What changed in this filing

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Item 1. Financial Statements

2021-11-02 compared with 2021-08-02 · 170 added, 138 removed, 514 unchanged (37% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, 2021 June 30, 2020

September 30, 2021 September 30, 2020

Revenues $ 2,202,337 $ 1,917,815

23 unchanged sentences

(in thousands, except per share data)

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Revenues $ 6,329,781 $ 5,493,365

24 unchanged sentences

Three Months Ended

June 30, 2021 June 30, 2020

September 30, 2021 September 30, 2020

Net income $ 305,463 $ 230,230

2 unchanged sentences

Income tax benefit related to foreign currency translation adjustments 447 —

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

Net unrealized (losses) gains on hedging activities ( 646 ) 194

Reclassification of net unrealized losses on hedging activities to interest expense 9,788 11,133

1 unchanged sentence

Other, net of tax ( 2,209 ) ( 3,531 )

Other comprehensive income 42,391 86,029

Other comprehensive (loss) income ( 74,360 ) 115,993

Comprehensive income 231,103 346,223

1 unchanged sentence

Comprehensive income attributable to Global Payments $ 226,478 $ 328,213

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Net income $ 770,686 $ 420,282

2 unchanged sentences

Income tax benefit related to foreign currency translation adjustments 5,438 1,160

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

Net unrealized losses on hedging activities ( 62 ) ( 53,332 )

Reclassification of net unrealized losses on hedging activities to interest expense 30,288 25,786

2 unchanged sentences

Other, net of tax 4,017 ( 3,288 )

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

Other comprehensive loss ( 48,043 ) ( 33,841 )

Comprehensive income 722,643 386,441

5 unchanged sentences

(in thousands, except share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

25 unchanged sentences

Common stock, no par value;

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

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

290,086,635 issued and outstanding at September 30, 2021 and 298,332,459 issued and outstanding at December 31, 2020

Paid-in capital 23,544,800 24,963,769

9 unchanged sentences

(in thousands)

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Cash flows from operating activities:

29 unchanged sentences

Common stock repurchased - share-based compensation plans ( 84,659 ) ( 41,966 )

Contribution from a noncontrolling interest 46,320 —

Distribution to a noncontrolling interest — ( 6,955 )

Dividends paid ( 188,203 ) ( 175,025 )

1 unchanged sentence

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 42,704 ) ( 12,558 )

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

Increase in cash, cash equivalents and restricted cash 378,843 542,549

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

8 unchanged sentences

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

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

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

Net income 296,736 296,736 8,727 305,463

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

Other comprehensive loss ( 70,258 ) ( 70,258 ) ( 4,102 ) ( 74,360 )

Stock issued under share-based compensation plans 819 9,262 9,262 9,262

2 unchanged sentences

Repurchases of common stock ( 4,232 ) ( 697,833 ) ( 42,924 ) ( 740,757 ) ( 740,757 )

Contribution from a noncontrolling interest — 46,320 46,320

Cash dividends declared ($ 0.25 per common share)

( 73,327 ) ( 73,327 ) ( 73,327 )

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

Balance at September 30, 2021 290,087 $ 23,544,800 $ 2,845,192 $ ( 242,965 ) $ 26,147,027 $ 207,322 $ 26,354,349

Number of Shares

3 unchanged sentences

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

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

2 unchanged sentences

Common stock repurchased - share-based compensation plans ( 7 ) ( 682 ) ( 682 ) ( 682 )

Distribution to a noncontrolling interest ( 6,955 ) ( 6,955 )

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

1 unchanged sentence

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

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

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

See Notes to Unaudited Consolidated Financial Statements.

9 unchanged sentences

Net income 757,007 757,007 13,679 770,686

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

Other comprehensive loss ( 40,692 ) ( 40,692 ) ( 7,351 ) ( 48,043 )

Stock issued under share-based compensation plans 1,900 38,570 38,570 38,570

2 unchanged sentences

Repurchases of common stock ( 9,689 ) ( 1,519,204 ) ( 294,486 ) ( 1,813,690 ) ( 1,813,690 )

Contribution from a noncontrolling interest — 46,320 46,320

Cash dividends declared ($ 0.64 per common share)

( 188,203 ) ( 188,203 ) ( 188,203 )

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

Balance at September 30, 2021 290,087 $ 23,544,800 $ 2,845,192 $ ( 242,965 ) $ 26,147,027 $ 207,322 $ 26,354,349

Number of Shares

6 unchanged sentences

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

Other comprehensive loss ( 148,575 ) ( 148,575 ) ( 1,259 ) ( 149,834 )

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

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

Distribution to a noncontrolling interest ( 6,955 ) ( 6,955 )

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

Cash dividends declared ($ 0.585 per common share)

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

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

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

See Notes to Unaudited Consolidated Financial Statements.

28 unchanged sentences

Recently issued pronouncements not yet adopted

ASU 2021-08 — In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ." Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASC Topic 606, at fair value on the acquisition date.

ASU 2021-08 requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts in accordance with ASC Topic 606 as if it had originated the contracts, which should generally result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements.

This update also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination.

The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

Early adoption is permitted, including adoption in an interim period.

Adoption during an interim period requires retrospective application to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application.

We are evaluating the effect of ASU 2021-08 on our consolidated financial statements.

ASU 2020-04 — In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848):

13 unchanged sentences

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):

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:

Provisional Amounts at Acquisition Date Measurement-Period Adjustments Provisional Amounts at September 30, 2021

(in thousands)

Cash and cash equivalents $ 67,374 $ — $ 67,374

9 unchanged sentences

Total purchase consideration $ 932,824 $ 422 $ 933,246

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.

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.

As of September 30, 2021, we considered these amounts to be provisional because we were still in the process of gathering and reviewing information to support the valuation of assets acquired and liabilities assumed and to evaluate the basis differences for assets and liabilities for financial reporting and tax purposes.

We made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $ 57.1 million.

The effects of the measurement-period adjustments on our consolidated statement of income for the third quarter of 2021 were not material.

Goodwill of $ 468.8 million arising from the acquisition, included in the Merchant Solutions 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.

The following table reflects the provisional estimated fair values of the identified intangible assets of Zego and the respective weighted-average estimated amortization periods:

Estimated Fair Value Weighted-Average Estimated Amortization Periods

(in thousands) (years)

Customer-related intangible assets $ 208,000 13

Contract-based intangible assets 119,000 20

Acquired technologies 124,000 6

Trademarks and trade names 22,000 15

Total estimated identifiable intangible assets $ 473,000 14

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 and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 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 nine months ended September 30, 2021 and 2020:

Three Months Ended September 30, 2021

Solutions Issuer

7 unchanged sentences

$ 1,495,898 $ 522,166 $ 207,670 $ ( 23,397 ) $ 2,202,337

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Solutions Issuer

7 unchanged sentences

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Solutions Issuer

7 unchanged sentences

$ 4,190,524 $ 1,528,349 $ 678,611 $ ( 67,703 ) $ 6,329,781

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Solutions Issuer

7 unchanged sentences

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

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

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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

(in thousands)

3 unchanged sentences

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, 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

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

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

Balance Sheet Location September 30, 2021 December 31, 2020

(in thousands)

5 unchanged sentences

Contract liabilities, net (noncurrent) Other noncurrent liabilities 46,290 52,944

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.

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

Revenue recognized for the three months ended September 30, 2021 and 2020 from contract liability balances at the beginning of each period was $ 75.5 million and $ 69.7 million, respectively.

Revenue recognized for the nine months ended September 30, 2021 and 2020 from contract liability balances at the beginning of each period was $ 186.0 million and $ 195.3 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 June 30, 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 September 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.

5 unchanged sentences

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

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

September 30, 2021 December 31, 2020

(in thousands)

13 unchanged sentences

$ 11,529,826 $ 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:

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

Solutions Issuer

5 unchanged sentences

Measurement period adjustments ( 5,202 ) — ( 140 ) ( 5,342 )

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.

Balance at September 30, 2021 $ 14,027,163 $ 7,953,358 $ 2,363,754 $ 24,344,275

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

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 was converted by Visa representing approximately half of the original potential conversion rate.

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

NOTE 6— LONG-TERM DEBT AND LINES OF CREDIT

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

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

(in thousands)

26 unchanged sentences

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 September 30, 2021, unamortized discount on senior notes was $ 8.7 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $ 49.0 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 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):

At September 30, 2021, unamortized debt issuance costs on the unsecured revolving credit facility were $ 10.8 million, and at December 31, 2020, unamortized debt issuance costs on the unsecured revolving credit facility were $ 13.8 million.

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

Year Ending December 31,

8 unchanged sentences

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 June 30, 2021.

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

1 unchanged sentence

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

As of September 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 June 30, 2021.

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

As of September 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 September 30, 2021.

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, 2021 Range of Maturity Dates at

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

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

September 30, 2021 September 30, 2021 December 31, 2020

(in thousands)

1 unchanged sentence

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

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

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

Other noncurrent liabilities 2.73 % December 31, 2022 $ 40,701 $ 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 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

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 nine months ended September 30, 2021 and 2020:

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

(in thousands)

Net unrealized gains (losses) recognized in other comprehensive income (loss) $ ( 410 ) $ ( 5,630 ) $ 584 $ ( 53,526 )

Net unrealized (losses) gains recognized in other comprehensive income (loss) $ ( 646 ) $ 194 $ ( 62 ) $ ( 53,332 )

Net unrealized losses reclassified out of other comprehensive income (loss) to interest expense $ 9,788 $ 11,133 $ 30,288 $ 25,786

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.

As of September 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 $ 38.5 million.

Interest Expense

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.

Interest expense was $ 82.3 million and $ 82.1 million for the three months ended September 30, 2021 and 2020, respectively, and $ 242.9 million and $ 244.3 million for the nine months ended September 30, 2021 and 2020, respectively.

NOTE 7— INCOME TAX

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.

Our effective income tax rates for the three and nine months ended September 30, 2021 were 15.5 % and 16.3 %, respectively.

Our effective income tax rates for the three and nine months ended September 30, 2021 differed favorably 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.

Our effective income tax rate for the nine months ended September 30, 2021 also included the effect of enacted tax law changes in the U.K.

which required a remeasurement of deferred tax balances raising the effective rate, and was favorably affected by a change in the assessment of the need for a valuation allowance related to foreign tax credit carryforwards.

The effective rate for each period includes the effects of applicable state income taxes.

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 a 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.

The effective rate for each period includes the effects of applicable state income taxes.

NOTE 8— 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 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 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.

During the three months ended September 30, 2021, we repurchased and retired 4,232,232 shares of our common stock at a cost, including commissions, of $ 740.8 million, or $ 175.03 per share.

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

During the nine months ended September 30, 2021 and 2020, we repurchased and retired 9,689,181 and 2,094,731 shares of our common stock at a cost, including commissions, of $ 1,813.7 million and $ 404.0 million, or $ 187.21 per share and $ 192.85 per share, respectively.

The activity for the nine months ended September 30, 2021 included the repurchase of 2,491,161 shares at an average price of $ 200.71 per share under an ASR agreement we entered into on February 10, 2021 with a financial institution to repurchase an aggregate of $ 500 million of our common stock during the A SR program purchase period, which ended on March 31, 2021.

As of September 30, 2021, the remaining amount available under our share repurchase program was $ 949.2 million.

On October 28, 2021, our board of directors declared a dividend of $ 0.25 per share payable on December 30, 2021 to common shareholders of record as of December 16, 2021.

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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

(in thousands) (in thousands)

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Share-Based Awards

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

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

Shares Weighted-Average

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Forfeited ( 90 ) 180.76

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.

Unvested at September 30, 2021 1,731 $ 183.74

The total fair value of restricted stock and performance awards vested during the nine months ended September 30, 2021 and September 30, 2020 was $ 178.9 million and $ 77.9 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of $ 62.2 million and $ 38.9 million during the three months ended September 30, 2021 and 2020, respectively, and $ 135.6 million and $ 94.9 million during the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, there was $ 204.9 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, 2021:

The following table summarizes stock option activity for the nine months ended September 30, 2021:

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

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Exercised ( 181 ) 69.08

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.

Outstanding at September 30, 2021 1,183 $ 106.98 6.0 $ 69.4

Options vested and exercisable at September 30, 2021 908 $ 86.45 5.3 $ 66.4

We recognized compensation expense for stock options of $ 1.9 million and $ 2.4 million during the three months ended September 30, 2021 and 2020, respectively, and $ 6.0 million and $ 6.5 million for the nine months ended September 30, 2021 and 2020, respectively.

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $ 23.4 million and $ 69.8 million, respectively.

As of September 30, 2021, we had $ 10.1 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 1.9 years.

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

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 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 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

The dilutive share base for the three and nine months ended September 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 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.

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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 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 June 30, 2021 and December 31, 2020 to the amounts in the consolidated balance sheets is as follows:

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

(in thousands)

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Accounts payable and accrued liabilities

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.

At September 30, 2021 and December 31, 2020, accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $ 17.7 million and $ 48.4 million, respectively, for employee termination benefits resulting from integration activities related to our merger with Total System Services, Inc.

(the "Merger").

During the three months ended September 30, 2021 and 2020, we recognized charges for employee termination benefits of $ 4.7 million and $ 8.1 million, which included $ 1.9 million of share-based compensation expense for the three months ended September 30, 2020.

During the nine months ended September 30, 2021 and 2020, we recognized charges for employee termination benefits of $ 43.0 million

and $ 49.8 million, which included $ 1.2 million and $ 6.1 million of share-based compensation expense, respectively.

As of September 30, 2021, the cumulative amount of recognized charges for employee termination benefits resulting from Merger-related integration activities was $ 183.4 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 12— 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, 2021 and 2020:

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, 2021 and 2020:

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

(in thousands)

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

Other comprehensive income (loss) ( 74,983 ) 6,934 ( 2,209 ) ( 70,258 )

Balance at September 30, 2021 $ ( 181,865 ) $ ( 58,614 ) $ ( 2,486 ) $ ( 242,965 )

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

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 )

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was a loss of $( 4.1 ) million and income of $ 8.8 million for the three months ended September 30, 2021 and 2020, respectively.

Foreign Currency Translation 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 )

Other comprehensive income (loss) ( 67,638 ) 22,929 4,017 ( 40,692 )

Balance at September 30, 2021 $ ( 181,865 ) $ ( 58,614 ) $ ( 2,486 ) $ ( 242,965 )

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 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.

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

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

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was a loss of $( 7.4 ) million and income of $ 7.5 million for the nine months ended September 30, 2021 and 2020, respectively.

NOTE 13— 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 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

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

(in thousands)

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(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.

(2) Operating loss for Corporate included acquisition and integration expenses of $ 70.7 million and $ 57.6 million during the three months ended September 30, 2021 and 2020, respectively, and $ 237.7 million and $ 208.0 million during the nine months ended September 30, 2021 and 2020, respectively.

NOTE 14— COMMITMENTS AND CONTINGENCIES

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

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

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

Year Ending December 31:

13 unchanged sentences

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