What changed in this filing

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Item 1. Financial Statements

2020-08-03 compared with 2020-05-06 · 279 added, 160 removed, 414 unchanged (51% of the section changed)

4 unchanged sentences

Three Months Ended

March 31, 2020

March 31, 2019

June 30, 2020

June 30, 2019

Operating expenses:

15 unchanged sentences

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

Six Months Ended

June 30, 2020

June 30, 2019

Operating expenses:

Cost of service

Selling, general and administrative

Operating income

Interest and other income

Interest and other expense

Income before income taxes and equity in income of equity method investments

Income tax expense

Income before equity in income of equity method investments

Equity in income of equity method investments, net of tax

Net income attributable to noncontrolling interests, net of tax

Net income attributable to Global Payments

Earnings per share attributable to Global Payments:

Basic earnings per share

Diluted earnings per share

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

Three Months Ended

March 31, 2020

March 31, 2019

June 30, 2020

June 30, 2019

Other comprehensive income (loss):

3 unchanged sentences

Reclassification of net unrealized losses (gains) on hedging activities to interest expense

Income tax (expense) benefit related to hedging activities

Other, net of tax

Other comprehensive income (loss)

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Global Payments

Six Months Ended

June 30, 2020

June 30, 2019

Other comprehensive income (loss):

Foreign currency translation adjustments

Income tax benefit related to foreign currency translation adjustments

Net unrealized losses on hedging activities

Reclassification of net unrealized losses (gains) on hedging activities to interest expense

Income tax benefit related to hedging activities

1 unchanged sentence

Other comprehensive loss

Comprehensive (loss) income

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive (loss) income attributable to Global Payments

Comprehensive income attributable to Global Payments

See Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except share data)

March 31, 2020

June 30, 2020

December 31, 2019

24 unchanged sentences

Common stock, no par value;

400,000,000 shares authorized at March 31, 2020 and December 31, 2019;

299,010,257 issued and outstanding at March 31, 2020 and 300,225,590 issued and outstanding at December 31, 2019

400,000,000 shares authorized at June 30, 2020 and December 31, 2019;

299,244,326 issued and outstanding at June 30, 2020 and 300,225,590 issued and outstanding at December 31, 2019

Paid-in capital

8 unchanged sentences

(in thousands)

Three Months Ended

March 31, 2020

March 31, 2019

Six Months Ended

June 30, 2020

June 30, 2019

Cash flows from operating activities:

18 unchanged sentences

Cash flows from financing activities:

Net repayments of settlement lines of credit

Net (repayments of) borrowings from settlement lines of credit

Proceeds from long-term debt

Repayments of long-term debt

Payments of debt issuance costs

Repurchases of common stock

5 unchanged sentences

Effect of exchange rate changes on cash

Increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of the period

10 unchanged sentences

Noncontrolling Interests

Balance at March 31, 2020

Other comprehensive income

Stock issued under share-based compensation plans

Common stock repurchased - share-based compensation plans

Share-based compensation expense

Cash dividends declared ($0.195 per share)

Balance at June 30, 2020

Number of Shares

Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Total Global Payments Shareholders’ Equity

Noncontrolling Interests

Balance at March 31, 2019

Other comprehensive (loss) income

Stock issued under share-based compensation plans

Common stock repurchased - share-based compensation plans

Share-based compensation expense

Distributions to noncontrolling interest

Repurchases of common stock

Cash dividends declared ($0.01 per share)

Balance at June 30, 2019

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands)

Number of Shares

Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Total Global Payments Shareholders’ Equity

Noncontrolling Interests

Balance at December 31, 2019

4 unchanged sentences

Share-based compensation expense

Repurchases of common stock

Cash dividends declared ($0.195 per share)

Balance at March 31, 2020

Repurchase of common stock

Dividends paid ($0.39 per share)

Balance at June 30, 2020

Number of Shares

10 unchanged sentences

Distributions to noncontrolling interest

Repurchases of common stock

Cash dividends declared ($0.01 per share)

Balance at March 31, 2019

Repurchase of common stock

Dividends paid ($0.02 per share)

Balance at June 30, 2019

See Notes to Unaudited Consolidated Financial Statements.

13 unchanged sentences

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 .

Recent developments relating to the outbreak of the coronavirus pandemic ("COVID-19")

COVID-19 Update

In March 2020, the World Health Organization declared the outbreak of the COVID-19 virus a global pandemic.

The pandemic is causing major disruptions to businesses and markets worldwide as the virus continues to spread.

A number of countries as well as many states and cities within the United States have enacted temporary closures of businesses, issued quarantine or shelter-in-place orders and taken other restrictive measures in response to COVID-19.

A number of countries as well as many states and cities within the United States have implemented measures in an effort to contain the virus, including physical distancing, travel restrictions, border closures, limitations on public gatherings, work from home and closure of nonessential businesses.

The effects of the outbreak are still evolving, and the ultimate severity and duration of the pandemic and the implications on global economic conditions remains uncertain.

Use of estimates

6 unchanged sentences

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (A Consensus of the FASB Emerging Issues Task Force)." ASU 2018-15 provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract.

The new guidance amends the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain implementation costs as if the arrangement was an internal-use software project.

We adopted ASU 2018-15 on January 1, 2020, applying the guidance prospectively to all implementation costs incurred after the date of adoption.

The new guidance amends the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain implementation costs following the internal-use software capitalization criteria within Accounting Standards Codification ("ASC") Subtopic 350-40.

We adopted ASU 2018-15 on January 1, 2020, applying the guidance prospectively to all implementation costs incurred on or after the date of adoption.

The adoption of this standard did not have a material effect on our consolidated financial statements.

We have historically capitalized implementation costs associated with cloud computing arrangements that are service contracts following the guidance in Subtopic 350-40 and will continue to do so pursuant to the clarifications provided in the new guidance.

We amortize deferred implementation costs to expense on a straight-line basis over the term of the applicable hosting arrangement.

We amortize capitalized implementation costs to expense on a straight-line basis over the term of the applicable hosting arrangement.

ASU 2016-13 — We adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326):

2 unchanged sentences

The amendments in this update changed how we measure and recognize credit impairment for certain financial instruments measured at amortized cost.

Under the current expected credit losses ("CECL") model, we recognize an estimate of credit losses expected to occur over the remaining life of each pool of financial assets with similar risk characteristics.

Under the current expected credit losses model required by ASU 2016-13, we recognize at asset inception and each subsequent reporting date an estimate of credit losses expected to occur over the remaining life of each pool of financial assets with similar risk characteristics.

We have exposure to credit losses for financial assets such as accounts receivable, certain settlement processing assets, check guarantee claims receivable assets and advances to sales representatives.

2 unchanged sentences

The estimation process also includes consideration of qualitative and quantitative risk factors associated with the age of asset balances, expected timing of payment, contract terms and conditions, changes in specific customer risk profiles or mix of customers, geographic risk, industry or economic trends and relevant environmental factors.

As of March 31, 2020 , the total allowance for credit losses was approximately $ 29.3 million .

As of June 30, 2020 , the total allowance for credit losses was approximately $ 39.9 million .

Financial assets are presented net of the allowance for credit losses in the consolidated balance sheets.

1 unchanged sentence

Depending on the nature of the underlying asset, credit loss expense is included as a component of cost of service or selling, general and administrative expense in the consolidated statements of income.

Write-offs are recorded in the period in which the asset is deemed uncollectible.

Write-offs are recorded in the period in which the asset is deemed to be uncollectible.

Recoveries are recorded when received as a direct credit to the credit loss expense in the consolidated statements of income.

3 unchanged sentences

Simplifying the Accounting for Income Taxes," which is intended to enhance and simplify various aspects of the accounting for income taxes.

The amendments in this update remove certain exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

ASU 2019-12 also clarifies and amends existing guidance to improve consistent application of the accounting for franchise taxes, enacted changes in tax laws or rates and transactions that result in a step-up in the tax basis of goodwill.

The amendments in this update remove certain exceptions to the general principles in ASC Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

ASU 2019-12 also clarifies and amends existing guidance to improve consistency in application of the accounting for franchise taxes, enacted changes in tax laws or rates and transactions that result in a step-up in the tax basis of goodwill.

ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted in any interim period.

We are evaluating the effect of ASU 2019-12 on our consolidated financial statements.

Based upon the analysis performed to date, we do not believe the adoption of ASU 2019-12 will have a material effect on our consolidated financial statements.

ASU 2020-04 — In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)," which provides optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity has elected certain optional expedients and are retained through the end of the hedging relationship.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships

entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity has elected certain optional expedients and are retained through the end of the hedging relationship.

The amendments in this update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination.

If elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant Topic or Industry Subtopic within the Codification that contains the guidance that otherwise would be required to be applied.

The amendments in this update can be adopted anytime beginning March 12, 2020 through December 31, 2022.

If elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant ASC Topic or Industry Subtopic that contains the guidance that otherwise would be required to be applied.

The amendments in this update were effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

We are evaluating the effect of ASU 2020-04 on our consolidated financial statements.

4 unchanged sentences

We accounted for this transaction as a business combination, which generally requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date.

The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of December 31, 2019 and March 31, 2020 , including a reconciliation to the total purchase consideration, were as follows:

The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of December 31, 2019 and June 30, 2020 , including a reconciliation to the total purchase consideration, were as follows:

Provisional Amounts at December 31, 2019

1 unchanged sentence

Provisional Amounts at

March 31, 2020

June 30, 2020

(in thousands)

8 unchanged sentences

Total purchase consideration

As of March 31, 2020 , we considered these amounts to be provisional because we were still in the process of reviewing information to support the valuations of the assets acquired and liabilities assumed.

We made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $ 54.7 million .

The decrease in deferred income tax liabilities for the three months ended March 31, 2020 primarily relates to a refined analysis of the outside bases of partnerships.

The effects of the measurement-period adjustments on our consolidated statement of income for the three months ended March 31, 2020 were not material.

As of March 31, 2020 , provisional goodwill arising from the acquisition of $ 17.3 billion was included in our reportable segments as follows:

As of June 30, 2020 , we considered these amounts to be provisional because we were still in the process of reviewing information to support the valuations of the assets acquired and liabilities assumed.

During the six months ended June 30, 2020 , we made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $ 65.6 million .

The decrease in deferred income tax liabilities for the six months ended June 30, 2020 primarily relates to a refined analysis of the outside bases of partnerships.

The effects of the measurement-period adjustments on our consolidated statements of income for the three and six months ended June 30, 2020 were not material.

As of June 30, 2020 , provisional goodwill arising from the acquisition of $ 17.3 billion was included in our reportable segments as follows:

$ 7.1 billion in the Merchant Solutions segment, $ 7.9 billion in the Issuer Solutions segment and $ 2.3 billion in the Business and Consumer Solutions segment.

1 unchanged sentence

We expect that substantially all of the goodwill from this acquisition will not be deductible for income tax purposes.

The following unaudited pro forma information shows the results of our operations for the three months ended March 31, 2019 as if the Merger had occurred on January 1, 2018.

The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of what would have occurred if the Merger had occurred as of that date.

The following unaudited pro forma information shows the results of our operations for the three and six months ended June 30, 2019 as if the Merger had occurred on January 1, 2018.

The unaudited pro forma information is presented for informational purposes

only and is not necessarily indicative of what would have occurred if the Merger had occurred as of that date.

The unaudited pro forma information is also not intended to be a projection of future results due to the integration of TSYS.

The unaudited pro forma information reflects the effects of applying our accounting policies and certain pro forma adjustments to the combined historical financial information of Global Payments and TSYS.

Three Months Ended

June 30, 2019

Six Months Ended

June 30, 2019

(in thousands)

1 unchanged sentence

Net income attributable to Global Payments

For the three months ended March 31, 2020 , the acquired operations of TSYS contributed $ 1,055.0 million to our consolidated revenues and $ 115.5 million to our consolidated operating income.

At March 31, 2020 , accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $ 48.3 million for employee termination benefits resulting from Merger-related integration activities.

During the three months ended March 31, 2020 , we recognized charges for employee termination benefits of $ 17.6 million , which included $ 2.6 million of share-based compensation expense.

As of March 31, 2020 , the cumulative amount of recognized charges for employee termination benefits resulting from Merger-related integration activities was $ 74.7 million , which included $ 19.9 million of share-based compensation expense.

For the three and six months ended June 30, 2020 , the acquired operations of TSYS contributed $ 997.0 million and $ 2,052.0 million , respectively, to our consolidated revenues and $ 103.8 million and $ 219.3 million , respectively, to our consolidated operating income.

At June 30, 2020 , accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $ 37.7 million for employee termination benefits resulting from Merger-related integration activities.

During the three months ended June 30, 2020 , we recognized charges for employee termination benefits of $ 24.1 million , which included $ 1.7 million of share-based compensation expense.

During the six months ended June 30, 2020 , we recognized charges for employee termination benefits of $ 41.7 million , which included $ 4.2 million of share-based compensation expense.

As of June 30, 2020 , the cumulative amount of recognized charges for employee termination benefits resulting from Merger-related integration activities was $ 98.8 million , which included $ 21.6 million of share-based compensation expense.

These charges are recorded within selling, general and administrative expenses in our consolidated statements of income and included within Corporate expenses for segment reporting purposes.

1 unchanged sentence

NOTE 3 — REVENUES

The following tables present a disaggregation of our revenue from contracts with customers by geography for each of our reportable segments for the three months ended March 31, 2020 and 2019:

Three Months Ended March 31, 2020

The following tables present a disaggregation of our revenue from contracts with customers by geography for each of our reportable segments for the three and six months ended June 30, 2020 and 2019 :

Three Months Ended June 30, 2020

Merchant Solutions

Business and Consumer Solutions

Intersegment Revenue

Intersegment Eliminations

(in thousands)

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

Merchant Solutions

Business and Consumer Solutions

Intersegment Revenue

Intersegment Eliminations

(in thousands)

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three months ended March 31, 2020 and 2019:

March 31, 2020

March 31, 2019

Six Months Ended June 30, 2020

Merchant Solutions

Business and Consumer Solutions

Intersegment Eliminations

(in thousands)

Six Months Ended June 30, 2019

Merchant Solutions

Business and Consumer Solutions

Intersegment Eliminations

(in thousands)

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three and six months ended June 30, 2020 and 2019 :

Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

(in thousands)

Relationship-led

Technology-enabled

Accounting Standards Codification Topic 606, Revenues from Contracts with Customers ("ASC 606") requires that we determine for each customer arrangement whether revenue should be recognized at a point in time or over time.

For the three months ended March 31, 2020 and 2019 , substantially all of our revenues were recognized over time.

Supplemental balance sheet information related to contracts from customers as of March 31, 2020 and December 31, 2019 was as follows:

ASC Topic 606, Revenues from Contracts with Customers ("ASC 606") requires that we determine for each customer arrangement whether revenue should be recognized at a point in time or over time.

For the three and six months ended June 30, 2020 and 2019 , substantially all of our revenues were recognized over time.

Supplemental balance sheet information related to contracts from customers as of June 30, 2020 and December 31, 2019 was as follows:

Balance Sheet Location

March 31, 2020

June 30, 2020

December 31, 2019

8 unchanged sentences

Other noncurrent liabilities

Net contract assets were not material at March 31, 2020 or at December 31, 2019 .

Revenue recognized for the three months ended March 31, 2020 and 2019 from contract liability balances at the beginning of each period was $ 90.8 million and $ 58.5 million , respectively.

Net contract assets were not material at June 30, 2020 or at December 31, 2019 .

Revenues recognized for the three months ended June 30, 2020 and 2019 from contract liability balances at the beginning of each period was $ 86.7 million and $ 52.0 million .

Revenue recognized for the six months ended June 30, 2020 and 2019 from contract liability balances at the beginning of each period was $ 159.9 million and $ 97.1 million .

ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations.

The purpose of this disclosure is to provide additional information about the amounts and expected timing of revenue to be recognized from the remaining performance obligations in our existing contracts.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at March 31, 2020 .

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at June 30, 2020 .

However, as permitted, we have elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria.

3 unchanged sentences

NOTE 4 — GOODWILL AND OTHER INTANGIBLE ASSETS

As of March 31, 2020 and December 31, 2019 , goodwill and other intangible assets consisted of the following:

March 31, 2020

As of June 30, 2020 and December 31, 2019 , goodwill and other intangible assets consisted of the following:

June 30, 2020

December 31, 2019

10 unchanged sentences

Trademarks and trade names

The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the three months ended March 31, 2020 :

The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the six months ended June 30, 2020 :

Merchant Solutions

5 unchanged sentences

Measurement-period adjustments

Balance at March 31, 2020

There were no accumulated impairment losses for goodwill as of March 31, 2020 or December 31, 2019 .

Balance at June 30, 2020

There were no accumulated impairment losses for goodwill as of June 30, 2020 or December 31, 2019 .

NOTE 5 — LONG-TERM DEBT AND LINES OF CREDIT

As of March 31, 2020 and December 31, 2019 , long-term debt consisted of the following:

March 31, 2020

As of June 30, 2020 and December 31, 2019 , long-term debt consisted of the following:

June 30, 2020

December 31, 2019

7 unchanged sentences

3.200% senior notes due August 15, 2029

2.900% senior notes due May 15, 2030

4.150% senior notes due August 15, 2049

6 unchanged sentences

Long-term debt, excluding current portion

The carrying amounts of our senior notes and term loans are presented net of unamortized discount and unamortized debt issuance costs, as applicable.

At March 31, 2020 , unamortized discount on senior notes was $ 5.8 million , and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $ 44.9 million .

The carrying amounts of our senior notes and term loans in the table above are presented net of unamortized discount and unamortized debt issuance costs, as applicable.

At June 30, 2020 , unamortized discount on senior notes was $ 8.9 million , and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $ 51.4 million .

Unamortized debt issuance costs on our senior notes and unsecured term loans at December 31, 2019 were $ 46.6 million .

The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets.

At March 31, 2020 , unamortized debt issuance costs on the unsecured revolving credit fa cility were $ 16.7 million , an d, at December 31, 2019 , unamortized debt issuance costs on the unsecured revolving credit facility were $ 17.6 million .

At June 30, 2020 , unamortized debt issuance costs on the unsecured revolving credit facility were $ 15.3 million , and, at December 31, 2019 , unamortized debt issuance costs on the unsecured revolving credit facility were $ 17.6 million .

The amortization of debt discounts and debt issuance costs is recognized as an increase to interest expense over the terms of the respective debt instruments.

Amortization of discounts and debt issuance costs for the three months ended March 31, 2020 and 2019 was $ 2.8 million and $ 3.1 million , respectively.

At March 31, 2020 , maturities of long-term debt (excluding finance lease liabilities) were as follows by year (in thousands):

Amortization of discounts and debt issuance costs for the three and six months ended June 30, 2020 was $ 3.0 million and $ 5.9 million , respectively.

Amortization of discounts and debt issuance costs for the three and six months ended June 30, 2019 was $ 3.1 million and $ 6.1 million , respectively.

At June 30, 2020 , maturities of long-term debt (excluding finance lease liabilities) were as follows by year (in thousands):

Year ending December 31,

1 unchanged sentence

2026 and thereafter

Senior Unsecured Notes

We have $ 7.1 billion in aggregate principal amount of senior unsecured notes, as presented in the table above.

Interest on the senior notes is payable semi-annually upon various dates.

Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture.

The difference between the acquisition fair value and face value of senior notes assumed in the Merger is recognized over the terms of the respective notes as a reduction of interest expense.

The amortization of this fair value adjustment was $ 9.0 million and $ 18.1 million , respectively, for the three and six months ended June 30, 2020 .

On May 15, 2020, we issued $ 1.0 billion aggregate principal amount of 2.900 % senior unsecured notes due May 2030 and received proceeds of $ 996.7 million , net of discounts.

We incurred debt issuance costs of approximately $ 8.4 million , including underwriting fees, fees for professional services and registration fees, all of which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet at June 30, 2020 .

Interest on the notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2020 .

The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness.

We used the net proceeds from the offering to repay a portion of the outstanding indebtedness on our revolving credit facility and for general corporate purposes.

As of June 30, 2020 , our senior notes had a total carrying amount of $ 7.1 billion and an estimated fair value of $ 7.7 billion .

The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy.

The fair value of other long-term debt approximated its carrying amount at June 30, 2020 .

Senior Unsecured Credit Facilities

5 unchanged sentences

Borrowings in U.S.

dollars and certain other LIBOR quoted currencies will bear interest, at our option, at a rate equal to either (1) the rate (adjusted for any statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits in the London interbank market, (2) a floating rate of interest set forth on the applicable LIBOR screen page designated by Bank of America or (3) the highest of (a) the federal funds effective rate plus 0.5 % , (b) the rate of interest as publicly announced by Bank of America as its "prime rate" or (c) LIBOR plus 1.0 % , in each case, plus an applicable margin.

As of March 31, 2020 , the interest rates on the term loan facility and the revolving credit facility were 2.36 % and 2.02 % , respectively.

or (3) the highest of (a) the federal funds effective rate plus 0.5 % , (b) the rate of interest as publicly announced by Bank of America as its "prime rate" or (c) LIBOR plus 1.0 % , in each case, plus an applicable margin.

As of June 30, 2020 , the interest rate on the term loan facility was 1.55 % .

In addition, we are required to pay a quarterly commitment fee with respect to the unused portion of the revolving credit facility at an applicable rate per annum ranging from 0.125 % to 0.300 % depending on our credit rating.

3 unchanged sentences

Outstanding letters of credit under the revolving credit facility reduce the amount of borrowings available to us.

The total available commitments under the revolving credit facility at March 31, 2020 were $ 1.6 billion .

Senior Unsecured Notes

We have $ 3.0 billion in aggregate principal amount of senior unsecured notes, consisting of the following:

(i) $ 1.0 billion aggregate principal amount of 2.650 % senior notes due 2025;

(ii) $ 1.25 billion aggregate principal amount of 3.200 % senior notes due 2029;

and (iii) $ 750 million aggregate principal amount of 4.150 % senior notes due 2049.

Interest on the senior notes is payable semi-annually in arrears on each February 15 and August 15.

Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture.

We have an additional $ 3.0 billion in aggregate principal amount of senior unsecured notes consisting of the following:

(i) $ 750 million aggregate principal amount of 3.800 % senior notes due 2021;

(ii) $ 550 million aggregate principal amount of 3.750 % senior notes due 2023;

(iii) $ 550 million aggregate principal amount of 4.000 % senior notes due 2023;

(iv) $ 750 million aggregate principal amount of 4.800 % senior notes due 2026;

and (v) $ 450 million aggregate principal amount of 4.450 % senior notes due 2028.

For the 3.800 % senior notes due 2021 and the 4.800 % senior notes due 2026, interest is payable semi-annually each April 1 and October 1.

For the 3.750 % senior notes due 2023, the 4.000 % senior notes due 2023 and the 4.450 % senior notes due 2028, interest is payable semi-annually each June 1 and December 1.

The difference between the fair value and face value of these senior notes at the date the Merger was consummated is recognized over the terms of the respective notes as a reduction of interest expense.

The amortization of this fair value adjustment was $ 9.0 million for the three months ended March 31, 2020 .

As of March 31, 2020 , our senior notes had a total carrying amount of $ 6.2 billion and an estimated fair value of $ 6.2 billion .

The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy.

The fair value of other long-term debt approximated its carrying amount at March 31, 2020 .

The amounts available to borrow under the revolving credit facility are also determined by our financial leverage covenant.

As of June 30, 2020 , the total available commitments under the revolving credit facility were $ 2.3 billion and there were no outstanding borrowings.

Compliance with Covenants

The senior unsecured term loan and revolving credit facility contain customary conditions to funding, affirmative covenants, negative covenants, financial covenants and events of default.

As of March 31, 2020 , financial covenants under the term loan facility required a leverage ratio of 3.50 to 1.00 and an interest coverage ratio of 3.00 to 1.00.

We were in compliance with all applicable covenants as of March 31, 2020 .

As of June 30, 2020 , financial covenants under the term loan facility required a leverage ratio of 3.50 to 1.00 and an interest coverage ratio of 3.00 to 1.00.

We were in compliance with all applicable

covenants as of June 30, 2020 .

Settlement Lines of Credit

3 unchanged sentences

Accordingly, the amount of the outstanding lines of credit may exceed the stated credit limit.

As of March 31, 2020 and December 31, 2019 , a total of $ 58.0 million and $ 74.5 million , respectively, of cash on deposit was used to determine the available credit.

As of March 31, 2020 and December 31, 2019 we had $ 375.2 million and $ 463.2 million , respectively, outstanding under these lines of credit with additional capacity to fund settlement of $ 1,092.1 million as of March 31, 2020 .

During the three months ended March 31, 2020 , the maximum and average outstanding balances under these lines of credit were $ 679.0 million and $ 376.4 million , respectively.

The weighted-average interest rate on these borrowings was 1.99 % and 3.16 % at March 31, 2020 and December 31, 2019 , respectively.

As of June 30, 2020 and December 31, 2019 , a total of $ 62.1 million and $ 74.5 million , respectively, of cash on deposit was used to determine the available credit.

As of June 30, 2020 and December 31, 2019 , we had $ 439.5 million and $ 463.2 million , respectively, outstanding under these lines of credit with additional capacity to fund settlement of $ 1,124.6 million as of June 30, 2020 .

During the six months ended June 30, 2020 , the maximum and average outstanding balances under these lines of credit were $ 508.5 million and $ 282.9 million , respectively.

The weighted-average interest rate on these borrowings was 2.11 % and 3.16 % at June 30, 2020 and December 31, 2019 , respectively.

Derivative Agreements

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Balance Sheet Location

Weighted-Average Fixed Rate of Interest at March 31, 2020

Weighted-Average Fixed Rate of Interest at June 30, 2020

Range of Maturity Dates at

March 31, 2020

June 30, 2020

December 31, 2019

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Prepaid expenses and other current assets

Interest rate swaps (Notional of $550 million at March 31, 2020)

Interest rate swaps (Notional of $550 million at June 30, 2020)

Accounts payable and accrued liabilities

July 31, 2020 - March 31, 2021

Interest rate swaps (Notional of $1.25 billion at March 31, 2020 and $1.55 billion at December 31, 2019)

Interest rate swaps (Notional of $1.25 billion at June 30, 2020 and $1.55 billion at December 31, 2019)

Other noncurrent liabilities

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NA = not applicable.

The table below presents the effects of our interest rate swaps on the consolidated statements of income and comprehensive income (loss) for the three months ended March 31, 2020 and 2019 :

The table below presents the effects of our interest rate swaps on the consolidated statements of income and comprehensive income for the three and six months ended June 30, 2020 and 2019 :

Three Months Ended

March 31, 2020

March 31, 2019

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

(in thousands)

Net unrealized losses recognized in other comprehensive loss

Net unrealized losses (gains) reclassified out of other comprehensive loss to interest expense

As of March 31, 2020 , the amount of net unrealized losses in accumulated other comprehensive loss related to our interest rate swaps that is expected to be reclassified into interest expense during the next 12 months was $ 41.4 million .

Net unrealized losses recognized in other comprehensive income (loss)

Net unrealized losses (gains) reclassified out of other comprehensive income (loss) to interest expense

As of June 30, 2020 , the amount of net unrealized losses in accumulated other comprehensive loss related to our interest rate swaps that is expected to be reclassified into interest expense during the next 12 months was $ 42.4 million .

Interest Expense

Interest expense was $ 81.1 million and $ 55.4 million for the three months ended March 31, 2020 and 2019 , respectively.

Interest expense was $ 81.1 million and $ 65.5 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 162.2 million and $ 123.9 million for the six months ended June 30, 2020 and 2019 , respectively.

NOTE 6— INCOME TAX

Our effective income tax rates for the three months ended March 31, 2020 and 2019 were 10.1 % and 16.8 % , respectively.

Our effective income tax rate for the three months ended March 31, 2020 differed from the U.S.

Our effective income tax rates for the three and six months ended June 30, 2020 were 3.0 % and 9.0 % , respectively.

Our effective income tax rate for the three and six months ended June 30, 2020 differed from the U.S.

statutory rate primarily as a result of tax credits, excess tax benefits of share-based awards that are recognized upon vesting or settlement and the foreign-derived intangible income deduction.

For the three months ended March 31, 2019, our effective income tax rate differed from the U.S.

statutory rate primarily due to the excess tax benefits of share-based awards that are recognized upon vesting or settlement.

Our effective income tax rates for the three and six months ended June 30, 2019 were 19.9 % and 18.4 % , respectively.

We conduct business globally and file income tax returns in the U.S.

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We are no longer subject to state income tax examinations for years ended on or before May 31, 2007, U.S.

federal income tax examinations for years ended on or before December 31, 2016 and U.K.

federal income tax examinations for years ended on or before May 31, 2016 and U.K.

federal income tax examinations for years ended on or before May 31, 2016.

1 unchanged sentence

We repurchase our common stock mainly through open market repurchase plans and, at times, through accelerated share repurchase programs.

During the three months ended March 31, 2020 , we repurchased and retired 2,094,731 shares of our common stock at a cost, including commissions, of $ 404.0 million , or $ 192.85 per share.

During the three months ended March 31, 2019 , we repurchased and retired 1,295,282 shares of our common stock at a cost, including commissions, of $ 158.0 million , or $ 121.98 per share.

During the three months ended June 30, 2020 , there were no repurchases.

During the three months ended June 30, 2019 , we repurchased and retired 513,116 shares of our common stock at a cost, including commissions, of $ 72.0 million , or $ 140.32 per share.

During the six months ended June 30, 2020 and 2019 , we repurchased and retired 2,094,731 and 1,808,398 shares of our common stock at a cost, including commissions, of $ 404.0 million and $ 230.0 million , or $ 192.85 per share and $ 127.18 per share, respectively.

On February 26, 2020 , our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to $ 1 billion .

As of March 31, 2020 , the amount that may yet be purchased under our share repurchase program was $ 880.0 million .

On April 29, 2020, our board of directors declared a dividend of $ 0.195 per share payable on June 26, 2020 to common shareholders of record as of June 12, 2020.

As of June 30, 2020 , the amount that may yet be purchased under our share repurchase program was $ 880.0 million .

On July 29, 2020, our board of directors declared a dividend of $ 0.195 per share payable on September 24, 2020 to common shareholders of record as of September 10, 2020.

NOTE 8— SHARE-BASED AWARDS AND STOCK OPTIONS

1 unchanged sentence

Three Months Ended

March 31, 2020

March 31, 2019

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

(in thousands)

2 unchanged sentences

Share-Based Awards

The following table summarizes the changes in unvested restricted stock and performance awards for the three months ended March 31, 2020 :

The following table summarizes the changes in unvested restricted stock and performance awards for the six months ended June 30, 2020 :

Weighted-Average

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Unvested at December 31, 2019

Unvested at March 31, 2020

The total fair value of restricted stock and performance awards vested during the three months ended March 31, 2020 and March 31, 2019 was $ 64.6 million and $ 20.8 million , respectively.

For restricted stock and performance awards, we recognized compensation expense of $ 25.2 million and $ 10.1 million during the three months ended March 31, 2020 and March 31, 2019 , respectively.

As of March 31, 2020 , there was $ 216.8 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 2.4 years.

Unvested at June 30, 2020

The total fair value of restricted stock and performance awards vested during the six months ended June 30, 2020 and June 30, 2019 was $ 76.0 million and $ 24.6 million , respectively.

For restricted stock and performance awards, we recognized compensation expense of $ 30.8 million and $ 14.8 million during the three months ended June 30, 2020 and 2019 , respectively, and $ 56.0 million and $ 24.9 million during the six months ended June 30, 2020 and 2019 , respectively.

As of June 30, 2020 , there were $ 184.2 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 2.3 years.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2020 :

The following table summarizes stock option activity for the six months ended June 30, 2020 :

Weighted-Average Exercise Price

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Outstanding at December 31, 2019

Outstanding at March 31, 2020

Options vested and exercisable at March 31, 2020

We recognized compensation expense for stock options of $ 1.9 million and $ 0.7 million during the three months ended March 31, 2020 and 2019 , respectively.

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2020 and 2019 was $ 53.6 million and $ 15.9 million , respectively.

As of March 31, 2020 , we had $ 14.7 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.2 years.

The weighted-average grant-date fair value of stock options granted, including Replacement Awards, during the three months ended March 31, 2020 and 2019 was $ 54.85 and $ 39.60 , respectively.

Outstanding at June 30, 2020

Options vested and exercisable at June 30, 2020

We recognized compensation expense for stock options of $ 2.2 million and $ 0.9 million during the three months ended June 30, 2020 and 2019 , respectively, and $ 4.1 million and $ 1.6 million for the six months ended June 30, 2020 and 2019 , respectively.

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2020 and 2019 was $ 66.5 million and $ 18.9 million , respectively.

As of June 30, 2020 , we had $ 12.6 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.0 years.

The weighted-average grant-date fair value of stock options granted during the six months ended June 30, 2020 and 2019 was $ 54.85 and $ 39.60 , respectively.

Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:

Three Months Ended

March 31, 2020

March 31, 2019

Six Months Ended

June 30, 2020

June 30, 2019

Risk-free interest rate

12 unchanged sentences

All stock options with an exercise price lower than the average market share price of our common stock for the period are assumed to have a dilutive effect on EPS.

The dilutive share base for the three months ended March 31, 2020 excludes approximately

The dilutive share base for the three and six months ended June 30, 2020 excluded approximately

124,888 shares, related to stock options that would have an antidilutive effect on the computation of diluted earnings per share.

There were no such shares for the three months ended March 31, 2019 .

The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three months ended March 31, 2020 and 2019 :

There were no such shares for the three and six months ended June 30, 2019 .

The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three and six months ended June 30, 2020 and 2019 :

Three Months Ended

March 31, 2020

March 31, 2019

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

(in thousands)

3 unchanged sentences

NOTE 10— ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in the accumulated balances for each component of other comprehensive income (loss) were as follows for the three months ended March 31, 2020 and 2019 :

The changes in the accumulated balances for each component of other comprehensive income (loss) were as follows for the three and six months ended June 30, 2020 and 2019 :

Foreign Currency Translation Gains (Losses)

2 unchanged sentences

(in thousands)

Balance at December 31, 2019

Other comprehensive income (loss)

Balance at March 31, 2020

Other comprehensive income

Balance at June 30, 2020

Balance at March 31, 2019

Other comprehensive income (loss)

Balance at June 30, 2019

Other comprehensive income attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 5.4 million and $ 3.9 million for the three months ended June 30, 2020 and 2019 , respectively.

Foreign Currency Translation Gains (Losses)

Unrealized Gains (Losses) on Hedging Activities

Accumulated Other Comprehensive Loss

(in thousands)

Balance at December 31, 2019

Other comprehensive (loss) income

Balance at June 30, 2020

Balance at December 31, 2018

Other comprehensive income (loss)

Balance at March 31, 2019

Other comprehensive loss attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 6.7 million and $ 4.6 million for the three months ended March 31, 2020 and 2019 , respectively.

Balance at June 30, 2019

Other comprehensive loss attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 1.3 million and $ 0.6 million for the six months ended June 30, 2020 and 2019 , respectively.

NOTE 11 — SEGMENT INFORMATION

7 unchanged sentences

The accounting policies of the reportable operating segments are the same as those described in our Annual Report on Form 10-K for the year ended December 31, 2019 and our summary of significant accounting policies in "Note 1 - Basis of Presentation and Summary of Significant Accounting Policies."

In connection with an organizational realignment implemented during the fourth quarter of 2019, the presentation of segment information for the three months ended March 31, 2019 has been recast to align with the segment presentation for the three months ended March 31, 2020 .

Information on segments and reconciliations to consolidated revenues, consolidated operating income and consolidated depreciation and amortization was as follows for the three months ended March 31, 2020 and 2019 :

In connection with an organizational realignment implemented during the fourth quarter of 2019, the presentation of segment information for the three and six months ended June 30, 2019 has been recast to align with the current segment presentation.

Three Months Ended

March 31, 2020

March 31, 2019

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

(in thousands)

Revenues (1) :

2 unchanged sentences

Business and Consumer Solutions

Segment revenues

Intersegment eliminations

12 unchanged sentences

For further discussion of our acquisitions, see "Note 2 — Acquisitions."

(2) During the three months ended March 31, 2020 , operating income for our Merchant Solutions segment reflected the effect of acquisition and integration expenses of $ 2.2 million .

Operating loss for Corporate included acquisition and integration expenses of $ 69.7 million and $ 5.3 million , during the three months ended March 31, 2020 and 2019, respectively.

(2) During the three months ended June 30, 2020 and 2019 , operating income for our Merchant Solutions segment reflected the effect of acquisition and integration expenses of $ 4.4 million and $ 3.7 million , respectively.

Operating loss for Corporate included acquisition and integration expenses of $ 80.7 million and $ 10.5 million during the three months ended June 30, 2020 and 2019 , respectively.

During the six months ended June 30, 2020 and 2019, operating income for our Merchant

Solutions segment reflected the effect of acquisition and integration expenses of $ 6.6 million and $ 8.4 million , respectively.

Operating loss for Corporate included acquisition and integration expense of $ 150.4 million and $ 11.1 million during the six months ended June 30, 2020 and 2019 , respectively.

NOTE 12 — COMMITMENTS AND CONTINGENCIES

Purchase Obligations

During the three months ended March 31, 2020 , our purchase obligations increased as a result of our entry into an arrangement to acquire software and related services for $ 293.8 million .

During the six months ended June 30, 2020 , our purchase obligations increased as a result of our entry into an arrangement to acquire software and related services for $ 293.8 million .

We financed $ 97.6 million of this amount utilizing a two -year vendor financing arrangement.

As of March 31, 2020 , the estimated remaining purchase commitments that are due for this acquisition are $ 47.6 million during the remainder of 2020, $ 64.9 million during 2021, $ 66.9 million during 2022 and $ 16.8 million during 2023.

As of June 30, 2020 , the estimated remaining purchase commitments that are due for this purchase were $ 29.7 million during the remainder of 2020, $ 64.9 million during 2021, $ 66.9 million during 2022 and $ 16.8 million during 2023.

Legal Matters

3 unchanged sentences

We believe the jury verdict is in error and Frontline’s case is completely without merit, and we are appealing the decision to the Georgia Court of Appeals.

While it is reasonably possible that we will incur some loss between zero and the judgment amount plus interest, we have determined that it is not probable that Global Payments has incurred a loss under the applicable accounting standard (Accounting Standards Codification Topic 450, Contingencies ) as of March 31, 2020 .

As a result, we have not recorded a liability on the consolidated balance sheet with respect to this litigation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements