What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-10-29 compared with 2020-08-03 · 302 added, 254 removed, 439 unchanged (56% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, 2020

June 30, 2019

September 30, 2020 September 30, 2019

Revenues $ 1,917,815 $ 1,105,941

Operating expenses:

Cost of service

900,921 427,720

Selling, general and administrative

726,475 504,184

1,627,396 931,904

Operating income 290,419 174,037

1 unchanged sentence

Interest and other expense ( 82,976 ) ( 96,161 )

( 52,993 ) ( 84,929 )

Income before income taxes and equity in income of equity method investments 237,426 89,108

Income tax expense

Income tax (expense) benefit ( 42,834 ) 16,623

Income before equity in income of equity method investments 194,592 105,731

Equity in income of equity method investments, net of tax 35,638 —

Net income 230,230 105,731

Net income attributable to noncontrolling interests, net of tax ( 9,259 ) ( 10,687 )

7 unchanged sentences

(in thousands, except per share data)

Six Months Ended

June 30, 2020

June 30, 2019

Nine Months Ended

September 30, 2020 September 30, 2019

Revenues $ 5,493,365 $ 2,924,131

Operating expenses:

Cost of service

2,728,532 1,035,225

Selling, general and administrative

2,122,862 1,293,651

4,851,394 2,328,876

Operating income 641,971 595,255

1 unchanged sentence

Interest and other expense ( 258,475 ) ( 220,858 )

( 223,198 ) ( 200,516 )

Income before income taxes and equity in income of equity method investments 418,773 394,739

2 unchanged sentences

Equity in income of equity method investments, net of tax 60,682 —

Net income 420,282 354,974

Net income attributable to noncontrolling interests, net of tax ( 18,406 ) ( 27,132 )

8 unchanged sentences

Three Months Ended

June 30, 2020

June 30, 2019

September 30, 2020 September 30, 2019

Net income $ 230,230 $ 105,731

Other comprehensive income (loss):

1 unchanged sentence

Income tax benefit related to foreign currency translation adjustments — 144

Net unrealized losses on hedging activities

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

Net unrealized gains (losses) on hedging activities 194 ( 40,265 )

Reclassification of net unrealized losses on hedging activities to interest expense 11,133 1,193

Income tax (expense) benefit related to hedging activities

( 2,612 ) 9,289

Other, net of tax ( 3,531 ) 37

3 unchanged sentences

Comprehensive income attributable to Global Payments $ 328,213 $ 6,883

Six Months Ended

June 30, 2020

June 30, 2019

Nine Months Ended

September 30, 2020 September 30, 2019

Net income $ 420,282 $ 354,974

Other comprehensive income (loss):

13 unchanged sentences

(in thousands, except share data)

June 30, 2020

December 31, 2019

September 30, 2020 December 31, 2019

Current assets:

4 unchanged sentences

Total current assets 4,968,650 4,366,448

Goodwill 23,745,340 23,759,740

Other intangible assets, net 12,251,680 13,154,655

2 unchanged sentences

Other noncurrent assets 2,051,112 1,810,225

Total assets $ 44,549,782 $ 44,480,162

LIABILITIES AND EQUITY

13 unchanged sentences

Common stock, no par value;

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

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

299,286,847 issued and outstanding at September 30, 2020 and 300,225,590 issued and outstanding at December 31, 2019

Paid-in capital 25,620,599 25,833,307

3 unchanged sentences

Noncontrolling interests 218,185 199,242

Total equity 27,963,842 28,054,989

Total liabilities and equity $ 44,549,782 $ 44,480,162

3 unchanged sentences

(in thousands)

Six Months Ended

June 30, 2020

June 30, 2019

Nine Months Ended

September 30, 2020 September 30, 2019

Cash flows from operating activities:

Net income $ 420,282 $ 354,974

Adjustments to reconcile net income to net cash provided by operating activities:

6 unchanged sentences

Deferred income taxes ( 118,466 ) ( 42,990 )

Equity in income of equity investments, net of tax ( 60,682 ) —

Other, net ( 13,584 ) ( 22,469 )

Changes in operating assets and liabilities, net of the effects of business combinations:

7 unchanged sentences

Capital expenditures ( 329,413 ) ( 201,017 )

Other, net 11,575 29,112

Net cash used in investing activities ( 395,018 ) ( 506,288 )

Cash flows from financing activities:

Net (repayments of) borrowings from settlement lines of credit

Net repayments of settlement lines of credit ( 31,069 ) ( 144,473 )

Proceeds from long-term debt 1,868,199 6,704,838

5 unchanged sentences

Distributions to noncontrolling interests ( 6,955 ) ( 31,632 )

Preacquisition dividends paid to former TSYS shareholders — ( 23,240 )

Dividends paid ( 175,025 ) ( 4,727 )

Net cash used in financing activities

Net cash (used in) provided by financing activities ( 594,635 ) 109,876

Effect of exchange rate changes on cash ( 12,558 ) ( 36,239 )

Increase (decrease) in cash and cash equivalents

Increase in cash and cash equivalents 542,549 916,738

Cash and cash equivalents, beginning of the period 1,678,273 1,210,878

7 unchanged sentences

Retained Earnings

Accumulated Other Comprehensive Loss

Total Global Payments Shareholders’ Equity

Noncontrolling Interests

Balance at March 31, 2020

Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity

Balance at June 30, 2020 299,244 $ 25,570,582 $ 2,314,423 $ ( 459,146 ) $ 27,425,859 $ 207,130 $ 27,632,989

Net income 220,971 220,971 9,259 230,230

Other comprehensive income 107,242 107,242 8,751 115,993

2 unchanged sentences

Share-based compensation expense 42,276 42,276 42,276

Distributions to noncontrolling interest — ( 6,955 ) ( 6,955 )

Cash dividends declared ($ 0.195 per share)

Balance at June 30, 2020

( 58,432 ) ( 58,432 ) ( 58,432 )

Balance at September 30, 2020 299,287 $ 25,620,599 $ 2,476,962 $ ( 351,904 ) $ 27,745,657 $ 218,185 $ 27,963,842

Number of Shares

1 unchanged sentence

Retained Earnings

Accumulated Other Comprehensive Loss

Total Global Payments Shareholders’ Equity

Noncontrolling Interests

Balance at March 31, 2019

Other comprehensive (loss) income

Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity

Noncontrolling Interests Total Equity

Balance at June 30, 2019 156,675 $ 2,126,065 $ 2,204,445 $ ( 339,906 ) $ 3,990,604 $ 184,512 $ 4,175,116

Net income 95,044 95,044 10,687 105,731

Other comprehensive loss ( 88,161 ) ( 88,161 ) ( 8,720 ) ( 96,881 )

Stock issued under share-based compensation plans 141 9,057 9,057 9,057

1 unchanged sentence

Share-based compensation expense 27,877 27,877 27,877

Issuance of common stock in connection with a business combination 143,909 23,771,389 23,771,389 23,771,389

Distributions to noncontrolling interest — ( 5,395 ) ( 5,395 )

Repurchases of common stock

Cash dividends declared ($ 0.01 per share)

Balance at June 30, 2019

( 1,592 ) ( 1,592 ) ( 1,592 )

Balance at September 30, 2019 300,545 $ 25,904,804 $ 2,297,897 $ ( 428,067 ) $ 27,774,634 $ 181,084 $ 27,955,718

See Notes to Unaudited Consolidated Financial Statements.

5 unchanged sentences

Retained Earnings

Accumulated Other Comprehensive Loss

Total Global Payments Shareholders’ Equity

Noncontrolling Interests

Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity

Balance at December 31, 2019 300,226 $ 25,833,307 $ 2,333,011 $ ( 310,571 ) $ 27,855,747 $ 199,242 $ 28,054,989

Cumulative effect of adoption of new accounting standard ( 5,379 ) ( 5,379 ) ( 5,379 )

Other comprehensive loss

Net income 401,876 401,876 18,406 420,282

Other comprehensive (loss) income ( 41,333 ) ( 41,333 ) 7,492 ( 33,841 )

Stock issued under share-based compensation plans 1,495 51,055 51,055 51,055

1 unchanged sentence

Share-based compensation expense 105,081 105,081 105,081

Distributions to noncontrolling interest — ( 6,955 ) ( 6,955 )

Repurchase of common stock ( 2,095 ) ( 326,441 ) ( 77,521 ) ( 403,962 ) ( 403,962 )

Dividends paid ($ 0.585 per share)

Balance at June 30, 2020

( 175,025 ) ( 175,025 ) ( 175,025 )

Balance at September 30, 2020 299,287 $ 25,620,599 $ 2,476,962 $ ( 351,904 ) $ 27,745,657 $ 218,185 $ 27,963,842

Number of Shares

1 unchanged sentence

Retained Earnings

Accumulated Other Comprehensive Loss

Total Global Payments Shareholders’ Equity

Noncontrolling Interests

Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity

Noncontrolling Interests Total Equity

Balance at December 31, 2018 157,962 $ 2,235,167 $ 2,066,415 $ ( 310,175 ) $ 3,991,407 $ 194,936 $ 4,186,343

Net income 327,842 327,842 27,132 354,974

Other comprehensive loss ( 117,892 ) ( 117,892 ) ( 9,352 ) ( 127,244 )

2 unchanged sentences

Share-based compensation expense 55,791 55,791 55,791

Issuance of common stock in connection with a business combination 143,909 23,771,389 23,771,389 23,771,389

Distributions to noncontrolling interest — ( 31,632 ) ( 31,632 )

1 unchanged sentence

Dividends paid ($ 0.03 per share)

Balance at June 30, 2019

( 4,727 ) ( 4,727 ) ( 4,727 )

Balance at September 30, 2019 300,545 $ 25,904,804 $ 2,297,897 $ ( 428,067 ) $ 27,774,634 $ 181,084 $ 27,955,718

See Notes to Unaudited Consolidated Financial Statements.

15 unchanged sentences

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 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 pandemic continues to cause major disruptions to businesses and markets worldwide as the virus spreads or has a resurgence in certain jurisdictions.

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.

2 unchanged sentences

Actual results could differ materially from those estimates.

In particular, the magnitude, duration and effects of the COVID-19 pandemic are difficult to predict at this time, and the ultimate effect could result in additional charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill and other losses.

In particular, the future magnitude, duration and effects of the COVID-19 pandemic are difficult to predict at this time, and the ultimate effect could result in additional charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill and other losses.

These unaudited consolidated financial statements reflect the financial statement effects of COVID-19 based upon management’s estimates and assumptions utilizing the most currently available information.

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

As of September 30, 2020, the total allowance for credit losses was approximately $ 36.9 million.

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

14 unchanged sentences

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 which 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.

7 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 June 30, 2020 , including a reconciliation to the total purchase consideration, were as follows:

Provisional Amounts at December 31, 2019

Measurement-Period Adjustments

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

Provisional Amounts at

June 30, 2020

December 31, 2019 Measurement-Period Adjustments Final Amounts at

September 30, 2020

(in thousands)

3 unchanged sentences

Property and equipment 644,084 ( 978 ) 643,106

Other assets 1,474,825 ( 2,969 ) 1,471,856

Accounts payable and accrued liabilities ( 614,060 ) ( 11,899 ) ( 625,959 )

Debt ( 3,295,342 ) 4,787 ( 3,290,555 )

Deferred income tax liabilities ( 2,687,849 ) 52,598 ( 2,635,251 )

1 unchanged sentence

Total identifiable net assets 7,076,100 39,684 7,115,784

Goodwill 17,398,853 ( 39,684 ) 17,359,169

Total purchase consideration $ 24,474,953 $ — $ 24,474,953

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.

During the nine months ended September 30, 2020, we made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $ 39.7 million.

The decrease in deferred income tax liabilities for the nine months ended September 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 nine months ended September 30, 2020 were not material.

As of September 30, 2020, goodwill arising from the acquisition of $ 17.4 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 $ 2.4 billion in the

Business and Consumer Solutions segment.

Goodwill was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining the acquired business into our existing business.

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 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.

Substantially all of the goodwill from this acquisition is not deductible for income tax purposes.

The following unaudited pro forma information shows the results of our operations for the three and nine months ended September 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.

1 unchanged sentence

Three Months Ended

June 30, 2019

Six Months Ended

June 30, 2019

September 30, 2019 Nine Months Ended

September 30, 2019

Actual Pro Forma Actual Pro Forma

(in thousands)

1 unchanged sentence

Net income attributable to Global Payments $ 95,044 $ 219,010 $ 327,842 $ 614,317

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.

For the three and nine months ended September 30, 2020, the acquired operations of TSYS contributed $ 1,067.2 million and $ 3,119.2 million, respectively, to our consolidated revenues and $ 165.8 million and $ 385.1 million, respectively, to our consolidated operating income.

At September 30, 2020, accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $ 26.3 million for employee termination benefits resulting from Merger-related integration activities.

During the three months ended September 30, 2020, we recognized charges for employee termination benefits of $ 8.1 million, which included $ 1.9 million of share-based compensation expense.

During the nine months ended September 30, 2020, we recognized charges for employee termination benefits of $ 49.8 million, which included $ 6.1 million of share-based compensation expense.

As of September 30, 2020, the cumulative amount of recognized charges for employee termination benefits resulting from Merger-related integration activities was $ 106.9 million, which included $ 23.4 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.

New obligations may arise as Merger-related integration activities continue in 2020.

New obligations may arise and related expenses may be incurred as Merger-related integration activities continue over the next 12 months.

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 and six months ended June 30, 2020 and 2019 :

Three Months Ended June 30, 2020

Merchant Solutions

Business and Consumer Solutions

Intersegment Eliminations

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

Three months ended September 30, 2020

Solutions Issuer

Solutions Business and

Solutions Intersegment

Eliminations Total

(in thousands)

Three Months Ended June 30, 2019

Merchant Solutions

Business and Consumer Solutions

Intersegment Eliminations

Americas $ 1,039,039 $ 370,938 $ 204,106 $ ( 15,097 ) $ 1,598,986

Europe 154,262 113,907 — — 268,169

Asia Pacific 50,660 2,564 — ( 2,564 ) 50,660

$ 1,243,961 $ 487,409 $ 204,106 $ ( 17,661 ) $ 1,917,815

Three months ended September 30, 2019

Solutions Issuer

Solutions Business and

Solutions Intersegment

Eliminations Total

(in thousands)

Six Months Ended June 30, 2020

Merchant Solutions

Business and Consumer Solutions

Intersegment Eliminations

Americas $ 786,659 $ 55,091 $ 27,896 $ ( 2,310 ) $ 867,336

Europe 159,592 20,321 — — 179,913

Asia Pacific 58,692 216 — ( 216 ) 58,692

$ 1,004,943 $ 75,628 $ 27,896 $ ( 2,526 ) $ 1,105,941

Nine Months Ended September 30, 2020

Solutions Issuer

Solutions Business and

Solutions Intersegment

Eliminations Total

(in thousands)

Six Months Ended June 30, 2019

Merchant Solutions

Business and Consumer Solutions

Intersegment Eliminations

Americas $ 2,926,472 $ 1,127,832 $ 624,774 $ ( 47,558 ) $ 4,631,520

Europe 392,721 327,532 — — 720,253

Asia Pacific 141,592 5,832 — ( 5,832 ) 141,592

$ 3,460,785 $ 1,461,196 $ 624,774 $ ( 53,390 ) $ 5,493,365

Nine Months Ended September 30, 2019

Solutions Issuer

Solutions Business and

Solutions Intersegment

Eliminations Total

(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

Americas $ 2,181,000 $ 55,092 $ 27,896 $ ( 2,311 ) $ 2,261,677

Europe 452,317 30,814 — — 483,131

Asia Pacific 179,323 216 — ( 216 ) 179,323

$ 2,812,640 $ 86,122 $ 27,896 $ ( 2,527 ) $ 2,924,131

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

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

(in thousands)

1 unchanged sentence

Technology-enabled 534,212 466,831 1,526,520 1,313,247

$ 1,243,961 $ 1,004,943 $ 3,460,785 $ 2,812,640

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

June 30, 2020

December 31, 2019

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

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

Balance Sheet Location September 30, 2020 December 31, 2019

(in thousands)

3 unchanged sentences

Other noncurrent assets $ 72,114 $ 38,150

Contract liabilities, net (current)

Accounts payable and accrued liabilities

Contract liabilities, net (noncurrent)

Other noncurrent liabilities

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 .

Contract liabilities, net (current) Accounts payable and accrued liabilities $ 206,299 $ 193,405

Contract liabilities, net (noncurrent) Other noncurrent liabilities $ 43,714 $ 35,272

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

Revenue recognized for the three months ended September 30, 2020 and 2019 from contract liability balances at the beginning of each period was $ 69.7 million and $ 52.0 million.

Revenue recognized for the nine months ended September 30, 2020 and 2019 from contract liability balances at the beginning of each period was $ 195.3 million and $ 122.7 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 June 30, 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 September 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.

1 unchanged sentence

Year ending December 31,

Remainder of 2020

2020 $ 251,524

2026 and thereafter 456,896

Total $ 3,289,960

NOTE 4— GOODWILL AND OTHER INTANGIBLE ASSETS

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

June 30, 2020

December 31, 2019

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

September 30, 2020 December 31, 2019

(in thousands)

Goodwill $ 23,745,340 $ 23,759,740

Other intangible assets:

3 unchanged sentences

Trademarks and trade names 1,238,495 1,239,471

15,189,894 15,184,846

Less accumulated amortization:

3 unchanged sentences

Trademarks and trade names 246,970 145,253

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

Business and Consumer Solutions

2,938,214 2,030,191

$ 12,251,680 $ 13,154,655

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

Solutions Issuer

Solutions Business and

Solutions Total

(in thousands)

3 unchanged sentences

Measurement-period adjustments ( 3,875 ) ( 42,298 ) 6,489 ( 39,684 )

Balance at June 30, 2020

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

Balance at September 30, 2020 $ 13,438,741 $ 7,941,453 $ 2,365,146 $ 23,745,340

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

NOTE 5 - OTHER ASSETS

Through certain of our subsidiaries in Europe, we were a member and shareholder of Visa Europe Limited ("Visa Europe").

On June 21, 2016, Visa Inc.

("Visa") acquired all of the membership interests in Visa Europe and we received consideration in the form of cash and Series B and C convertible preferred shares of Visa.

We assigned the preferred shares received a value of zero based on transfer restrictions, Visa's ability to adjust the conversion rate and the estimation uncertainty associated with those factors.

Based on the outcome of any current or potential litigation involving Visa Europe in the United Kingdom and elsewhere in Europe, the conversion rate of the preferred shares could be adjusted down such that the number of Visa common shares we receive could be as low as zero .

The Series B and C convertible preferred shares become convertible in stages based on developments in the litigation and become fully convertible no later than 2028 (subject to a holdback to cover any then pending claims).

On September 24, 2020, in connection with the first mandatory release assessment, a portion of the Series B and C convertible preferred shares were converted by Visa.

We recognized a gain of $ 27.3 million reported in interest and other income in our consolidated statements of income for the three and nine months ended September 30, 2020 based on the fair value of the shares received.

The shares were recorded at fair value within prepaid expenses and other current assets in our consolidated balance sheet at September 30, 2020, and subsequently sold in October.

As of September 30, 2020, the remaining Series B and C convertible preferred shares continue to be carried at an assigned value of zero based on the aforementioned factors.

NOTE 6— LONG-TERM DEBT AND LINES OF CREDIT

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

June 30, 2020

December 31, 2019

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

September 30, 2020 December 31, 2019

(in thousands)

3.800 % senior notes due April 1, 2021

$ 754,398 $ 760,996

3.750 % senior notes due June 1, 2023

563,526 567,330

4.000 % senior notes due June 1, 2023

567,578 572,522

2.650 % senior notes due February 15, 2025

992,688 991,423

4.800 % senior notes due April 1, 2026

812,149 820,623

4.450 % senior notes due June 1, 2028

483,687 486,982

3.200 % senior notes due August 15, 2029

1,236,029 1,234,843

2.900 % senior notes due May 15, 2030

4.150 % senior notes due August 15, 2049

739,699 739,431

Unsecured term loan facility 1,984,858 1,981,758

6 unchanged sentences

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 .

At September 30, 2020, unamortized discount on senior notes was $ 8.7 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $ 49.4 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 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 .

At September 30, 2020, unamortized debt issuance costs on the unsecured revolving credit facility were $ 14.7 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 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):

Amortization of discounts and debt issuance costs for the three and nine months ended September 30, 2020 was $ 3.1 million and $ 8.9 million, respectively.

Amortization of discounts and debt issuance costs for the three and nine months ended September 30, 2019 was $ 3.1 million and $ 9.2 million, respectively.

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

Year ending December 31,

Remainder of 2020

2020 $ 20,474

2023 1,300,000

2024 1,750,000

2025 1,000,000

2026 and thereafter 4,200,000

Total $ 9,130,044

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.

Interest on the senior notes is payable semi-annually at 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 .

The amortization of this fair value adjustment was $ 9.0 million and $ 27.1 million, respectively, for the three and nine months ended September 30, 2020.

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

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

1 unchanged sentence

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 .

As of September 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 .

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

Senior Unsecured Credit Facilities

3 unchanged sentences

dollars and borrowings under the revolving credit facility are available to be made in U.S.

dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option.

dollars, euros, sterling, Canadian dollars and, subject to specific conditions, certain other currencies at our option.

Borrowings in U.S.

1 unchanged sentence

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 % .

As of September 30, 2020, the interest rate on the term loan facility was 1.52 %.

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 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.

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

As of September 30, 2020, the total available commitments under the revolving credit facility were $ 2.1 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 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 .

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 September 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 September 30, 2020.

Settlement Lines of Credit

In various markets where we do business, we have specialized lines of credit, which are restricted for use in funding settlement.

In various markets where we do business, we have specialized lines of credit, that are restricted for use in funding settlement.

The settlement lines of credit generally have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies.

1 unchanged sentence

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

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.

As of September 30, 2020, a total of $ 58.5 million of cash on deposit was used to determine the available credit.

As of September 30, 2020 and December 31, 2019, we had $ 439.4 million and $ 463.2 million, respectively, outstanding under these lines of credit with additional capacity to fund settlement of $ 1,387.3 million as of September 30, 2020.

During the three months ended September 30, 2020, the maximum and average outstanding balances under these lines of credit were $ 560.7 million and $ 324.6 million, respectively.

The weighted-average interest rate on these borrowings was 2.05 % and 3.16 % at September 30, 2020 and December 31, 2019, respectively.

Derivative Agreements

5 unchanged sentences

The table below presents information about our derivative financial instruments, designated as cash flow hedges, included in the consolidated balance sheets:

Derivative Financial Instruments

Balance Sheet Location

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

Range of Maturity Dates at

June 30, 2020

December 31, 2019

Derivative Financial Instruments Balance Sheet Location Weighted-Average Fixed Rate of Interest at September 30, 2020 Range of Maturity Dates at

September 30, 2020 September 30, 2020 December 31, 2019

(in thousands)

Interest rate swaps (Notional of $ 250 million at December 31, 2019)

Prepaid expenses and other current assets

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 June 30, 2020 and $1.55 billion at December 31, 2019)

Other noncurrent liabilities

December 31, 2022

Prepaid expenses and other current assets NA NA $ — $ 472

Interest rate swaps (Notional of $ 300 million at September 30, 2020)

Accounts payable and accrued liabilities 1.91 % March 31, 2021 $ 2,662 $ —

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

Other noncurrent liabilities 2.73 % December 31, 2022 $ 74,102 $ 45,604

NA = not applicable.

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

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 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 nine months ended September 30, 2020 and 2019:

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

(in thousands)

Net unrealized losses recognized in other comprehensive income (loss)

Net unrealized gains (losses) recognized in other comprehensive income (loss) $ 194 $ ( 40,265 ) $ ( 53,332 ) $ ( 96,997 )

Net unrealized losses (gains) reclassified out of other comprehensive income (loss) to interest expense $ 11,133 $ 1,193 $ 25,786 $ ( 1,530 )

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 .

As of September 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 $ 40.9 million.

Interest Expense

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.

Interest expense was $ 82.1 million and $ 96.0 million for the three months ended September 30, 2020 and 2019, respectively, and $ 244.3 million and $ 221.0 million for the nine months ended September 30, 2020 and 2019, respectively.

NOTE 7— INCOME TAX

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.

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

Our effective income tax rates for the three and nine months ended September 30, 2020 were 18.0 % and 14.1 %, respectively.

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

statutory rate primarily due to tax credits, foreign interest income not subject to tax, the foreign-derived intangible income deduction, changes in uncertain tax positions and the tax effect of the U.K.

statutory income tax rate change that took effect during the quarter.

Our effective income tax rate for the nine months ended September 30, 2020 differed from the U.S.

statutory rate primarily due to tax credits, foreign interest income not subject to tax, the foreign-derived intangible income deduction and excess tax benefits of share-based awards.

Our effective income tax rate for the three months ended September 30, 2019 was a benefit of 18.7 %, and our effective income tax rate for the nine months ended September 30, 2019 was 10.1 %.

Our effective income tax rates for those periods differed from the U.S.

statutory rate primarily due to the reduction of our U.S.

deferred tax liability resulting from the effects of the Merger on the apportionment of income among states, excess tax benefits of share-based awards, the U.S.

tax benefits associated with income derived from foreign sources and the benefits related to the effective settlement of uncertain tax positions.

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

federal jurisdiction and various state and foreign jurisdictions.

In the normal course of business, we are subject to examination by taxing authorities around the world, including, without limitation, the United States and the United Kingdom.

In the normal course of business, we are subject to examination by taxing authorities around the world.

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

3 unchanged sentences

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

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 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.

During the three months ended September 30, 2020 and 2019, there were no repurchases.

During the nine months ended September 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 October 28, 2020, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to $ 1.25 billion.

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

On October 28, 2020, our board of directors declared a dividend of $ 0.195 per share payable on December 31, 2020 to common shareholders of record as of December 17, 2020.

NOTE 9— SHARE-BASED AWARDS AND STOCK OPTIONS

The following table summarizes share-based compensation expense and the related income tax benefit recognized for our share-based awards and stock options:

Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 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 six months ended June 30, 2020 :

Weighted-Average

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

Shares Weighted-Average

(in thousands)

Unvested at December 31, 2019 1,844 $ 149.96

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.

Granted 601 185.71

Vested ( 652 ) 119.62

Forfeited ( 51 ) 169.02

Unvested at September 30, 2020 1,742 $ 173.10

The total fair value of restricted stock and performance awards vested during the nine months ended September 30, 2020 and September 30, 2019 was $ 77.9 million and $ 35.3 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of $ 38.9 million and $ 20.2 million during the three months ended September 30, 2020 and 2019, respectively, and $ 94.9 million and $ 45.0 million during the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, there were $ 187.7 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 2.1 years.

Stock Options

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

Weighted-Average Exercise Price

Weighted-Average Remaining Contractual Term

Aggregate Intrinsic Value

(in thousands)

(in millions)

The following table summarizes stock option activity for the nine months ended September 30, 2020:

Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value

(in thousands) (years) (in millions)

Outstanding at December 31, 2019 1,755 $ 74.06 6.5 $ 190.3

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.

Granted 124 200.42

Forfeited ( 2 ) 113.48

Exercised ( 506 ) 60.18

Outstanding at September 30, 2020 1,371 $ 90.64 6.4 $ 122.0

Options vested and exercisable at September 30, 2020 974 $ 69.50 5.6 $ 105.3

We recognized compensation expense for stock options of $ 2.4 million and $ 7.0 million during the three months ended September 30, 2020 and 2019, respectively, and $ 6.5 million and $ 8.6 million for the nine months ended September 30, 2020 and 2019, respectively.

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2020 and 2019 was $ 69.8 million and $ 22.9 million, respectively.

As of September 30, 2020, we had $ 10.5 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 1.8 years.

The weighted-average grant-date fair value of stock options granted during the nine months ended September 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:

Six Months Ended

June 30, 2020

June 30, 2019

Nine Months Ended

September 30, 2020 September 30, 2019

Risk-free interest rate 1.24 % 1.72 %

11 unchanged sentences

Diluted EPS is computed by dividing net income attributable to Global Payments by the weighted-average number of shares outstanding during the period, including the effect of share-based awards that would have a dilutive effect on EPS.

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 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 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

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

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 and nine months ended September 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 and nine months ended September 30, 2019.

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

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

(in thousands)

3 unchanged sentences

NOTE 11— ACCUMULATED OTHER COMPREHENSIVE LOSS

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)

Unrealized Gains (Losses) on Hedging Activities

Accumulated Other Comprehensive Loss

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

Foreign Currency Translation Gains (Losses) Unrealized Gains (Losses) on Hedging Activities Other Accumulated Other Comprehensive Loss

(in thousands)

Balance at March 31, 2020

Other comprehensive income

Balance at June 30, 2020 $ ( 361,133 ) $ ( 98,903 ) $ 890 $ ( 459,146 )

Balance at March 31, 2019

Other comprehensive income (loss) 102,058 8,715 ( 3,531 ) 107,242

Balance at September 30, 2020 $ ( 259,075 ) $ ( 90,188 ) $ ( 2,641 ) $ ( 351,904 )

Balance at June 30, 2019 $ ( 289,194 ) $ ( 47,313 ) $ ( 3,399 ) $ ( 339,906 )

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

Other comprehensive (loss) income ( 58,415 ) ( 29,783 ) 37 ( 88,161 )

Balance at September 30, 2019 $ ( 347,609 ) $ ( 77,096 ) $ ( 3,362 ) $ ( 428,067 )

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was income of $ 8.8 million and a loss of $ 8.7 million for the three months ended September 30, 2020 and 2019, respectively.

Foreign Currency Translation Gains (Losses) Unrealized Gains (Losses) on Hedging Activities Other Accumulated Other Comprehensive Loss

(in thousands)

Balance at December 31, 2019 $ ( 241,899 ) $ ( 69,319 ) $ 647 $ ( 310,571 )

Other comprehensive (loss) income

Balance at June 30, 2020

Other comprehensive loss ( 17,176 ) ( 20,869 ) ( 3,288 ) ( 41,333 )

Balance at September 30, 2020 $ ( 259,075 ) $ ( 90,188 ) $ ( 2,641 ) $ ( 351,904 )

Balance at December 31, 2018 $ ( 304,274 ) $ ( 2,374 ) $ ( 3,527 ) $ ( 310,175 )

Other comprehensive income (loss)

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.

Other comprehensive (loss) income ( 43,335 ) ( 74,722 ) 165 ( 117,892 )

Balance at September 30, 2019 $ ( 347,609 ) $ ( 77,096 ) $ ( 3,362 ) $ ( 428,067 )

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was income of $ 7.5 million and a loss of $ 9.4 million for the nine months ended September 30, 2020 and 2019, respectively.

NOTE 12— 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 and six months ended June 30, 2019 has been recast to align with the current segment presentation.

Information on segments and reconciliations to consolidated revenues, consolidated operating income and consolidated depreciation and amortization was as follows 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 connection with an organizational realignment implemented during the fourth quarter of 2019, the presentation of segment information for the three and nine months ended September 30, 2019 has been recast to align with the current segment presentation.

Three Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

(in thousands)

9 unchanged sentences

Business and Consumer Solutions 31,052 3,365 110,358 3,365

Corporate ( 156,414 ) ( 153,999 ) ( 480,730 ) ( 261,356 )

Consolidated operating income $ 290,419 $ 174,037 $ 641,971 $ 595,255

3 unchanged sentences

Business and Consumer Solutions 23,957 5,200 71,712 5,200

Corporate 6,031 1,189 15,917 3,296

Consolidated depreciation and amortization $ 406,899 $ 183,746 $ 1,207,392 $ 477,498

1 unchanged sentence

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

(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.

(2) Operating loss for Corporate included acquisition and integration expenses of $ 57.6 million and $ 86.9 million during the three months ended September 30, 2020 and 2019, respectively.

Operating loss for Corporate included acquisition and integration expense of $ 208.0 million and $ 98.0 million during the nine months ended September 30, 2020 and 2019, respectively.

Operating income for our Merchant Solutions segment reflected the effect of acquisition and integration expenses of $ 13.9 million for the three months ended September 30, 2019 and $ 5.7 million and $ 22.3 million for the nine months ended September 30, 2020 and 2019, respectively.

NOTE 13— COMMITMENTS AND CONTINGENCIES

Purchase Obligations

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 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.

We have contractual obligations related to service arrangements with suppliers for fixed or minimum amounts.

Future minimum payments at September 30, 2020 for purchase obligations were as follows (in thousands):

Year ending December 31:

2020 $ 88,681

2026 and thereafter 527,427

Total future minimum payments $ 1,317,009

During the nine months ended September 30, 2020, we entered into a new agreement to acquire software and related services, of which $ 97.6 million was financed utilizing a two -year vendor financing arrangement.

Legal Matters

2 unchanged sentences

The Superior Court entered a final judgment on the verdict in favor of Frontline on September 30, 2019.

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 June 30, 2020 .

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

Our appeal is pending.

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 (ASC Topic 450, Contingencies ) as of September 30, 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