Company Quick10K Filing
Euronet Worldwide
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 55 $8,764
10-Q 2019-11-07 Quarter: 2019-09-30
10-Q 2019-08-08 Quarter: 2019-06-30
10-Q 2019-05-08 Quarter: 2019-03-31
10-K 2019-02-28 Annual: 2018-12-31
10-Q 2018-11-02 Quarter: 2018-09-30
10-Q 2018-08-03 Quarter: 2018-06-30
10-Q 2018-05-10 Quarter: 2018-03-31
10-K 2018-03-01 Annual: 2017-12-31
10-Q 2017-10-27 Quarter: 2017-09-30
10-Q 2017-07-31 Quarter: 2017-06-30
10-Q 2017-05-02 Quarter: 2017-03-31
10-K 2017-03-01 Annual: 2016-12-31
10-Q 2016-10-28 Quarter: 2016-09-30
10-Q 2016-08-01 Quarter: 2016-06-30
10-Q 2016-04-29 Quarter: 2016-03-31
10-K 2016-02-29 Annual: 2015-12-31
10-Q 2015-11-02 Quarter: 2015-09-30
10-Q 2015-07-31 Quarter: 2015-06-30
10-Q 2015-04-30 Quarter: 2015-03-31
10-K 2015-02-27 Annual: 2014-12-31
10-Q 2014-10-28 Quarter: 2014-09-30
10-Q 2014-08-06 Quarter: 2014-06-30
10-Q 2014-05-02 Quarter: 2014-03-31
10-K 2014-02-27 Annual: 2013-12-31
10-Q 2013-10-31 Quarter: 2013-09-30
10-Q 2013-08-02 Quarter: 2013-06-30
10-Q 2013-05-03 Quarter: 2013-03-31
10-K 2013-02-27 Annual: 2012-12-31
10-Q 2012-10-31 Quarter: 2012-09-30
10-Q 2012-08-06 Quarter: 2012-06-30
10-Q 2012-05-03 Quarter: 2012-03-31
10-K 2012-02-29 Annual: 2011-12-31
10-Q 2011-11-04 Quarter: 2011-09-30
10-Q 2011-08-04 Quarter: 2011-06-30
10-Q 2011-05-05 Quarter: 2011-03-31
10-K 2011-02-25 Annual: 2010-12-31
10-Q 2010-11-04 Quarter: 2010-09-30
10-Q 2010-08-06 Quarter: 2010-06-30
10-Q 2010-05-07 Quarter: 2010-03-31
10-K 2010-03-01 Annual: 2009-12-31
8-K 2019-10-22 Earnings, Exhibits
8-K 2019-07-23 Earnings, Exhibits
8-K 2019-05-23 Shareholder Vote
8-K 2019-05-17 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-05-17 Regulation FD, Exhibits
8-K 2019-04-29 Earnings, Exhibits
8-K 2019-04-04 Officers
8-K 2019-03-18 Enter Agreement, Off-BS Arrangement, Sale of Shares, Other Events, Exhibits
8-K 2019-03-13 Regulation FD, Exhibits
8-K 2019-03-12 Regulation FD, Exhibits
8-K 2019-02-07 Earnings, Exhibits
8-K 2018-10-23 Enter Agreement, Leave Agreement, Off-BS Arrangement, Shareholder Rights, Regulation FD, Exhibits
8-K 2018-10-18 Earnings, Exhibits
8-K 2018-10-01 Regulation FD, Exhibits
8-K 2018-07-24 Earnings, Exhibits
8-K 2018-05-24 Shareholder Vote
8-K 2018-05-21 Officers, Exhibits
8-K 2018-04-24 Earnings, Exhibits
8-K 2018-02-06 Earnings, Exhibits
8-K 2018-01-02 Regulation FD, Exhibits
EEFT 2019-09-30
Part I-Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii-Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 eeft9302019ex311.htm
EX-31.2 eeft9302019ex312.htm
EX-32.1 eeft9302019ex321.htm
EX-32.2 eeft9302019ex322.htm

Euronet Worldwide Earnings 2019-09-30

EEFT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
NMR 12,061 40,969,439 38,288,646 0 0 0 0 5,240,698 0%
MKTX 11,853 812 150 464 0 185 256 11,566 0% 45.1 23%
RJF 11,606 38,677 32,113 7,900 0 1,032 1,723 5,654 0% 3.3 3%
YIN 8,783 3,253 628 0 0 0 0 8,452 0%
EEFT 8,764 4,333 2,935 2,633 1,102 265 523 7,888 42% 15.1 6%
SEIC 8,419 1,953 318 1,624 510 485 643 7,733 31% 12.0 25%
LPLA 6,740 5,364 4,339 5,409 0 529 919 7,953 0% 8.6 10%
SEB 4,929 5,901 2,482 6,678 421 59 231 5,608 6% 24.3 1%
SF 4,480 24,344 20,858 3,312 0 427 845 4,686 0% 5.5 2%
NAVI 3,233 98,320 95,008 380 0 467 4,367 85,583 0% 19.6 0%

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
to
Commission File Number: 001-31648
EURONET WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware
74-2806888
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
Identification No.)
 
 
 
3500 College Boulevard
 
Leawood,
Kansas
66211
(Address of principal executive offices)
(Zip Code)
(913) 327-4200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
EEFT
Nasdaq Global Select Market
1.375% Senior Notes due 2026
EEFT
Nasdaq Global Select Market

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

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









Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act
Large accelerated filer
Accelerated filer o
Non-accelerated filer o
Smaller reporting company
                          Emerging growth company
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

On November 6, 2019, Euronet Worldwide, Inc. had 54,027,791 shares of Common Stock outstanding.
 
 
 
 
 



EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Table of Contents
 
 
Page
 
Item 1.
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
Item 1.
Item 1A.
Item 2.
Item 6.
 
 
 
 


Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 
As of
 
September 30,
2019
 
December 31,
2018
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,730,855

 
$
1,054,357

Restricted cash
63,900

 
76,595

Trade accounts receivable, net of allowances for doubtful accounts of $26,219 at September 30, 2019 and $24,287 at December 31, 2018
662,997

 
693,616

Prepaid expenses and other current assets
275,503

 
263,019

Total current assets
2,733,255

 
2,087,587

Operating right of use lease assets
361,747

 

Property and equipment, net of accumulated depreciation of $382,965 at September 30, 2019 and $373,180 at December 31, 2018
321,802

 
291,869

Goodwill
685,991

 
704,197

Acquired intangible assets, net of accumulated amortization of $201,801 at September 30, 2019 and $190,920 at December 31, 2018
96,236

 
114,485

Other assets, net of accumulated amortization of $43,530 at September 30, 2019 and $50,821 at December 31, 2018
115,093

 
123,017

Total assets
$
4,314,124

 
$
3,321,155

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Trade accounts payable
$
450,866

 
$
528,913

Accrued expenses and other current liabilities
748,434

 
712,012

Current portion of operating lease liabilities
122,211

 

Short-term debt obligations and current maturities of long-term debt obligations
18,626

 
38,017

Income taxes payable
53,323

 
40,159

Deferred revenue
57,261

 
59,293

Total current liabilities
1,450,721

 
1,378,394

Debt obligations, net of current portion
1,067,672

 
589,782

Operating lease liabilities, net of current portion
230,391

 

Deferred income taxes
56,032

 
57,145

Other long-term liabilities
63,756

 
62,992

Total liabilities
2,868,572

 
2,088,313

Equity:
 
 
 
Euronet Worldwide, Inc. stockholders’ equity:
 
 
 
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued

 

Common Stock, $0.02 par value. 90,000,000 shares authorized; 62,599,954 issued at September 30, 2019 and 59,897,309 issued at December 31, 2018
1,252

 
1,198

Additional paid-in-capital
1,179,413

 
1,104,264

Treasury stock, at cost, 8,359,459 shares at September 30, 2019 and 8,077,311 shares at December 31, 2018
(433,282
)
 
(391,551
)
Retained earnings
910,108

 
669,805

Accumulated other comprehensive loss
(211,853
)
 
(151,043
)
Total Euronet Worldwide, Inc. stockholders’ equity
1,445,638

 
1,232,673

Noncontrolling interests
(86
)
 
169

Total equity
1,445,552

 
1,232,842

Total liabilities and equity
$
4,314,124

 
$
3,321,155

See accompanying notes to the unaudited consolidated financial statements.

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EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except share and per share data)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Revenues
$
786,986

 
$
714,505

 
$
2,056,362

 
$
1,887,244

Operating expenses:
 
 
 
 
 
 
 
Direct operating costs
405,081

 
388,236

 
1,152,725

 
1,093,072

Salaries and benefits
101,354

 
93,108

 
292,699

 
270,537

Selling, general and administrative
58,715

 
55,787

 
160,704

 
158,156

Depreciation and amortization
27,846

 
26,461

 
82,253

 
78,726

Total operating expenses
592,996

 
563,592

 
1,688,381

 
1,600,491

Operating income
193,990

 
150,913

 
367,981

 
286,753

Other income (expense):
 
 
 
 
 
 
 
Interest income
568

 
288

 
1,424

 
1,000

Interest expense
(9,093
)
 
(11,269
)
 
(27,321
)
 
(28,936
)
Loss on early retirement of debt

 

 
(9,831
)
 

Loss from unconsolidated affiliates

 

 

 
(117
)
Foreign currency exchange loss, net
(10,967
)
 
(2,704
)
 
(7,880
)
 
(21,459
)
Other (losses) gains

 
(34
)
 
(4
)
 
26

Other expense, net
(19,492
)
 
(13,719
)
 
(43,612
)
 
(49,486
)
Income before income taxes
174,498

 
137,194

 
324,369

 
237,267

Income tax expense
(36,957
)
 
(34,937
)
 
(84,244
)
 
(65,031
)
Net income
137,541

 
102,257

 
240,125

 
172,236

Net loss attributable to noncontrolling interests
66

 
466

 
178

 
623

Net income attributable to Euronet Worldwide, Inc.
$
137,607

 
$
102,723

 
$
240,303

 
$
172,859

 
 
 
 
 
 
 
 
Earnings per share attributable to Euronet Worldwide, Inc. stockholders:
 
 
 
 
 
 
 
Basic
$
2.53

 
$
2.01

 
$
4.52

 
$
3.36

Diluted
$
2.46

 
$
1.89

 
$
4.40

 
$
3.17

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
54,449,256

 
51,182,502

 
53,180,850

 
51,436,228

Diluted
55,972,061

 
54,263,892

 
54,622,219

 
54,521,262

See accompanying notes to the unaudited consolidated financial statements.

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EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in thousands)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
137,541

 
$
102,257

 
$
240,125

 
$
172,236

Translation adjustment
(56,863
)
 
(4,613
)
 
(60,887
)
 
(40,198
)
Comprehensive income
80,678

 
97,644

 
179,238

 
132,038

Comprehensive loss attributable to noncontrolling interests
126

 
480

 
255

 
674

Comprehensive income attributable to Euronet Worldwide, Inc.
$
80,804

 
$
98,124

 
$
179,493

 
$
132,712

See accompanying notes to the unaudited consolidated financial statements.

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

 
 
Number of
Shares
Outstanding
 
 
Common
Stock
 
Additional
Paid-in
Capital
 
 
Treasury
Stock
Balance as of December 31, 2017
 
52,808,158

 
$
1,178

 
$
1,072,005

 
$
(217,161
)
Net income (loss)
 
 
 
 
 
 
 
 
Other comprehensive income
 
 
 
 
 
 
 
 
Stock issued under employee stock plans
 
116,358

 
2

 
2,468

 
(1,237
)
Share-based compensation
 
 
 
 
 
4,029

 
 
Repurchase of shares
 
(1,418,895
)
 
 
 
 
 
(125,000
)
Balance as of March 31, 2018
 
51,505,621

 
1,180

 
1,078,502

 
(343,398
)
Net income (loss)
 
 
 
 
 
 
 
 
Other comprehensive loss
 
 
 
 
 
 
 
 
Stock issued under employee stock plans
 
89,954

 
1

 
1,484

 
260

Share-based compensation
 
 
 
 
 
4,550

 
 
Repurchase of shares
 
(613,704
)
 
 
 
 
 
(50,000
)
Balance as of June 30, 2018
 
50,981,871

 
1,181

 
1,084,536

 
(393,138
)
Net income (loss)
 
 
 
 
 
 
 
 
Other comprehensive loss
 
 
 
 
 
 
 
 
Stock issued under employee stock plans
 
476,783

 
10

 
5,977

 
1,043

Share-based compensation
 
 
 
 
 
4,018

 
 
Balance as of September 30, 2018
 
51,458,654

 
$
1,191

 
$
1,094,531

 
$
(392,095
)

 
 
Number of
Shares
Outstanding
 
 
Common
Stock
 
Additional
Paid-in
Capital
 
 
Treasury
Stock
Balance as of December 31, 2018
 
51,819,998

 
$
1,198

 
$
1,104,264

 
$
(391,551
)
Net income
 
 
 
 
 
 
 
 
Other comprehensive loss
 
 
 
 
 
 
 
 
Stock issued under employee stock plans
 
130,136

 
3

 
5,194

 
(1,756
)
Share-based compensation
 
 
 
 
 
4,490

 
 
Issuance of convertible notes, net of tax
 
 
 
 
 
71,660

 
 
Repurchases and conversions of convertible notes, net of tax
 
6

 
 
 
(42,917
)
 
 
Balance as of March 31, 2019
 
51,950,140

 
1,201

 
1,142,691

 
(393,307
)
Net income (loss)
 
 
 
 
 
 
 
 
Other comprehensive income
 
 
 
 
 
 
 
 
Stock issued under employee stock plans
 
41,856

 
 
 
1,740

 
(46
)
Share-based compensation
 
 
 
 
 
6,003

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

 
50

 
22,400

 
 
Balance as of June 30, 2019
 
54,480,239

 
1,251

 
1,172,834

 
(393,353
)
Net income (loss)
 
 
 
 
 
 
 
 
Other comprehensive income
 
 
 
 
 
 
 
 
Stock issued under employee stock plans
 
35,437

 
1

 
1,131

 
(178
)
Share-based compensation
 
 
 
 
 
5,456

 
 
Repurchase of shares
 
(275,181
)
 
 
 
 
 
(39,751
)
Other
 
 
 


 
(8
)
 
 
Balance as of September 30, 2019
 
54,240,495

 
$
1,252

 
$
1,179,413

 
$
(433,282
)
See accompanying notes to the unaudited consolidated financial statements.

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

 
 
 Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
 
Noncontrolling
Interests
 
Total
Balance as of December 31, 2017
 
$
436,954

 
$
(94,458
)
 
$
960

 
$
1,199,478

Net income (loss)
 
26,413

 
 
 
(69
)
 
26,344

Other comprehensive income
 
 
 
22,894

 
54

 
22,948

Stock issued under employee stock plans
 
 
 
 
 
 
 
1,233

Share-based compensation
 
 
 
 
 
 
 
4,029

Repurchase of shares
 
 
 
 
 
 
 
(125,000
)
Balance as of March 31, 2018
 
463,367

 
(71,564
)
 
945

 
1,129,032

Net income (loss)
 
43,724

 
 
 
(88
)
 
43,636

Other comprehensive loss
 
 
 
(58,442
)
 
(91
)
 
(58,533
)
Stock issued under employee stock plans
 
 
 
 
 
 
 
1,745

Share-based compensation
 
 
 
 
 
 
 
4,550

Repurchase of shares
 
 
 
 
 
 
 
(50,000
)
Balance as of June 30, 2018
 
507,091

 
(130,006
)
 
766

 
1,070,430

Net income (loss)
 
102,722

 
 
 
(465
)
 
102,257

Other comprehensive loss
 
 
 
(4,599
)
 
(15
)
 
(4,614
)
Stock issued under employee stock plans
 
 
 
 
 
 
 
7,030

Share-based compensation
 
 
 
 
 
 
 
4,018

Balance as of September 30, 2018
 
$
609,813

 
$
(134,605
)
 
$
286

 
$
1,070,430

 
 
 Retained Earnings
 
Accumulated Other
Comprehensive Loss
 
 
Noncontrolling
Interests
 
Total
Balance as of December 31, 2018
 
$
669,805

 
$
(151,043
)
 
$
169

 
$
1,232,842

Net income
 
34,543

 
 
 
36

 
34,579

Other comprehensive loss
 
 
 
(16,156
)
 
(29
)
 
(16,185
)
Stock issued under employee stock plans
 
 
 
 
 
 
 
3,441

Share-based compensation
 
 
 
 
 
 
 
4,490

Issuance of convertible notes, net of tax
 
 
 
 
 
 
 
71,660

Repurchases and conversions of convertible notes, net of tax
 
 
 
 
 
 
 
(42,917
)
Balance as of March 31, 2019
 
704,348

 
(167,199
)
 
176

 
1,287,910

Net income (loss)
 
68,153

 
 
 
(148
)
 
68,005

Other comprehensive income
 
 
 
12,149

 
12

 
12,161

Stock issued under employee stock plans
 
 
 
 
 
 
 
1,694

Share-based compensation
 
 
 
 
 
 
 
6,003

Redemptions and conversions of convertible notes, net of tax
 
 
 
 
 
 
 
22,450

Balance as of June 30, 2019
 
772,501

 
(155,050
)
 
40

 
1,398,223

Net income (loss)
 
137,607

 
 
 
(66
)
 
137,541

Other comprehensive loss
 
 
 
(56,803
)
 
(60
)
 
(56,863
)
Stock issued under employee stock plans
 
 
 
 
 
 
 
954

Share-based compensation
 
 
 
 
 
 
 
5,456

Repurchase of shares
 
 
 
 
 
 
 
(39,751
)
Other
 
 
 
 
 
 
 
(8
)
Balance as of September 30, 2019
 
$
910,108

 
$
(211,853
)
 
$
(86
)
 
$
1,445,552

See accompanying notes to the unaudited consolidated financial statements.

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EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Nine Months Ended
September 30,
 
2019
 
2018
Net income
$
240,125

 
$
172,236

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
82,253

 
78,726

Share-based compensation
15,949

 
12,597

Unrealized foreign exchange loss, net
7,880

 
21,459

Deferred income taxes
13,313

 
(1,208
)
Loss on early retirement of debt

9,831

 

Loss from unconsolidated affiliates

 
117

Accretion of convertible debt discount and amortization of debt issuance costs
13,385

 
10,582

Changes in working capital, net of amounts acquired:
 
 
 
Income taxes payable, net
15,363

 
10,022

Trade accounts receivable
4,719

 
(87,237
)
Prepaid expenses and other current assets
(26,292
)
 
42,552

Trade accounts payable
(62,078
)
 
(81,149
)
Deferred revenue
5

 
2,525

Accrued expenses and other current liabilities
58,559

 
9,877

Changes in noncurrent assets and liabilities
(8,633
)
 
1,474

Net cash provided by operating activities
364,379

 
192,573

Cash flows from investing activities:
 
 
 
Acquisitions, net of cash acquired
1

 
(12,854
)
Purchases of property and equipment
(100,443
)
 
(82,129
)
Purchases of other long-term assets
(7,276
)
 
(5,787
)
Other, net
3,317

 
1,401

Net cash used in investing activities
(104,401
)
 
(99,369
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of shares
8,297

 
11,757

Repurchase of shares
(37,260
)
 
(177,163
)
Borrowings from revolving credit agreements
2,365,698

 
4,267,881

Repayments of revolving credit agreements
(2,580,871
)
 
(4,003,662
)
Proceeds from long-term debt obligations
1,194,900

 

Repayments of long-term debt obligations
(446,702
)
 
(51,199
)
(Repayments of) borrowings from short-term debt obligations, net
(18,793
)
 
204,211

Debt issuance costs
(18,810
)
 

Other, net
(4,827
)
 
(4,738
)
Net cash provided by financing activities
461,632

 
247,087

Effect of exchange rate changes on cash and cash equivalents and restricted cash
(57,807
)
 
(38,084
)
Increase in cash and cash equivalents and restricted cash
663,803

 
302,207

Cash and cash equivalents and restricted cash at beginning of period
1,130,952

 
900,518

 
 
 
 
Cash and cash equivalents and restricted cash at end of period
$
1,794,755

 
$
1,202,725

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Interest paid during the period
$
10,614

 
$
19,243

Income taxes paid during the period
$
55,025

 
$
55,338

See accompanying notes to the unaudited consolidated financial statements.

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

(1) GENERAL
Organization
Euronet Worldwide, Inc. (together with its subsidiaries, the “Company” or “Euronet”) is a leading electronic payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive automated teller machine (“ATM”), point-of-sale (“POS”), card outsourcing, card issuing and merchant acquiring services, software solutions, electronic distribution of prepaid mobile airtime and other digital media products, foreign currency exchange services and global money transfer services.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the consolidated financial position and the results of operations, comprehensive income and cash flows for the interim periods. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2018, including the notes thereto, set forth in the Company’s 2018 Annual Report on Form 10-K. Certain amounts in prior years have been reclassified to conform to the current year's presentation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Significant items subject to such estimates and assumptions include computing income taxes, estimating the useful lives and potential impairment of long-lived assets and goodwill, as well as allocating the purchase price to assets acquired and liabilities assumed in acquisitions and revenue recognition. Actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2019.
Seasonality
Euronet’s EFT Processing Segment experiences its heaviest demand for ATM cash withdrawal transactions and dynamic currency conversion ("DCC") services during the third quarter of the fiscal year, coinciding with the tourism season followed by lower transaction levels during the fourth quarter. Additionally, the epay Segment is impacted by seasonality during the fourth quarter and the first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Seasonality in the Money Transfer Segment varies by regions of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and experiences its lowest transaction levels during the first quarter of each year.
(2) RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS

The Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), as amended, as of January 1, 2019, using the modified retrospective approach and comparative periods were not restated. The new standards provide a number of optional practical expedients in transition.
The Company elected the “package of practical expedients” which permits the Company not to reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected to combine lease and non-lease components and to include short-term leases with an initial term of 12 months or less on the Consolidated Balance Sheets.
In addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases. The election of the hindsight practical expedient resulted in, for substantially all leases in effect on January 1, 2019, the lease term for implementation of this pronouncement, as the lease’s life being January 1, 2019 through the lease’s contractual termination date, rather than the actual lease life as set out in the lease agreement. Lease lives for lease agreements committed to on January 1, 2019 and, thereafter, are included based on the lease’s commencement date and termination date. In the application of hindsight, the Company evaluated the performance of all the leases and the associated markets in relation to the Company’s

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operations, which resulted in the determination that the exercise of renewal options would not be reasonably certain in determining the expected lease term.
Adoption of the new standard resulted in the recognition of additional operating right of use lease assets and lease liabilities of approximately $296.9 million, as of January 1, 2019.

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company does not expect that the adoption of this guidance to have a significant impact on its consolidated financial statements.
(3) STOCKHOLDERS' EQUITY
Earnings Per Share
Basic earnings per share has been computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the respective periods. Diluted earnings per share has been computed by dividing earnings available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for any potential dilution from options to purchase the Company's common stock, assumed vesting of restricted stock and the assumed conversion of the Company’s convertible debentures. The following table provides the computation of diluted weighted average number of common shares outstanding:

Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Computation of diluted weighted average shares outstanding:
 
 
 
 
 
 
 
Basic weighted average shares outstanding
54,449,256

 
51,182,502

 
53,180,850

 
51,436,228

Incremental shares from assumed exercise of stock options and vesting of restricted stock
1,522,805

 
1,521,560

 
1,441,369

 
1,525,204

Incremental shares from assumed conversion of convertible notes

 
1,559,830

 

 
1,559,830

Diluted weighted average shares outstanding
55,972,061

 
54,263,892

 
54,622,219

 
54,521,262


The table includes the impact of all stock options and restricted stock that are dilutive to the Company’s weighted average common shares outstanding during the three and nine months ended September 30, 2019 and 2018. The calculation of diluted earnings per share excludes stock options or shares of restricted stock that are anti-dilutive to the Company’s weighted average common shares outstanding of approximately 751,000 and 841,000 for the three and nine months ended September 30, 2019, respectively, and approximately 436,000 and 792,000 for the three and nine months ended September 30, 2018, respectively.
The Company issued new Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019 and retired the existing convertible notes ("Retired Convertible Notes") that would have matured in 2044 on May 28, 2019. The Company's Convertible Notes currently have, and the Retired Convertible Notes had, a settlement feature requiring the Company upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of the Company's common stock or a combination thereof, at the Company's option. The Company has stated its intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium. Accordingly, the Convertible Notes and the Retired Convertible Notes were included in the calculation of diluted earnings per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price. The Retired Convertible Notes had a dilutive effect in the three and nine months ended September 30, 2018 as the $83.77 market price per share of Common Stock as of September 30, 2018 exceeded the $72.18 conversion price per share. The Convertible Notes would only have a dilutive effect if the market price per share of common stock exceeds the conversion price of $188.73 per share. As of September 30, 2019, the Convertible Notes did not have a dilutive effect on the earnings per share. See Note 7, Debt Obligations, for more information about the convertible notes.
Share repurchases
The Company's Board of Directors has authorized a stock repurchase program ("Repurchase Program") allowing Euronet to repurchase up to $375 million in value or 10.0 million shares of stock through March 31, 2020. During the three and nine

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months ended September 30, 2019, the remaining maximum dollar value of shares that may yet be purchased under the Repurchase program was $160.2 million. Repurchases under the Repurchase Program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan. For the first nine months ended September 30, 2019 and 2018, the Company repurchased $39.8 million and $175.0 million, respectively, in value of Euronet common stock under the Repurchase Program. In connection with the issuance of the Convertible Notes, the Board of Directors of the Company authorized the Company to repurchase up to $120 million of the Company’s common stock concurrently with or following the issuance of the Convertible Notes. This authorization will expire on March 11, 2021. For the three and nine months ended September 30, 2019, the Company did not make any repurchases under this special authorization.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded foreign currency translation gains of $56.9 million for the third quarter of 2019, and losses of $60.9 million, $4.6 million, and $40.2 million for the first nine months of 2019,the three and nine months ended September 30, 2018, respectively. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018.
(4) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET
A summary of acquired intangible assets and goodwill activity for the nine months ended September 30, 2019 is presented below:
(in thousands)
 
Acquired
Intangible
Assets
 
Goodwill
 
Total
Intangible
Assets
Balance as of December 31, 2018
 
$
114,485

 
$
704,197

 
$
818,682

Increases (decreases):
 
 
 
 
 
 
Acquisition
 

 
686

 
686

Amortization
 
(15,320
)
 

 
(15,320
)
Other (primarily changes in foreign currency exchange rates)
 
(2,929
)
 
(18,892
)
 
(21,821
)
Balance as of September 30, 2019
 
$
96,236

 
$
685,991

 
$
782,227


Estimated amortization expense on intangible assets with finite lives, before income taxes, as of September 30, 2019, is expected to total $4.9 million for the remainder of 2019, $19.2 million for 2020, $18.3 million for 2021, $17.3 million for 2022, $12.7 million for 2023 and $6.5 million for 2024.
In January 2019, the Company completed the acquisition of the majority interests of a small Indonesian business in which the Company previously held the minority interest for an immaterial amount of cash consideration. The acquisition has been accounted for as business combinations in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment.
The Company’s annual goodwill impairment test is performed during the fourth quarter of its fiscal year. The annual impairment test for the year ended December 31, 2018 resulted in no impairment charge.
Determining the fair value of reporting units requires significant management judgment in estimating future cash flows and assessing potential market and economic conditions. It is reasonably possible that the Company’s operations will not perform as expected, or that the estimates or assumptions included in the 2018 annual impairment test could change, which may result in the Company recording material non-cash impairment charges during the year in which these changes take place.

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(5) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
 
As of
(in thousands)
September 30, 2019
 
December 31, 2018
Money transfer settlement obligations

$
353,400

 
$
310,710

Accrued expenses
267,788

 
293,864

Accrued amounts due to mobile operators and other content providers
70,330

 
65,878

Derivative liabilities
50,973

 
36,102

Current portion of capital lease obligations
5,943

 
5,458

Total
$
748,434

 
$
712,012



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

The Company records deferred revenues when cash payments are received or due in advance of its performance. The decrease in the deferred revenue balance for the first nine months of 2019 is primarily driven by $31.6 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2018, largely offset by $29.6 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations.

(7) DEBT OBLIGATIONS
Debt obligations consist of the following:
 
As of
(in thousands)
September 30, 2019
 
December 31, 2018
Credit Facility:
 
 
 
Revolving credit agreements, due 2023
$
741

 
$
215,725

 


 


Convertible Debt:
 
 
 
0.75% convertible notes, unsecured, due 2049
433,262

 

1.50% convertible notes, unsecured, due 2044

 
379,859

 
 
 
 
1.375% Senior Notes, due 2026
653,940

 

 
 
 
 
Other obligations
18,811

 
38,513

 
 
 
 
Total debt obligations
1,106,754

 
634,097

Unamortized debt issuance costs
(20,456
)
 
(6,298
)
Carrying value of debt
1,086,298

 
627,799

Short-term debt obligations and current maturities of long-term debt obligations
(18,626
)
 
(38,017
)
Long-term debt obligations
$
1,067,672

 
$
589,782



Credit Facility
On October 17, 2018, the Company entered into a new unsecured revolving credit agreement (the "Credit Facility") for $1.0 billion that expires on October 17, 2023. Fees and interest on borrowings are based upon the Company's corporate credit rating

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and are based, in the case of letter of credit fees, on a margin , and in the case of interest, on a margin over London Inter-Bank Offered Rate (“LIBOR”) or a margin over the base rate, as selected by the Company, with the applicable margin ranging from 1.125% to 2.0% or 0.175% to 1.0% for base rate loans. The Credit Facility allows for borrowings in Australian Dollars, British Pounds Sterling, Canadian Dollars, Czech Koruna, Danish Krone, Euros, Hungarian Forints, Japanese Yen, New Zealand Dollars, Norwegian Krone, Polish Zlotys, Swedish Krona, Swiss Francs, and U.S. Dollars. The weighted average interest rate of the Company's borrowing under the Credit Facility was 1.05% as of September 30, 2019.
The Credit Facility contains customary affirmative and negative covenants, events of default and financial covenants include: (i) as of the end of each fiscal quarter ended on March 31, September 30 and December 31, a Consolidated Total Leverage Ratio not to be greater than 3.5 to 1.0; (ii) as of the end of each fiscal quarter ended on June 30, a Consolidated Total Leverage Ratio not to be greater than 4.0 to 1.0; provided that, not more than two times prior to the expiration date, upon notice to the administrative agent (an "Increase Leverage Notice") that a Material Acquisition has been consummated, for any period of four consecutive fiscal quarters following such Material Acquisitions, the Consolidated Total Leverage Ratio will be not greater than 4.0 to 1.0 for fiscal quarters ended on March 31, September 30 and December 31 and not greater than 4.5 to 1.0 for fiscal quarters ended on June 30; provided, further, that following such four consecutive fiscal quarters for which the maximum Consolidated Total Leverage Ratio is increased, the maximum Consolidated Total Leverage Ratio shall revert to the levels set forth in clauses (i) and (ii) above for not fewer than two fiscal quarters before a subsequent Increase Leverage Notice is delivered to the administrative agent; and (iii) a Consolidated Interest Coverage Ratio not less than 4.0 to 1.0. The Company is permitted to pay dividends and repurchase common stock if the Company would not be in default under the Credit Facility after giving effect to such dividend or repurchase.
As of September 30, 2019, the Company is in compliance with all debt covenants.
Convertible Debt
On March 18, 2019, the Company completed the sale of $525 million of Convertible Senior Notes ("Convertible Notes"). The Convertible Notes mature in March 2049 unless redeemed or converted prior to such date, and are convertible into shares of Euronet Common Stock at a conversion price of approximately $188.73 per share. The Company used $94.2 million of the net proceeds from the issuance of the new debt to repurchase $49 million aggregate principal amount of the Company's 1.5% Convertible Senior Notes outstanding due 2044 (the "Retired Convertible Notes") from a limited number of holders in privately negotiated transactions. The Company expects to use the remainder of the net proceeds for general corporate purposes, which may include repaying borrowings outstanding under the Credit Facility, share repurchases or acquisitions.
On March 18, 2019, the Company provided a notice of redemption to the trustee of the indenture governing the Retired Convertible Notes (the "Existing Indenture"), pursuant to which the Company would redeem all of the remaining principal amount outstanding of the Retired Convertible Notes on May 28, 2019 (the "Redemption Date") for cash at a redemption price equal to 100% of the principal amount of the Retired Convertible Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date. The issuance of the Convertible Notes and the conversion of the Retired Convertible Notes, resulted in a $25.6 million recognition and a $34.2 million reversal of deferred tax liabilities within the additional paid-in capital as of September 30, 2019, respectively.
Prior to the Redemption Date, approximately $352.4 million principal amount of the Retired Convertible Notes were submitted for conversion. The Company elected to settle the conversion of such Retired Convertible Notes through a combination of cash and stock. The Company paid cash equal to $1,000 for each $1,000 principal amount of Retired Convertible Notes submitted for conversion and satisfied the remainder of the conversion obligation by issuing shares of the Company's Common Stock valued at $147.24 per share. As a result, the Company paid cash of $352.4 million and issued approximately 2.5 million shares of its Common Stock. In accordance with ASC 470, the Company recognized a loss of $9.8 million on the conversion and redemption of the debt for the first nine months of 2019, representing the difference between the fair value of the Retired Convertible Notes converted and the carrying value of the bonds at the time of conversion.
In accordance with ASC 470-20-30-27, proceeds from the issuance of convertible debt is allocated between debt and equity components so that debt is discounted to reflect the Company's nonconvertible debt borrowing rate. ASC 470-20-35-13 requires the debt discount to be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. The allocation resulted in an increase to additional paid-in capital of $99.7 million for the Convertible Notes.
Contractual interest expense for the Retired Convertible Notes was $1.5 million for the first nine months of 2019. Accretion expense was $4.6 million for the first nine months of 2019.
Contractual interest expense for the Convertible Notes was $1.0 million and $2.1 million for the three and nine months ended September 30, 2019, respectively. Accretion expense was $3.7 million and $7.9 million for the three and nine months ended September 30, 2019, respectively. The effective interest rate was 4.4% for the three and nine months ended September 30, 2019. As of September 30, 2019, the unamortized discount was $91.7 million and will be amortized through March 2025.

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1.375% Senior Notes due 2026
On May 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of Senior Notes that expire on May 2026 (the “Senior Notes”). The Senior Notes accrue interest at a rate of 1.375% per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of September 30, 2019, the Company has outstanding €600 million ($653.9 million) principal amount of the Senior Notes. In addition, the Company may redeem some or all of these notes on or after February 22, 2026 at their principal amount plus any accrued and unpaid interest.
(8) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. Dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) short-term borrowings that are payable in currencies other than the U.S. dollar. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"), primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates being reflected concurrently in earnings for both the derivative instrument and the hedged transaction and having an offsetting effect.
Foreign currency exchange contracts - Ria Operations and Corporate
In the United States, the Company's Ria operations use short-duration foreign currency forward contracts, generally with maturities up to 14 days, to offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction and its settlement. Due to the short duration of these contracts and the Company’s credit profile, the Company is generally not required to post collateral with respect to these foreign currency forward contracts. Most derivative contracts executed with counterparties in the U.S. are governed by an International Swaps and Derivatives Association agreement that includes standard netting arrangements; therefore, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity. As of September 30, 2019, the Company held in its Ria operations foreign currency forward contracts outstanding in the U.S. with a notional value of $146 million, primarily in Australian dollars, Canadian dollars, British pounds, euros and Mexican pesos.
In addition, the Company uses forward contracts, typically with maturities from a few days to less than one year, to offset foreign exchange rate fluctuations on certain foreign currency denominated other asset and liability positions. As of September 30, 2019, the Company had foreign currency forward contracts outstanding with a notional value of $80 million, primarily in euros.
Foreign currency exchange contracts - xe Operations
xe writes derivative instruments, primarily foreign currency forward contracts and cross-currency swaps, mostly with counterparties comprised of individuals and small-to-medium size businesses and derives a currency margin from this activity as part of its operations. xe aggregates its foreign currency exposures arising from customer contracts and may hedge some or all of the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from xe's total portfolio of positions were $17.5 million and $52.2 million for the three and nine months ended September 30, 2019, respectively, and $16.8 million and $52.5 million for the three and nine months ended September 30, 2018, respectively. All of the derivative contracts used in the Company's xe operations are economic hedges and are not designated as hedges under ASC Topic 815. The duration of these derivative contracts is generally less than one year.
The fair value of xe's total portfolio of positions can change significantly from period to period based on, among other factors, market movements and changes in customer contract positions. xe manages counterparty credit risk (the risk that counterparties will default and not make payments according to the terms of the agreements) on an individual counterparty basis. It mitigates this risk by entering into contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. xe does not expect any significant losses from counterparty defaults.
The aggregate equivalent U.S. dollar notional amounts of foreign currency derivative customer contracts held by the Company in its xe operations as of September 30, 2019 was approximately $1.3 billion. The majority of customer contracts are written in major currencies such as the U.S. dollar, euro, New Zealand dollar, British pound, and Australian dollar.




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Balance Sheet Presentation
The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the dates below:
 
 
Asset Derivatives
 
Liability Derivatives
 
 
 
 
Fair Value
 
 
 
Fair Value
(in thousands)
 
Balance Sheet Location
 
September 30, 2019
 
December 31, 2018
 
Balance Sheet Location
 
September 30, 2019
 
December 31, 2018
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Prepaid expenses and other current assets
 
$
61,649

 
$
44,637

 
Accrued expenses and other current liabilities
 
$
(50,973
)
 
$
(36,102
)

The following tables summarize the gross and net fair value of derivative assets and liabilities as of September 30, 2019 and December 31, 2018 (in thousands):
Offsetting of Derivative Assets
 
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Consolidated Balance Sheet
 
 
As of September 30, 2019
 
Gross Amounts of Recognized Assets
 
Gross Amounts Offset in the Consolidated Balance Sheet
 
Net Amounts Presented in the Consolidated Balance Sheet
 
Financial Instruments
 
Cash Collateral Received
 
Net Amounts
Derivatives subject to a master netting arrangement or similar agreement
 
$
61,649

 
$

 
$
61,649

 
$
(39,867
)
 
$
(4,631
)