GLOBAL PAYMENTS INC 10-Q

ITEM 1—FINANCIAL STATEMENTS GLOBAL PAYMENTS INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) Three Months Ended June 30, 2022 June 30, 2021 Revenues $ 2,280,906 $ 2,137,437 Operating expenses: Cost of service 962,299 936,310 Selling, general and administrative 863,179 838,569 Impairment of goodwill 833,075 — Loss on business dispositions 152,211 — 2,810,764 1,774,879 Operating (loss) income ( 529,858 ) 362,558 Interest and other income 2,956 5,455 Interest and other expense ( 99,188 ) ( 80,556 ) ( 96,232 ) ( 75,101 ) (Loss) income before income taxes and equity in income of equity method investments ( 626,090 ) 287,457 Income tax expense 52,776 60,808 (Loss) income before equity in income of equity method investments ( 678,866 ) 226,649 Equity in income of equity method investments, net of tax 13,815 40,164 Net (loss) income ( 665,051 ) 266,813 Net income attributable to noncontrolling interests, net of tax ( 7,948 ) ( 3,223 ) Net (loss) income attributable to Global Payments $ ( 672,999 ) $ 263,590 (Loss) earnings per share attributable to Global Payments: Basic (loss) earnings per share $ ( 2.42 ) $ 0.89 Diluted (loss) earnings per share $ ( 2.42 ) $ 0.89 See Notes to Unaudited Consolidated Financial Statements. 3 Table of Contents GLOBAL PAYMENTS INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) Six Months Ended June 30, 2022 June 30, 2021 Revenues $ 4,437,160 $ 4,127,444 Operating expenses: Cost of service 1,919,457 1,861,556 Selling, general and administrative 1,686,328 1,628,071 Impairment of goodwill 833,075 — Loss on business dispositions 152,211 — 4,591,071 3,489,627 Operating (loss) income ( 153,911 ) 637,817 Interest and other income 4,667 9,689 Interest and other expense ( 192,471 ) ( 163,697 ) ( 187,804 ) ( 154,008 ) (Loss) income before income taxes and equity in income of equity method investments ( 341,715 ) 483,809 Income tax expense 104,994 81,483 (Loss) income before equity in income of equity method investments ( 446,709 ) 402,326 Equity in income of equity method investments, net of tax 31,294 62,897 Net (loss) income ( 415,415 ) 465,223 Net income attributable to noncontrolling interests, net of tax ( 12,851 ) ( 4,952 ) Net (loss) income attributable to Global Payments $ ( 428,266 ) $ 460,271 (Loss) earnings per share attributable to Global Payments: Basic (loss) earnings per share $ ( 1.53 ) $ 1.56 Diluted (loss) earnings per share $ ( 1.53 ) $ 1.55 See Notes to Unaudited Consolidated Financial Statements. 4 Table of Contents GLOBAL PAYMENTS INC. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Three Months Ended June 30, 2022 June 30, 2021 Net (loss) income $ ( 665,051 ) $ 266,813 Other comprehensive income (loss): Foreign currency translation adjustments ( 210,882 ) 32,671 Reclassification of accumulated foreign currency translation losses to net loss as a result of the sale of a foreign entity 62,925 — Income tax benefit related to foreign currency translation adjustments 963 4,242 Net unrealized gains (losses) on hedging activities 5,051 ( 410 ) Reclassification of net unrealized losses on hedging activities to interest expense 7,534 9,662 Income tax expense related to hedging activities ( 3,052 ) ( 2,225 ) Other, net of tax — ( 1,549 ) Other comprehensive (loss) income ( 137,461 ) 42,391 Comprehensive (loss) income ( 802,512 ) 309,204 Comprehensive loss (income) attributable to noncontrolling interests 5,540 ( 5,948 ) Comprehensive (loss) income attributable to Global Payments $ ( 796,972 ) $ 303,256 Six Months Ended June 30, 2022 June 30, 2021 Net (loss) income $ ( 415,415 ) $ 465,223 Other comprehensive income (loss): Foreign currency translation adjustments ( 243,843 ) ( 895 ) Reclassification of accumulated foreign currency translation losses to net loss as a result of the sale of a foreign entity 62,925 — Income tax benefit related to foreign currency translation adjustments 1,634 4,991 Net unrealized gains on hedging activities 13,985 584 Reclassification of net unrealized losses on hedging activities to interest expense 16,979 20,500 Income tax expense related to hedging activities ( 7,508 ) ( 5,089 ) Other, net of tax — 6,226 Other comprehensive (loss) income ( 155,828 ) 26,317 Comprehensive (loss) income ( 571,243 ) 491,540 Comprehensive loss (income) attributable to noncontrolling interests 5,981 ( 1,703 ) Comprehensive (loss) income attributable to Global Payments $ ( 565,262 ) $ 489,837 See Notes to Unaudited Consolidated Financial Statements. 5 Table of Contents GLOBAL PAYMENTS INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) June 30, 2022 December 31, 2021 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,933,309 $ 1,979,308 Accounts receivable, net 989,172 946,247 Settlement processing assets 1,544,124 1,143,539 Current assets held for sale 65,998 4,779 Prepaid expenses and other current assets 684,393 637,112 Total current assets 5,216,996 4,710,985 Goodwill 23,496,495 24,813,274 Other intangible assets, net 10,272,685 11,633,709 Property and equipment, net 1,689,292 1,687,586 Deferred income taxes 30,564 12,117 Noncurrent assets held for sale 1,087,411 — Other noncurrent assets 2,382,381 2,422,042 Total assets $ 44,175,824 $ 45,279,713 LIABILITIES AND EQUITY Current liabilities: Settlement lines of credit $ 469,540 $ 484,202 Current portion of long-term debt 1,279,743 78,505 Accounts payable and accrued liabilities 2,338,867 2,542,256 Settlement processing obligations 1,799,689 1,358,051 Current liabilities held for sale 93,966 — Total current liabilities 5,981,805 4,463,014 Long-term debt 10,883,721 11,414,809 Deferred income taxes 2,626,096 2,793,427 Noncurrent liabilities held for sale 4,670 — Other noncurrent liabilities 703,005 739,046 Total liabilities 20,199,297 19,410,296 Commitments and contingencies Equity: Preferred stock, no par value; 5,000,000 shares authorized and none issued — — Common stock, no par value; 400,000,000 shares authorized at June 30, 2022 and December 31, 2021; 277,032,813 issued and outstanding at June 30, 2022 and 284,750,452 issued and outstanding at December 31, 2021 — — Paid-in capital 21,800,574 22,880,261 Retained earnings 2,326,259 2,982,122 Accumulated other comprehensive loss ( 371,178 ) ( 234,182 ) Total Global Payments shareholders’ equity 23,755,655 25,628,201 Noncontrolling interests 220,872 241,216 Total equity 23,976,527 25,869,417 Total liabilities and equity $ 44,175,824 $ 45,279,713 See Notes to Unaudited Consolidated Financial Statements. 6 Table of Contents GLOBAL PAYMENTS INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Six Months Ended June 30, 2022 June 30, 2021 Cash flows from operating activities: Net (loss) income $ ( 415,415 ) $ 465,223 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 199,875 193,574 Amortization of acquired intangibles 656,373 654,042 Amortization of capitalized contract costs 53,113 43,975 Share-based compensation expense 85,414 80,490 Provision for operating losses and credit losses 57,929 50,802 Noncash lease expense 43,036 54,533 Deferred income taxes ( 180,001 ) ( 91,177 ) Equity in income of equity method investments, net of tax ( 31,294 ) ( 62,897 ) Distribution received on investments 8,212 20,305 Impairment of goodwill 833,075 — Loss on business dispositions 152,211 — Other, net 9,361 ( 6,340 ) Changes in operating assets and liabilities, net of the effects of business combinations: Accounts receivable ( 80,580 ) ( 91,580 ) Settlement processing assets and obligations, net 69,595 25,312 Prepaid expenses and other assets ( 191,652 ) ( 151,353 ) Accounts payable and other liabilities ( 71,119 ) ( 75,268 ) Net cash provided by operating activities 1,198,133 1,109,641 Cash flows from investing activities: Business combinations and other acquisitions, net of cash acquired ( 9,931 ) ( 943,108 ) Capital expenditures ( 324,027 ) ( 219,579 ) Effect on cash from sale of business ( 29,755 ) — Other, net 16 742 Net cash used in investing activities ( 363,697 ) ( 1,161,945 ) Cash flows from financing activities: Net borrowings from settlement lines of credit 4,139 134,245 Proceeds from long-term debt 2,954,156 2,820,988 Repayments of long-term debt ( 2,276,488 ) ( 1,830,258 ) Payments of debt issuance costs ( 1,706 ) ( 8,569 ) Repurchases of common stock ( 1,249,994 ) ( 1,072,934 ) Proceeds from stock issued under share-based compensation plans 23,619 29,304 Common stock repurchased - share-based compensation plans ( 26,972 ) ( 49,664 ) Distributions to noncontrolling interests ( 14,363 ) — Payment of contingent consideration in business combination ( 15,726 ) — Dividends paid ( 139,315 ) ( 114,875 ) Net cash used in financing activities ( 742,650 ) ( 91,763 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 114,968 ) ( 5,980 ) Decrease in cash, cash equivalents and restricted cash ( 23,182 ) ( 150,047 ) Cash, cash equivalents and restricted cash, beginning of the period 2,123,023 2,089,771 Cash, cash equivalents and restricted cash, end of the period $ 2,099,841 $ 1,939,724 See Notes to Unaudited Consolidated Financial Statements. 7 Table of Contents GLOBAL PAYMENTS INC. UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands, except per share data) Number of Shares Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity Balance at March 31, 2022 281,434 $ 22,338,086 $ 3,068,683 $ ( 247,205 ) $ 25,159,564 $ 235,241 $ 25,394,805 Net (loss) income ( 672,999 ) ( 672,999 ) 7,948 ( 665,051 ) Other comprehensive loss ( 123,973 ) ( 123,973 ) ( 13,488 ) ( 137,461 ) Stock issued under share-based compensation plans 125 15,680 15,680 15,680 Common stock repurchased - share-based compensation plans ( 2 ) ( 220 ) ( 220 ) ( 220 ) Share-based compensation expense 47,014 47,014 47,014 Repurchases of common stock ( 4,524 ) ( 599,986 ) ( 352 ) ( 600,338 ) ( 600,338 ) Distributions to noncontrolling interest — ( 8,829 ) ( 8,829 ) Cash dividends declared ($ 0.25 per common share) ( 69,073 ) ( 69,073 ) ( 69,073 ) Balance at June 30, 2022 277,033 $ 21,800,574 $ 2,326,259 $ ( 371,178 ) $ 23,755,655 $ 220,872 $ 23,976,527 Number of Shares Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity Balance at March 31, 2021 295,158 $ 24,403,323 $ 2,500,812 $ ( 212,373 ) $ 26,691,762 $ 150,429 $ 26,842,191 Net income 263,590 263,590 3,223 266,813 Other comprehensive income 39,666 39,666 2,725 42,391 Stock issued under share-based compensation plans 78 11,599 11,599 11,599 Common stock repurchased - share-based compensation plans ( 31 ) ( 8,900 ) ( 8,900 ) ( 8,900 ) Share-based compensation expense 43,325 43,325 43,325 Repurchases of common stock ( 1,502 ) ( 247,584 ) ( 42,393 ) ( 289,977 ) ( 289,977 ) Cash dividends declared ($ 0.195 per common share) ( 57,302 ) ( 57,302 ) ( 57,302 ) Balance at June 30, 2021 293,703 $ 24,201,763 $ 2,664,707 $ ( 172,707 ) $ 26,693,763 $ 156,377 $ 26,850,140 See Notes to Unaudited Consolidated Financial Statements. 8 Table of Contents GLOBAL PAYMENTS INC. UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands, except per share data) Number of Shares Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity Balance at December 31, 2021 284,750 $ 22,880,261 $ 2,982,122 $ ( 234,182 ) $ 25,628,201 $ 241,216 $ 25,869,417 Net (loss) income ( 428,266 ) ( 428,266 ) 12,851 ( 415,415 ) Other comprehensive loss ( 136,996 ) ( 136,996 ) ( 18,832 ) ( 155,828 ) Stock issued under share-based compensation plans 1,518 23,619 23,619 23,619 Common stock repurchased - share-based compensation plans ( 196 ) ( 27,008 ) ( 27,008 ) ( 27,008 ) Share-based compensation expense 85,414 85,414 85,414 Repurchases of common stock ( 9,039 ) ( 1,161,712 ) ( 88,282 ) ( 1,249,994 ) ( 1,249,994 ) Distributions to noncontrolling interest — ( 14,363 ) ( 14,363 ) Cash dividends declared ($ 0.50 per common share) ( 139,315 ) ( 139,315 ) ( 139,315 ) Balance at June 30, 2022 277,033 $ 21,800,574 $ 2,326,259 $ ( 371,178 ) $ 23,755,655 $ 220,872 $ 23,976,527 Number of Shares Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity Balance at December 31, 2020 298,332 $ 24,963,769 $ 2,570,874 $ ( 202,273 ) $ 27,332,370 $ 154,674 $ 27,487,044 Net income 460,271 460,271 4,952 465,223 Other comprehensive income (loss) 29,566 29,566 ( 3,249 ) 26,317 Stock issued under share-based compensation plans 1,081 29,304 29,304 29,304 Common stock repurchased - share-based compensation plans ( 253 ) ( 50,429 ) ( 50,429 ) ( 50,429 ) Share-based compensation expense 80,490 80,490 80,490 Repurchases of common stock ( 5,457 ) ( 821,371 ) ( 251,563 ) ( 1,072,934 ) ( 1,072,934 ) Cash dividends declared ($ 0.39 per common share) ( 114,875 ) ( 114,875 ) ( 114,875 ) Balance at June 30, 2021 293,703 $ 24,201,763 $ 2,664,707 $ ( 172,707 ) $ 26,693,763 $ 156,377 $ 26,850,140 See Notes to Unaudited Consolidated Financial Statements. 9 Table of Contents NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1— BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 13—Segment Information." Global Payments Inc. and its consolidated subsidiaries are referred to herein collectively as "Global Payments," the "Company," "we," "our" or "us," unless the context requires otherwise. These unaudited consolidated financial statements include our accounts and those of our majority-owned subsidiaries, and all intercompany balances and transactions have been eliminated in consolidation. These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The consolidated balance sheet as of December 31, 2021 was derived from the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 but does not include all disclosures required by GAAP for annual financial statements. In the opinion of our management, all known adjustments necessary for a fair presentation of the results of the interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amount of assets and liabilities. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. 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. Actual results could differ materially from those estimates. In particular, the future magnitude, duration and effects of the COVID-19 pandemic and the ongoing invasion of Ukraine by Russia are difficult to predict at this time, and the ultimate effect could result in additional charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill and other losses. These unaudited consolidated financial statements reflect the financial statement effects based upon management’s estimates and assumptions utilizing the most currently available information. Recently issued pronouncements not yet adopted Accounting Standards Update ("ASU") 2021-08 — In October 2021, the Financial Accounting Standards Board ("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 Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("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 Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with 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. 10 Table of Contents NOTE 2— ACQUISITION On June 10, 2021, we acquired Zego, a real estate technology company that provides comprehensive resident experience management software and digital commerce solutions to property managers, primarily in the United States, for cash consideration of approximately $ 933 million. We accounted for this transaction as a business combination, which generally requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date. The final 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: Final Amounts at June 30, 2022 (in thousands) Cash and cash equivalents $ 67,374 Accounts receivable 1,017 Identifiable intangible assets 473,000 Property and equipment 575 Other assets 9,051 Accounts payable and accrued liabilities ( 71,006 ) Deferred income tax liabilities ( 10,749 ) Other liabilities ( 8,010 ) Total identifiable net assets 461,252 Goodwill 471,994 Total purchase consideration $ 933,246 During the six months ended June 30, 2022, we made measurement-period adjustments that decreased the amount of deferred income tax liabilities and provisional goodwill by $ 3.2 million. The decrease in deferred income tax liabilities for the six months ended June 30, 2022 primarily related to finalizing the evaluation of the differences in the bases of assets and liabilities for financial reporting and tax purposes. The effects of the measurement-period adjustments on our consolidated statements of income for the three and six months ended June 30, 2022 were not material. Goodwill of $ 472.0 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. Substantially all of the goodwill is deductible for income tax purposes. The following table reflects the estimated fair values of the identified intangible assets of Zego and their 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 11 Table of Contents NOTE 3— BUSINESS DISPOSITIONS Sale of Merchant Solutions Business in Russia We sold our Merchant Solutions business in Russia effective April 29, 2022 for cash proceeds of $ 9 million. During the three months ended June 30, 2022, we recognized a loss of $ 127.2 million associated with the sale, comprised of the difference between the consideration received and the net carrying amount of the business and the reclassification of $ 62.9 million of associated accumulated foreign currency translation losses from the separate component of equity. The loss was presented within loss on business dispositions in our consolidated statement of income. Consumer Business Disposition During the first quarter of 2022, we commenced a strategic evaluation of the consumer portion of our Business and Consumer Solutions segment. As of June 30, 2022, we committed to a plan to sell the business within one year and were actively marketing the business in its current condition for a price that was reasonable in comparison to its estimated fair value. The assets and liabilities of the consumer business met the criteria for classification as held for sale and are reported at fair value less costs to sell in our consolidated balance sheet as of June 30, 2022. As further discussed in "Note 5— Goodwill and Other Intangible Assets," we recognized a goodwill impairment charge of $ 833.1 million during the three months ended June 30, 2022 related to the Business and Consumer Solutions reporting unit. We also recognized a charge of $ 25 million during the three months ended June 30, 2022 to reduce the disposal group to estimated fair value less costs to sell, which is presented within loss on business dispositions in our consolidated statement of income. On July 31, 2022, we entered into a definitive agreement to sell the consumer business for $ 1 billion. We will provide up to $ 675 million of seller financing and $ 80 million of future services in connection with the sale. The transaction is expected to close prior to the end of the first quarter of 2023 and is subject to customary terms and conditions. For the three and six months ended June 30, 2022, the consumer business contributed $ 21.9 million and $ 44.6 million to the Business and Consumer Solutions segment operating income. For the three and six months ended June 30, 2021, the consumer business contributed $ 33.9 million and $ 87.6 million to the Business and Consumer Solutions segment operating income. The major classes of assets presented as held for sale in the consolidated balance sheet as of June 30, 2022, primarily related to the consumer business, include cash of $ 0.7 million, accounts receivable of $ 11.6 million, other current assets of $ 53.6 million, goodwill of $ 366.4 million, other intangible assets of $ 651.2 million, property and equipment of $ 48.9 million, and other noncurrent assets of $ 20.9 million. The major classes of liabilities presented as held for sale in the consolidated balance sheet as of June 30, 2022 include accounts payable and accrued liabilities of $ 94.0 million, and other noncurrent liabilities of $ 4.7 million. 12 Table of Contents NOTE 4— REVENUES The following tables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the three and six months ended June 30, 2022 and 2021: Three Months Ended June 30, 2022 Merchant Solutions Issuer Solutions Business and Consumer Solutions Intersegment Eliminations Total (in thousands) Americas $ 1,334,231 $ 412,023 $ 183,404 $ ( 14,476 ) $ 1,915,182 Europe 187,450 114,011 4,228 — 305,689 Asia Pacific 60,035 8,437 — ( 8,437 ) 60,035 $ 1,581,716 $ 534,471 $ 187,632 $ ( 22,913 ) $ 2,280,906 Three Months Ended June 30, 2021 Merchant Solutions Issuer Solutions Business and Consumer Solutions Intersegment Eliminations Total (in thousands) Americas $ 1,202,970 $ 379,121 $ 224,529 $ ( 16,768 ) $ 1,789,852 Europe 166,644 120,974 2,826 — 290,444 Asia Pacific 57,141 5,837 — ( 5,837 ) 57,141 $ 1,426,755 $ 505,932 $ 227,355 $ ( 22,605 ) $ 2,137,437 Six Months Ended June 30, 2022 Merchant Solutions Issuer Solutions Business and Consumer Solutions Intersegment Eliminations Total (in thousands) Americas $ 2,576,851 $ 797,266 $ 374,836 $ ( 29,927 ) $ 3,719,026 Europe 361,505 231,682 8,568 — 601,755 Asia Pacific 116,379 17,024 — ( 17,024 ) 116,379 $ 3,054,735 $ 1,045,972 $ 383,404 $ ( 46,951 ) $ 4,437,160 Six Months Ended June 30, 2021 Merchant Solutions Issuer Solutions Business and Consumer Solutions Intersegment Eliminations Total (in thousands) Americas $ 2,283,440 $ 757,164 $ 465,163 $ ( 33,673 ) $ 3,472,094 Europe 299,578 238,386 5,778 — 543,742 Asia Pacific 111,609 10,633 — ( 10,634 ) 111,608 $ 2,694,627 $ 1,006,183 $ 470,941 $ ( 44,307 ) $ 4,127,444 13 Table of Contents The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three and six months ended June 30, 2022 and 2021: Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (in thousands) Relationship-led $ 827,577 $ 778,978 $ 1,564,982 $ 1,445,890 Technology-enabled 754,139 647,777 1,489,753 1,248,737 $ 1,581,716 $ 1,426,755 $ 3,054,735 $ 2,694,627 ASC Topic 606, Revenues from Contracts with Customers ("ASC 606"), requires that we determine for each customer arrangement whether revenue should be recognized at a point in time or over time. For the three and six months ended June 30, 2022 and 2021, substantially all of our revenues were recognized over time. Supplemental balance sheet information related to contracts from customers as of June 30, 2022 and December 31, 2021 was as follows: Balance Sheet Location June 30, 2022 December 31, 2021 (in thousands) Assets: Capitalized costs to obtain customer contracts, net Other noncurrent assets $ 312,728 $ 291,914 Capitalized costs to fulfill customer contracts, net Other noncurrent assets $ 131,580 $ 113,366 Liabilities: Contract liabilities, net (current) Accounts payable and accrued liabilities $ 211,799 $ 227,783 Contract liabilities, net (noncurrent) Other noncurrent liabilities $ 45,066 $ 44,502 Net contract assets were not material at June 30, 2022 or at December 31, 2021. Revenue recognized for the three months ended June 30, 2022 and 2021 from contract liability balances at the beginning of each period was $ 83.2 million and $ 85.0 million, respectively. Revenue recognized for the six months ended June 30, 2022 and 2021 from contract liability balances at the beginning of each period was $ 149.8 million and $ 146.6 million, respectively. ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations. The purpose of this disclosure is to provide additional information about the amounts and expected timing of revenue to be recognized from the remaining performance obligations in our existing contracts. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at June 30, 2022. 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 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): 14 Table of Contents Year Ending December 31, 2022 $ 514,844 2023 903,194 2024 640,729 2025 510,197 2026 401,120 2027 259,652 2028 and thereafter 388,622 Total $ 3,618,358 15 Table of Contents NOTE 5— GOODWILL AND OTHER INTANGIBLE ASSETS As of June 30, 2022 and December 31, 2021, goodwill and other intangible assets consisted of the following: June 30, 2022 December 31, 2021 (in thousands) Goodwill $ 23,496,495 $ 24,813,274 Other intangible assets: Customer-related intangible assets $ 9,628,040 $ 9,694,083 Acquired technologies 2,860,123 2,962,154 Contract-based intangible assets 1,736,581 2,258,676 Trademarks and trade names 1,067,789 1,271,302 15,292,533 16,186,215 Less accumulated amortization: Customer-related intangible assets 2,898,008 2,587,586 Acquired technologies 1,518,941 1,367,513 Contract-based intangible assets 168,053 180,975 Trademarks and trade names 434,846 416,432 5,019,848 4,552,506 $ 10,272,685 $ 11,633,709 Approximately $ 651.2 million of intangible assets have been reclassified to assets held for sale in connection with the presentation of the consumer business as held for sale as of June 30, 2022. See “Note 3—Business Dispositions” for further discussion. The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the six months ended June 30, 2022: Merchant Solutions Issuer Solutions Business and Consumer Solutions Total (in thousands) Balance at December 31, 2021 $ 14,063,682 $ 7,954,453 $ 2,795,139 $ 24,813,274 Effect of foreign currency translation ( 62,933 ) ( 27,341 ) ( 1,737 ) ( 92,011 ) Reallocation of goodwill among segments (1) — 407,713 ( 407,713 ) — Goodwill derecognized in connection with the sale of a business (2) ( 17,719 ) — — ( 17,719 ) Impairment of goodwill — — ( 833,075 ) ( 833,075 ) Reclassification of goodwill to assets held for sale (3) — — ( 366,436 ) ( 366,436 ) Measurement period adjustments ( 2,957 ) ( 4,581 ) — ( 7,538 ) Balance at June 30, 2022 $ 13,980,073 $ 8,330,244 $ 1,186,178 $ 23,496,495 (1) During the first quarter of 2022, the recently acquired operations of MineralTree were reassigned to the Issuer Solutions segment to reflect how the business will be managed going forward. As a result of this realignment, $ 407.7 million of goodwill was reallocated from the Business and Consumer Solutions segment to the Issuer Solutions segment. (2) Reflects goodwill derecognized in connection with the sale of our Merchant Solutions business in Russia. See “Note 3—Business Dispositions” for further discussion. 16 Table of Contents (3) Reflects the reclassification of goodwill in connection with the presentation of the consumer business as held for sale as of June 30, 2022. See “Note 3—Business Dispositions” for further discussion. We test goodwill for impairment at the reporting unit level annually and more often if an event occurs or circumstances change that indicate the fair value of a reporting unit may be below its carrying amount. 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. The income approach calculates a value based upon the present value of estimated future cash flows, while the market approach uses earnings multiples of similarly situated guideline public companies. Determining the fair value of a reporting unit involves judgment and the use of significant estimates and assumptions, which include assumptions regarding the revenue growth rates and operating margins used to calculate estimated future cash flows, risk-adjusted discount rates and future economic and market conditions. The sustained decline in our share price and recent increases in discount rates, primarily resulting from increased economic uncertainty, indicated a potential decline in fair value and triggered a requirement to evaluate our Issuer Solutions and Business and Consumer Solutions reporting units for potential impairment as of June 30, 2022. Further, the estimated sales price for the consumer business portion of our Business and Consumer Solutions reporting unit also indicated a potential decline in fair value as of June 30, 2022. We determined on the basis of the quantitative assessment that the fair value of the Issuer Solutions reporting unit was still greater than its carrying amount as of June 30, 2022, indicating no impairment. Based on the quantitative assessment of the Business and Consumer Solutions reporting unit, including consideration of the consumer business disposal group and the remaining assets of the reporting unit, we recognized a goodwill impairment charge of $ 833.1 million in our consolidated statement of income for the three and six months ended June 30, 2022. We continue to closely monitor developments related to COVID-19 and other global events. The future magnitude, duration and effects of these events are difficult to predict at this time, and it is reasonably possible that future developments could have a negative effect on the estimates and assumptions utilized in our goodwill impairment assessments and could result in material impairment charges in future periods. Accumulated impairment losses for goodwill as of June 30, 2022 were $ 833.1 million. There were no accumulated impairment losses for goodwill as of December 31, 2021. 17 Table of Contents NOTE 6— LONG-TERM DEBT AND LINES OF CREDIT As of June 30, 2022 and December 31, 2021, long-term debt consisted of the following: June 30, 2022 December 31, 2021 (in thousands) 3.750 % senior notes due June 1, 2023 $ 554,650 $ 557,186 4.000 % senior notes due June 1, 2023 556,042 559,338 1.500 % senior notes due November 15, 2024 497,674 497,185 2.650 % senior notes due February 15, 2025 995,641 994,797 1.200 % senior notes due March 1, 2026 1,092,974 1,092,016 4.800 % senior notes due April 1, 2026 792,374 798,024 2.150 % senior notes due January 15, 2027 744,321 743,695 4.450 % senior notes due June 1, 2028 475,997 478,194 3.200 % senior notes due August 15, 2029 1,238,797 1,238,006 2.900 % senior notes due May 15, 2030 990,781 990,196 2.900 % senior notes due November 15, 2031 742,136 741,716 4.150 % senior notes due August 15, 2049 740,324 740,146 Unsecured term loan facility 1,991,802 1,989,793 Unsecured revolving credit facility 700,000 — Finance lease liabilities 49,908 64,421 Other borrowings 43 8,601 Total long-term debt 12,163,464 11,493,314 Less current portion 1,279,743 78,505 Long-term debt, excluding current portion $ 10,883,721 $ 11,414,809 The carrying amounts of our senior notes and unsecured term loan facility in the table above are presented net of unamortized discount and unamortized debt issuance costs, as applicable. At June 30, 2022, unamortized discount on senior notes was $ 11.0 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $ 54.6 million. At December 31, 2021, unamortized discount on senior notes was $ 11.7 million and unamortized debt issuance costs on our senior notes and the unsecured term loan facility were $ 60.7 million. The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets. At June 30, 2022, unamortized debt issuance costs on the unsecured revolving credit facility were $ 8.1 million, and at December 31, 2021, unamortized debt issuance costs on the unsecured revolving credit facility were $ 9.9 million. At June 30, 2022, future maturities of long-term debt (excluding finance lease liabilities) are as follows by year (in thousands): Year Ending December 31, 2022 $ 50,000 2023 1,300,000 2024 2,950,000 2025 1,000,000 2026 1,850,000 2027 750,000 2028 and thereafter 4,200,000 Total $ 12,100,000 18 Table of Contents Long-Term Debt As of June 30, 2022, our senior notes had a total carrying amount of $ 9.4 billion and an estimated fair value of $ 8.5 billion. The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy. The fair value of other long-term debt approximated its carrying amount at June 30, 2022. Compliance with Covenants The unsecured term loan and revolving credit facilities contain customary conditions to funding, affirmative covenants, negative covenants, financial covenants and events of default. As of June 30, 2022, financial covenants under the term loan facility required a leverage ratio of 3.50 to 1.00 and an interest coverage ratio of 3.00 to 1.00. We were in compliance with all applicable covenants as of June 30, 2022. Derivative Agreements 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. Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. Since we have designated the interest rate swap agreements as portfolio cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recorded as components of other comprehensive income (loss). 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 the valuation date. These derivative instruments were classified within Level 2 of the valuation hierarchy. The table below presents information about our derivative financial instruments, designated as cash flow hedges, included in the consolidated balance sheets: Fair Values Derivative Financial Instruments Balance Sheet Location Weighted-Average Fixed Rate of Interest at June 30, 2022 Range of Maturity Dates at June 30, 2022 June 30, 2022 December 31, 2021 (in thousands) Interest rate swaps (Notional of $ 500 million at June 30, 2022 and $ 0 at December 31, 2021 Prepaid expenses and other current assets 2.51 % December 31, 2022 $ 329 $ — Interest rate swaps (Notional of $ 750 million at June 30, 2022 and $ 1,250 million at December 31, 2021) Accounts payable and accrued liabilities 2.88 % December 31, 2022 $ 874 $ 28,777 19 Table of Contents The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the three and six months ended June 30, 2022 and 2021: Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (in thousands) Net unrealized gains (losses) recognized in other comprehensive income (loss) $ 5,051 $ ( 410 ) $ 13,985 $ 584 Net unrealized losses reclassified out of other comprehensive income (loss) to interest expense $ 7,534 $ 9,662 $ 16,979 $ 20,500 As of June 30, 2022, 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 $ 5.7 million. Interest Expense Interest expense was $ 97.1 million and $ 79.0 million for the three months ended June 30, 2022 and 2021, respectively, and $ 186.4 million and $ 160.5 million for the six months ended June 30, 2022 and 2021, respectively. NOTE 7— INCOME TAX For the three and six months ended June 30, 2022, we incurred income tax expense in spite of reporting a loss before income taxes, primarily due to the unfavorable effects of the goodwill impairment charge and loss on the sale of our Merchant Solutions business in Russia for which no tax benefit was recognized. These unfavorable effects were partially offset by the favorable effects of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction. Our effective income tax rates for the three and six months ended June 30, 2021 were 21.2 % and 16.8 %, respectively. Our effective income tax rates for the three and six months ended June 30, 2021 differed from the U.S. statutory rate primarily as a result of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction, each favorably affecting the effective rate, and the effect of enacted tax law changes in the U.K. which required a remeasurement of deferred tax balances raising the effective rate. A change in the assessment of the need for a valuation allowance related to foreign tax credit carryforwards also had a favorable effect on the effective income tax rate for the six months ended June 30, 2021. NOTE 8— SHAREHOLDERS’ EQUITY We repurchase our common stock mainly through open market repurchase plans and, at times, through accelerated share repurchase ("ASR") programs. During the three months ended June 30, 2022 and 2021, we repurchased and retired 4,523,563 and 1,501,549 shares of our common stock at a cost, including commissions, of $ 600.3 million and $ 290.0 million, or $ 132.64 and $ 193.12 per share, respectively. During the six months ended June 30, 2022 and 2021, we repurchased and retired 9,039,189 and 5,456,949 shares of our common stock at a cost, including commissions, of $ 1,250.0 million and $ 1,072.9 million, or $ 138.29 and $ 196.65 per share, respectively. The activity for the six months ended June 30, 2021 included the repurchase of 2,491,161 shares at an average price of $ 200.71 per share under an ASR agreement we entered into on February 10, 2021 with a financial institution to repurchase an aggregate of $ 500 million of our common stock during the A SR program purchase period, which ended on March 31, 2021. As of June 30, 2022, the remaining amount available under our share repurchase program was $ 1,107.0 million. On July 28, 2022, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to $ 1.5 billion. 20 Table of Contents On July 28, 2022, our board of directors declared a dividend of $ 0.25 per share payable on September 30, 2022 to common shareholders of record as of September 16, 2022. NOTE 9— SHARE-BASED AWARDS AND STOCK OPTIONS The following table summarizes share-based compensation expense and the related income tax benefit recognized for our share-based awards and stock options: Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (in thousands) Share-based compensation expense $ 47,014 $ 43,325 $ 85,414 $ 80,490 Income tax benefit $ 10,318 $ 9,972 $ 19,997 $ 18,371 Share-Based Awards The following table summarizes the changes in unvested restricted stock and performance awards for the six months ended June 30, 2022: Shares Weighted-Average Grant-Date Fair Value (in thousands) Unvested at December 31, 2021 1,640 $ 184.90 Granted 1,450 138.20 Vested ( 556 ) 173.19 Forfeited ( 79 ) 162.21 Unvested at June 30, 2022 2,455 $ 160.65 The total fair value of restricted stock and performance awards vested during the six months ended June 30, 2022 and June 30, 2021 was $ 96.4 million and $ 97.2 million, respectively. For restricted stock and performance awards, we recognized compensation expense of $ 43.6 million and $ 39.9 million during the three months ended June 30, 2022 and 2021, respectively, and $ 78.7 million and $ 73.3 million during the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, there was $ 284.8 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 2.2 years. 21 Table of Contents Stock Options The following table summarizes stock option activity for the six months ended June 30, 2022: Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) (years) (in millions) Outstanding at December 31, 2021 1,172 $ 107.44 5.8 $ 47.4 Granted 154 136.02 Exercised ( 61 ) 69.15 Outstanding at June 30, 2022 1,265 $ 112.76 5.9 $ 24.5 Options vested and exercisable at June 30, 2022 996 $ 99.38 5.1 $ 24.5 We recognized compensation expense for stock options of $ 1.8 million and $ 1.8 million during the three months ended June 30, 2022 and 2021, respectively, and $ 3.6 million and $ 4.2 million during the six months ended June 30, 2022 and 2021, respectively. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2022 and 2021 was $ 3.8 million and $ 23.1 million, respectively. As of June 30, 2022, we had $ 12.1 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.1 years. The weighted-average grant-date fair value of stock options granted during the six months ended June 30, 2022 and 2021 was $ 48.88 and $ 65.99 , respectively. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions: Six Months Ended June 30, 2022 June 30, 2021 Risk-free interest rate 1.87 % 0.59 % Expected volatility 40 % 40 % Dividend yield 0.56 % 0.44 % Expected term (years) 5 5 The risk-free interest rate was based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. 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. We based our assumptions on the expected term of the options on our analysis of the historical exercise patterns of the options and our assumption on the future exercise pattern of options. NOTE 10— EARNINGS PER SHARE Basic earnings per share ("EPS") was computed by dividing net income (loss) attributable to Global Payments by the weighted-average number of shares outstanding during the period. Earnings available to common shareholders was the same as reported net income (loss) attributable to Global Payments for all periods presented. 22 Table of Contents Diluted EPS is computed by dividing net income (loss) attributable to Global Payments by the weighted-average number of shares outstanding during the period, including the effect of share-based awards that would have a dilutive effect on EPS. All stock options with an exercise price lower than the average market share price of our common stock for the period are assumed to have a dilutive effect on EPS. Due to a net loss for the three and six months ended June 30, 2022, no incremental shares are included in the computation of diluted earnings per share because the effect would be antidilutive. Approximately 2.0 million shares related to stock options and share-based awards were therefore excluded from the dilutive share base for the three and six months ended June 30, 2022. The dilutive share base for the three and six months ended June 30, 2021 excluded approximately 234,813 shares related to stock options that would have an antidilutive effect on the computation of diluted earnings per share. The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three and six months ended June 30, 2022 and 2021: Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (in thousands) Basic weighted-average number of shares outstanding 278,181 294,914 280,130 295,665 Plus: Dilutive effect of stock options and other share-based awards — 1,225 — 1,236 Diluted weighted-average number of shares outstanding 278,181 296,139 280,130 296,901 NOTE 11 - SUPPLEMENTAL BALANCE SHEET INFORMATION Cash, cash equivalents and restricted cash 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: June 30, 2022 December 31, 2021 (in thousands) Cash and cash equivalents $ 1,933,309 $ 1,979,308 Restricted cash included in prepaid expenses and other current assets 165,802 143,715 Cash included in assets held for sale 730 — Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 2,099,841 $ 2,123,023 Accounts payable and accrued liabilities At December 31, 2021, accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $ 14.5 million for employee termination benefits resulting from integration activities related to our merger with Total System Services, Inc. (the "Merger"). During the three and six months ended June 30, 2021, we recognized charges for employee termination benefits of $ 13.1 million and $ 38.3 million, respectively, which included $ 0.7 million and $ 1.2 million of share-based compensation expense, respectively. 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. Employee termination benefits from Merger-related integration activities were substantially complete as of December 31, 2021. There were no significant charges recognized during the three and six months ended June 30, 2022 and no significant remaining obligations to be paid as of June 30, 2022. 23 Table of Contents NOTE 12— ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in the accumulated balances for each component of other comprehensive income (loss) were as follows for the three and six months ended June 30, 2022 and 2021: Foreign Currency Translation Gains (Losses) Unrealized Gains (Losses) on Hedging Activities Other Accumulated Other Comprehensive Loss (in thousands) Balance at March 31, 2022 $ ( 209,895 ) $ ( 34,567 ) $ ( 2,743 ) $ ( 247,205 ) Other comprehensive (loss) income ( 133,506 ) 9,533 — ( 123,973 ) Balance at June 30, 2022 $ ( 343,401 ) $ ( 25,034 ) $ ( 2,743 ) $ ( 371,178 ) Balance at March 31, 2021 $ ( 141,070 ) $ ( 72,575 ) $ 1,272 $ ( 212,373 ) Other comprehensive income (loss) 34,188 7,027 ( 1,549 ) 39,666 Balance at June 30, 2021 $ ( 106,882 ) $ ( 65,548 ) $ ( 277 ) $ ( 172,707 ) Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was $( 13.5 ) million and $ 2.7 million for the three months ended June 30, 2022 and 2021, respectively. Foreign Currency Translation Gains (Losses) Unrealized Gains (Losses) on Hedging Activities Other Accumulated Other Comprehensive Loss (in thousands) Balance at December 31, 2021 $ ( 182,949 ) $ ( 48,490 ) $ ( 2,743 ) $ ( 234,182 ) Other comprehensive (loss) income ( 160,452 ) 23,456 — ( 136,996 ) Balance at June 30, 2022 $ ( 343,401 ) $ ( 25,034 ) $ ( 2,743 ) $ ( 371,178 ) Balance at December 31, 2020 $ ( 114,227 ) $ ( 81,543 ) $ ( 6,503 ) $ ( 202,273 ) Other comprehensive income 7,345 15,995 6,226 29,566 Balance at June 30, 2021 $ ( 106,882 ) $ ( 65,548 ) $ ( 277 ) $ ( 172,707 ) Other comprehensive loss attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 18.8 million and $ 3.2 million for the six months ended June 30, 2022 and 2021, respectively. NOTE 13— SEGMENT INFORMATION We operate in three reportable segments: Merchant Solutions, Issuer Solutions and Business and Consumer Solutions. We evaluate performance and allocate resources based on the operating income of each operating segment. The operating income of each operating segment includes the revenues of the segment less expenses that are directly related to those revenues. Operating overhead, shared costs and share-based compensation costs are included in Corporate. Impairment of goodwill and gains or losses on business dispositions are not included in segment operating income. Interest and other income, interest and other expense, income tax expense and equity in income of equity method investments, net of tax, 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 our Annual Report on Form 10-K for the year ended December 31, 2021 and our summary of significant accounting policies in "Note 1—Basis of Presentation and Summary of Significant Accounting Policies." 24 Table of Contents During the first quarter of 2022, the recently acquired operations of MineralTree were reassigned to the Issuer Solutions segment to reflect how the business will be managed going forward. As a result of the planned divestiture of the consumer portion of our Business and Consumer Solutions segment, we anticipate that we will realign the retained business-to-business portion of the Business and Consumer Solutions segment to the Issuer Solutions segment during the third quarter of 2022 to reflect how the business will be managed going forward. We would begin reporting on the revised basis during the third quarter of 2022 and recast prior periods to reflect the change in segment reporting. Information on segments and reconciliations to consolidated revenues, consolidated operating income and consolidated depreciation and amortization were as follows for the three and six months ended June 30, 2022 and 2021: Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (in thousands) Revenues : (1) Merchant Solutions $ 1,581,716 $ 1,426,755 $ 3,054,735 $ 2,694,627 Issuer Solutions 534,471 505,932 1,045,972 1,006,183 Business and Consumer Solutions 187,632 227,355 383,404 470,941 Intersegment eliminations ( 22,913 ) ( 22,605 ) ( 46,951 ) ( 44,307 ) Consolidated revenues $ 2,280,906 $ 2,137,437 $ 4,437,160 $ 4,127,444 Operating income (loss) (1) : Merchant Solutions $ 535,359 $ 437,293 $ 979,889 $ 777,283 Issuer Solutions 67,715 74,806 125,816 143,262 Business and Consumer Solutions 31,726 42,283 65,385 104,205 Corporate (2) ( 179,372 ) ( 191,824 ) ( 339,715 ) ( 386,933 ) Impairment of goodwill (3) ( 833,075 ) — ( 833,075 ) — Loss on business dispositions (4) ( 152,211 ) — ( 152,211 ) — Consolidated operating income (loss) $ ( 529,858 ) $ 362,558 $ ( 153,911 ) $ 637,817 Depreciation and amortization : (1) Merchant Solutions $ 248,891 $ 248,503 $ 498,852 $ 499,099 Issuer Solutions 153,457 145,691 305,580 290,300 Business and Consumer Solutions 20,268 21,938 40,536 43,858 Corporate 4,960 5,912 11,280 14,359 Consolidated depreciation and amortization $ 427,576 $ 422,044 $ 856,248 $ 847,616 (1) Revenues, operating income (loss) and depreciation and amortization reflect the effects of acquired businesses from the respective acquisition dates and the effects of divested businesses through the respective disposal dates. See “Note 2—Acquisition” and “Note 3—Business Dispositions” for further discussion. (2) Operating loss for Corporate included acquisition and integration expenses of $ 61.4 million and $ 76.8 million during the three months ended June 30, 2022 and 2021, respectively. Operating loss for Corporate included acquisition and integration expenses of $ 109.5 million and $ 167.0 million during the six months ended June 30, 2022 and 2021, respectively. (3) During the three and six months ended June 30, 2022, consolidated operating loss included a $ 833.1 million goodwill impairment charge related to the Business and Consumer Solutions reporting unit. See “Note 5—Goodwill and Other Intangible Assets” for further discussion. (4) During the three and six months ended June 30, 2022, consolidated operating loss included a $ 127.2 million loss on the sale of our Merchant Solutions business in Russia and a charge for the estimated costs to sell our consumer business. 25 Table of Contents NOTE 14— COMMITMENTS AND CONTINGENCIES Legal Matters We are party to a number of claims and lawsuits incidental to our business. In our opinion, the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, are not expected to have a material adverse effect on our financial position, liquidity, results of operations or cash flows. NOTE 15— SUBSEQUENT EVENTS Visa Preferred Shares Through certain of our subsidiaries in Europe, we were a member and shareholder of Visa Europe Limited ("Visa Europe"). On June 21, 2016, Visa Inc. ("Visa") acquired all of the membership interests in Visa Europe, and we received consideration in the form of cash and Series B and C convertible preferred shares of Visa. 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 July 1, 2022, in connection with the second mandatory release assessment, we received notice that a portion of the Series B and C convertible preferred shares will be converted by Visa subject to a review period as required by the terms of the original transaction. We expect the review period will be completed during the third quarter of 2022, at which time we expect to recognize a gain of $ 13.6 million. Pending Business Acquisition and Related Bridge Facility On August 1, 2022, we entered into a merger agreement to acquire all outstanding equity of EVO Payments, Inc. (“EVO”) for $ 34 per share, or approximately $ 3.4 billion in preliminary estimated cash consideration to be transferred to EVO shareholders, which equates to an enterprise value of approximately $ 4 billion. EVO is a leading payment technology and services provider, offering an array of innovative, reliable, and secure payment solutions to merchants ranging from small and middle market merchant enterprises to multinational companies and organizations across the Americas and Europe. The acquisition aligns with our technology-enabled payments strategy, expands our geographic presence and augments our business-to-business software and payment solutions business. The acquisition is expected to close prior to the end of first quarter of 2023, subject to regulatory and shareholder approvals. In connection with our entry into the merger agreement, on August 1, 2022, we obtained commitments for a $ 4.3 billion, 364-day senior unsecured bridge facility (the "Bridge Facility"). The Bridge Facility establishes an unsecured capital structure under which we can refinance our Senior Unsecured Credit Facilities in order to pay the cash consideration to acquire all outstanding equity of EVO in accordance with the terms of the merger agreement, refinance certain outstanding indebtedness of EVO in connection with the acquisition and pay related transaction fees and expenses. We expect to execute permanent financing prior to the closing of the acquisition that will eliminate the need for the Bridge Facility commitments. Estimated fees associated with the Bridge Facility of $ 17.3 million will be amortized to interest expense through the expected date of termination of the Bridge Facility commitment. 26 Table of Contents Convertible Senior Notes On August 1, 2022, we entered into an investment agreement with Silver Lake Partners relating to the issuance of $ 1.5 billion in aggregate principal amount of 1.0 % convertible unsecured senior notes (‘Convertible Notes”) due 2029 in a private placement. The interest rate of the Convertible Notes is fixed at 1.0 % per annum and is payable semi-annually. The Convertible Notes are convertible at the option of the holder after 18 months at a 15 % conversion premium. Upon conversion of the Convertible Notes, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. In connection with the offering of the Convertible Notes, we expect to enter into a convertible note hedge transaction with certain bank counterparties whereby we have the option to purchase shares of our common stock. In addition, we expect to sell warrants to certain bank counterparties whereby the holders of the warrants have the option to purchase shares of our common stock. Taken together, the purchase of the convertible note hedges and the sale of warrants are intended to offset the dilutive effect from the conversion of the Convertible Notes. 27 Table of Contents