What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-18 compared with 2021-02-19 · 299 added, 320 removed, 1243 unchanged (33% of the section changed)

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of Global Payments Inc.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with the applicable accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in fiscal year 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinion

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Professional services representing performance obligations are satisfied over time.

We identified the determination of performance obligations for Issuer Solutions revenue contracts as a critical audit matter, given the judgment required to determine whether promised services are capable of being distinct and are distinct within the context of the contract.

We identified the determination of performance obligations for Issuer Solutions revenue contracts as a critical audit matter, given the judgment required to determine whether any unusual and/or complex terms within the contract are identified and

evaluated appropriately.

A high degree of auditor judgment was required to evaluate the Company's identification of the performance obligations in the contract.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2020, of the Company and our report dated February 19, 2021, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s change in its method of accounting for leases in fiscal year 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases .

As described in Management's Report on Internal Control over Financial Reporting, the Company completed the acquisition of Zego on June 10, 2021, and management excluded from its assessment of internal control over financial reporting the acquired operations of Zego, which constituted approximately 1% of consolidated assets, excluding goodwill, less than 1% of consolidated revenues, and less than 1% of consolidated operating income, as of and for the year ended December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting of the acquired operations of Zego that is excluded from management’s assessment.

Basis for Opinion

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Foreign currency translation adjustments ( 79,550 ) 153,210 58,369

Income tax benefit (expense) related to foreign currency translation adjustments 1,160 1,281 ( 832 )

Net unrealized losses on hedging activities ( 52,742 ) ( 90,238 ) ( 7,553 )

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

36,510 2,257 ( 4,792 )

Income tax benefit related to hedging activities 4,008 21,036 2,972

Income tax benefit related to foreign currency translation adjustments 455 1,160 1,281

Net unrealized gains (losses) on hedging activities 3,425 ( 52,742 ) ( 90,238 )

Reclassification of net unrealized losses on hedging activities to interest expense 40,094 36,510 2,257

Income tax (expense) benefit related to hedging activities ( 10,466 ) 4,008 21,036

Other, net of tax 3,760 ( 7,150 ) 4,174

Other comprehensive income (loss) 134,996 ( 3,121 ) ( 127,884 )

Other comprehensive (loss) income ( 42,282 ) 134,996 ( 3,121 )

Comprehensive income

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Deferred income taxes ( 189,050 ) ( 166,224 ) ( 108,309 )

Equity in income of equity investments, net of tax ( 88,297 ) ( 13,541 ) —

Equity in income of equity method investments, net of tax ( 112,353 ) ( 88,297 ) ( 13,541 )

Facilities exit charges 51,349 — —

Distribution received on investments 36,914 7,738 —

Other, net 10,810 ( 21,403 ) 12,971

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Cash flows from financing activities:

Net (repayments of) borrowings from settlement lines of credit ( 133,282 ) ( 236,473 ) 70,783

Net borrowings from (repayments of) settlement lines of credit 149,528 ( 133,282 ) ( 236,473 )

Proceeds from long-term debt 7,057,668 2,401,147 7,203,903

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— ( 578,196 ) —

Net cash (used in) provided by financing activities ( 1,546,142 ) ( 28,674 ) 286,930

Contributions from noncontrolling interests

Net cash used in financing activities ( 405,365 ) ( 1,546,142 ) ( 28,674 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 48,382 ) 81,832 21,877

Increase (decrease) in cash, cash equivalents and restricted cash 411,498 467,395 ( 124,977 )

Increase in cash, cash equivalents and restricted cash 33,252 411,498 467,395

Cash, cash equivalents and restricted cash, beginning of the period 2,089,771 1,678,273 1,210,878

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

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

Net income 965,460 965,460 22,404 987,864

Other comprehensive income 120,353 120,353 14,643 134,996

Other comprehensive loss ( 32,001 ) ( 32,001 ) ( 10,281 ) ( 42,282 )

Stock issued under share-based compensation plans 2,085 49,545 49,545 49,545

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Share-based compensation expense 180,779 180,779 180,779

Noncontrolling interest of acquired business 14,812 14,812

Purchase of subsidiary shares from noncontrolling interest

Contributions from noncontrolling interests — 69,987 69,987

Change in ownership attributable to a noncontrolling interest

— ( 4,524 ) 92 ( 4,432 ) 4,432 —

Distributions to noncontrolling interests ( 26,199 ) ( 26,199 )

Repurchases of common stock ( 15,169 ) ( 2,219,143 ) ( 294,486 ) ( 2,513,629 ) ( 2,513,629 )

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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 standards ( 5,379 ) ( 5,379 ) ( 5,379 )

Net income 584,520 584,520 20,580 605,100

Other comprehensive loss ( 396 ) ( 396 ) ( 2,725 ) ( 3,121 )

Other comprehensive income 120,353 120,353 14,643 134,996

Stock issued under share-based compensation plans 1,726 66,142 66,142 66,142

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Share-based compensation expense 148,792 148,792 148,792

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

Distribution of noncontrolling interests ( 31,632 ) ( 31,632 )

Noncontrolling interest of acquired business — 14,812 14,812

Purchase of subsidiary shares from noncontrolling interest ( 497,737 ) ( 12,055 ) ( 509,792 ) ( 68,404 ) ( 578,196 )

Distributions to noncontrolling interests ( 26,199 ) ( 26,199 )

Repurchases of common stock ( 3,304 ) ( 525,886 ) ( 108,062 ) ( 633,948 ) ( 633,948 )

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

Cumulative effect of adoption of new accounting standards 50,969 ( 1,843 ) 49,126 49,126

Net income 430,613 430,613 38,663 469,276

Other comprehensive income ( 125,188 ) ( 125,188 ) ( 2,696 ) ( 127,884 )

Other comprehensive loss ( 396 ) ( 396 ) ( 2,725 ) ( 3,121 )

Stock issued under share-based compensation plans 991 24,514 24,514 24,514

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Share-based compensation expense 89,634 89,634 89,634

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

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

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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:

Merchant Solutions, Issuer Solutions and Business and Consumer Solutions, which are described in "Note 16—Segment Information." Global Payments Inc.

and its consolidated subsidiaries are referred to collectively as "Global Payments," the "Company," "we," "our" or "us," unless the context requires otherwise.

and its consolidated subsidiaries are referred to herein collectively as "Global Payments," the "Company," "we," "our" or "us," unless the context requires otherwise.

On September 18, 2019, we consummated our merger with Total System Services, Inc.

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These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").

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

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

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

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

COVID-19 Update — Since early 2020, the global economy has been 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 continue, and its ultimate severity, scope 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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Recently adopted accounting pronouncements

Accounting Standards Update ("ASU") 2018-15 — In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

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

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ," which provides optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

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

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

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

If elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant Accounting Standards Codification ("ASC") Topic or Industry Subtopic that contains the guidance that otherwise

would be required to be applied.

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

A portion of our indebtedness, related to borrowings under the term loan credit agreement ("Term Loan Credit Agreement") and revolving credit agreement ("Unsecured Revolving Credit Agreement"), bears interest at a variable rate based on LIBOR.

Borrowings under the Term Loan Credit Agreement were made in U.S.

dollars and borrowings under the Unsecured Revolving Credit Agreement are available to be made in U.S.

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

In connection with the sunset of certain LIBOR reference rates occurring at the end of 2021, we amended the Unsecured Revolving Credit Agreement in December 2021 to replace LIBOR as administered by the ICE Benchmark Administration with the Sterling Overnight Index Average Reference Rate and the Euro Interbank Offered Rate for any extension of credit denominated in sterling or euros, respectively.

We elected to apply the expedients under ASU 2020-04 to the amendment, the application of which did not result in any effect on our consolidated financial statements.

Further amendments may be necessary to address the LIBOR reference rates applicable to borrowings made in U.S.

Furthermore, we have entered into hedging instruments to manage our exposure to fluctuations in the USD LIBOR benchmark interest rate, which will mature as of December 31, 2022.

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

ASU 2019-12 — In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

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

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

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

The adoption of ASU 2019-12 on January 1, 2021 did not have a material effect on our consolidated financial statements.

ASU 2018-15 — In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

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

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

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

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

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

We have historically capitalized implementation costs associated with cloud computing arrangements that are

service contracts following the guidance in Subtopic 350-40 and will continue to do so pursuant to the clarifications provided in the new guidance.

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

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

Our cloud computing arrangements involve services we use to support certain internal corporate functions as well as technology associated with revenue-generating activities.

As of December 31, 2020, capitalized implementation costs, net of accumulated amortization, were $ 16.2 million and are presented within other noncurrent assets in the consolidated balance sheets.

Amortization expense for the year ended December 31, 2020 was $ 3.1 million, and is presented in the same line item in the consolidated statements of income as the expense for the associated cloud services arrangement.

As of December 31, 2021 and 2020, capitalized implementation costs, net of accumulated amortization, were $ 72.4 million and $ 16.2 million, respectively, and are presented within other noncurrent assets in the consolidated balance sheets.

Amortization expense for the years ended December 31, 2021 and 2020 was $ 3.0 million and $ 3.1 million, respectively, and is presented in the same line item in the consolidated statements of income as the expense for the associated cloud services arrangement.

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

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

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

Under the current expected credit losses model required by ASU 2016-13, we recognize at asset inception and each

subsequent reporting date an estimate of credit losses expected to occur over the remaining life of each pool of financial assets with similar risk characteristics.

ASU 2016-02 — ASU 2016-02 “Leases” requires recognition of assets and liabilities for the rights and obligations created by leases and new disclosures about leases.

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Adoption did not have a material effect on any line items in our consolidated statement of income or on our cash flows from operating activities, investing activities or financing activities included in our consolidated statement of cash flows.

ASU 2014-09 — We adopted ASU 2014-09, "Revenues from Contracts with Customers (Topic 606)" as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard ("ASC 606") and ASC Subtopic 340-40:

"Other Assets and Deferred Costs - Contracts with Customers" ("ASC 340-40") on January 1, 2018.

We elected the modified retrospective transition method, which resulted in a net increase to retained earnings of $ 51.0 million for the cumulative effect of applying the standard.

The primary components of the cumulative-effect adjustment were changes in the accounting for certain costs to obtain and fulfill customer contracts and the related income tax effects, which resulted in increases to other noncurrent assets and deferred income tax liabilities of $ 64.6 million and $ 15.6 million, respectively.

Upon the adoption of ASC 606, we present revenue net of payments made to certain third-parties, including payment networks.

The adoption of ASC 606 did not have a material effect on any other line items in our consolidated statement of income for year ended December 31, 2018 or on any other line items in our consolidated balance sheet as of December 31, 2018 and had no effect on our cash flows from operating activities, investing activities or financing activities included in our consolidated statement of cash flows for the year ended December 31, 2018.

Revenue Recognition — At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good or service that is distinct.

In accordance with ASC 606, we recognize revenue when a customer obtains control of promised services.

In accordance with ASC Topic 606, Revenues from Contracts with Customers ("ASC 606"), we recognize revenue when a customer obtains control of promised services.

The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these services.

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Our customers in the Merchant Solutions segment contract with us for payment services, which we provide in exchange for consideration for completed transactions.

Our payment solutions are similar around the world in that we enable our customers to accept card, electronic, check and digital-based payments.

Our comprehensive offerings include, but are not limited to, authorization services, settlement and funding services, customer support and help-desk functions, chargeback resolution, payment security services, consolidated billing and statements and on-line reporting.

Our payment solutions are similar around the world in that we enable our customers to accept card, check and digital-based payments.

Our comprehensive offerings include, but are not limited to, authorization, settlement and funding services, customer support, chargeback resolution, payment security services, consolidated billing and reporting.

In addition, we may sell or lease point-of-sale terminals or other equipment to customers.

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Because these promised services within our SaaS arrangements are delivered concurrently over the contract term, we account for these promises as if they are a single performance obligation that includes a series of distinct services with the same pattern of transfer to the customer.

In addition, certain installation services are not considered distinct from the SaaS and are recognized over the expected period of benefit.

In addition, certain implementation services are not considered distinct from the SaaS and are recognized over the expected period of benefit.

Once we determine the performance obligations and the transaction price, including an estimate of any variable consideration, we then allocate the transaction price to each performance obligation in the contract using a relative standalone selling price method.

We determine standalone selling price based on the price at which the good or service is sold separately.

the standalone selling price is not observable through past transactions, we estimate the standalone selling price by considering all reasonably available information, including market conditions, trends or other company- or customer-specific factors.

If the standalone selling price is not observable through past transactions, we estimate the standalone selling price by considering all reasonably available information, including market conditions, trends or other company- or customer-specific factors.

Substantially all of the performance obligations within our SaaS arrangements described above are satisfied over time.

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Business and Consumer Solutions.

Business and Consumer Solution arrangements include a stand-ready performance obligation to provide account access and facilitate purchase transactions.

Business and Consumer Solutions arrangements include a stand-ready performance obligation to provide account access and facilitate purchase transactions.

Revenues principally consist of fees collected from cardholders and fees generated by cardholder activity in connection with the programs that we manage.

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Revenues are recognized net of fees charged by the payment networks for services they provide in processing transactions routed through them.

Additionally, certain of our Business and Consumer Solutions customer arrangements provide business-to-business ("B2B") payment services, consisting of a stand-ready obligation to process financial transactions for which revenue is recognized on a daily basis based on the services that are performed on that day.

Other customer contracts include subscription based SaaS arrangements that automate key procurement processes and enable virtual cards and integrated payments options, for which revenue is recognized over time on a ratable basis over the contract term beginning on the date that the services are made available to the customer.

Cash, cash equivalents and restricted cash — Cash and cash equivalents include cash on hand and all liquid investments with a maturity of three months or less when purchased.

We consider certain portions of our cash and cash equivalents to be unrestricted but not available for general purposes.

The amount of cash that we consider to be available for general purposes does not include the following:

The amount of cash that we consider to be available for general purposes, $ 894.6 million and $ 1,100.9 million as of December 31, 2021 and 2020, respectively, does not include the following:

(i) settlement-related cash balances, (ii) funds held as collateral for merchant losses ("Merchant Reserves") and (iii) funds held for customers.

Settlement-related cash balances represent funds that we hold when the incoming amount from the card networks precedes the funding obligation to the merchant.

Settlement-related cash balances are not restricted;

Settlement-related cash balances are not restricted in their use;

however, these funds are generally paid out in satisfaction of a processing obligation the following day.

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We record a corresponding liability in settlement processing assets and settlement processing obligations in our consolidated balance sheet.

While this cash is not restricted in its use, we believe that designating this cash as Merchant Reserves strengthens our fiduciary standing with financial institutions that sponsor us and is in accordance with guidelines set by the card networks.

Funds held for customers and the corresponding liability include amounts collected prior to remittance to or at the direction of our customers.

While this cash is not restricted in its use, we believe that designating this cash as Merchant Reserves strengthens our fiduciary standing with financial institutions that sponsor us.

Funds held for customers, which are not restricted in their use, include amounts collected before the corresponding obligation is due to be settled to or at the direction of our customers.

Restricted cash includes amounts that cannot be withdrawn or used for general operating activities under legal or regulatory restrictions.

Restricted cash consists of amounts deposited by customers for prepaid card transactions that are subject to local regulatory restrictions requiring appropriate segregation and restriction in their use.

These amounts cannot be withdrawn or used for general operating activities under legal or regulatory restrictions.

Restricted cash is included in prepaid expenses and other current assets in the consolidated balance sheet with a corresponding liability in accounts payable and accrued liabilities.

A reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheets to the beginning and ending balances shown in the consolidated statements of cash flows is as follows:

A reconciliation of the amounts of cash and cash equivalents and restricted cash in the consolidated balance sheets to the amount in the consolidated statements of cash flows is as follows:

(in thousands)

Cash and cash equivalents $ 1,979,308 $ 1,945,868

Restricted cash included in prepaid expenses and other current assets 143,903 —

Restricted cash 143,715 143,903

Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 2,123,023 $ 2,089,771

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

Accounts receivable is presented net of an allowance for credit losses of $ 20.6 million as of December 31, 2020.

Accounts receivable is presented net of an allowance for credit losses of $ 17.4 million and $ 20.6 million as of December 31, 2021 and 2020, respectively.

The measurement of the allowance for credit losses is recognized through credit loss expense and is included as a component of selling, general and administrative expense in our consolidated statements of income.

We recognized credit loss expense of $ 23.0 million for the year ended December 31, 2020.

We recognized credit loss expense of $ 12.8 million and $ 23.0 million for the years ended December 31, 2021 and 2020, respectively.

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

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At contract inception, we capitalize such costs that we expect to recover and that would not have been incurred if the contract had not been obtained.

In certain cases in which costs related to obtaining customers are incurred after the inception of the customer contract, such costs are capitalized as the corresponding liability is recognized.

In certain instances in which costs related to obtaining customers are incurred after the inception of the customer contract, such costs are capitalized as the corresponding liability is recognized.

We also capitalize certain costs incurred to fulfill our contracts with customers that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy our performance obligation under the contract and (iii) are expected to be recovered through revenues generated under the contract.

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If the contract requires the distributor or partner to perform specific acts and no other conditions exist for the distributor or partner to earn or retain the up-front payment, then we recognize the capitalized amount as an expense when the performance conditions have been met.

Up-front distributor and partner payments are classified on our consolidated balance sheets within prepaid expenses and other current assets and other noncurrent assets and the related expense is reported within selling, general and administrative expenses in our consolidated statements of income.

Up-front distributor and partner payments are classified in our consolidated balance sheets within prepaid expenses and other current assets and other noncurrent assets and the related expense is reported within selling, general and administrative expenses in our consolidated statements of income.

Settlement processing assets and obligations — Funds settlement refers to the process in our Merchant Solutions segment of transferring funds between card issuers and merchants for merchant sales and credits processed on our systems.

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Timing differences, interchange fees, merchant reserves and exception items cause differences between the amount received from the payment networks and the amount funded to the merchants.

These intermediary balances arising in our settlement process are reflected as settlement processing assets and obligations on our consolidated balance sheets.

These intermediary balances arising in our settlement process are reflected as settlement processing assets and obligations in our consolidated balance sheets.

Settlement processing assets and obligations include the following components:

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In these situations, we apply offsetting to determine a net position for each Member agreement.

If that net position is an asset, we reflect the net amount in settlement processing assets on our consolidated balance sheet.

If that net position is a liability, we reflect the net amount in settlement processing obligations on our consolidated balance sheet.

If that net position is an asset, we reflect the net amount in settlement processing assets in our consolidated balance sheet.

If that net position is a liability, we reflect the net amount in settlement processing obligations in our consolidated balance sheet.

In the direct membership model, offsetting is not applied, and the individual components are presented as an asset or obligation based on the nature of that component.

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We require cash deposits, guarantees, letters of credit and other types of collateral from certain merchants to minimize the risk of loss, and we also utilize

a number of systems and procedures to manage merchant risk.

The allowance for credit losses on settlement processing assets was $ 6.2 million as of December 31, 2020.

We require cash deposits, guarantees, letters of credit and other types of collateral from certain merchants to minimize the risk of loss, and we also utilize a number of systems and procedures to manage merchant risk.

The allowance for credit losses on settlement processing assets was $ 3.0 million and $ 6.2 million as of December 31, 2021 and 2020, respectively.

The measurement of the allowance for credit losses is recognized through credit loss expense and is included as a component of cost of service in our consolidated statements of income.

We recognized credit loss expense of $ 16.8 million for the year ended December 31, 2020.

We recognized credit loss expense of $ 3.6 million and $ 16.8 million for the years ended December 31, 2021 and 2020, respectively.

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

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In our check guarantee service offering, we charge our merchants a percentage of the gross amount of the check and guarantee payment of the check to the merchant in the event the check is not honored by the checkwriter's bank.

We have the right to collect the full amount of the check from the checkwriter, but we have not always recovered 100% of the guaranteed checks.

We have the right to collect the full

amount of the check from the checkwriter, but we have not always recovered 100% of the guaranteed checks.

We recognize an allowance for estimated losses on returned checks to reduce the claims receivable balance to the amount expected to be recovered, which is determined based on recent loss history and expected future collection trends.

Check guarantee claims receivable are included in prepaid expenses and other current assets in the consolidated balance sheets and are presented net of an allowance of $ 2.1 million as of December 31, 2020.

The provision for check guarantee losses, which is approximately $ 10.1 million for the year ended December 31, 2020, is included as a component of cost of service in the consolidated statements of income.

Check guarantee claims receivable are included in prepaid expenses and other current assets in the consolidated balance sheets and are presented net of an allowance of $ 2.5 million and $ 2.1 million as of December 31, 2021 and 2020, respectively.

The provision for check guarantee losses, which was approximately $ 10.2 million and $ 10.1 million for the years ended December 31, 2021 and 2020, respectively, is included as a component of cost of service in the consolidated statements of income.

Reserve for contract contingencies and processing errors — A significant number of our customer contracts in our Issuer Solutions segment contain service level agreements that can result in performance penalties payable by us if we do not meet contractually required service levels.

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Costs incurred during the preliminary project stage are recognized as expense as incurred.

Capitalized internal-use software is

amortized over its estimated useful life, which is typically two to ten years, in a manner that best reflects the pattern of economic use of the assets.

Capitalized internal-use software is amortized over its estimated useful life, which is typically five to ten years , in a manner that best reflects the pattern of economic use of the assets.

Goodwill — We perform our annual goodwill impairment test as of October 1 each year.

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If we elect to bypass the qualitative assessment or if we determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative test would be required.

The quantitative assessment compares the fair value of the reporting unit to its carrying amount, and recognizes an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, without exceeding the total amount of goodwill allocated to that reporting unit.

The quantitative assessment compares the estimated fair value of the reporting unit to its carrying amount, and recognizes an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, without exceeding the

total amount of goodwill allocated to that reporting unit.

When applying the quantitative assessment, we determine the fair value of our reporting units based on a weighted average of multiple valuation techniques, principally a combination of an income approach and a market approach.

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North America Payment Solutions, Integrated Solutions, Vertical Market Software Solutions, Europe Merchant Solutions, Spain Merchant Solutions, Asia-Pacific Merchant Solutions, Issuer Solutions and Business and Consumer Solutions.

As of October 1, 2020, we performed a quantitative assessment of impairment for our Issuer Solutions and Business and Consumer Solutions reporting units and a qualitative assessment for all other reporting units.

We determined on the basis of the quantitative assessments of our Issuer Solutions and Business and Consumer Solutions reporting units that the fair value of each reporting unit is equal to or greater than its respective carrying amount.

As of October 1, 2021, we performed a quantitative assessment of impairment for our Vertical Market Software Solutions, Issuer Solutions and Business and Consumer Solutions reporting units and a qualitative assessment for all other reporting units.

We determined on the basis of the quantitative assessments of our Vertical Market Software Solutions, Issuer Solutions and Business and Consumer Solutions reporting units that the fair value of each reporting unit is greater than its respective carrying amount.

Additionally, we determined on the basis of the qualitative factors that the fair value of other reporting units was not more likely than not less than the respective carrying amounts.

Our current year assessments also included consideration of the expected near term effects of the COVID-19 pandemic on revenues and our cost mitigation efforts, as well as longer term performance expectations.

We believe that the fair value of each of our reporting units is substantially in excess of its carrying amount, except for Issuer Solutions and Business and Consumer Solutions for which the respective carrying amounts approximate fair value since they were recently acquired in the Merger.

Other intangible assets — Other intangible assets include customer-related intangible assets (such as customer lists, merchant contracts and referral agreements), contract-based intangible assets (such as noncompete agreements, distributor agreements and processing rights), acquired technologies, trademarks and trade names associated with business combinations.

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The useful lives of contract-based intangible assets are equal to the terms of the agreements.

The useful lives of acquired technologies are based on an estimate of the period over which we expect to receive economic benefit.

The useful lives of amortizable trademarks and trade names are based on an estimate of the period over which we will earn revenues for the related brands, including contemplation of any future plans to use the trademarks and trade names in the applicable markets.

We use the straight-line method of amortization for our acquired technologies, trademarks and trade names and contract-based intangibles.

Amortization for most of our customer-related intangible assets is determined using an accelerated method.

We use the straight-line method of amortization for our amortizable acquired technologies, trademarks and trade names and certain contract-based intangibles.

Amortization for most of our customer-related intangible assets and certain contract-based intangibles is determined using an accelerated method.

Under this accelerated method, the first step in determining the amortization expense for any period is that we divide the expected cash flows for that period that were used in determining the acquisition-date fair value of the asset by the expected total cash flows over the estimated life of the asset.

We then multiply that ratio by the initial carrying amount of the asset to arrive at the amortization expense for that period.

If the cash flow patterns that we experience differ significantly from our

initial estimates, we adjust the amortization schedule prospectively.

We believe that our accelerated method reflects the expected pattern of the benefit to be derived from the acquired customer relationships.

Impairment of long-lived assets — We regularly evaluate whether events and circumstances have occurred that indicate the carrying amount of property and equipment and finite-life intangible assets may not be recoverable.

When factors indicate that these long-lived assets should be evaluated for possible impairment, we assess the potential impairment by determining whether the carrying amount of such long-lived assets will be recovered through the future undiscounted cash flows expected from use of the asset and its eventual disposition.

The evaluation is performed at the asset group level, which is the lowest level of identifiable cash flows.

If the carrying amount of the asset group is determined not to be recoverable, a write-down to fair value is recorded.

Fair values are determined based on quoted market prices or discounted cash flow analysis as applicable.

We regularly evaluate whether events and circumstances have occurred that indicate the useful lives of property and equipment and finite-life intangible assets may warrant revision.

If the cash flow patterns that we experience differ significantly from our initial estimates, we adjust the amortization schedule prospectively.

We believe that our accelerated method reflects the expected pattern of the benefit to be derived.

Leases — We evaluate each of our lease and service arrangements at inception to determine if the arrangement is, or contains, a lease and the appropriate classification of each identified lease.

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The incremental borrowing rate used is a fully collateralized rate that considers our credit rating, market conditions and the term of the lease at the lease commencement date.

Equity method investments — We have certain investments, including a 45 % investment in China UnionPay Data Co., Ltd., which we account for using the equity method of accounting.

Impairment of long-lived assets — We regularly evaluate whether events and circumstances have occurred that indicate the carrying amount of property and equipment, lease right-of-use assets and finite-life intangible assets may not be recoverable.

When factors indicate that these long-lived assets should be evaluated for possible impairment, we assess the

potential impairment by determining whether the carrying amount of such long-lived assets will be recovered through the future undiscounted cash flows expected from use of the asset and its eventual disposition.

The evaluation is performed at the asset group level, which is the lowest level of identifiable cash flows.

If the carrying amount of the asset group is determined not to be recoverable, a write-down to fair value is recorded.

Fair values are determined based on quoted market prices or discounted cash flow analysis as applicable.

We regularly evaluate whether events and circumstances have occurred that indicate the useful lives of property and equipment and finite-life intangible assets may warrant revision.

Equity method investments — We have certain investments, including a 45 % interest in China UnionPay Data Co., Ltd.

that we account for using the equity method of accounting.

Equity method investments are recorded initially at cost and subsequently adjusted for equity in earnings, cash contributions and distributions, and foreign currency translation adjustments.

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Subsequent changes in the estimated accrued buyout liability due to merchant attrition, same-store sales growth or contraction and changes in profitability are included in the selling, general and administrative expense in the consolidated statements of income.

The classification of the accrued buyout liability between current and noncurrent on the consolidated balance sheet is based upon our estimate of the amount of the accrued buyout liability that we reasonably expect to pay over the next 12 months.

The classification of the accrued buyout liability between current and noncurrent in the consolidated balance sheet is based upon our estimate of the amount of the accrued buyout liability that we reasonably expect to pay over the next 12 months.

Income taxes — Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates.

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If we determine that the tax position is more likely than not to be sustained, we recognize the largest amount of benefit that is more likely than not to be realized when the tax position is settled.

interest and penalties related to unrecognized income tax benefits in interest and selling, general and administrative expenses, respectively, in our consolidated statements of income.

We present interest and penalties related to unrecognized income tax benefits in interest and selling, general and administrative expenses, respectively, in our consolidated statements of income.

Derivative instruments — We may use interest rate swaps or other derivative instruments to manage a portion of our exposure to the variability in interest rates.

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Fluctuations in the value of these instruments generally are offset by changes in the forecasted cash flows of the underlying exposures being hedged.

This offset is driven by the high degree of effectiveness between the exposure being hedged and the hedging instrument.

offset is driven by the high degree of effectiveness between the exposure being hedged and the hedging instrument.

We designated each of our active interest rate swap agreements as a cash flow hedge of interest payments on variable rate borrowings.

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See "Note 8 — Long-Term Debt and Lines of Credit" for further information.

We also have investments in equity instruments without readily determinable fair value.

We also have investments in equity instruments without readily determinable fair values.

As permitted, we have elected a measurement alternative for equity instruments that do not have readily determinable fair values.

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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.

During the year ended December 31, 2020 there were 124,888 stock options that had an antidilutive effect on the computation of diluted EPS.

During the years ended December 31, 2019 and 2018, there were no stock options that would have an antidilutive effect on the computation of diluted EPS.

During the years ended December 31, 2021 and 2020, there were 234,813 and 124,888 , respectively, of stock options that would have an antidilutive effect on the computation of diluted EPS.

During the year ended December 31, 2019, there were no stock options that would have an antidilutive effect on the computation of diluted EPS.

The following table sets forth the computation of the diluted weighted-average number of shares outstanding for all periods presented:

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Recently issued pronouncements not yet adopted

ASU 2019-12 — In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

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

We will adopt ASU 2019-12 when it becomes effective for us on January 1, 2021.

We have completed our evaluation of the effect of ASU 2019-12 on our consolidated financial statements and internal controls.

We do not expect the adoption of this standard will have a material effect on our consolidated financial statements.

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

or reassessment of a previous accounting determination.

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

A portion of our current indebtedness bears interest at a variable rate based on LIBOR.

Furthermore, we have entered into hedging instruments to manage our exposure to fluctuations in the LIBOR benchmark interest rate.

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

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 potential effects of ASU 2021-08 on our consolidated financial statements.

NOTE 2— ACQUISITIONS

The transactions described below were accounted for as business combinations, which generally requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date.

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.

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 December 31, 2021

(in thousands)

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

Accounts receivable 1,033 ( 16 ) 1,017

Identifiable intangible assets 410,443 62,557 473,000

Property and equipment 3,634 ( 3,059 ) 575

Other assets 9,141 ( 90 ) 9,051

Accounts payable and accrued liabilities ( 65,753 ) ( 5,253 ) ( 71,006 )

Deferred income tax liabilities ( 10,709 ) ( 3,193 ) ( 13,902 )

Other liabilities ( 8,268 ) 258 ( 8,010 )

Total identifiable net assets 406,895 51,204 458,099

Goodwill 525,929 ( 50,782 ) 475,147

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

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 December 31, 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 differences in the bases of 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 $ 50.8 million.

The effects of the measurement-period adjustments on our consolidated statement of income for the year ended December 31, 2021 were not material.

Goodwill of $ 475.1 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 substantially all of the goodwill will be deductible for income tax purposes.

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

Other business acquisitions

During the year ended December 31, 2021, we completed other business acquisitions that were insignificant, individually and in the aggregate, to the consolidated financial statements for an aggregate purchase price of $ 963 million.

The assets acquired and liabilities assumed were recorded based on the provisional estimated fair values, including intangible assets of $ 438 million and goodwill of $ 514 million.

See "Note 5 — Goodwill and Intangible Assets" for the aggregate allocation of goodwill to the respective segments.

The operating results of each acquisition have been included in the consolidated financial statements since the respective acquisition dates.

Total System Services, Inc.

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(1) Fair value of common stock issued to TSYS shareholders does not equal the product of shares of Global Payments common stock issued to TSYS shareholders and price per share of Global Payments common stock as presented in the table above due to the rounding of the number of shares in thousands.

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

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

Provisional Amounts at December 31, 2019 Measurement- Period Adjustments Final

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

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.

During the year ended December 31, 2020, we made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $ 39.7 million.

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

The decrease in deferred income tax liabilities for the year ended December 31, 2020 primarily related to a refined analysis of the outside bases of partnerships.

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

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Transaction costs directly related to the Merger were $ 68.9 million for the year ended December 31, 2019.

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

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

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

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• the income tax effects of the pro forma adjustments.

In addition, the pro forma net income attributable to Global Payments includes presentation of transaction costs of $ 150 million related to the Merger in earnings in the earliest period presented, the year ended December 31, 2018.

December 31, 2019 Year Ended

December 31, 2019

Actual Pro Forma Actual Pro Forma

Actual Pro Forma

(in thousands)

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Net income attributable to Global Payments $ 430,613 $ 711,658

SICOM Systems, Inc.

On October 17, 2018, we acquired SICOM Systems, Inc.

("SICOM") for total purchase consideration of $ 410.2 million, which we funded with cash on hand and incremental debt.

SICOM is a provider of end-to-end enterprise, cloud-based software solutions and other technologies to quick service restaurants and food service management companies.

Prior to the acquisition, SICOM was indirectly owned by a private equity investment firm where one of our board members was a partner and investor.

His direct interest in the transaction was approximately $ 1.1 million, the amount distributed to him based on his investment interest in the fund of the private equity firm that sold SICOM to us.

Based on consideration of all relevant information, the audit committee of our board of directors recommended that the board approve the acquisition of SICOM, which it did.

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

Provisional Amounts at December 31, 2018 Measurement- Period Adjustments Final

(in thousands)

Cash and cash equivalents $ 7,540 $ — $ 7,540

Property and equipment 5,943 ( 105 ) 5,838

Identified intangible assets 188,294 — 188,294

Other assets 22,278 ( 3 ) 22,275

Deferred income tax liabilities ( 48,448 ) 838 ( 47,610 )

Other liabilities ( 31,250 ) ( 100 ) ( 31,350 )

Total identifiable net assets 144,357 630 144,987

Goodwill 264,844 370 265,214

Total purchase consideration $ 409,201 $ 1,000 $ 410,201

Goodwill arising from the acquisition of $ 265.2 million, included in the Merchant Solutions segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining the acquired business into our existing business.

We expect that approximately $ 40.0 million of the goodwill from this acquisition will be deductible for income tax purposes.

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

Estimated Fair Values Weighted-Average Estimated Amortization Periods

(in thousands) (years)

Customer-related intangible assets $ 104,900 14

Acquired technologies 65,312 6

Trademarks and trade names 11,202 5

Contract-based intangible assets 6,880 5

Total estimated acquired intangible assets $ 188,294 10

On September 4, 2018, we acquired AdvancedMD, Inc.

("AdvancedMD") for total purchase consideration of $ 706.9 million, which we funded with cash on hand and incremental debt.

AdvancedMD is a provider of cloud-based enterprise software solutions to small-to-medium sized ambulatory-care physician practices.

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

Provisional Amounts at December 31, 2018 Measurement- Period Adjustments Final

(in thousands)

Cash and cash equivalents $ 7,657 $ — $ 7,657

Property and equipment 5,672 — 5,672

Identified intangible assets 419,500 — 419,500

Other assets 11,958 ( 173 ) 11,785

Deferred income tax liabilities ( 98,979 ) 4,935 ( 94,044 )

Other liabilities ( 15,624 ) ( 23 ) ( 15,647 )

Total identifiable net assets 330,184 4,739 334,923

Goodwill 376,701 ( 4,739 ) 371,962

Total purchase consideration $ 706,885 $ — $ 706,885

Goodwill arising from the acquisition of $ 372.0 million, included in the Merchant Solutions segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining the acquired business into our existing business.

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

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

Estimated Fair Values Weighted-Average Estimated Amortization Periods

(in thousands) (years)

Customer-related intangible assets $ 303,100 11

Acquired technologies 83,700 5

Trademarks and trade names 32,700 15

Total estimated identified intangible assets $ 419,500 10

Valuation of Identified Intangible Assets

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$ 5,665,557 $ 4,688,335 $ 4,098,580

ASC 606 requires that we determine for each customer arrangement whether revenues should be recognized at a point in time or over time.

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 years ended December 31, 2021, 2020, and 2019, substantially all of our revenues were recognized over time.

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

Revenue recognized for the year ended December 31, 2020 and 2019 from contract liability balances at the beginning of each period was $ 182.3 million and $ 137.2 million, respectively.

Revenue recognized for the years ended December 31, 2021 and 2020 from contract liability balances at the beginning of each period was $ 207.1 million and $ 182.3 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 revenues expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at December 31, 2020.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at December 31, 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 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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778,533 679,686

Buildings 2 - 43

195,088 208,264

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$ 1,687,586 $ 1,578,532

As a result of actions taken during the fourth quarter of 2021 to reduce our facilities footprint in certain markets around the world given the success of remote work and flexible arrangements implemented during the COVID-19 pandemic, we recognized charges of $ 9.2 million in selling, general and administrative expenses in our consolidated statement of income, primarily related to certain leasehold improvements, furniture and fixtures and equipment to reduce the carrying amount of each asset group to the estimated fair value.

We continue to evaluate our physical footprint and additional charges may be incurred as these facilities exit activities continue in 2022.

During the fourth quarter of 2019, we wrote-off capitalized software assets of $ 31.1 million related to legacy Global Payments technology that will no longer be utilized for the combined company.

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There were no accumulated impairment losses for goodwill at any balance sheet date reflected in the table above.

Customer-related intangible assets, acquired technologies and contract-based intangible assets acquired during the year ended December 31, 2020 had weighted-average amortization periods of 8.9 years, 5.0 years, and 9.8 years, respectively.

Customer-related intangible assets, acquired technologies, contract-based intangible assets, and trademarks and trade names acquired during the year ended December 31, 2021 had weighted-average amortization periods of 11.9 years, 6.0 years, 18.5 years, and 15.0 years, respectively.

Customer-related intangible assets, acquired technologies, contract-based intangible assets and trademarks and trade names acquired during the year ended December 31, 2019 had weighted-average amortization periods of 15.1 years, 6.9 years, 17.7 years and 10.7 years, respectively.

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2025 1,110,748

2025 1,051,578

NOTE 6— LEASES

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As described in "Note 1—Basis of Presentation and Summary of Significant Accounting Policies," we adopted ASU 2016-02 on January 1, 2019.

Unless otherwise indicated, the following information in this footnote applies only to periods after December 31, 2018.

As of December 31, 2021 and 2020, right-of-use assets and lease liabilities consisted of the following:

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(1) Total operating lease payments do not include approximately $ 24.2 million for operating leases that had not yet commenced at December 31, 2021.

Total finance lease payments do not include approximately $ 18.1 million for finance leases that had not yet commenced at December 31, 2020.

We expect the lease commencement dates for these leases to occur in 2022.

Operating lease costs in our consolidated statement of income for the year ended December 31, 2020 we re $ 147.0 million, including $ 108.4 million in selling, general and administrative expenses and $ 38.6 million in cost of services.

Total lease costs for the year ended December 31, 2020 include variable lease costs of approximatel y $ 17.9 million, w hich are primarily comprised of the cost of property taxes, insurance and maintenance.

Operating lease costs in our consolidated statement of income for the year ended December 31, 2021 were $ 195.6 million, including $ 157.4 million in selling, general and administrative expenses and $ 38.2 million in cost of services.

Total lease costs for the year ended December 31, 2021 include variable lease costs of $ 18.1 million, which are primarily comprised of the cost of property taxes, insurance and maintenance.

Finance lease costs for the year ended December 31, 2021 were $ 20.5 million, including $ 18.4 million of amortization on right-of use assets and $ 2.2 million of interest on lease liabilities.

Lease costs for leases with a term of less than 12 months were not material for the year ended December 31, 2021 .

Operating lease costs in our consolidated statement of income for the year ended December 31, 2020 were $ 147.0 million, including $ 108.4 million in selling, general and administrative expenses and $ 38.6 million in cost of services.

Total lease costs for the year ended December 31, 2020 include variable lease costs of $ 17.9 million, which are primarily comprised of the cost of property taxes, insurance and maintenance.

Finance lease costs for the year ended December 31, 2020 wer e $ 16.3 million, including $ 14.6 million of amortization on right-of use assets and $ 1.6 million of interest on lease liabilities.

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Operating lease costs in our consolidated statement of income for the year ended December 31, 2019 were $ 85.9 million, including $ 71.0 million in selling, general and administrative expenses and $ 14.9 million in cost of services.

Total lease costs for the year ended December 31, 2019 include variable lease costs of approximately $ 19.1 million, which are primarily comprised of the cost of property taxes, insurance and maintenance.

Total lease costs for the year ended December 31, 2019 include variable lease costs of $ 19.1 million, which are primarily comprised of the cost of property taxes, insurance and maintenance.

Finance lease costs and lease costs for leases with a term of less than 12 months were not material for the year ended December 31, 2019.

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2020 and 2019 w as $ 117.7 million a nd $ 70.4 million, respectively, which are included as a component of cash provided by operating activities in the consolidated statement of cash flows.

Operating lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were approximat ely $ 158.6 million an d $ 28.4 million for the years ended December 31, 2020 and 2019, respectively.

Cash paid for amounts included in the measurement of finance lease liabilities that is included as a component of cash used in financing activities in the consolidated statement of cash flows was $ 11.2 million for the year ended December 31, 2020.

Finance lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were approximately $ 51.3 million for the year ended December 31, 2020.

Opportunities were identified during the fourth quarter of 2021 to reduce our facilities footprint in certain markets around the world given the success of remote work and flexible arrangements implemented during the COVID-19 pandemic.

In conjunction with the actions taken to exit certain leased facilities, we assessed the respective asset groups for impairment by comparing the carrying amount of the assets associated with the leased facilities to the discounted cash flows from estimated sublease payments.

As a result, we recognized a charge of $ 42.1 million in selling, general and administrative expenses in our consolidated statement of income for the year ended December 31, 2021.

We continue to evaluate our physical footprint and additional charges may be incurred as these facilities exit activities continue in 2022.

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2021, 2020 and 2019 w as $ 123.6 million , $ 117.7 million and $ 70.4 million, respectively, which are included as a component of cash provided by operating activities in the consolidated statement of cash flows.

Operating lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were $ 200.1 million, $ 158.6 million and $ 28.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Finance lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were $ 7.9 million and $ 51.3 million for the years ended December 31, 2021 and 2020, respectively.

Cash paid for finance lease liabilities and finance lease liabilities arising from obtaining new or modified right-of-use assets were not material for the year ended December 31, 2019.

In connection with the Merger, we acquired right-of-use assets and assumed lease liabilities of $ 256.2 million and $ 272.0 million, respectively.

Rent expense on all operating leases for the year ended December 31, 2018 was $ 47.1 million.

In connection with acquisitions completed during the year ended December 31, 2021, we acquired right-of-use assets and assumed lease liabilities for operating and finance leases of $ 8.8 million and $ 5.8 million, respectively.

In connection with the Merger during the year ended December 31, 2019, we acquired right-of-use assets and assumed lease liabilities of $ 256.2 million and $ 272.0 million, respectively.

NOTE 7 - OTHER ASSETS

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

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

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 $ 27.7 million reported in interest and other income in our consolidated statement of income for the year ended December 31, 2020 based on the fair value of the shares received.

The shares were subsequently sold in October 2020.

As of December 31, 2020, the remaining Series B and C convertible preferred shares continue to be carried at an assigned value of zero based on the aforementioned factors.

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

NOTE 8— LONG-TERM DEBT AND LINES OF CREDIT

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559,338 565,930

1.500 % senior notes due November 15, 2024

2.650 % senior notes due February 15, 2025

994,797 993,110

1.200 % senior notes due March 1, 2026

4.800 % senior notes due April 1, 2026

798,024 809,324

2.150 % senior notes due January 15, 2027

4.450 % senior notes due June 1, 2028

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2.900 % senior notes due May 15, 2030

990,196 989,025

2.900 % senior notes due November 15, 2031

4.150 % senior notes due August 15, 2049

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Long-term debt, excluding current portion $ 11,414,809 $ 8,466,407

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

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 December 31, 2021, unamortized discount on senior notes was $ 11.7 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $ 60.7 million.

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Amortization of discounts and debt issuance costs was $ 14.4 million, $ 12.0 million and $ 11.9 million, respectively, for years ended December 31, 2021, 2020 and 2019.

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

At December 31, 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 4,950,000

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Senior Unsecured Notes

We have $ 7.1 billion in aggregate principal amount of senior unsecured notes, as presented in the table above, which are comprised of senior notes issued in 2020, senior notes assumed in the Merger and senior notes issued in 2019.

We have $ 9.4 billion in aggregate principal amount of senior unsecured notes, as presented in the table above, which are comprised of senior notes issued in 2021, 2020 and 2019, and senior notes assumed in the Merger.

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

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

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

On November 22, 2021, we issued $ 2.0 billion aggregate principal amount of senior unsecured notes consisting of the following:

(i) $ 500.0 million aggregate principal amount of 1.500 % senior notes due November 2024;

(ii) $ 750.0 million aggregate principal amount of 2.150 % senior notes due January 2027;

and (iii) $ 750.0 million aggregate principal amount of 2.900 % senior notes due November 2031.

We incurred debt issuance costs of approximately $ 14.4 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet at December 31, 2021.

Interest on the senior unsecured notes is payable semi-annually in arrears on May 15 and November 15 for the 2024 and 2031 notes and January 15 and July 15 on the 2027 note, commencing May 15, 2022 for the 2024 note and the 2031 note and July 15, 2022 for the 2027 note.

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

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

On February 26, 2021, we issued $ 1.1 billion 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 December 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.

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

We used the net proceeds from 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.

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

We incurred debt issuance costs of approximately $ 8.4 million, including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet at December 31, 2021.

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

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

In August 14, 2019, we completed the public offering and issuance of $ 3.0 billion aggregate principal amount of senior unsecured notes, consisting of the following:

On August 14, 2019, we issued $ 3.0 billion aggregate principal amount of senior unsecured notes, consisting of the following:

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

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From August 14, 2019 until the closing of the Merger on September 18, 2019, the proceeds from the issuance of the senior notes were held in escrow.

certain of our existing indebtedness, fund cash payments made in lieu of fractional shares and pay transaction fees and costs related to the Merger.

Upon closing, the funds were released and used together with borrowings under the term loan facility and the revolving credit facility, as well as cash on hand, to repay TSYS' unsecured revolving credit facility, refinance certain of our existing indebtedness, fund cash payments made in lieu of fractional shares and pay transaction fees and costs related to the Merger.

In addition, in connection with the Merger, we assumed $ 3.0 billion aggregate principal amount of senior unsecured notes of TSYS, consisting of the following:

(i) $ 750.0 million aggregate principal amount of 3.800 % senior notes due 2021;

(i) $ 750.0 million aggregate principal amount of 3.800 % senior notes due 2021, which were redeemed in February 2021;

(ii) $ 550.0 million aggregate principal amount of 3.750 % senior notes due 2023;

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

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

For the 3.750 % senior notes due 2023, the 4.000 % senior notes due 2023 and the 4.450 % senior notes due 2028, interest is payable

semi-annually each June 1 and December 1.

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

The amortization of this fair value adjustment was $ 36.2 million and $ 10.5 million for the year ended December 31, 2020 and 2019, respectively.

The amortization of this fair value adjustment was $ 29.6 million and $ 36.2 million for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, our senior notes had a total carrying amount of $ 9.4 billion and an estimated fair value of $ 9.8 billion.

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Senior Unsecured Credit Facilities

We have a term loan credit agreement ("Term Loan Credit Agreement") and a revolving credit agreement ("Unsecured Revolving Credit Agreement") in each case with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents.

We have a Term Loan Credit Agreement and an Unsecured Revolving Credit Agreement in each case with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents.

The Term Loan Credit Agreement provides for a senior unsecured $ 2.0 billion term loan facility, and the Unsecured Revolving Credit Agreement provides for a senior unsecured $ 3.0 billion revolving credit facility.

We capitalized debt issuance costs of $ 12.8 million in connection with the issuances of these term loan and revolving credit facilities.

As of December 31, 2020, borrowings outstanding under the term loan facility and the revolving credit facility were $ 2.0 billion and $ 36.0 million, respectively.

As of December 31, 2021, borrowings outstanding under the term loan facility were $ 2.0 billion and there were no outstanding borrowings under the revolving credit facility.

Borrowings under the term loan facility were made in U.S.

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Borrowings in U.S.

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

As of December 31, 2020, the interest rates on the term loan facility and the revolving credit facility were 1.52 % and 1.48 %, respectively.

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

As of December 31, 2021, the interest rate on the term loan facility was 1.48 %.

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

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As of December 31, 2021, the total available commitments under the revolving credit facility wer e $ 1.9 billion .

Prior Credit Facility

Prior to completion of the Merger, we were party to a credit facility agreement with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents.

The credit facility provided for

secured financing comprised of (i) a $ 1.5 billion revolving credit facility;

(ii) a $ 1.5 billion term loan;

(iii) a $ 1.37 billion term loan;

(iv) a $ 1.14 billion term loan;

and (v) a $ 500.0 million term loan.

Upon the consummation of the Merger, all borrowings outstanding and other amounts due under the credit facility were repaid and this credit facility was terminated.

In connection with the extinguishment of this credit facility, we wrote off related unamortized debt issuance costs of $ 16.7 million to interest expense during the year ended December 31, 2019.

Bridge Facility

On May 27, 2019, in connection with our entry into the Merger Agreement described in "Note 2—Acquisitions," we obtained commitments for a $ 2.75 billion, 364 -day senior unsecured bridge facility (the "Bridge Facility").

On July 9, 2019, upon our entry into the senior unsecured term loan and revolving credit facilities described below, the aggregate commitments under the Bridge Facility were reduced to approximately $ 2.1 billion.

Concurrently with the issuance of our senior unsecured notes, the remaining aggregate commitments under the Bridge Facility were reduced to zero and terminated.

During the year ended December 31, 2019, we recognized $ 11.7 million of fees associated with the Bridge Facility in interest expense.

Compliance with Covenants

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

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

As of December 31, 2021, financial covenants under the term loan facility required a leverage ratio o f 3.50 to 1.00 and an interest coverage ratio of 3.00 to 1.00.

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As of December 31, 2021 and 2020, a total of $ 76.3 million an d $ 64.5 million, respectively, of cash on deposit was used to determine the available credit.

As of December 31, 2020, we h ad $ 358.7 million outst anding under these lines of credit with additional capacity to fund settlement o f $ 1,507.6 million.

As of December 31, 2021, we had $ 484.2 million outstanding under these lines of credit with additional capacity to fund settlement of $ 1,693.2 million.

During the year ended December 31, 2021, the maximum and average outstanding balances under these lines of credit were $ 1,267.4 million and $ 487.7 million, respectively.

The weighted-average interest rate on these borrowings wa s 2.35 % at December 31, 2020.

Derivative Agreements

The weighted-average interest rate on these borrowings was 2.22 % at December 31, 2021.

Derivative Instruments

We have interest rate swap agreements with financial institutions to hedge changes in cash flows attributable to interest rate risk on a portion of our variable-rate debt instruments.

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Upon issuance of our senior unsecured notes, we terminated the forward-starting swap agreements and made settlement payments of $ 48.3 million, which are included in cash flows from operating activities in our consolidated statement of cash flows for the year ended December 31, 2019 within the caption labeled "Other, net." We have and will continue to reclassify the effective portion of the realized loss from accumulated other comprehensive loss into interest expense over the terms of the related senior notes.

The fair values of our interest rate

swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of December 31, 2020, and classified within Level 2 of the valuation hierarchy.

The table below presents information about our derivative financial instruments as of December 31, 2020 and 2019:

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

The fair values of our interest rate swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of December 31, 2021 and classified within Level 2 of the valuation hierarchy.

Weighted-Average Fixed Rate of Interest at Range of Maturity Dates at Fair Value

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(in thousands)

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

Prepaid expenses and other current assets N/A N/A $ — $ 472

Interest rate swaps (Notional of $ 300 million at December 31, 2020)

AP & accrued liabilities 1.91 % March 31, 2021 $ 1,330 $ —

Interest rate swaps (Notional of $ 1,250.0 million at December 31, 2021 and $ 300.0 million at December 31, 2020)

Other noncurrent liabilities 2.73 % December 31, 2022 $ 65,490 $ 45,604

Accounts payable & accrued liabilities 2.73 % December 31, 2022 $ 28,777 $ 1,330

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

Other noncurrent liabilities N/A N/A $ — $ 65,490

N/A - not applicable.

The table below presents the effects of our interest rate swaps on the consolidated statements of income and comprehensive income for the years ended December 31, 2020, 2019 and 2018:

The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the years ended December 31, 2021, 2020 and 2019:

Years Ended December 31,

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(in thousands)

Net unrealized losses recognized in other comprehensive loss $ ( 52,742 ) $ ( 90,238 ) $ ( 7,553 )

Net unrealized losses (gains) reclassified out of other comprehensive loss to interest expense $ 36,510 $ 2,257 $ ( 4,792 )

Net unrealized gains (losses) recognized in other comprehensive loss $ 3,425 $ ( 52,742 ) $ ( 90,238 )

Net unrealized losses reclassified out of other comprehensive loss to interest expense $ 40,094 $ 36,510 $ 2,257

At December 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 approximately $ 34.2 million.

Interest Expense

Interest expense was $ 326.8 million, $ 301.2 million and $ 195.5 million, respectively, for the years ended December 31, 2020, 2019 and 2018.

Interest expense was $ 328.0 million, $ 326.8 million and $ 301.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.

NOTE 9— ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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Funds held for customers $ 775,852 $ 645,863

Trade accounts payable 262,014 128,721

Contract liabilities 227,783 217,938

Compensation and benefits 194,090 212,016

Payment network fees 187,665 166,880

Trade accounts payable 128,721 148,084

Compensation and benefits 184,580 194,090

Operating lease liabilities 103,554 103,706

Third-party commissions 88,109 74,391

Audit and legal 82,108 44,146

Miscellaneous taxes and withholdings 68,323 68,048

Interest 64,591 62,865

Audit and legal 44,146 26,080

Income taxes payable 51,818 13,517

Unclaimed property 34,744 32,497

Interest rate swap liabilities 28,777 1,330

Third-party processing fees 27,345 24,619

Settlement of common share repurchases 20,000 17,200

Current portion of accrued buyout liability (1)

22,204 16,180

Income taxes payable 13,517 56,426

Settlement of common share repurchases — 20,000

Other 332,789 246,593

$ 2,542,256 $ 2,061,384

(1) The noncurrent portion of accrued buyout liability of $ 30.7 million and $ 34.2 million is included in other noncurrent liabilities on the consolidated balance sheets as of December 31, 2020 and 2019, respectively.

(1) The noncurrent portion of accrued buyout liability of $ 44.6 million and $ 30.7 million is included in other noncurrent liabilities in the consolidated balance sheets as of December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $ 14.5 million and $ 48.4 million, respectively, for employee termination benefits resulting from Merger-related integration activities.

During the year ended December 31, 2020, we recognized charges for employee termination benefits of $ 83.3 million, which included $ 6.7 million of share-based compensation expense.

During the year ended December 31, 2019, we recognized charges for employee termination benefits of $ 57.1 million, which included $ 17.3 million of share-based compensation expense.

During the years ended December 31, 2021, 2020 and 2019, we recognized charges for employee termination benefits of $ 43.4 million, $ 83.3 million and $ 57.1 million, respectively, which included $ 1.2 million, $ 6.7 million and $ 17.3 million, respectively, of share-based compensation expense.

As of December 31, 2021, the cumulative amount of recognized charges for employee termination benefits resulting from Merger-related integration activities was $ 183.8 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.

New obligations may arise and related expenses may be incurred as Merger-related integration activities continue in 2021.

Employee termination benefits from Merger-related integration activities are substantially complete as of December 31, 2021 and any remaining obligations are expected to be paid within the next 12 months.

NOTE 10— INCOME TAX

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statutory rate 21.0 % 21.0 % 21.0 %

Tax credits ( 5.3 ) ( 3.9 ) ( 0.5 )

Foreign interest income not subject to tax ( 4.2 ) ( 4.2 ) ( 4.5 )

Tax credits ( 3.8 ) ( 5.3 ) ( 3.9 )

State income taxes, net of federal income tax benefit 3.4 0.7 1.0

Foreign-derived intangible income deduction ( 1.9 ) ( 2.8 ) ( 2.7 )

Share-based compensation expense ( 2.7 ) ( 2.5 ) ( 2.1 )

Valuation allowance ( 1.7 ) ( 0.1 ) 4.6

Nondeductible executive compensation 1.0 1.7 1.0

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Uncertain tax positions ( 0.3 ) 1.1 ( 2.6 )

State income taxes, net of federal income tax benefit 0.7 1.0 2.7

Foreign income taxes 0.3 0.6 ( 0.7 )

Valuation allowance ( 0.1 ) 4.6 1.4

transition tax — — ( 4.1 )

Share-based compensation expense ( 0.2 ) ( 2.7 ) ( 2.5 )

Other 1.7 1.9 1.3

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Foreign net operating loss carryforwards 104,499 107,931

Financial instruments 60,340 65,848

Credit carryforwards 49,875 42,637

Share-based compensation expense 41,558 48,204

Accrued expenses 42,839 38,521

Financial instruments 37,928 60,340

Share-based compensation expense 36,086 41,558

Domestic net operating loss carryforwards 29,806 18,952

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Net deferred income tax liability $ 2,781,310 $ 2,940,763

The net deferred income taxes reflected on our consolidated balance sheets as of December 31, 2020 and 2019 are as follows:

The net deferred income taxes reflected in our consolidated balance sheets as of December 31, 2021 and 2020 are as follows:

(in thousands)

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Allowance for foreign net operating loss carryforwards ( 26,439 )

Allowance for domestic net operating loss carryforwards 1,145

Allowance for foreign credit carryforwards ( 15,226 )

Allowance for state credit carryforwards ( 6,680 )

Allowance for domestic net operating loss carryforwards ( 307 )

Balance at December 31, 2019 ( 72,042 )

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Balance at December 31, 2021 $ ( 112,259 )

The decrease in the valuation allowance for the year ended December 31, 2021 is primarily related to the foreign net operating loss carryforwards and the foreign tax credit carryforwards which the Company determined are more likely than not to be realized.

The increase in the valuation allowance related to the foreign net operating loss carryforwards for the year ended December 31, 2020 is due to the addition of a foreign affiliate net operating loss with a related full valuation allowance.

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corporation tax examinations for years ended on or before December 31, 2017.

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the years ended December 31, 2020, 2019 and 2018 as follows:

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits, excluding penalties and interest, for the years ended December 31, 2021, 2020 and 2019 is as follows:

Years Ended December 31,

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Average cost per share $ 165.72 $ 191.87 $ 139.42

In connection with the completion of the Merger, our Articles of Incorporation were amended to increase the number of authorized shares of Global Payments common stock from 200 million to 400 million.

The share repurchase activity for the year ended December 31, 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.

In connection with the completion of the Merger, our Articles of Incorporation were amended during the year ended December 31, 2019 to increase the number of authorized shares of Global Payments common stock from 200 million to 400 million.

As of December 31, 2021, the amount that may yet be purchased under our share repurchase program was $ 1,540.0 million.

On January 27, 2022, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to $ 2.0 billion.

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 will end on March 31, 2021.

On February 12, 2021, 2,090,713 shares were initially delivered to us.

On January 28, 2021, the board of directors declared a cash dividend of $ 0.195 per share payable on March 26, 2021 to common shareholders of record on March 12, 2021.

On January 27, 2022, our board of directors declared a cash dividend of $ 0.25 per share payable on March 25, 2022 to common shareholders of record on March 11, 2022.

NOTE 12— SHARE-BASED AWARDS AND OPTIONS

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Unvested at December 31, 2018 1,084 $ 108.51

Replacement Awards 894 163.74

Granted 784 142.26

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Unvested at December 31, 2019 1,844 149.96

Replacement Awards 894 163.74

Granted 607 191.20

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The total fair value of restricted stock and performance awards vested was $ 194.6 million, $ 107.7 million and $ 82.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

For restricted stock awards and performance units, we recognized compensation expense of $ 135.4 million , $ 74.3 million and $ 53.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

For restricted stock and performance awards, we recognized compensation expense of $ 167.3 million, $ 135.4 million and $ 74.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Compensation expense for the year ended December 31, 2021 included approximately $ 32.2 million related to the vesting of certain performance-based restricted stock units upon achievement of performance measures during the period.

As of December 31, 2021, there was $ 174.2 million of unrecognized compensation expense related to unvested restricted stock awards and performance units that we expect to recognize over a weighted-average period of 1.9 years.

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Outstanding at December 31, 2018 598 $ 59.16 6.2 $ 27.3

Replacement Awards 1,336 68.96

Granted 109 128.22

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

Replacement Awards 1,336 68.96

Granted 124 200.42

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Treasury security with a maturity equal to the expected life of the option from the date of the grant.

Our assumption on expected volatility is based on our historical volatility.

Our assumption on expected volatility was based on our historical volatility.

The dividend yield assumption was determined using our average stock price over the preceding year and the annualized amount of our most current quarterly dividend per share.

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$ 12,123 $ 35,223 $ 35,938

On October 1, 2020, we paid € 493 million ($ 578.2 million equivalent as of October 1, 2020) to increase our controlling financial interest in Comercia Global Payments Entidad de Pago, S.L.

During the year ended December 31, 2021, Global Payments and noncontrolling shareholders made contributions of $ 209.6 million and $ 70.0 million, respectively, to certain of our majority-owned subsidiaries based on each shareholder's proportionate ownership, primarily to fund acquisitions that closed in the fourth quarter of 2021.

The contributions from the noncontrolling shareholders were recorded as an increase to noncontrolling interests in the consolidated balance sheet.

In addition, we increased our controlling financial interest in one of our majority-owned subsidiaries from 51 % to 55 %, which resulted in a reallocation between equity attributable to noncontrolling interests and total equity attributable to Global Payments.

During the year ended December 31, 2020, we paid € 493 million ($ 578.2 million equivalent) to increase our controlling financial interest in Comercia Global Payments Entidad de Pago, S.L.

(“Comercia”) from 51 % to 80 %.

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

Cumulative effect of adoption of new accounting standards ( 1,843 ) — — ( 1,843 )

Other comprehensive (loss) income ( 116,575 ) ( 9,373 ) 760 ( 125,188 )

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

Other comprehensive income (loss) 62,375 ( 66,945 ) 4,174 ( 396 )

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

Other comprehensive income (loss) ( 68,814 ) 33,053 3,760 ( 32,001 )

Effect of change in ownership attributable to a noncontrolling interest 92 — — 92

Balance at December 31, 2021 $ ( 182,949 ) $ ( 48,490 ) $ ( 2,743 ) $ ( 234,182 )

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was $( 10.3 ) million, $ 14.6 million, and $( 2.7 ) million for the years ended December 31, 2021, 2020 and 2019, respectively.

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Merchant Solutions, Issuer Solutions and Business and Consumer Solutions.

Our payment technology solutions are similar around the world in that we enable our customers to accept card, electronic, check and digital-based payments.

Through our Merchant Solutions segment, our offerings include, but are not limited to, authorization services, settlement and funding services, customer support and help-desk functions, chargeback resolution, terminal rental, sales and deployment, payment security services, consolidated billing and statements and on-line reporting.

Our payment technology solutions are similar around the world in that we enable our customers to accept card, check and digital-based payments.

Through our Merchant Solutions segment, our offerings include, but are not limited to, authorization, settlement and funding services, customer support, chargeback resolution, terminal rental, sales and deployment, payment security services, consolidated billing and on-line reporting.

In addition, we offer a wide array of enterprise software solutions that streamline business operations to customers in numerous vertical markets.

We also provide a variety of value-added services, including analytic and engagement tools, payroll and human capital management services and reporting that assist our customers with driving demand and operating their businesses more efficiently.

We also provide a variety of value-added solutions and services, including specialty point-of-sale software, analytic and customer engagement, human capital management and payroll and reporting that assist our customers with driving demand and operating their businesses more efficiently.

Through our Issuer Solutions segment, we provide solutions that enable financial institutions and retailers to manage their card portfolios, reduce technical complexity and overhead and offer a seamless experience for cardholders on a single platform.

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Through our Business and Consumer Solutions segment, we provide general purpose reloadable prepaid debit and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses in the United States.

Additionally, our Business and Consumer Solutions segment provides B2B payment services and SaaS offerings that automate key procurement processes and enable virtual cards and integrated payments options.

We evaluate performance and allocate resources based on the operating income of each operating segment.

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Operating overhead, shared costs and share-based compensation costs are included in Corporate.

Interest and other income, interest and other expense, income tax expense and equity in income of equity method investments are not allocated to the segments.

Interest and other income, interest and other expense, income tax expense and equity in income of equity method investments are not allocated to the individual segments.

We do not evaluate the performance of or allocate resources to our operating segments using asset data.

The accounting policies of the reportable operating segments are the same as those described in the 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 are as follows:

Information on segments and reconciliations to consolidated revenues, consolidated operating income and consolidated depreciation and amortization was as follows:

Years Ended December 31,

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$ 1,691,384 $ 1,614,440 $ 878,335

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

For further discussion, see "Note 2—Acquisitions."

(2) During the year ended December 31, 2020 and 2019, operating income for our Merchant Solutions segment reflected the effect of acquisition and integration expenses of $ 7.0 million and $ 56.1 million, respectively.

Operating loss for Corporate included acquisition and integration expenses of $ 313.0 million, $ 199.5 million and $ 56.1 million, respectively, during the years ended December 31, 2020, 2019 and 2018.

Acquisition and integration expenses for 2020 and 2019 were primarily related to the Merger.

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

(2) During the years ended December 31, 2021, 2020 and 2019, operating loss for Corporate included acquisition and integration expenses of $ 335.5 million, $ 313.0 million, and $ 199.5 million, respectively.

During the year ended December 31, 2021, operating loss for Corporate also included $ 56.8 million of other costs related to facilities exit activities in response to the transition to remote and flexible work arrangements.

Operating income for our Merchant Solutions segment reflected the effect of acquisition and integration expenses of $ 56.1 million during the year ended December 31, 2019.

Entity-Wide Information

As a percentage of our total consolidated revenues, revenues from external customers in the United States and the United Kingdom were 78 % and 8 %, respectively, for the year ended December 31, 2020, 72 % and 8 %, respectively, for the year ended December 31, 2019, and 67 % and 9 %, respectively, for the year ended December 31, 2018.

As a percentage of our total consolidated revenues, revenues from external customers in the United States were 79 % for the year ended December 31, 2021, 78 % for the year ended December 31, 2020, and 72 % for the year ended December 31, 2019.

Revenues from external customers are attributed to individual countries based on the location of the customer arrangements.

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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 December 31, 2020.

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

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.

On January 11, 2022, the Georgia Supreme Court denied Frontline’s petition for writ of certiorari and the case has been remanded back to the trial court.

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.

Operating Taxes

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During the course of operations, we must interpret the meaning of various operating tax regulations in the United States and in the foreign jurisdictions in which we do business.

Taxing authorities in those various jurisdictions may arrive at different interpretations of applicable tax laws and regulations which could result in the payment of additional taxes in those jurisdictions.

We are subject to ongoing audits in certain jurisdictions, and taxing authorities in those various jurisdictions may arrive at different interpretations of applicable tax laws and regulations which could result in the payment of additional taxes in those jurisdictions.

BIN/ICA Agreements

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Certain of these agreements contain financial covenants, and we were in compliance with all such covenants as of December 31, 2021.

NOTE 18— QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

Summarized quarterly results for the years ended December 31, 2020 and 2019 were as follows:

Quarters Ended

March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020

(in thousands, except per share data)

Revenues $ 1,903,598 $ 1,671,952 $ 1,917,815 $ 1,930,193

Operating income 243,979 107,574 290,419 251,981

Net income 150,608 39,444 230,230 184,818

Net income attributable to Global Payments 143,575 37,331 220,971 182,643

Basic earnings per share attributable to Global Payments

0.48 0.12 0.74 0.61

Diluted earnings per share attributable to Global Payments

0.48 0.12 0.74 0.61

Quarters Ended

March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019

(in thousands, except per share data)

Revenues $ 883,039 $ 935,152 $ 1,105,941 $ 1,987,760

Operating income 199,492 221,726 174,037 196,162

Net income 119,205 130,039 105,731 114,301

Net income attributable to Global Payments 112,341 120,458 95,044 102,770

Basic earnings per share attributable to Global Payments

0.71 0.77 0.54 0.34

Diluted earnings per share attributable to Global Payments

0.71 0.77 0.54 0.34

The quarterly financial data in the table above reflect the effects of business combinations and borrowings to fund certain of those business combinations.

Notably, we completed our merger with TSYS during the quarter ended September 30, 2019.

Additionally, our consolidated results reflected incremental expenses associated with the acquisition and integration of acquired businesses.

See "Note 2—Acquisitions" for further discussion of our acquisitions.

Acquisition and integration expenses were $ 71.9 million, $ 85.1 million, $ 56.7 million and $ 106.3 million for the quarters ended March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020, respectively.

Acquisition and integration expenses were $ 5.3 million, $ 14.2 million, $ 100.8 million and $ 135.3 million for the quarters ended March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019, respectively.

GLOBAL PAYMENTS INC.

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(a) (b) (c) (d) (e)

Description (3)

Balance at Beginning of Period

Description Balance at Beginning of Period

Charged to Costs and Expenses (2)

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December 31, 2020 4,216 515 1,142 3,589

December 31, 2021 $ 3,589 $ 734 $ 2,986 $ 1,337

Reserve for cardholder losses

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December 31, 2020 9,232 61,847 61,004 10,075

December 31, 2021 $ 10,075 $ 62,751 $ 62,769 $ 10,058

Deferred income tax asset valuation allowance

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(2) In addition to amounts charged to costs and expenses, amounts in this column include additions, as applicable, resulting from business combinations and the adoption of the new credit loss standard as of January 1, 2020.

(3) Reflects certain changes in descriptions and grouping of accounts as a result of the adoption of the new credit loss standard as of January 1, 2020.

Reclassifications have been made to the prior year comparative periods to conform with the current period presentation, including the separate presentation of sales allowances.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data