changes in currency exchange rates will likely have a significant impact on our growth in revenues, operating income and diluted earnings per share (for more discussion, see Item 1A — Risk Factors and Item 7A - Quantitative and Qualitative Disclosures About Market Risk).

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 19% of total consolidated revenue for the year ended December 31, 2009, 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 debit and 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 license fees, professional services and maintenance fees for software and sales of related hardware. Software license fees are the fees we charge to 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 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 58% of total consolidated revenue for the year ended December 31, 2009, is primarily derived from commissions or processing fees received from telecommunications service providers for the sale and distribution 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’ customers. Other products offered by this segment include prepaid long distance calling card plans, prepaid Internet plans, prepaid debit cards, prepaid gift cards, prepaid vouchers, transport payments, lottery payments, bill payment, money transfer and prepaid content such as music and games.

Money Transfer Segment – Revenue in the Money Transfer Segment, which represents approximately 23% of total consolidated revenue for the year ended December 31, 2009, is primarily derived by charging a transaction fee, and retaining the difference between purchasing foreign currency at wholesale exchange rates and selling the foreign currency to consumers at retail exchange rates. We have an origination network in place comprised of agents and Company-owned stores primarily in North America and Europe 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

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

	•		signing new outsourced ATM and POS terminal management contracts;
	•		increasing transactions processed on our network of owned and operated ATMs;
	•		expansion of our prepaid processing network;
	•		expansion of our money transfer and bill payment network; and
	•		development of our credit and debit card outsourcing business.

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

	•		the impact of competition by banks and other ATM operators and service providers in our current target markets;
	•		the demand for our ATM outsourcing services in our current target markets;
	•		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 ability to renew existing contracts at profitable rates;
	•		the ability to maintain pricing and interchange fees at current levels;
	•		the ability to expand and sign additional customers for the cross-border merchant processing and acquiring business; and
	•		the continued development and implementation of our software products and their ability to interact with other leading products.

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

Software products are an integral part of our product lines, and our investment in research, development, delivery and customer support reflects our ongoing commitment to an expanded customer base. We have been able to enter into agreements under which we contribute the right to 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 and, since the beginning of 2007, we have devoted significant resources to the development of the necessary processing systems and capabilities for 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 generally involves the assumption of credit risk, as the principal amount of transactions is usually 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, content providers, agent financial institutions and retailers;
	•		the ability to use existing expertise and relationships with mobile operators, content providers and retailers to our advantage;
	•		the continued use of third-party providers such as ourselves to supply electronic processing solutions for prepaid content;
	•		the development of mobile phone networks in the markets in which we do business and the increase in the number of mobile phone users;
	•		the overall pace of growth in the prepaid mobile phone market;
	•		our market share of the retail distribution capacity;
	•		the ability to successfully brand our retail locations;
	•		the level of commission that is paid to the various intermediaries in the prepaid 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; and
	•		the availability of financing for further expansion.

In mature markets, such as the U.K., Australia, Germany, New Zealand and Spain, the conversion from scratch cards to electronic forms of distribution is either complete or nearing completion. Because of this factor, we are not likely to experience the organic increases in the number of transactions per terminal that we have experienced historically. Also in mature markets, competition among prepaid distributors results in the increase of commissions paid to retailers and increases in retailer attrition rates. The combined impact of these factors in developed markets is a flattening of growth in the revenues and profits that we earn. In other markets in which we operate, such as Poland, Germany and the U.S., many of the factors that may contribute to rapid growth (conversion from scratch cards to electronic distribution, growth in the prepaid market, expansion of our network of retailers and access to all mobile operators’ products) remain present.

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

	•		the continued growth in worker migration and employment opportunities;
	•		the mitigation of economic and political factors that have had an adverse impact on money transfer volumes, such as changes in the economic sectors in which immigrants work and the developments in immigration policies in the U.S.;
	•		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 and 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;
	•		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 the 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;
	•		the availability of financing for further expansion;
	•		our ability to continue to successfully integrate RIA with our other operations; and
	•		our ability to successfully expand our agent network in Europe using our Payment Services Directive license.

Like other participants in the money transfer industry, as a result of downturns in certain labor markets, the current recessionary economic environment and immigration developments, the number of money transfers from the U.S. to Mexico decreased in 2009 and 2008 compared to respective prior years. We cannot predict how long these issues will continue to affect the U.S. market or whether other markets will experience similar issues.

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. These services are not directly identifiable with our business segments.

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

For all segments, our continued expansion may involve additional acquisitions that could divert our resources and management time and require integration of new assets with our existing networks and services. Our ability to effectively manage our rapid growth has required us to expand our operating systems and employee base, particularly at the management level, which has added incremental operating costs. An inability to continue to effectively manage expansion could have a material adverse effect on our business, growth, financial condition or results of operations. Inadequate technology and resources would impair our ability to maintain current processing technology and efficiencies, as well as deliver new and innovative services to compete in the marketplace.

SEGMENT REVENUES AND OPERATING INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

		Revenues												Operating Income (Loss)
(in thousands)		2009				2008				2007				2009				2008				2007
EFT Processing		$	197,740			$	205,257			$	174,049			$	48,190			$	38,306			$	36,147
Prepaid Processing			602,075				609,106				569,858				49,446				(4,659	)			52,813
Money Transfer			232,879				231,302				158,759				(354	)			(157,150	)			7,130
Total			1,032,694				1,045,665				902,666				97,282				(123,503	)			96,090
Corporate services			—				—				—				(25,017	)			(25,518	)			(19,856	)
Total		$	1,032,694			$	1,045,665			$	902,666			$	72,265			$	(149,021	)		$	76,234

SUMMARY

Our annual consolidated revenues decreased by 1% for 2009 compared to 2008 and increased by 16% for 2008 over 2007. The 2009 decrease was largely the result of the impact of a stronger U.S. dollar, partly offset by growth in our business resulting from increases in transactions processed. The 2008 increase is primarily due to the acquisition of RIA Envia in April 2007 along with increases in transactions processed. For further discussion regarding acquisitions, see Note 6, Acquisitions, to the Consolidated Financial Statements.

Our operating income for 2009 and 2008 includes non-cash goodwill and intangible asset impairment charges of $9.9 million and $220.1 million, respectively, as discussed in Note 10, Goodwill and Acquired Intangible Assets, Net, to the Consolidated Financial Statements. The results for 2007 include an increase in operating income of $12.2 million for a federal excise tax refund discussed in Note 23, Federal Excise Tax Refund, to the Consolidated Financial Statements. Excluding the goodwill and intangible assets impairment charges in 2009 and 2008 and the federal excise tax refund in 2007, our operating income increased 16% for 2009 over 2008 and 11% for 2008 over 2007. These increases were primarily the result of growth in transaction volumes and related revenues.

Net income attributable to Euronet Worldwide, Inc. for 2009 was $30.3 million, or $0.59 per diluted share, compared to net loss attributable to Euronet Worldwide, Inc. for 2008 of $193.5 million, or $3.93 per diluted share, and net income attributable to Euronet Worldwide, Inc. of $35.8 million, or $0.76 per diluted share for 2007. In addition to the explanations above, net loss for 2008 included an $18.8 million impairment loss on investment securities and a foreign currency exchange translation loss of $9.8 million, while net income for 2009 and 2007 included foreign currency exchange translation gains of $3.9 million and $15.5 million, respectively. Net income (loss) attributable to Euronet Worldwide, Inc. for 2009, 2008 and 2007 includes gain (loss) from discontinued operations of $0.5 million, $(1.1) million and $1.0 million, respectively, or $0.01, $(0.02) and $0.02 per diluted share, respectively.

Impact of changes in foreign currency exchange rates

During 2007 and through mid-2008, the U.S. dollar weakened compared to most of the currencies of the countries in which we operate. In the second half of 2008 and through the first half of 2009, the U.S. dollar strengthened before weakening again in the second half of 2009. These fluctuations in currency exchange rates resulted in the U.S. dollar being, on average, stronger in 2009 than in 2008 and weaker in 2008 than in 2007. Because our revenues and local expenses are recorded in the functional currencies of our operating entities, amounts we earned for 2009 were negatively impacted by the stronger U.S. dollar, while amounts we earned for 2008 and 2007 were positively impacted by the weaker U.S. dollar. Because of changes in foreign currency exchanges rates, we estimate that our 2009 operating income was diminished by approximately 14% compared to 2008, while 2008 operating income benefited by approximately 5% when compared to 2007. While the impact of the stronger U.S. dollar generally hampered results in each segment in 2009, the benefit for 2008 was mainly concentrated in the EFT Processing Segment, largely due to the impact of the

changes in exchange rates of the Polish zloty. To provide further perspective on the impact of foreign currency exchange rates, the following table shows the changes in values for 2009 and 2008, relative to the U.S. dollar, of the currencies of the countries in which we have our most significant operations.

		Average Translation Rate
																		2008
		Year Ended				Year Ended				Year Ended				2009				Increase
		December 31,				December 31,				December 31,				Decrease				(Decrease)
Currency		2009				2008				2007				Percent				Percent
Australian dollar		$	0.7922			$	0.8519			$	0.8380				(7	%)			2	%
British pound			1.5660				1.8528				2.0006				(15	%)			(7	%)
euro			1.3938				1.4707				1.3699				(5	%)			7	%
Hungarian forint			0.0050				0.0059				0.0054				(15	%)			9	%
Indian rupee			0.0207				0.0232				0.0242				(11	%)			(4	%)
Polish zloty			0.3235				0.4200				0.3623				(23	%)			16	%

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007 — BY BUSINESS SEGMENT

EFT PROCESSING SEGMENT

2009 Compared to 2008

The following table summarizes the results of operations for the EFT Processing Segment for the years ended December 31, 2009 and 2008:

		Year Ended December 31,								Year-over-Year Change
										Increase				Increase
										(Decrease)				(Decrease)
(dollar amounts in thousands)		2009				2008				Amount				Percent
Total revenues		$	197,740			$	205,257			$	(7,517	)			(4	%)
Operating expenses:
Direct operating costs			83,198				93,414				(10,216	)			(11	%)
Salaries and benefits			30,302				34,944				(4,642	)			(13	%)
Selling, general and administrative			17,437				19,398				(1,961	)			(10	%)
Depreciation and amortization			18,613				19,195				(582	)			(3	%)
Total operating expenses			149,550				166,951				(17,401	)			(10	%)
Operating income		$	48,190			$	38,306			$	9,884				26	%
Transactions processed (millions)			703.0				672.2				30.8				5	%
ATMs as of December 31			9,720				10,128				(408	)			(4	%)
Average ATMs			9,441				10,554				(1,113	)			(11	%)

Revenues

Our revenues for 2009 decreased when compared to 2008 due to the stronger U.S. dollar during 2009 compared to 2008 relative to most of the currencies 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 negatively impacted by the stronger U.S. dollar. Additionally, the decrease in the number of ATMs operated, which is primarily due to expiration or termination of ATM services contracts discussed in more detail in the following paragraphs, limited our revenue growth. Offsetting these decreases were contract termination fees totaling $4.4 million and increases in revenues primarily associated with our operations in Germany, India, Poland and our software and cross-border merchant processing and acquiring businesses.

Average monthly revenue per ATM was $1,745 for 2009, compared to $1,621 for 2008. The increase is generally the result of increased transaction fees in Germany, the non-recurring contract termination fees discussed above and the expiration of an ATM services contract in the U.K. at the end of the first quarter 2008, partly offset by the impact of the stronger U.S. dollar. We have recently been able to increase transaction fees in Germany, but we are uncertain if we will be able to increase them further or maintain the current rates. The U.K. contract involved processing services only with very little associated costs and, therefore, had lower-than-average revenue per ATM. Revenues per transaction were $0.28 for 2009 and $0.31 for 2008. The decrease is primarily the result of the impact of the stronger U.S. dollar and the growth of transactions in India and China, where revenues per transaction have been historically lower than in Central and Eastern Europe, generally due to lower labor costs. During 2009, transactions on Cashnet—Euronet’s shared network in India— increased 98% when compared to 2008.

Our contracts in the EFT Processing Segment tend to cover large numbers of ATMs, so significant increases and decreases in our pool of managed ATMs could result from entry into or termination of these management contracts. Banks have historically been very deliberate in negotiating these agreements and have evaluated a wide range of matters when deciding to choose an outsource vendor. Generally, the process of negotiating a new agreement is subject to extensive management analysis and approvals and the process typically takes six to twelve months or longer. Increasing consolidation in the banking industry could make this process less predictable.

Our existing contracts generally have terms of five to seven years and a number of them will expire or be up for renewal each year for the next few years. As a result, we expect to be regularly engaged in discussions with one or more of our customer banks to either renew or restructure our ATM outsourcing agreements. During the fourth quarter 2008 and first quarter 2009, certain customer contracts were terminated or expired, resulting in a decrease of approximately 1,700 ATMs. Most of the ATM reductions resulted from bank customers shifting their processing to related processing subsidiaries in contemplation of selling the subsidiaries to raise capital, rather than the loss of contracts to competitors. The reduction in the number of ATMs from contract terminations or expirations was partially offset during 2009 by increases in ATMs driven under new contracts, expansion of ATMs under existing contracts and the deployment of ATMs in markets where we operate Euronet-branded ATMs.

For contracts that we are able to renew, as was the case for certain contract renewals in prior years, we expect customers to seek rate concessions or up-front payments because of the greater availability of alternative processing solutions in many of our markets now, as compared to when we entered into the contracts. Excluding the expired or terminated contracts discussed above, we were able to renew or extend most of the remaining contracts that were due to expire in 2009. While we were successful in many cases in obtaining new terms that preserve the same level of earnings arising from the agreements, we were not successful in all cases and, therefore, we expect to experience reductions in revenues in future quarters arising from the expiration or restructuring of agreements.

For the contracts that expired during the fourth quarter 2008 and first quarter 2009, excluding substantial termination fees described above, we estimate that the impact to 2009 was a reduction in revenues of approximately $15 million to $16 million, resulting in reduced operating income of approximately $3 million to $4 million.

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 processing centers’ facility-related costs and other processing-center-related expenses. The decrease in direct operating cost for 2009, compared to 2008, is attributed to the impact of the stronger U.S. dollar and the decrease in the number of ATMs under operation.

Gross profit

Gross profit, which is calculated as revenues less direct operating costs, increased to $114.5 million for 2009 from $111.8 million for 2008. This increase is mainly attributable to the increased transaction fees in Germany, improved profitability in India, Poland and our cross-border merchant processing and acquiring business and the contract termination fee revenues discussed above. Partly offsetting these increases are the impact of the stronger U.S. dollar and the loss of ATM services contracts discussed above. Gross profit as a percentage of revenues (“gross margin”) was 58% for 2009 compared to 54% for 2008. The increase in gross margin is primarily due to the previously mentioned contract termination fees and gross margin improvements in Germany, India and our cross-border merchant processing and acquiring business.

Salaries and benefits

The decrease in salaries and benefits for 2009 compared to 2008 is almost entirely due to the impact of the stronger U.S. dollar discussed above. As a percentage of revenues, these costs decreased to 15% for 2009 from 17% for 2008.

Selling, general and administrative

The decrease in selling, general and administrative expenses for 2009 compared to 2008 is due primarily to the impact of the stronger U.S. dollar. The decrease in these expenses was also impacted by the spike in expenses in the second half of 2008 following the launch of our cross-border merchant processing and acquiring business. As a percentage of revenues, selling, general and administrative expenses remained flat at 9% for 2009 and 2008.

Depreciation and amortization

The decrease in depreciation and amortization expense for 2009 compared to 2008 is due primarily to the impact of the stronger U.S. dollar described above, partly offset by increased depreciation associated with our cross-border merchant processing and acquiring business as well as increased deployment of owned ATMs in Poland. As a percentage of revenues, these expenses remained flat at 9% for 2009 and 2008.

Operating income

Operating income as a percentage of revenues was 24% for 2009 compared to 19% for 2008. The increases in operating income and operating margin were primarily due to the substantial contract termination fee revenues described above and the improvements in Germany, India and our software and cross-border merchant processing and acquiring businesses, partly offset by the impact of the stronger U.S. dollar. Operating income per transaction was $0.07 for 2009 and $0.06 for 2008.

Software sales backlog

As of December 31, 2009, the EFT Segment had a software contract backlog of approximately $6.3 million compared to approximately $7.9 million as of December 31, 2008. This backlog represents software sales based on signed contracts under which we continue to have performance milestones before the sale will be completed. We recognize revenues 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 revenues within the next year.

2008 Compared to 2007

The following table summarizes the results of operations for the EFT Processing Segment for the years ended December 31, 2008 and 2007:

		Year Ended December 31,								Year-over-Year Change
										Increase				Increase
										(Decrease)				(Decrease)
(dollar amounts in thousands)		2008				2007				Amount				Percent
Total revenues		$	205,257			$	174,049			$	31,208				18	%
Operating expenses:
Direct operating costs			93,414				74,879				18,535				25	%
Salaries and benefits			34,944				31,874				3,070				10	%
Selling, general and administrative			19,398				14,952				4,446				30	%
Depreciation and amortization			19,195				16,197				2,998				19	%
Total operating expenses			166,951				137,902				29,049				21	%
Operating income		$	38,306			$	36,147			$	2,159				6	%
Transactions processed (millions)			672.2				582.5				89.7				15	%
ATMs as of December 31			10,128				11,347				(1,219	)			(11	%)
Average ATMs			10,554				10,025				529				5	%

Revenues

Our revenues for 2008 increased when compared to 2007 primarily due to increases in the average number of ATMs operated and the number of transactions processed. These increases were attributable to many of our operations, but primarily our operations in Poland,

India and Euronet Card Services Greece. Additionally, during 2008 the U.S. dollar was weaker on average than during 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. Partly offsetting these improvements were decreases in revenue associated with our operations in Romania due to a decrease in the per-transaction fee structure with a customer that was granted in exchange for an extension of the contract term and the expiration of an ATM services contract discussed in more detail in the following paragraph.

Average monthly revenue per ATM was $1,621 for 2008, compared to $1,447 for 2007 and revenue per transaction was $0.31 for 2008 and $0.30 for 2007. The increase in revenues per ATM is generally the result of the expiration of an ATM services contract in the U.K. at the end of the first quarter 2008 that involved processing services only, with very little associated costs and, therefore, had lower-than-average revenue per ATM. As of December 31, 2007 and March 31, 2008, we were providing processing services for approximately 2,300 and 2,400 ATMs, respectively, under this contract. Partly offsetting this improvement is the addition of ATMs in China and India, where revenues per ATM have been historically lower than Central and Eastern Europe, generally due to lower labor costs.

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 processing centers’ facility-related costs and other processing-center-related expenses. The increase in direct operating cost for 2008, compared to 2007, is attributed to the increase in the average number of ATMs under operation, particularly the growing number of independently deployed ATMs in new markets, and the launch of our cross-border merchant processing and acquiring business. Throughout 2007 and into 2008, we incurred substantial capital and operating expenditures in anticipation of entering the cross-border merchant processing and acquiring business after we entered into an agreement for these services with a large petrol retailer in Central Europe. The revenues recorded in 2008 after launching this business in mid-2008 were not significant; however, the cost structure was largely in place and contributed to the increase in direct operating costs and certain other expenses discussed below. Additionally, 2008 and 2007 include losses of approximately $0.7 million and $1.9 million, respectively, primarily in Poland and Hungary, as a result of certain fraudulent transactions by card holders on our network.

Gross profit

Gross profit increased to $111.8 million for 2008 from $99.2 million for 2007. This increase is mainly attributable to the increase in revenues discussed above. Gross margin was 54% for 2008 compared to 57% for 2007. The decrease in gross margin is primarily due to the impact of the expiration of the ATM services contract in the U.K. and launching the cross-border merchant processing and acquiring business.

Salaries and benefits

The increase in salaries and benefits for 2008 compared to 2007 was due to staffing costs to support growth in the average number of ATMs managed and transactions processed and 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. As a percentage of revenue, however, these costs decreased slightly to 17% of revenues for 2008 compared to 18% for 2007.

Selling, general and administrative

Selling, general and administrative expenses for 2007 include a $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. Excluding the impact of the arbitration loss, as a percentage of revenues, selling general and administrative expenses increased to 9% in 2008 compared to 8% in 2007. This increase in selling, general and administrative expenses for 2008 compared to 2007 is due primarily to the launch of our cross-border merchant processing and acquiring business that occurred during the second quarter 2008.

Depreciation and amortization

The increase in depreciation and amortization expense for 2008 compared to 2007 is due primarily to additional ATMs in Poland and India and additional equipment and software for our processing centers in Hungary and China. As a percentage of revenue, these expenses remained flat at 9% for both 2008 and 2007.

Operating income

The increase in operating income was primarily due to the increases in revenues described above. Additionally, operating income was affected by several unique items in 2008 and 2007: 2007 operating income was reduced $1.2 million by the arbitration loss described

above; operating income was $1.2 million greater in 2008 compared to 2007 due to the decrease in fraudulent card losses described above; operating income was $7.6 million less in 2008 compared to 2007 due to the expiration of the ATM services contract in the U.K. and the launching of the cross-border merchant processing and acquiring business described above. Excluding the impacts of these items, operating income increased 20% in 2008 compared to 2007, was 22% as a percentage of revenues for 2008 compared to 21% for 2007 and was $0.06 per transaction for both 2008 and 2007.

PREPAID PROCESSING SEGMENT

2009 Compared to 2008

The following table summarizes the results of operations for the Prepaid Processing Segment for the years ended December 31, 2009 and 2008:

		Year Ended December 31,								Year-over-Year Change
										Increase				Increase
										(Decrease)				(Decrease)
(dollar amounts in thousands)		2009				2008				Amount				Percent
Total revenues		$	602,075			$	609,106			$	(7,031	)			(1	%)
Operating expenses:
Direct operating costs			485,305				495,971				(10,666	)			(2	%)
Salaries and benefits			28,753				28,574				179				1	%
Selling, general and administrative			23,154				22,098				1,056				5	%
Goodwill impairment			—				50,681				(50,681	)			n/m
Depreciation and amortization			15,417				16,441				(1,024	)			(6	%)
Total operating expenses			552,629				613,765				(61,136	)			(10	%)
Operating income (loss)		$	49,446			$	(4,659	)		$	54,105				n/m
Transactions processed (millions)			777.1				713.1				64.0				9	%

n/m — Not meaningful.

Revenues

The decrease in revenues for 2009 compared to 2008 was generally attributable to the impact of the stronger U.S. dollar and mobile operator commission rate decreases in certain markets, largely offset by the increase in total transactions processed across most of our Prepaid Processing Segment operations, particularly Australia, Germany and the U.S.

In certain more mature markets, such as the U.K., 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) additional products sold over the base of prepaid processing terminals, (ii) developing markets or markets in which there is organic growth in the prepaid sector overall, (iii) continued conversion from scratch cards to electronic top-up in less mature markets, and (iv) acquisitions, if available.

Revenues per transaction decreased to $0.77 for 2009 from $0.85 for 2008 due primarily to the impact of the stronger U.S. dollar and mobile operator commission rate decreases in certain markets.

Direct operating costs

Direct operating costs in the Prepaid Processing Segment include the commissions we pay to retail merchants for the distribution and sale of prepaid mobile airtime and other prepaid products, as well as expenses required to operate POS terminals. These expenditures generally fluctuate directly with revenues and processed transactions. The decrease in direct operating costs is generally attributable to the impact of the stronger U.S. dollar, partly offset by the increase in total transactions processed. Additionally, almost of the decrease in mobile operator commission revenues discussed above was passed on to retail merchants resulting in lower commission costs.

Gross profit

Gross profit was $116.8 million for 2009 compared to $113.1 million for 2008. Gross margin remained flat at 19% for both 2009 and 2008 and gross profit per transaction was $0.15 for 2009 compared to $0.16 for 2008. Most of the reduction in gross profit per transaction is due to the impact of the stronger U.S. dollar.

Salaries and benefits

Salaries and benefits were flat for 2009 compared to 2008 as a result of the impact of the stronger U.S. dollar largely offsetting increased costs to support development in new and growing markets. As a percentage of revenues, salaries and benefits increased slightly to 4.8% for 2009 from 4.7% for 2008.

Selling, general and administrative

The increase in selling, general and administrative expenses for 2009 compared to 2008 is primarily due to additional overhead to support development in new and growing markets and increased allowance for bad debts and other balance sheet reconciliation issues in one of our operating units, partly offset by the impact of the stronger U.S. dollar. As a percentage of revenues, selling, general and administrative expenses increased to 3.8% for 2009 from 3.6% for 2008.

Goodwill impairment

In 2008, we recorded a non-cash impairment charge of $50.7 million related to the goodwill of the Spanish prepaid business. See the discussion in “2008 Compared to 2007” below for more information about this charge.

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 decrease in depreciation and amortization for 2009 compared to 2008 is almost entirely due to the impact of the stronger U.S. dollar. As a percentage of revenues, depreciation and amortization expense decreased slightly to 2.6% for 2009 from 2.7% for 2008.

Operating income (loss)

The increase in operating income for 2009 compared to 2008 is mainly due to the goodwill impairment charge in 2008. Excluding the goodwill impairment charge, operating income as a percentage of revenues was 8.2% for 2009 compared to 7.6% for 2008. The increase is primarily due to the growth in transactions processed. Also excluding the goodwill impairment charge, operating income per transaction remained flat at $0.06 for each of 2009 and 2008.

2008 Compared to 2007

The following table summarizes the results of operations for the Prepaid Processing Segment for the years ended December 31, 2008 and 2007:

		Year Ended December 31,								Year-over-Year Change
										Increase
										(Decrease)				Increase
(dollar amounts in thousands)		2008				2007				Amount				Percent
Total revenues		$	609,106			$	569,858			$	39,248				7	%
Operating expenses:
Direct operating costs			495,971				464,874				31,097				7	%
Salaries and benefits			28,574				27,493				1,081				4	%
Selling, general and administrative			22,098				20,567				1,531				7	%
Goodwill impairment			50,681				—				50,681				n/m
Federal excise tax refund			—				(12,191	)			12,191				n/m
Depreciation and amortization			16,441				16,302				139				1	%
Total operating expenses			613,765				517,045				96,720				19	%
Operating income (loss)		$	(4,659	)		$	52,813			$	(57,472	)			n/m
Transactions processed (millions)			713.1				634.8				78.3				12	%

n/m — Not meaningful.

Revenues

The increase in revenues for 2008 compared to 2007 was generally attributable to the increase in total transactions processed across most of our Prepaid Processing Segment operations, particularly Australia, Germany and Poland.

Revenues per transaction decreased to $0.85 for 2008 from $0.90 for 2007 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’s results. Results attributable to the 49% minority owner are reflected in the noncontrolling interests line of our Consolidated Statements of Operations. ATX provides only transaction processing services without 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. Partly offsetting this decrease was the growth in both volumes and revenues in Australia which generally has higher revenues per transaction, but also pays higher commission rates to retailers, than our other Prepaid Processing subsidiaries.

Direct operating costs

The increase in direct operating costs is generally attributable to the increase in total transactions processed.

Gross profit

Gross profit was $113.1 million for 2008 compared to $105.0 million for 2007. Gross margin increased to 19% for 2008 compared to 18% for 2007 and gross profit per transaction was $0.16 for 2008 compared to $0.17 for 2007. Most of the reduction in gross profit per transaction is due to the growth of revenues and transactions at our ATX subsidiary and the general maturity of the prepaid mobile airtime business in many of our markets.

Salaries and benefits

While salaries and benefits increased for 2008 compared to 2007 to support development in new and growing markets, as a percentage of revenue, they decreased slightly to 4.7% for 2008 from 4.8% for 2007.

Selling, general and administrative

The increase in selling, general and administrative expenses for 2008 compared to 2007 is the result of additional overhead to support development in new and growing markets. As a percentage of revenues, these selling, general and administrative expenses remained flat at 3.6% for both 2008 and 2007.

Goodwill impairment

In 2008, we recorded a non-cash impairment charge of $50.7 million related to the goodwill of the Spanish prepaid business. We perform our annual goodwill impairment test during the fourth quarter of each year, which coincided in 2008 with severe disruptions in the credit markets and the macroeconomic business climate. These events caused credit, currency and stock markets to plummet in the second half of 2008 and adversely impacted corporate valuations across most industries, all of which contributed to a significant decline in our stock price during this period. An important component of the 2008 goodwill impairment testing was the reconciliation of a company’s equity to its market capitalization. During the fourth quarter 2008 and into 2009, our total market capitalization was less than the recorded value of the Company’s equity by an amount approaching 50% of recorded equity, creating a strong indicator of impairment for our goodwill balance. Because of these macroeconomic conditions, after incorporating assumptions that we or another purchaser would likely make into the Company’s business outlook and projections for the Spanish prepaid business, we determined that the resulting valuations were not sufficient to support the recorded value of our investment. Specifically, growth in the prepaid mobile phone business in Spain had been slower than expected and commission pressure from mobile operators, as well as intense competition from other prepaid processors, had reduced profitability. See Note 10, Goodwill and Acquired Intangible Assets, Net, to the Consolidated Financial Statements for a further discussion of this charge.

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 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, were entitled to a credit or refund of amounts paid in conjunction with the filing of 2006 federal income tax returns. During 2007, $12.2 million was recorded for amounts paid during this period as a reduction to operating expenses of the Prepaid Processing Segment.

Depreciation and amortization

The increase in depreciation and amortization for 2008 compared to 2007 reflects additional POS terminals installed as the business has grown. As a percentage of revenues, depreciation and amortization expense decreased to 2.7% for 2008 from 2.9% for 2007.

Operating income (loss)

The decrease in operating income for 2008 compared to 2007 is mainly due to the goodwill impairment charge in 2008 and the benefit of the federal excise tax refund in 2007. Excluding the goodwill impairment charge and the benefit of the federal excise tax refund, operating income as a percentage of revenues was 7.6% for 2008 compared to 7.1% for 2007. The increase is due to the growth in revenues and transactions processed and the impact of leveraging operating costs. Also excluding the goodwill impairment charge and the federal excise tax refund, operating income per transaction remained flat at $0.06 for 2008 and 2007.

MONEY TRANSFER SEGMENT

2009 Compared to 2008

The following table presents the actual results of operations for the years ended December 31, 2009 and 2008 for the Money Transfer Segment.

		Year Ended December 31,								Year-over-Year Change
										Increase				Increase
										(Decrease)				(Decrease)
(dollar amounts in thousands)		2009				2008				Amount				Percent
Total revenues		$	232,879			$	231,302			$	1,577				1	%
Operating expenses:
Direct operating costs			109,867				114,457				(4,590	)			(4	%)
Salaries and benefits			54,166				50,543				3,623				7	%
Selling, general and administrative			38,716				34,673				4,043				12	%
Goodwill and acquired intangible assets impairment			9,884				169,396				(159,512	)			n/m
Depreciation and amortization			20,600				19,383				1,217				6	%
Total operating expenses			233,233				388,452				(155,219	)			n/m
Operating (loss)		$	(354	)		$	(157,150	)		$	156,796				n/m
Transactions processed (millions)			17.6				16.7				0.9				5	%

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. Revenues per transaction were $13.23 for 2009 compared to $13.85 for 2008. On a historical basis, about 75% of our Money Transfer Segment revenues is derived from transaction fees, about 25% is derived from the foreign currency spread and other small amounts of revenue are derived from sources such as fees for cashing checks, issuing money orders and processing bill payments. For 2009, 63% of our money transfers were initiated in the U.S., 33% in Europe and 4% in other countries, such as Canada and Australia. For 2008, 68% of our money transfers were initiated in the U.S., 29% in Europe and 3% in other countries. 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 revenues for 2009 compared to 2008 is primarily due to a 5% increase in the number of transactions processed for 2009 compared to 2008, mostly offset by the impact of the stronger U.S. dollar. For 2009, money transfers to Mexico, which represented 25% of total money transfers, decreased by 19%, while transfers to all other countries increased 17% when compared to the prior year primarily due to the expansion of our operations. The decline in transfers to Mexico was largely the result of downturns in certain labor markets and other economic factors impacting the U.S. market as well as immigration developments in the U.S. These issues have also resulted in certain competitors lowering transaction fees and foreign currency exchange spreads in an attempt to limit the impact on money transfer volumes. We have generally maintained our pricing structure in response to these developments.

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. The decrease in direct operating costs in 2009 compared to 2008 is due to the impact of the stronger U.S. dollar, partly offset by the growth in transactions processed.

Gross profit

Gross profit was $123.0 million for 2009 compared to gross profit of $116.8 million for 2008. This improvement is primarily due to the growth in money transfer transactions, partly offset by the impact of the stronger U.S. dollar related to money transfers originated

outside the U.S. As discussed above, certain competitors have been lowering transaction fees and foreign currency exchange spreads in the U.S. market as a result of the economic factors and immigration developments impacting the U.S. market. We have generally maintained our pricing structure in response to these developments. We cannot predict how long these issues will continue to affect the U.S. market or whether other markets will experience similar issues, and we cannot predict whether we will change our pricing strategy over the short or long term in order to protect or increase market share. Gross margin was 53% for 2009 compared to 51% for 2008. The improvement primarily reflects the strong growth in transaction volume in our higher margin non-U.S. locations.

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. The increase in salaries and benefits for 2009 compared to 2008 is primarily due to the increased expenditures we incurred to support expansion or our operations, primarily internationally, partly offset by the impact of the stronger U.S. dollar. As a percentage of revenues, salaries and benefits increased slightly to 23% for 2009 from 22% for 2008.

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. The increase in selling, general and administrative expenses for 2009 compared to 2008 is primarily the result of increased expenditures to support expansion of our operations, primarily internationally, and increased professional fees for legal expenses, partly offset by the impact of the stronger U.S. dollar. As a percentage of revenues, selling, general and administrative expenses increased to 17% for 2009 from 15% in 2008.

Goodwill and acquired intangible assets impairment

In the fourth quarter of 2008, we recorded a non-cash impairment charge of $169.4 million related to certain goodwill and intangible assets of the RIA money transfer business. This charge was an estimate based on the assessment performed up to the filing date of our 2008 Annual Report on Form 10-K. We completed the assessment in the first quarter of 2009 and recorded an additional $9.9 million non-cash impairment charge in the first quarter of 2009. See the discussion in “2008 Compared to 2007” below for more information about these charges.

Depreciation and amortization

Depreciation and amortization primarily represents amortization of acquired intangibles and also includes depreciation of money transfer terminals, computers and software, leasehold improvements and office equipment. The increase in depreciation and amortization for 2009 compared to 2008 is primarily due to additional computer equipment in our customer service centers and increased leasehold improvements, office equipment and computer equipment for expansion of our company stores along with greater acquisition-related amortization, partly offset by the impact of the stronger U.S. dollar. As a percentage of revenues, depreciation and amortization increased to 8.8% for 2009 from 8.4% for 2008.

Operating income (loss)

The increase in operating income for 2009 compared to 2008 is mainly due to the larger goodwill and acquired intangible impairment charge in 2008 compared to 2009. Excluding these charges from both years, operating income decreased 22% in 2009 compared to 2008, which is the result of increased costs to expand internationally, increased professional fees and the negative impact of the stronger U.S. dollar, partly offset by the growth in transactions processed, mainly those originated in non-U.S. locations. Additionally, 2008 revenues and operating income included approximately $2.5 million in benefit from the favorable management of foreign exchange spreads that did not recur in 2009.

2008 Compared to 2007

The Money Transfer Segment was established during April 2007 with the acquisition of RIA, which is more fully described in Note 6, Acquisitions, to the Consolidated Financial Statements included in this report. To assist in better understanding the results of the Money Transfer Segment, unaudited pro forma results for 2007 have been provided as if RIA’s results were included in our consolidated results of operations beginning January 1, 2007. 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.

The following table presents the actual results of operations for the years ended December 31, 2008 and 2007 for the Money Transfer Segment.

		As Reported
		Year Ended December 31,								Year-over-Year Change
										Increase
										(Decrease)				Increase
(dollar amounts in thousands)		2008				2007				Amount				Percent
Total revenues		$	231,302			$	158,759			$	72,543				46	%
Operating expenses:
Direct operating costs			114,457				83,795				30,662				37	%
Salaries and benefits			50,543				32,705				17,838				55	%
Selling, general and administrative			34,673				21,459				13,214				62	%
Goodwill and acquired intangible assets impairment			169,396				—				169,396				n/m
Depreciation and amortization			19,383				13,670				5,713				42	%
Total operating expenses			388,452				151,629				236,823				156	%
Operating income (loss)		$	(157,150	)		$	7,130			$	(164,280	)			n/m
Transactions processed (millions)			16.7				12.0				4.7				39	%

n/m — Not meaningful.

The following table compares the results of operations for the year ended December 31, 2008 to the pro forma results of operations for the year ended December 31, 2007 for the Money Transfer Segment:

		Year Ended December 31,								Year-over-Year Change
										Increase
						2007				(Decrease)				Increase
(dollar amounts in thousands)		2008				Pro Forma				Amount				Percent
						(unaudited)
Total revenues		$	231,302			$	204,948			$	26,354				13	%
Operating expenses:
Direct operating costs			114,457				108,589				5,868				5	%
Salaries and benefits			50,543				42,383				8,160				19	%
Selling, general and administrative			34,673				27,444				7,229				26	%
Goodwill and acquired intangible assets impairment			169,396				—				169,396				n/m
Depreciation and amortization			19,383				17,700				1,683				10	%
Total operating expenses			388,452				196,116				192,336				98	%
Operating income (loss)		$	(157,150	)		$	8,832			$	(165,982	)			n/m
Transactions processed (millions)			16.7				15.5				1.2				8	%

n/m — Not meaningful.

Comparison of pro forma operating results

During 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 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.

Revenues

Revenue per transaction was $13.85 for 2008 compared to pro forma revenue per transaction of $13.22 for 2007. For 2008, 68% of our money transfers were initiated in the U.S., 29% in Europe and 3% in other countries, such as Canada and Australia. For 2007, 75% of our money transfers were initiated in the U.S., 23% in Europe and 2% in other countries.

The increase in revenues for 2008 compared to pro forma revenues for 2007 is primarily due to an 8% increase in the number of transactions processed for 2008 compared to 2007. For 2008, money transfers to Mexico, which represented 32% of total money transfers, decreased by 9%, while transfers to all other countries increased 18% when compared to the prior year due to the expansion of our operations and continued growth in immigrant worker populations in countries other than the U.S. The decline in transfers to Mexico was largely the result of immigration issues, downturns in certain labor markets and the economic crisis that began in 2008.

Direct operating costs

While direct operating costs generally increase or decrease by a similar percentage as transactions, growth in transactions has outpaced the growth in direct costs in 2008 due to a greater growth rate for Company-owned stores than for agents.

Gross profit

Gross profit was $116.8 million for 2008 compared to pro forma gross profit of $96.4 million for 2007. This improvement is primarily due to the growth in money transfer transactions originated in non-U.S. locations, discussed above, along with favorable management of foreign currency exchange rate spreads. Gross margin was 51% for 2008 compared to pro forma gross margin of 47% for 2007. The improvement primarily reflects the strong growth in transaction volume in our more profitable non-U.S. locations.

Salaries and benefits

The increase in salaries and benefits for 2008 compared to pro forma salaries and benefits for 2007 is primarily due to merit increases and additional costs to support our global expansion efforts, primarily the opening of Company-owned stores in Germany, France, Spain and the U.S.

Selling, general and administrative

The increase in selling, general and administrative expenses for 2008 compared to pro forma selling, general and administrative expenses for 2007 is primarily to support our global expansion efforts.

Goodwill and acquired intangible assets impairment

In 2008, we recorded a non-cash impairment charge of $169.4 million related to certain goodwill and intangible assets of the RIA money transfer business. We perform our annual goodwill impairment test during the fourth quarter of each year, which coincided in 2008 with severe disruptions in the credit markets and the macroeconomic business climate. These events caused credit, currency and stock markets to plummet in the second half of 2008 and adversely impacted corporate valuations across most industries, all of which contributed to a significant decline in our stock price. An important component of the 2008 goodwill impairment testing was the reconciliation of a company’s equity to its market capitalization. During the fourth quarter 2008 and into 2009, our total market capitalization was less than the recorded value of the Company’s equity by an amount approaching 50% of recorded equity, creating a strong indicator of impairment for our goodwill balance. Because of these macroeconomic conditions, after incorporating assumptions that we or another purchaser would likely make into the business outlook and projections for the Money Transfer Segment, we determined that the resulting valuations were not sufficient to support the recorded value of our investment. Specifically, we experienced reductions in volumes for money transfers between the U.S. and Mexico, among other corridors, that were initially expected to continue expanding. See Note 10, Goodwill and Acquired Intangible Assets, Net, to the Consolidated Financial Statements for a further discussion of this charge.

Depreciation and amortization

The increase in depreciation and amortization for 2008 compared to pro forma depreciation and amortization for 2007 is primarily due to additional computer equipment in our customer service centers and increased leasehold improvements, office equipment and computer equipment for expansion of our Company-owned stores. As a percentage of revenues, depreciation and amortization was relatively flat at 8.4% for 2008 compared to pro forma depreciation and amortization of 8.6% for 2007.

Operating income (loss)

The decrease in operating income for 2008 compared to pro forma operating income for 2007 is due to the goodwill and acquired intangible impairment charge in 2008. Excluding this charge, operating income increased 39% in 2008 compared to pro forma operating income for 2007 which is the result of increased revenues and gross profit as discussed in more detail above, partly offset by additional costs incurred to support our global expansion efforts. Additionally, 2008 revenues and operating income included approximately $2.5 million in benefit from the favorable management of foreign exchange currency spreads as the result of unique circumstances.

CORPORATE SERVICES

The components of Corporate Services operating expenses for 2009, 2008 and 2007 were as follows:

														Year-over-Year Change
														2009
														Increase				2008
		Year Ended December 31,												(Decrease)				Increase
(dollar amounts in thousands)		2009				2008				2007				Percent				Percent
Salaries and benefits		$	16,226			$	15,037			$	13,217				8	%			14	%
Selling, general and administrative			7,398				9,249				5,811				(20	%)			59	%
Depreciation and amortization			1,393				1,232				828				13	%			49	%
Total operating expenses		$	25,017			$	25,518			$	19,856				(2	%)			29	%

Operating expenses for Corporate Services decreased by 2% for 2009 and increased by 29% for 2008 compared to the respective prior year. The increase in salaries and benefits for 2009 compared to 2008 is primarily the result of greater incentive compensation recorded in 2009 than in 2008. The decrease in selling, general and administrative expenses is due primarily to 2008 professional fees and settlement costs of $3.0 million associated with our efforts to acquire MoneyGram, partly offset by increased cost for professional fees for legal and acquisition-related expenses during 2009. The increase in corporate depreciation and amortization is the result of increased amortization related to an enterprise-wide desk-top license.

The increase in salaries and benefits for 2008 compared to 2007 is primarily the result of severance costs related to certain senior level positions and increased share-based compensation related to awards made to new employees, including those in the Money Transfer Segment. The increase in selling, general and administrative expenses is due primarily to $3.0 million in professional fees and settlement costs associated with our efforts to acquire MoneyGram. The increase in corporate depreciation and amortization is the result of amortization associated with the third quarter 2007 purchase of an enterprise-wide desk-top license.

OTHER INCOME (EXPENSE)

														Year-over-Year Change
														2009				2008
														Increase				Increase
		Year Ended December 31,												(Decrease)				(Decrease)
(dollar amounts in thousands)		2009				2008				2007				Percent				Percent
Interest income		$	3,250			$	10,611			$	16,250				(69	%)			(35	%)
Interest expense			(25,716	)			(36,351	)			(37,597	)			(29	%)			(3	%)
Income from unconsolidated affiliates			1,934				1,250				908				55	%			38	%
Gain on sale of (impairment loss on) investment securities			1,751				(18,760	)			—				n/m				n/m
Gain (loss) on early retirement of debt			(254	)			1,425				(427	)			n/m				n/m
Foreign currency exchange gain (loss), net			3,943				(9,821	)			15,497				n/m				n/m
Total other expense, net		$	(15,092	)		$	(51,646	)		$	(5,369	)			n/m				n/m

Interest income

The decreases in interest income for 2009 from 2008 and for 2008 from 2007 are primarily due to a decline in short-term interest rates and a decrease in average cash balances on hand during the respective years. Interest income for 2008 included $1.6 million for interest related to a federal excise tax refund. Increasing average cash deposits held in our trust accounts related to the administration of customer collections and vendor remittance activities of the Prepaid Processing Segment have slowed the decline in interest income as the Segment’s operations have grown.

Short-term interest rates continue to be at historically low levels at the beginning of 2010 and if rates continue to be near these levels, we expect interest income earned on our invested balances for 2010 will remain low as a result.

Interest expense

The decreases in interest expense for 2009 from 2008 and for 2008 from 2007 are primarily due to the repurchases of convertible debentures in late 2008 and early 2009 along with lower interest rates paid on floating-rate debt. During 2008, we also repaid $32 million on our term loan and significantly reduced borrowings under the revolving credit facility. 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.

Similar to the impact on interest income, due to the recent low levels of short-term interest rates, we expect that interest paid on our floating-rate borrowings for 2010 will remain low if short-term interest rates remain near their current levels.

Income from unconsolidated affiliates

Income from unconsolidated affiliates mainly represents the equity in income of our 40% equity investment in epay Malaysia and our 49% investment in Euronet Middle East, an EFT Processing Segment joint venture in Bahrain. The increases in income for 2009 from 2008 and for 2008 from 2007 are the result of increased profitability of both affiliates. Income for 2007 includes the $0.4 million gain recognized from the sale of our 8% interest in CashNet Telecommunications Egypt SAE (CashNet).

Gain on sale of (impairment loss on) investment securities

During 2009, we sold our shares of MoneyGram stock, recognizing a $1.8 million gain. The gain resulted from the increase in the share price after the $18.8 million impairment loss recorded in 2008 due to the other-than-temporary decline in value of our investment in MoneyGram.

Gain (loss) on early retirement of debt

During 2009 and 2008, we repurchased in privately negotiated transactions $25.8 million and $70.0 million, respectively, in principal amount of the 1.625% convertible debentures due 2024. Loss on early retirement of debt of $0.3 million for 2009 and the gain of $1.4 million for 2008 represent the difference in the amounts paid for the convertible debentures compared to their carrying amounts, along with the pro-rata write-off of deferred financing costs associated with the portions of the term loan that were prepaid during 2009 and 2008. We expect to continue to prepay amounts outstanding under the term loan through available cash flows. Accordingly, we would recognize losses on early retirement of debt for the pro-rata portion of unamortized deferred financing costs.

Foreign currency exchange gain (loss), net

Assets and liabilities denominated in currencies other than the local currency of each of our subsidiaries give rise to foreign currency exchange gains and losses. Exchange gains and losses that result from re-measurement of these assets and liabilities are recorded in determining net income. The majority of our foreign currency gains or losses are due to the re-measurement of intercompany loans that are in a currency other than the functional currency of one of the parties to the loan. For example, we make intercompany loans based in euros from our corporate division, which is comprised of U.S. dollar functional currency entities, to certain European entities that use the euro as the functional currency. As the U.S. dollar strengthens against the euro, foreign currency losses are generated on our corporate entities because the number of euros to be received in settlement of the loans decreases in U.S. dollar terms. Conversely, in this example, in periods where the U.S. dollar weakens, our corporate entities will record foreign currency gains.

We recorded net foreign currency exchange gains of $3.9 million and $15.5 million during 2009 and 2007, respectively, and a loss of $9.8 million during 2008. Throughout 2007, the U.S. dollar weakened against most European-based currencies, primarily the euro and British pound, creating realized and unrealized foreign currency exchange gains. This compares to 2008, when in the latter part of the year the U.S. dollar strengthened against these currencies and we, therefore, recorded realized and unrealized foreign currency exchange losses. The strengthening of the U.S. dollar continued through the first half of 2009 before weakening in the second half, resulting in net realized and unrealized gains.

INCOME TAX EXPENSE

		Year Ended December 31,
(dollar amounts in thousands)		2009				2008				2007
Income (loss) from continuing operations before income taxes		$	57,173			$	(200,667	)		$	70,865
Income tax expense (benefit)			25,836				(7,337	)			34,038
Income (loss) from continuing operations		$	31,337			$	(193,330	)		$	36,827
Effective income tax rate			45.2	%			3.7	%			48.0	%
Income (loss) from continuing operations before income taxes		$	57,173			$	(200,667	)		$	70,865
Adjust: Foreign currency exchange gain (loss), net			3,943				(9,821	)			15,497
Adjust: Goodwill and acquired intangible assets impairment			(9,884	)			(220,077	)			—
Adjust: Gain (loss) related to investment securities			1,751				(18,760	)			—
Income from continuing operations before income taxes, as adjusted		$	61,363			$	47,991			$	55,368
Income tax expense (benefit)		$	25,836			$	(7,337	)		$	34,038
Adjust: Income tax expense (benefit) attributable to foreign currency exchange gain (loss), net			29				(12,896	)			10,524
Adjust: Income tax benefit attributable to goodwill and acquired intangible assets impairment			—				(11,916	)			—
Income tax expense, as adjusted		$	25,807			$	17,475			$	23,514
Effective income tax rate, as adjusted			42.1	%			36.4	%			42.5	%