What changed in this filing

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Item 1. Financial Statements

2021-08-02 compared with 2021-05-04 · 274 added, 110 removed, 378 unchanged (50% of the section changed)

4 unchanged sentences

Three Months Ended

March 31, 2021 March 31, 2020

June 30, 2021 June 30, 2020

Revenues $ 2,137,437 $ 1,671,952

21 unchanged sentences

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

Six Months Ended

June 30, 2021 June 30, 2020

Revenues $ 4,127,444 $ 3,575,550

Operating expenses:

Cost of service

1,861,556 1,827,611

Selling, general and administrative

1,628,071 1,396,386

3,489,627 3,223,997

Operating income 637,817 351,553

Interest and other income 9,689 5,293

Interest and other expense ( 163,697 ) ( 175,499 )

( 154,008 ) ( 170,206 )

Income before income taxes and equity in income of equity method investments 483,809 181,347

Income tax expense 81,483 16,338

Income before equity in income of equity method investments 402,326 165,009

Equity in income of equity method investments, net of tax 62,897 25,041

Net income 465,223 190,050

Net income attributable to noncontrolling interests, net of tax ( 4,952 ) ( 9,147 )

Net income attributable to Global Payments $ 460,271 $ 180,903

Earnings per share attributable to Global Payments:

Basic earnings per share $ 1.56 $ 0.60

Diluted earnings per share $ 1.55 $ 0.60

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

1 unchanged sentence

Three Months Ended

March 31, 2021 March 31, 2020

June 30, 2021 June 30, 2020

Net income $ 266,813 $ 39,444

2 unchanged sentences

Income tax benefit related to foreign currency translation adjustments 4,242 154

Net unrealized losses on hedging activities ( 410 ) ( 5,630 )

Reclassification of net unrealized losses on hedging activities to interest expense 9,662 9,982

Income tax expense related to hedging activities ( 2,225 ) ( 1,057 )

Other, net of tax ( 1,549 ) 122

Other comprehensive income 42,391 86,029

Comprehensive income 309,204 125,473

Comprehensive income attributable to noncontrolling interests ( 5,948 ) ( 7,508 )

Comprehensive income attributable to Global Payments $ 303,256 $ 117,965

Six Months Ended

June 30, 2021 June 30, 2020

Net income $ 465,223 $ 190,050

Other comprehensive income (loss):

Foreign currency translation adjustments ( 895 ) ( 121,653 )

Income tax benefit related to foreign currency translation adjustments 4,991 1,160

Net unrealized gains (losses) on hedging activities 584 ( 53,526 )

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Other, net of tax 6,226 243

Other comprehensive loss ( 16,074 ) ( 235,862 )

Comprehensive income (loss) 182,336 ( 85,254 )

Comprehensive loss (income) attributable to noncontrolling interests 4,245 ( 380 )

Comprehensive income (loss) attributable to Global Payments $ 186,581 $ ( 85,634 )

Other comprehensive income (loss) 26,317 ( 149,834 )

Comprehensive income 491,540 40,216

Comprehensive income attributable to noncontrolling interests ( 1,703 ) ( 7,888 )

Comprehensive income attributable to Global Payments $ 489,837 $ 32,328

See Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except share data)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets:

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Common stock, no par value;

400,000,000 shares authorized at March 31, 2021 and December 31, 2020;

295,157,603 issued and outstanding at March 31, 2021 and 298,332,459 issued and outstanding at December 31, 2020

400,000,000 shares authorized at June 30, 2021 and December 31, 2020;

293,702,910 issued and outstanding at June 30, 2021 and 298,332,459 issued and outstanding at December 31, 2020

Paid-in capital 24,201,763 24,963,769

9 unchanged sentences

(in thousands)

Three Months Ended

March 31, 2021 March 31, 2020

Six Months Ended

June 30, 2021 June 30, 2020

Cash flows from operating activities:

32 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 5,980 ) ( 32,556 )

Increase in cash, cash equivalents and restricted cash 112,303 121,788

(Decrease) increase in cash, cash equivalents and restricted cash ( 150,047 ) 147,352

Cash, cash equivalents and restricted cash, beginning of the period 2,089,771 1,678,273

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

Balance at December 31, 2020 298,332 $ 24,963,769 $ 2,570,874 $ ( 202,273 ) $ 27,332,370 $ 154,674 $ 27,487,044

Balance at March 31, 2021 295,158 $ 24,403,323 $ 2,500,812 $ ( 212,373 ) $ 26,691,762 $ 150,429 $ 26,842,191

Net income 263,590 263,590 3,223 266,813

Other comprehensive loss ( 10,100 ) ( 10,100 ) ( 5,974 ) ( 16,074 )

Other comprehensive income 39,666 39,666 2,725 42,391

Stock issued under share-based compensation plans 78 11,599 11,599 11,599

4 unchanged sentences

( 57,302 ) ( 57,302 ) ( 57,302 )

Balance at June 30, 2021 293,703 $ 24,201,763 $ 2,664,707 $ ( 172,707 ) $ 26,693,763 $ 156,377 $ 26,850,140

Number of Shares

Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity

Noncontrolling Interests Total Equity

Balance at March 31, 2020 299,010 $ 25,525,184 $ 2,335,407 $ ( 539,780 ) $ 27,320,811 $ 199,622 $ 27,520,433

Net income 37,331 37,331 2,113 39,444

Other comprehensive income 80,634 80,634 5,395 86,029

Stock issued under share-based compensation plans 257 14,349 14,349 14,349

Common stock repurchased - share-based compensation plans ( 23 ) ( 3,934 ) ( 3,934 ) ( 3,934 )

Share-based compensation expense 34,983 34,983 34,983

Cash dividends declared ($ 0.195 per common share)

( 58,315 ) ( 58,315 ) ( 58,315 )

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

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except per share data)

Number of Shares

4 unchanged sentences

Balance at December 31, 2020 298,332 $ 24,963,769 $ 2,570,874 $ ( 202,273 ) $ 27,332,370 $ 154,674 $ 27,487,044

Net income 460,271 460,271 4,952 465,223

Other comprehensive income (loss) 29,566 29,566 ( 3,249 ) 26,317

Stock issued under share-based compensation plans 1,081 29,304 29,304 29,304

Common stock repurchased - share-based compensation plans ( 253 ) ( 50,429 ) ( 50,429 ) ( 50,429 )

Share-based compensation expense 80,490 80,490 80,490

Repurchases of common stock ( 5,457 ) ( 821,371 ) ( 251,563 ) ( 1,072,934 ) ( 1,072,934 )

Cash dividends declared ($ 0.39 per common share)

( 114,875 ) ( 114,875 ) ( 114,875 )

Balance at June 30, 2021 293,703 $ 24,201,763 $ 2,664,707 $ ( 172,707 ) $ 26,693,763 $ 156,377 $ 26,850,140

Number of Shares

Paid-in Capital

Retained Earnings

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 )

4 unchanged sentences

Share-based compensation expense 62,805 62,805 62,805

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

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

Cash dividends declared ($ 0.39 per common share)

( 116,591 ) ( 116,591 ) ( 116,591 )

Balance at March 31, 2020 299,010 $ 25,525,184 $ 2,335,407 $ ( 539,780 ) $ 27,320,811 $ 199,622 $ 27,520,433

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

See Notes to Unaudited Consolidated Financial Statements.

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NOTE 1— BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business, consolidation and presentation - We are a leading pure play payments technology company delivering innovative software and services to our customers globally.

Our technologies, services and employee expertise enable us to provide a broad range of solutions that allow our customers to operate their businesses more efficiently across a variety of channels around the world.

Business, consolidation and presentation - We are a leading payments technology company delivering innovative software and services to our customers globally.

Our technologies, services and team member expertise allow us to provide a broad range of solutions that enable our customers to operate their businesses more efficiently across a variety of channels around the world.

We operate in three reportable segments:

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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, 2020.

COVID-19 Update - During 2020 and continuing into 2021, the global economy has been, and continues to be, affected by COVID-19.

The pandemic has caused and may continue to cause significant disruptions to businesses and markets worldwide as the virus continues to spread or has a resurgence in certain jurisdictions.

COVID-19 Update - Since early 2020, the global economy has been, and continues to be, affected by COVID-19.

The pandemic has caused and may continue to cause significant disruptions to businesses and markets worldwide as the virus spreads or has a resurgence in certain jurisdictions.

Measures have been implemented by governments worldwide in an effort to contain the virus, including lockdowns, physical distancing, travel restrictions, limitations on public gatherings, work from home and restrictions on nonessential businesses.

Certain government actions to gradually ease restrictions, provide economic stimulus and distribute vaccines have resulted in signs of economic recovery.

However, the effects of the pandemic are still evolving, and its ultimate severity and duration, and the implications on future global economic conditions, remain uncertain.

However, the effects of the pandemic continue, and its ultimate severity and duration, and the implications on future global economic conditions, remain uncertain.

Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period.

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We are evaluating the effect of the discontinuance of LIBOR on our outstanding debt and hedging instruments and the related effect of ASU 2020-04 on our consolidated financial statements.

NOTE 2— ACQUISITION

On June 10, 2021, we acquired Zego, a real estate technology company that provides a comprehensive resident experience management software and digital commerce solutions to property managers, primarily in the United States.

Zego’s real estate software and payments solutions support property managers and residents throughout the real estate lifecycle.

This acquisition aligns with our technology-enabled, software driven strategy and expands our business into a new vertical market.

We paid cash consideration of approximately $ 933 million, which we funded with cash on hand and by drawing on our revolving credit facility.

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

Due to the timing of the acquisition, the ac counting for this acquisition was not complete as of June 30, 2021.

The fair values of the assets acquired and the liabilities assumed have been determined provisionally and are subject to adjustment as we obtain additional information.

In particular, additional time is needed to refine and review the results of the valuation of assets and liabilities and to evaluate the basis differences for assets and liabilities for financial reporting and tax purposes.

The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, including a reconciliation to the total purchase consideration, are as follows (in thousands):

Cash and cash equivalents $ 67,374

Accounts receivable 1,033

Identifiable intangible assets 410,443

Property and equipment 3,634

Other assets 9,141

Accounts payable and accrued liabilities ( 65,753 )

Deferred income tax liabilities ( 10,709 )

Other liabilities ( 8,268 )

Total identifiable net assets 406,895

Goodwill 525,929

Total purchase consideration $ 932,824

Goodwill of $ 525.9 million arising from the acquisition, included in the Merchant Solutions operating segment, is attributable to expected growth opportunities, potential synergies from combining our existing businesses and an assembled workforce.

We expect that a portion of the goodwill will be deductible for income tax purposes.

We are still evaluating information to separately identify and value the intangible assets acquired.

We expect such assets to primarily include customer-related intangible assets and acquired technology as well as other identifiable intangible assets that are similar to those we have identified in previous acquisitions.

We estimate the amortization periods for the more significant intangible assets to be in a range of 7 to 14 years.

NOTE 3— REVENUES

The following tables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the three months ended March 31, 2021 and 2020:

Three months ended March 31, 2021

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 six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 2021

Solutions Issuer

7 unchanged sentences

$ 1,426,755 $ 505,932 $ 227,355 $ ( 22,605 ) $ 2,137,437

Three months ended March 31, 2020

Three Months Ended June 30, 2020

Solutions Issuer

7 unchanged sentences

$ 1,001,555 $ 470,025 $ 216,722 $ ( 16,350 ) $ 1,671,952

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three months ended March 31, 2021 and 2020:

Three Months Ended

March 31, 2021 March 31, 2020

Six Months Ended June 30, 2021

Solutions Issuer

Solutions Business and

Solutions Intersegment

Eliminations Total

(in thousands)

Americas $ 2,283,440 $ 757,164 $ 465,163 $ ( 33,673 ) $ 3,472,094

Europe 299,578 238,386 5,778 — 543,742

Asia Pacific 111,609 10,633 — ( 10,634 ) 111,608

$ 2,694,627 $ 1,006,183 $ 470,941 $ ( 44,307 ) $ 4,127,444

Six Months Ended June 30, 2020

Solutions Issuer

Solutions Business and

Solutions Intersegment

Eliminations Total

(in thousands)

Americas $ 1,887,433 $ 756,893 $ 420,668 $ ( 32,461 ) $ 3,032,533

Europe 238,459 213,626 — — 452,085

Asia Pacific 90,932 3,268 — ( 3,268 ) 90,932

$ 2,216,824 $ 973,787 $ 420,668 $ ( 35,729 ) $ 3,575,550

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three and six months ended June 30, 2021 and 2020:

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(in thousands)

Relationship-led $ 778,978 $ 566,414 $ 1,445,890 $ 1,242,935

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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 months ended March 31, 2021 and 2020, substantially all of our revenues were recognized over time.

Supplemental balance sheet information related to contracts from customers as of March 31, 2021 and December 31, 2020 was as follows:

Balance Sheet Location March 31, 2021 December 31, 2020

For the three and six months ended June 30, 2021 and 2020, substantially all of our revenues were recognized over time.

Supplemental balance sheet information related to contracts from customers as of June 30, 2021 and December 31, 2020 was as follows:

Balance Sheet Location June 30, 2021 December 31, 2020

(in thousands)

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Contract liabilities, net (noncurrent) Other noncurrent liabilities 49,610 52,944

Net contract assets were not material at March 31, 2021 or at December 31, 2020.

Revenue recognized for the three months ended March 31, 2021 and 2020 from contract liability balances at the beginning of each period was $ 85.9 million and $ 90.8 million, respectively.

Net contract assets were not material at June 30, 2021 or at December 31, 2020.

Revenue recognized for the three months ended June 30, 2021 and 2020 from contract liability balances at the beginning of each period was $ 85.0 million and $ 86.7 million, respectively.

Revenue recognized for the six months ended June 30, 2021 and 2020 from contract liability balances at the beginning of each period was $ 146.6 million and $ 159.9 million, respectively.

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, 2021.

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, 2021.

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.

Accordingly, the total unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amounts disclosed in the table below (in thousands):

Accordingly, the total amount of unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amounts disclosed in the table below (in thousands):

Year Ending December 31,

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Total $ 3,507,277

NOTE 4— GOODWILL AND OTHER INTANGIBLE ASSETS

As of June 30, 2021 and December 31, 2020, goodwill and other intangible assets consisted of the following:

June 30, 2021 December 31, 2020

(in thousands)

Goodwill $ 24,422,012 $ 23,871,451

Other intangible assets:

Customer-related intangible assets $ 9,476,680 $ 9,275,093

Acquired technologies 2,975,966 2,795,991

Contract-based intangible assets 2,003,166 1,981,260

Trademarks and trade names 1,286,627 1,239,925

15,742,439 15,292,269

Less accumulated amortization:

Customer-related intangible assets 2,257,116 1,914,214

Acquired technologies 1,169,394 960,281

Contract-based intangible assets 151,556 120,631

Trademarks and trade names 349,270 281,260

3,927,336 3,276,386

$ 11,815,103 $ 12,015,883

The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the six months ended June 30, 2021:

Solutions Issuer

Solutions Business and

(in thousands)

Balance at December 31, 2020 $ 13,548,690 $ 7,957,616 $ 2,365,145 $ 23,871,451

Goodwill acquired 563,232 — — 563,232

Effect of foreign currency translation ( 9,669 ) 2,907 ( 707 ) ( 7,469 )

Measurement period adjustments ( 5,202 ) — — ( 5,202 )

Balance at June 30, 2021 $ 14,097,051 $ 7,960,523 $ 2,364,438 $ 24,422,012

There were no accumulated impairment losses for goodwill as of June 30, 2021 or December 31, 2020.

NOTE 5— LONG-TERM DEBT AND LINES OF CREDIT

As of March 31, 2021 and December 31, 2020, long-term debt consisted of the following:

March 31, 2021 December 31, 2020

As of June 30, 2021 and December 31, 2020, long-term debt consisted of the following:

June 30, 2021 December 31, 2020

(in thousands)

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Long-term debt, excluding current portion $ 10,216,979 $ 8,466,407

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 March 31, 2021, unamortized discount on senior notes was $ 9.3 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $ 53.8 million.

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

At June 30, 2021, unamortized discount on senior notes was $ 9.0 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $ 51.4 million.

At December 31, 2020, unamortized discount on senior notes was $ 8.5 million, and unamortized debt issuance costs on our senior notes and the unsecured term loan facility were $ 47.4 million.

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

At March 31, 2021, unamortized debt issuance costs on the unsecured revolving credit facility were $ 12.6 million, and, at December 31, 2020, unamortized debt issuance costs on the unsecured revolving credit facility were $ 13.8 million.

At March 31, 2021, future maturities of long-term debt (excluding finance lease liabilities) were as follows by year (in thousands):

At June 30, 2021, unamortized debt issuance costs on the unsecured revolving credit facility were $ 11.7 million, and, at December 31, 2020, unamortized debt issuance costs on the unsecured revolving credit facility were $ 13.8 million.

At June 30, 2021, future maturities of long-term debt (excluding finance lease liabilities) are as follows by year (in thousands):

Year Ending December 31,

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2025 1,000,000

2026 1,850,000

2027 and thereafter 3,450,000

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On February 26, 2021, we issued $ 1.1 billion in aggregate principal amount of 1.200 % senior unsecured notes due March 2026.

We incurred debt issuance costs of approximately $ 8.6 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 March 31, 2021.

Interest on the notes is payable semi-annually in arrears on March 1 and September 1 of each year, commencing September 1, 2021.

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We used the net proceeds from this offering to fund the redemption in full of the 3.800 % senior unsecured notes due April 2021, to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes.

As of March 31, 2021, our senior notes had a total carrying amount of $ 7.5 billion and an estimated fair value of $ 7.8 billion.

As of June 30, 2021, our senior notes had a total carrying amount of $ 7.5 billion and an estimated fair value of $ 7.9 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, 2021.

The fair value of other long-term debt approximated its carrying amount at June 30, 2021.

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, 2021, 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, 2021.

As of June 30, 2021, 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, 2021.

Derivative Agreements

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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 March 31, 2021 Range of Maturity Dates at

March 31, 2021 March 31, 2021 December 31, 2020

Derivative Financial Instruments Balance Sheet Location Weighted-Average Fixed Rate of Interest at June 30, 2021 Range of Maturity Dates at

June 30, 2021 June 30, 2021 December 31, 2020

(in thousands)

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Accounts payable and accrued liabilities NA NA $ — $ 1,330

Interest rate swaps (Notional of $ 1,250 million at March 31, 2021 and December 31, 2020)

Interest rate swaps (Notional of $ 1,250 million at June 30, 2021 and December 31, 2020)

Other noncurrent liabilities 2.73 % December 31, 2022 $ 48,474 $ 65,490

NA = not applicable.

The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the three months ended March 31, 2021 and 2020:

Three Months Ended

March 31, 2021 March 31, 2020

The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the three and six months ended June 30, 2021 and 2020:

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(in thousands)

1 unchanged sentence

Net unrealized losses reclassified out of other comprehensive income (loss) to interest expense $ 9,662 $ 9,982 $ 20,500 $ 14,653

As of March 31, 2021, 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 $ 38.3 million.

As of June 30, 2021, 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 $ 38.4 million.

Interest Expense

Interest expense was $ 81.2 million and $ 81.1 million for the three months ended March 31, 2021 and 2020, respectively.

Interest expense was $ 79.0 million and $ 81.1 million for the three months ended June 30, 2021 and 2020, respectively, and $ 160.5 million and $ 162.2 million for the six months ended June 30, 2021 and 2020, respectively.

NOTE 6— INCOME TAX

Our effective income tax rate for the three months ended March 31, 2021 was 10.5 %.

Our effective income tax rate for the three months ended March 31, 2021 differed from the U.S.

statutory rate primarily as a result of a change in the assessment of the need for a valuation allowance related to foreign tax credit carryforwards, foreign interest income not subject to tax, tax credits, the foreign-derived intangible income deduction and excess tax benefits of share-based awards.

Our effective income tax rate for the three months ended March 31, 2020 was 10.1 %.

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, 2021 were 21.2 % and 16.8 %, respectively.

Our effective income tax rate for the three and six months ended June 30, 2021 differed from the U.S.

statutory rate primarily as a result of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction, each favorably affecting the effective rate, and the effect of enacted tax law changes in the U.K.

which required a remeasurement of deferred tax balances raising the effective rate.

A change in the assessment of the need for a valuation allowance related to foreign tax credit carryforwards also had a favorable effect on the effective income tax rate for the six months ended June 30, 2021.

Our effective income tax rates for 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 and the foreign-derived intangible income deduction.

The prior year effective tax rates were unusually low due to the effects of permanent differences on the lower income before income taxes.

NOTE 7— SHAREHOLDERS’ EQUITY

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

During the three months ended March 31, 2021 and 2020, we repurchased and retired 3,955,400 and 2,094,731 shares of our common stock at a cost, including commissions, of $ 783.0 million and $ 404.0 million, or $ 198.00 per share and $ 192.85 per share, respectively.

As of March 31, 2021, the remaining amount available under our share repurchase program was $ 901.0 million.

During the three months ended June 30, 2021, we repurchased and retired 1,501,549 shares of our common stock at a cost, including commissions, of $ 290.0 million, or $ 193.12 per share.

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

During the six months ended June 30, 2021 and 2020, we repurchased and retired 5,456,949 and 2,094,731 shares of our common stock at a cost, including commissions, of $ 1,072.9 million and $ 404.0 million, or $ 196.65 per share and $ 192.85 per share, respectively.

The activity for the six months ended June 30, 2021 included the repurchase of a total of 2,491,161 shares at an average price of $ 200.71 per share under an ASR program.

On February 10, 2021, we entered into an ASR agreement with a financial institution to repurchase an aggregate of $ 500 million of our common stock.

In exchange for an up-front payment of $ 500 million, the financial institution committed to deliver a number of shares during the ASR program purchase period, which ended on March 31, 2021.

The total number of shares delivered under this ASR program was 2,491,161 shares at an average price of $ 200.71 per share.

On April 29, 2021, our board of directors declared a dividend of $ 0.195 per share payable on June 25, 2021 to common shareholders of record as of June 11, 2021.

In exchange for an up-front payment of $ 500 million, the financial institution committed to deliver a number of shares during the A SR program purchase period, which ended on March 31, 2021.

As of June 30, 2021, the remaining amount available under our share repurchase program was $ 611.0 million.

On July 29, 2021, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to $ 1.5 billion.

On July 29, 2021, our board of directors declared a dividend of $ 0.25 per share payable on September 24, 2021 to common shareholders of record as of September 10, 2021.

NOTE 8— 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

March 31, 2021 March 31, 2020

(in thousands)

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(in thousands) (in thousands)

Share-based compensation expense $ 43,325 $ 34,983 $ 80,490 $ 62,805

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Share-Based Awards

The following table summarizes the changes in unvested restricted stock and performance awards for the three months ended March 31, 2021:

The following table summarizes the changes in unvested restricted stock and performance awards for the six months ended June 30, 2021:

Shares Weighted-Average

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Forfeited ( 46 ) 184.69

Unvested at March 31, 2021 1,790 $ 181.40

The total fair value of restricted stock and performance awards vested during the three months ended March 31, 2021 and March 31, 2020 was $ 86.1 million and $ 64.6 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of $ 33.5 million and $ 25.2 million during the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, there was $ 289.4 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 1.1 years.

Unvested at June 30, 2021 1,690 $ 184.16

The total fair value of restricted stock and performance awards vested during the six months ended June 30, 2021 and June 30, 2020 was $ 97.2 million and $ 76.0 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of $ 39.9 million and $ 30.8 million during the three months ended June 30, 2021 and 2020, respectively, and $ 73.3 million and $ 56.0 million during the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, there was $ 254.1 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 2.2 years.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2021:

The following table summarizes stock option activity for the six months ended June 30, 2021:

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

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Granted 112 196.06

Forfeited ( 1 ) 113.48

Exercised ( 180 ) 69.67

Outstanding at March 31, 2021 1,202 $ 106.19 6.5 $ 114.7

Options vested and exercisable at March 31, 2021 925 $ 85.79 5.8 $ 107.1

We recognized compensation expense for stock options of $ 2.4 million and $ 1.9 million during the three months ended March 31, 2021 and 2020, respectively.

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2021 and 2020 was $ 20.6 million and $ 53.6 million, respectively.

As of March 31, 2021, we had $ 14.1 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.3 years.

The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2021 and 2020 was $ 65.99 and $ 54.85 , respectively.

Outstanding at June 30, 2021 1,184 $ 106.82 6.3 $ 98.2

Options vested and exercisable at June 30, 2021 908 $ 86.25 5.6 $ 92.6

We recognized compensation expense for stock options of $ 1.8 million and $ 2.2 million during the three months ended June 30, 2021 and 2020, respectively, and $ 4.2 million and $ 4.1 million for the six months ended June 30, 2021 and 2020, respectively.

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2021 and 2020 was $ 23.1 million and $ 66.5 million, respectively.

As of June 30, 2021, we had $ 11.9 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.1 years.

The weighted-average grant-date fair value of stock options granted during the six months ended June 30, 2021 and 2020 was $ 65.99 and $ 54.85 , 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, 2021 March 31, 2020

Six Months Ended

June 30, 2021 June 30, 2020

Risk-free interest rate 0.59 % 1.24 %

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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 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, 2021.

The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three months ended March 31, 2021 and 2020:

Three Months Ended

March 31, 2021 March 31, 2020

The dilutive share base for the three and six months ended June 30, 2021 excluded approximately 234,813 shares related to stock options that would have an antidilutive effect on the computation of diluted earnings per share.

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.

The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three and six months ended June 30, 2021 and 2020:

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(in thousands)

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Cash, cash equivalents and restricted cash

A reconciliation of cash, cash equivalents and restricted cash in the consolidated statements of cash flows as of March 31, 2021 and December 31, 2020 to the amounts in the consolidated balance sheets is as follows:

March 31, 2021 December 31, 2020

A reconciliation of cash, cash equivalents and restricted cash in the consolidated statements of cash flows as of June 30, 2021 and December 31, 2020 to the amounts in the consolidated balance sheets is as follows:

June 30, 2021 December 31, 2020

(in thousands)

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Accounts payable and accrued liabilities

At March 31, 2021 and December 31, 2020, accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $ 43.5 million and $ 48.4 million, respectively, for employee termination benefits resulting from merger-related integration activities.

During the three months ended March 31, 2021, we recognized charges for employee termination benefits of $ 25.2 million, which included $ 0.5 million of share-based compensation expense.

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, 2021, the cumulative amount of recognized charges for employee termination benefits resulting from merger-related integration activities was $ 165.6 million, which included $ 24.5 million of share-based compensation expense.

At June 30, 2021 and December 31, 2020, accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $ 17.4 million and $ 48.4 million, respectively, for employee termination benefits resulting from merger-related integration activities.

During the three months ended June 30, 2021 and 2020, we recognized charges for employee termination benefits of $ 13.1 million and $ 24.1 million, which included $ 0.7 million and $ 1.7 million of share-based compensation expense, respectively.

During the six months ended June 30, 2021 and 2020, we recognized charges for employee termination benefits of $ 38.3 million and $ 41.7 million, which included $ 1.2 million and $ 4.2 million of share-based compensation expense, respectively.

As of June 30, 2021, the cumulative amount of recognized charges for employee termination benefits resulting from merger-related integration activities was $ 178.7 million, which included $ 25.2 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.

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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 months ended March 31, 2021 and 2020:

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, 2021 and 2020:

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

(in thousands)

Balance at December 31, 2020 $ ( 114,227 ) $ ( 81,543 ) $ ( 6,503 ) $ ( 202,273 )

Other comprehensive (loss) income ( 26,843 ) 8,968 7,775 ( 10,100 )

Balance at March 31, 2021 $ ( 141,070 ) $ ( 72,575 ) $ 1,272 $ ( 212,373 )

Other comprehensive income (loss) 34,188 7,027 ( 1,549 ) 39,666

Balance at June 30, 2021 $ ( 106,882 ) $ ( 65,548 ) $ ( 277 ) $ ( 172,707 )

Balance at March 31, 2020 $ ( 438,350 ) $ ( 102,198 ) $ 768 $ ( 539,780 )

Other comprehensive income 77,217 3,295 122 80,634

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

Other comprehensive income attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 2.7 million and $ 5.4 million for the three months ended June 30, 2021 and 2020, respectively.

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

(in thousands)

Balance at December 31, 2020 $ ( 114,227 ) $ ( 81,543 ) $ ( 6,503 ) $ ( 202,273 )

Other comprehensive income 7,345 15,995 6,226 29,566

Balance at June 30, 2021 $ ( 106,882 ) $ ( 65,548 ) $ ( 277 ) $ ( 172,707 )

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

Other comprehensive (loss) income ( 119,234 ) ( 29,584 ) 243 ( 148,575 )

Balance at March 31, 2020 $ ( 438,350 ) $ ( 102,198 ) $ 768 $ ( 539,780 )

Other comprehensive loss attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 6.0 million and $ 6.7 million for the three months ended March 31, 2021 and 2020, respectively.

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

Other comprehensive loss attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 3.2 million and $ 1.3 million for the six months ended June 30, 2021 and 2020, respectively.

NOTE 12— SEGMENT INFORMATION

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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, 2020 and our summary of significant accounting policies in "Note 1 - Basis of Presentation and Summary of Significant Accounting Policies."

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, 2021 and 2020:

Three Months Ended

March 31, 2021 March 31, 2020

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

(in thousands)

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Consolidated depreciation and amortization $ 422,044 $ 402,675 $ 847,616 $ 800,493

(1) Operating loss for Corporate included acquisition and integration expenses of $ 90.1 million and $ 69.7 million during the three months ended March 31, 2021 and 2020, respectively.

(1) Revenues, operating income and depreciation and amortization reflect the effects of acquired businesses from the respective acquisition dates.

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

(2) Operating loss for Corporate included acquisition and integration expenses of $ 76.8 million and $ 80.7 million during the three months ended June 30, 2021 and 2020, respectively.

Operating loss for Corporate included acquisition and integration expenses of $ 167.0 million and $ 150.4 million during the six months ended June 30, 2021 and 2020, respectively.

NOTE 13— COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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

Future minimum payments at March 31, 2021 for purchase obligations were as follows (in thousands):

Future minimum payments at June 30, 2021 for purchase obligations were as follows (in thousands):

Year Ending December 31:

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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 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 March 31, 2021.

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

NOTE 12— SUBSEQUENT EVENT

On May 4, 2021, we announced our plan to acquire Zego (Powered by PayLease), a leading property technology company that modernizes the resident experience with a comprehensive management software platform.

Pursuant to the terms and subject to the conditions set forth in the purchase agreement, we will pay the seller cash consideration of approximately $ 925 million, which we plan to fund with cash on hand and our revolving credit facility.

We expect the acquisition to close by the end of the second quarter of 2021, subject to regulatory approval and customary closing conditions.

We appealed the decision to the Georgia Court of Appeals.

On June 30, 2021, a panel of the Georgia Court of Appeals unanimously reversed the judgment, including the entire damages award.

We previously determined that it was not probable that a loss had been incurred under the applicable accounting standard (ASC Topic 450, Contingencies );

therefore, the reversal of the judgment did not affect our consolidated financial statements.

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