• 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 430,000 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 75,800 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 23 principal offices in Europe, one in the Middle East, five in Asia Pacific, and six 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 Disclosure 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 20% of total consolidated revenue for the year ended December 31, 2008, is derived from fees charged for transactions effected by cardholders on our proprietary network of ATMs, as well as fixed management fees and transaction fees we charge to banks for operating ATMs and processing credit cards under outsourcing agreements. Through our proprietary network, we generally charge fees for four types of ATM transactions: i) cash withdrawals,
ii) balance inquiries, iii) transactions not completed because the relevant card issuer does not give authorization, and iv) prepaid telecommunication recharges. Revenue in this segment is also derived from 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, 2008, 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, bill payment, money transfer and prepaid mobile content such as music, ringtones and games.
Money Transfer Segment - Revenue in the Money Transfer Segment, which represents approximately 22% of total consolidated revenue for the year ended December 31, 2008, 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 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 mobile airtime top-up 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 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 through the execution of an agreement with a large petrol retailer in Central Europe. Since the beginning of 2007, we have devoted significant resources to the development of the necessary processing systems and capabilities to enter this business, which involves the purchase and design of hardware and software. Merchant acquiring involves processing credit and debit card transactions that are made on POS terminals, including authorization, settlement, and processing of settlement files. It 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, agent financial institutions and retailers;

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

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

• the development of mobile phone networks in 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 level of commission that is paid to the various intermediaries in the prepaid mobile airtime distribution chain;

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

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

• the availability of financing for further expansion.

In mature markets, such as the U.K., 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. In Australia, our main competitor ceased business during 2008, allowing us to strengthen our position in this key market.
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; and

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

Like other participants in the money transfer industry, as a result of immigration developments, downturns in certain labor markets and the current economic crisis, the number of money transfers from the U.S. to Mexico decreased in 2008 compared to 2007. 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 related to most stock option and restricted stock grants. 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). We evaluate performance of our segments based on income or loss from continuing operations before income taxes, foreign currency exchange gain (loss), minority interest and other nonrecurring gains and losses.
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, 2008, 2007 AND 2006

                                                 Revenues                                           Operating Income (Loss)
(in thousands)                  2008                2007               2006               2008                2007               2006
EFT Processing              $    205,257         $  174,049         $  144,515         $    38,306         $   36,147         $   34,278
Prepaid Processing               609,106            569,858            467,651              (4,659 )           52,813             37,622
Money Transfer                   231,302            158,759              3,210            (157,150 )            7,130             (3,295 )

Total                          1,045,665            902,666            615,376            (123,503 )           96,090             68,605
Corporate services                     -                  -                  -             (25,518 )          (19,856 )          (17,833 )


Total                       $  1,045,665         $  902,666         $  615,376         $  (149,021 )       $   76,234         $   50,772

SUMMARY
Our annual consolidated revenues increased by 16% for 2008 over 2007, and 47% for 2007 over 2006. These increases reflect acquisitions, primarily RIA in April 2007, as well as growth in our business resulting from increases in the average number of ATMs managed and transactions processed. For further discussion regarding acquisitions, see Note 6, Acquisitions, to the Consolidated Financial Statements.
Our operating income for 2008 includes a non-cash goodwill and intangible asset impairment charge of $220.1 million 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 charge in 2008 and the federal excise tax refund in 2007, our operating income increased 11% for 2008 over 2007 and 26% for 2007 over 2006. These increases were primarily the result of growth in transaction volumes and related revenues.
Net loss for 2008 was $195.1 million, or $3.97 per diluted share, compared to net income for 2007 of $53.5 million, or $1.11 per diluted share, and net income of $46.0 million, or $1.16 per diluted share for 2006. 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 2007 and 2006 included foreign currency exchange translation gains of $15.5 million and $10.3 million, respectively. Net loss for 2008 includes a loss from discontinued operations of $1.1 million, or $0.02 per diluted share while net income for 2007 and 2006 include gains from discontinued operations of $1.0 million and $0.6 million, respectively, or $0.02 per diluted share for each year.
Impact of changes in foreign currency exchange rates Beginning in 2006 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, the U.S. dollar strengthened significantly. Despite the recent strengthening, the U.S. dollar was, on average, 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 2008 and 2007 are positively impacted by the weakening of the U.S. dollar. We estimate that, depending on the mix of countries and currencies, our 2008 and 2007 operating income benefited by approximately 5% to 10% when compared to 2007 and 2006, respectively. While the benefit of the weakened U.S. dollar generally contributed to improvements in each segment in 2007, 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.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND
2006 - BY BUSINESS SEGMENT
EFT PROCESSING SEGMENT
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)                                704.2            603.8                   100.4                17 %
ATMs as of December 31                   10,128           11,347                  (1,219 )             (11 %)
Average ATMs                             10,554           10,025                     529                 5 %

Discontinued operations
During 2008, we decided to sell Euronet Essentis Limited ("Essentis"), a U.K. software entity previously included in the EFT Processing Segment, in order to focus our investments and resources on our transactions processing businesses. We are in the process of selling the business. Accordingly, the results of operations for Essentis are shown as discontinued operations in the Consolidated Statements of Operations for all periods presented and have been removed from the table above.
Revenues
Our revenue 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 $0.29 for both 2008 and 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.
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 obtain renewal of, 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 689 ATMs in the fourth quarter 2008 and approximately 1,000 ATMs in the first quarter 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 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 contract renewals . . .