5 unchanged sentences
and subsidiaries (the "Company") as of December 31, 2022 and 2021, 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, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
−Removed: 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.
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with 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, 2022, 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 17, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.
24 unchanged sentences
Our audit procedures related to the Company's Issuer Solutions revenue transactions, specifically its identification of the performance obligations in contracts with its customers, included the following, among others:
−Removed: • We evaluated the effectiveness of controls over Issuer Solutions contract revenue, including controls over the identification of performance obligations.
+Added: • We evaluated the effectiveness of controls over Issuer Solutions contract revenues, including controls over the identification of performance obligations.
• We selected a sample of Issuer Solutions contracts and evaluated whether the performance obligations were appropriately identified in each of the selected contracts including whether the promised services are capable of being distinct and are distinct in the context of the contract.
2 unchanged sentences
The Company's revenues from its payment processing solutions and services consist of activity-based fees made up of a significant volume of low-dollar transactions, sourced from multiple systems and applications.
−Removed: The processing of transactions and recording of revenue is highly automated and is based on contractual terms with merchants, financial institutions, financial service providers, payment networks, and other parties.
−Removed: Accordingly, we identified payment processing solutions and services revenues as a critical audit matter.
−Removed: This required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), to identify, test, and evaluate the Company's systems, software applications, and automated controls.
+Added: The processing of transactions and recording of revenues is highly automated and is based on contractual terms with merchants, financial institutions, financial service providers, payment networks, and other parties.
+Added: We identified payment processing solutions and services revenues as a critical audit matter given the increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), to identify, test, and evaluate the Company's systems, software applications, and automated controls.
How the Critical Audit Matter Was Addressed in the Audit
2 unchanged sentences
◦ Identified the significant systems used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.
−Removed: ◦ Tested system interface controls and automated controls within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenue.
−Removed: • We tested internal controls within the relevant revenue business processes, including those in place to reconcile the various reports extracted from the IT systems to the Company’s general ledger.
+Added: ◦ Tested system interface controls and automated controls within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenues.
+Added: • We tested controls within the relevant revenue business processes, including those in place to reconcile the various reports extracted from the IT systems to the Company’s general ledger.
• We evaluated trends in recorded revenues, including interchange fees and payment network fees.
−Removed: • For a sample of revenue transactions, we tested selected transactions by agreeing the amounts of revenue recognized to source documents and testing the mathematical accuracy of the recorded revenue.
+Added: • For a sample of revenue transactions, we tested selected transactions by agreeing the amounts of revenue recognized to source documents and tested the mathematical accuracy of the recorded revenues.
+Added: Issuer Solutions Goodwill and Business and Consumer Solutions Goodwill - Refer to Notes 1 and 6 to the financial statements
+Added: Critical Audit Matter Description
+Added: The Company’s evaluation of goodwill for impairment involves the comparison of the fair values of its reporting units, including the Issuer Solutions reporting unit (as of June 30, 2022 and October 1, 2022) and the former Business and Consumer reporting unit (as of June 30, 2022), to their respective carrying values.
+Added: The Company determined the fair values of these reporting units based on a weighted average of multiple valuation techniques, principally a combination of an income approach and a market approach.
+Added: The Company utilizes discounted cash flow models to perform its income approach which requires management to make significant assumptions related to discount rates and forecasts of future revenues and cash flows, among others.
+Added: Changes in these assumptions could have a significant impact on either the fair values of the reporting units, the amount of any goodwill impairment charge, or both.
+Added: The Company recorded a goodwill impairment charge during 2022 of $833.1 million related to its former Business and Consumer reporting unit.
+Added: The goodwill balance was $23.3 billion as of December 31, 2022, of which $9.5 billion was allocated to the Issuer Solutions reporting unit.
+Added: We identified valuation of goodwill for the Issuer Solutions and the former Business and Consumer Solutions reporting units as a critical audit matter because of the significant judgments made by management to estimate the fair values of these reporting units.
+Added: This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to discount rates and forecasts of future revenues and cash flows.
+Added: How the Critical Audit Matter Was Addressed in the Audit
+Added: Our audit procedures related to management’s estimates and assumptions used in its discounted cash flow models included the following, among others:
+Added: • We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those controls related to management’s selection of the discount rates and forecasts of future revenues and cash flows.
+Added: • With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology and the key assumptions used, including discount rates for which we tested the mathematical accuracy of the calculation, and developed a range of independent estimates and compared those to the discount rate selected by management.
+Added: • We evaluated management’s ability to accurately forecast future revenues and cash flows by comparing the forecasts to (1) historical results, (2) projections utilized in the prior year goodwill impairment analysis, and (3) forecasted information included in analyst and industry reports of the Company and companies in its peer group.
/s/ Deloitte & Touche LLP
1 unchanged sentence
February 17, 2023
−Removed: We have served as the Company's auditors since 2002.
+Added: We have served as the Company's auditor since 2002.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
4 unchanged sentences
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
−Removed: 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, 2021, of the Company and our report dated February 18, 2022, expressed an unqualified opinion on those financial statements.
−Removed: 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.
−Removed: 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.
+Added: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 17, 2023, expressed an unqualified opinion on those financial statements.
Basis for Opinion
28 unchanged sentences
3,524,578 3,391,161 2,878,878
+Added: Impairment of goodwill 833,075 — —
+Added: Loss on business dispositions 199,094 — —
8,335,364 7,164,886 6,529,605
22 unchanged sentences
Foreign currency translation adjustments ( 276,559 ) ( 79,550 ) 153,210
+Added: 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 2,698 455 1,160
4 unchanged sentences
Other comprehensive (loss) income ( 185,088 ) ( 42,282 ) 134,996
−Removed: Comprehensive income
−Removed: 945,582 740,096 466,155
+Added: Comprehensive (loss) income ( 41,775 ) 945,582 740,096
Comprehensive income attributable to noncontrolling interests ( 18,519 ) ( 12,123 ) ( 35,223 )
−Removed: Comprehensive income attributable to Global Payments $ 933,459 $ 704,873 $ 430,217
+Added: Comprehensive (loss) income attributable to Global Payments $ ( 60,294 ) $ 933,459 $ 704,873
See Notes to Consolidated Financial Statements.
7 unchanged sentences
Settlement processing assets 2,519,114 1,143,539
+Added: Current assets held for sale 138,815 4,779
Prepaid expenses and other current assets 660,321 637,112
4 unchanged sentences
Deferred income taxes 37,907 12,117
+Added: Noncurrent assets held for sale 1,295,799 —
Other noncurrent assets 2,343,241 2,422,042
6 unchanged sentences
Settlement processing obligations 2,413,799 1,358,051
+Added: Current liabilities held for sale 125,891 —
Total current liabilities 6,898,691 4,463,014
1 unchanged sentence
Deferred income taxes 2,428,412 2,793,427
+Added: Noncurrent liabilities held for sale 4,478 —
Other noncurrent liabilities 647,975 739,046
31 unchanged sentences
Facilities exit charges 30,437 51,349 —
−Removed: Distribution received on investments 36,914 7,738 —
+Added: Distributions received on investments 45,521 36,914 7,738
+Added: Impairment of goodwill 833,075 — —
+Added: Loss on business dispositions 199,094 — —
Other, net 993 10,810 ( 21,403 )
9 unchanged sentences
Capital expenditures ( 615,652 ) ( 493,216 ) ( 436,236 )
+Added: Effect on cash from sale of business ( 29,755 ) — —
+Added: Proceeds from sale of investments 33,046 — —
Other, net 2,496 10,822 39,323
9 unchanged sentences
Distributions to noncontrolling interests ( 23,031 ) — ( 26,199 )
−Removed: Preacquisition dividends paid to former TSYS shareholders — — ( 23,240 )
+Added: Contributions from noncontrolling interests
+Added: Payment of contingent consideration in business combination ( 15,726 ) — —
+Added: Purchase of capped calls related to issuance of convertible notes ( 302,375 ) — —
Dividends paid ( 273,955 ) ( 259,726 ) ( 233,216 )
1 unchanged sentence
— — ( 578,196 )
−Removed: Contributions from noncontrolling interests
Net cash used in financing activities ( 1,376,701 ) ( 405,365 ) ( 1,546,142 )
14 unchanged sentences
Share-based compensation expense 163,261 163,261 163,261
−Removed: Contributions from noncontrolling interests — 69,987 69,987
−Removed: Change in ownership attributable to a noncontrolling interest
−Removed: — ( 4,524 ) 92 ( 4,432 ) 4,432 —
Repurchases of common stock ( 23,266 ) ( 2,841,534 ) ( 88,280 ) ( 2,929,814 ) ( 2,929,814 )
+Added: Distributions to noncontrolling interests — ( 23,031 ) ( 23,031 )
+Added: Purchase of capped calls related to issuance of convertible notes, net of taxes of $ 72,778
+Added: ( 229,597 ) ( 229,597 ) ( 229,597 )
Cash dividends declared ($ 1.00 per common share)
3 unchanged sentences
Balance at December 31, 2020 298,332 $ 24,963,769 $ 2,570,874 $ ( 202,273 ) $ 27,332,370 $ 154,674 $ 27,487,044
−Removed: Cumulative effect of adoption of new accounting standards ( 5,379 ) ( 5,379 ) ( 5,379 )
Net income 965,460 965,460 22,404 987,864
−Removed: Other comprehensive income 120,353 120,353 14,643 134,996
+Added: 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
1 unchanged sentence
Share-based compensation expense 180,779 180,779 180,779
−Removed: Noncontrolling interest of acquired business — 14,812 14,812
−Removed: Purchase of subsidiary shares from noncontrolling interest ( 497,737 ) ( 12,055 ) ( 509,792 ) ( 68,404 ) ( 578,196 )
−Removed: Distributions to noncontrolling interests ( 26,199 ) ( 26,199 )
+Added: Contributions from noncontrolling interests — 69,987 69,987
+Added: Change in ownership attributable to a noncontrolling interest
+Added: ( 4,524 ) 92 ( 4,432 ) 4,432 —
Repurchases of common stock ( 15,169 ) ( 2,219,143 ) ( 294,486 ) ( 2,513,629 ) ( 2,513,629 )
8 unchanged sentences
Balance at December 31, 2019 300,226 $ 25,833,307 $ 2,333,011 $ ( 310,571 ) $ 27,855,747 $ 199,242 $ 28,054,989
+Added: Cumulative effect of adoption of new accounting standards ( 5,379 ) ( 5,379 ) ( 5,379 )
Net income 584,520 584,520 20,580 605,100
−Removed: Other comprehensive loss ( 396 ) ( 396 ) ( 2,725 ) ( 3,121 )
+Added: 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
1 unchanged sentence
Share-based compensation expense 148,792 148,792 148,792
−Removed: Issuance of common stock in connection with a business combination 143,909 23,771,389 23,771,389 23,771,389
+Added: Noncontrolling interest of acquired business — 14,812 14,812
+Added: 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 )
8 unchanged sentences
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.
−Removed: We operate in three reportable segments:
−Removed: Merchant Solutions, Issuer Solutions and Business and Consumer Solutions, which are described in "Note 16—Segment Information." Global Payments Inc.
+Added: 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.
−Removed: On September 18, 2019, we consummated our merger with Total System Services, Inc.
−Removed: ("TSYS") (the "Merger") for total purchase consideration of $ 24.5 billion, primarily funded with shares of our common stock.
−Removed: Prior to the Merger, TSYS was a leading global payments provider, offering seamless, secure and innovative solutions to issuers, merchants and consumers.
−Removed: See "Note 2—Acquisitions" for further discussion of the Merger and other acquisitions.
+Added: During 2022, as a result of the pending divestiture of our consumer business and changes in how our business is managed, we realigned the businesses previously comprising our Business and Consumer Solutions segment to include the business-to-business ("B2B") portion within our Issuer Solutions segment and the consumer portion forming our new Consumer Solutions segment.
+Added: Our three reportable segments now are:
+Added: Merchant Solutions, Issuer Solutions and Consumer Solutions.
+Added: See "Note 17—Segment Information" in the notes to the accompanying consolidated financial statements for additional information about our segments.
These consolidated financial statements include our accounts and those of our majority-owned subsidiaries, and all intercompany balances and transactions have been eliminated in consolidation.
−Removed: Investments in entities that we do not control are accounted for using the equity or cost method, depending upon our ability to exercise significant influence over operating and financial policies.
+Added: Investments in entities that we do not control are accounted for using the equity or cost method, based on whether or not we have the ability to exercise significant influence over operating and financial policies.
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").
−Removed: COVID-19 Update — Since early 2020, the global economy has been affected by COVID-19.
−Removed: 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.
−Removed: 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.
−Removed: Certain government actions to gradually ease restrictions, provide economic stimulus and distribute vaccines have resulted in signs of economic recovery.
−Removed: 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.
Actual results could differ materially from those estimates.
−Removed: In particular, the future magnitude, duration and effects of the COVID-19 pandemic are difficult to predict at this time, and the ultimate effect could result in additional charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill and other losses.
−Removed: These consolidated financial statements reflect the financial statement effects of COVID-19 based upon management's estimates and assumptions utilizing the most currently available information.
+Added: In particular, uncertainty resulting from the COVID-19 pandemic, global events and other macroeconomic conditions 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.
+Added: These consolidated financial statements reflect the financial statement effects based upon management’s estimates and assumptions utilizing the most currently available information.
Recently adopted accounting pronouncements
−Removed: Accounting Standards Update ("ASU") 2020-04 — In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, "Reference Rate Reform (Topic 848):
+Added: Accounting Standards Update ("ASU") 2021-08— In October 2021, the Financial Accounting Standards Board ("FASB") issued ASU 2021-08, "Business Combinations (Topic 805):
+Added: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ." We elected to early adopt ASU 2021-08 during the year ended December 31, 2022, with application to any business combinations for which the acquisition date occurred after January 1, 2022.
+Added: Prior to the adoption of this update, an acquirer generally recognized 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" or "ASC 606"), at fair value on the acquisition date.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: ASU 2020-04— In March 2020, the 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.
−Removed: 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.
−Removed: 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.
−Removed: 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
−Removed: would be required to be applied.
−Removed: 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.
−Removed: 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.
−Removed: Borrowings under the Term Loan Credit Agreement were made in U.S.
−Removed: dollars and borrowings under the Unsecured Revolving Credit Agreement are available to be made in U.S.
−Removed: dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option.
−Removed: 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.
−Removed: 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.
−Removed: Further amendments may be necessary to address the LIBOR reference rates applicable to borrowings made in U.S.
−Removed: 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.
−Removed: 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.
+Added: The amendments in this update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to
+Added: be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination.
+Added: 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.
+Added: The amendments in this update were effective upon issuance and, as further updated by ASU 2022-06, “Reference Rate Reform (Topic 848):
+Added: Deferral of the Sunset Date of Topic 848 ,” may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2024.
+Added: We elected to apply the expedients under ASU 2020-04 to a debt facility amendment completed in December 2021, the application of which did not result in any effect on our consolidated financial statements.
+Added: As a result of changes in our debt structure during 2022, which did not qualify for the optional expedients under ASU 2020-04, we no longer have any significant indebtedness or borrowings that bear interest at a variable rate based on LIBOR.
+Added: Therefore, we do not expect the discontinuance of LIBOR or the related effects of ASU 2020-04 will have a material effect on our consolidated financial statements.
+Added: See "Note 9—Long-Term Debt and Lines of Credit" in the notes to the accompanying consolidated financial statements for further information about our borrowing agreements.
ASU 2019-12— In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):
12 unchanged sentences
As of December 31, 2022 and 2021, capitalized implementation costs, net of accumulated amortization, were $ 142.9 million and $ 72.4 million, respectively, and are presented within other noncurrent assets in the consolidated balance sheets.
−Removed: 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.
+Added: Amortization expense for the years ended December 31, 2022, 2021 and 2020 was $ 3.1 million, $ 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):
2 unchanged sentences
The amendments in this update changed how we measure and recognize credit impairment for certain financial instruments measured at amortized cost.
−Removed: Under the current expected credit losses model required by ASU 2016-13, we recognize at asset inception and each
−Removed: 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.
−Removed: 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.
−Removed: We adopted ASU 2016-02, as well as other related clarifications and interpretive guidance issued by the FASB, on January 1, 2019 using the modified retrospective transition method.
−Removed: Under this transition method, we did not recast the prior period financial statements presented.
−Removed: We elected the transition package of three practical expedients, which among other things, allowed for the carryforward of historical lease classifications.
−Removed: We made an accounting policy election to not recognize assets or liabilities for leases with a term of less than 12 months and to account for all components in a lease arrangement as a single combined lease component for all of our then existing asset classes.
−Removed: In connection with the Merger, we acquired right-of-use assets that represent an additional asset class for computer equipment, for which we account for lease and nonlease components separately.
−Removed: The adoption of ASU 2016-02 resulted in the measurement and recognition of lease liabilities in the amount of $ 274.0 million and right-of-use assets in the amount of $ 236.0 million as of January 1, 2019.
−Removed: Lease liabilities were measured as the present value of remaining lease payments, and the corresponding right-of-use assets were measured at an amount equal to the lease liabilities adjusted by the amounts of certain assets and liabilities, such as prepaid rent and deferred lease obligations, that we previously recognized on the balance sheet prior to the initial application of ASU 2016-02.
−Removed: To calculate the present value of remaining lease payments, we elected to use an incremental borrowing rate based on the remaining lease term at transition.
−Removed: 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.
+Added: 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.
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.
−Removed: In accordance with ASC Topic 606, Revenues from Contracts with Customers ("ASC 606"), we recognize revenue when a customer obtains control of promised services.
+Added: accordance with 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.
17 unchanged sentences
The majority of our payment services are priced as a percentage of transaction value or a specified fee per transaction, depending on the card type.
−Removed: We also charge other per occurrence fees based on specific services that may be unrelated to the number of transactions or transaction value.
+Added: We also charge other per occurrence fees for specific services that may be unrelated to the number of transactions or transaction value.
Given the nature of the promise and the underlying fees based on unknown quantities or outcomes of services to be performed over the contract term, the total consideration is determined to be variable consideration.
7 unchanged sentences
In addition, certain implementation services are not considered distinct from the SaaS and are recognized over the expected period of benefit.
−Removed: 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.
+Added: 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
+Added: selling price method.
We determine standalone selling price based on the price at which the good or service is sold separately.
7 unchanged sentences
Issuer Solutions.
−Removed: Issuer Solutions segment revenues are derived from long-term contracts with financial institutions and other financial service providers.
+Added: Issuer Solutions segment revenues are primarily derived from long-term contracts with financial institutions and other financial service providers.
Issuer Solutions customer contracts typically include an obligation to provide processing services to financial institutions and other financial services providers.
Payment processing services revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements generated and/or mailed, managed services, cards embossed and mailed, and other processing services for cardholder accounts on file.
−Removed: Most of these contracts have prescribed annual minimums, penalties for early termination, and service level agreements that may affect contractual fees if specific service levels are not achieved.
+Added: Most of the customer contracts have prescribed annual minimums, penalties for early termination, and service level agreements that may affect contractual fees if specific service levels are not achieved.
We have determined that these processing services represent a stand-ready obligation comprising a series of distinct days of services that are substantially the same and have the same pattern of transfer to the customer.
13 unchanged sentences
The deferred portion of consideration paid to customers is classified within other assets in our consolidated balance sheets.
−Removed: Business and Consumer Solutions.
−Removed: Business and Consumer Solutions arrangements include a stand-ready performance obligation to provide account access and facilitate purchase transactions.
+Added: Other Issuer Solutions customer arrangements provide 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.
+Added: Customer contracts may also 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 first made available to the customer.
+Added: Consumer Solutions.
+Added: 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.
5 unchanged sentences
Revenues are recognized net of fees charged by the payment networks for services they provide in processing transactions routed through them.
−Removed: 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.
−Removed: 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.
16 unchanged sentences
Restricted cash 147,422 143,715
+Added: Cash included in assets held for sale 70,618 —
Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 2,215,606 $ 2,123,023
3 unchanged sentences
Contract liabilities represent consideration received from customers in excess of revenues recognized.
−Removed: Contract assets and liabilities are presented net at the individual contract level in the consolidated balance sheet and are classified as current or noncurrent based on the nature of the underlying contractual rights and obligations.
+Added: Contract assets and liabilities are presented net at the individual contract level in the consolidated balance
+Added: sheet and are classified as current or noncurrent based on the nature of the underlying contractual rights and obligations.
Allowance for credit losses — We are exposed to credit losses on accounts receivable balances.
We utilize a combination of aging and loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool.
−Removed: A broad range of information is considered in the estimation process, including historical loss information adjusted for current conditions, the effects of COVID-19 on our customers and expectations of future trends.
+Added: A broad range of information is considered in the estimation process, including historical loss information adjusted for current conditions and expectations of future trends.
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.
−Removed: 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.
+Added: Accounts receivable is presented net of an allowance for credit losses of $ 21.0 million and $ 17.4 million as of December 31, 2022 and 2021, respectively, including $ 3.3 million presented within assets held for sale in the consolidated balance sheet as of December 31, 2022 as further discussed in "Note 3—Business Dispositions."
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.
−Removed: We recognized credit loss expense of $ 12.8 million and $ 23.0 million for the years ended December 31, 2021 and 2020, respectively.
+Added: We recognized credit loss expense of $ 15.0 million, $ 12.8 million and $ 23.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Write-offs are recorded in the period in which the asset is deemed to be uncollectible.
−Removed: Recoveries are recognized when received as a direct credit to the credit loss expense in the consolidated statements of income.
−Removed: Prior to the adoption of ASU 2016-13, credit losses on accounts receivable balances were recognized when an occurrence was deemed to be probable.
+Added: Recoveries are recognized when received as a direct credit to the credit loss expense.
Revenues are recognized net of estimated billing adjustments.
Adjustments to customer invoices are charged against the allowance for billing adjustments.
−Removed: Contract costs — We capitalize costs to obtain contracts with customers, including employee sales commissions and fees to business partners.
−Removed: 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.
+Added: Contract costs — We capitalize certain costs to obtain contracts with customers, including employee sales commissions and fees to business partners.
+Added: At contract inception, we capitalize costs incurred that we expect to recover and that would not have been incurred if the contract had not been obtained.
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.
47 unchanged sentences
If that net position is an asset, we reflect the net amount in settlement processing assets in our consolidated balance sheet.
−Removed: If that net position is a liability, we reflect the net amount in settlement processing obligations in our consolidated balance sheet.
+Added: If that net position is a liability, we reflect the net amount in settlement
+Added: 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.
3 unchanged sentences
We utilize a combination of aging and loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool.
−Removed: A broad range of information is considered in the estimation process, including historical loss information adjusted for current conditions, consideration of the effects of COVID-19 on our customers and expectations of future trends.
+Added: A broad range of information is considered in the estimation process, including historical loss information adjusted for current conditions and expectations of future trends.
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.
2 unchanged sentences
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.
−Removed: We recognized credit loss expense of $ 3.6 million and $ 16.8 million for the years ended December 31, 2021 and 2020, respectively.
+Added: We recognized credit loss expense of $ 13.0 million , $ 3.6 million and $ 16.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Write-offs are recognized in the period in which the asset is deemed to be uncollectible.
−Removed: Recoveries are recognized when received as a direct credit to the credit loss expense in the consolidated statements of income.
−Removed: Prior to the adoption of ASU 2016-13, credit losses were recognized when an occurrence was deemed to be probable.
+Added: Recoveries are recognized when received as a direct credit to the credit loss expense.
Additionally, when we are not able to collect these amounts from merchants due to merchant fraud, insolvency, bankruptcy or any other reason, we may be liable for the reversed charges.
1 unchanged sentence
The provision for merchant losses is included as a component of cost of service in our consolidated statements of income.
−Removed: Allowance for credit and operating losses on check guarantee claims receivable assets — Our check guarantee business is exposed to credit losses when we are unable to collect the full amount of a guaranteed check from the checkwriter.
+Added: Allowance for credit and operating losses on check guarantee claims receivable assets — The check guarantee portion of our gaming business is exposed to credit losses when we are unable to collect the full amount of a guaranteed check from the checkwriter.
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.
−Removed: We have the right to collect the full
−Removed: amount of the check from the checkwriter, but we have not always recovered 100% of the guaranteed checks.
+Added: 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.
−Removed: 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.
−Removed: 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.
+Added: As of December 31, 2022, check guarantee claims receivable, net of an allowance of $ 3.4 million , are included within the gaming business disposal group presented as held for sale in the consolidated balance sheet, as further discussed in "Note 3—Business Dispositions." As of December 31, 2021, check guarantee claims receivable, net of an allowance of $ 2.5 million, are included in prepaid expenses and other current assets in the consolidated balance sheet.
+Added: The provision for check guarantee losses, which was approximately $ 12.3 million , $ 10.2 million and $ 10.1 million for the years ended December 31, 2022, 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.
1 unchanged sentence
When providing for these accruals, we consider such factors as our history of incurring performance penalties and processing errors, actual contractual penalty charge rates in our contracts, progress towards milestones and known processing errors.
−Removed: These accruals are included in accounts payable and accrued liabilities in our consolidated balance sheets.
+Added: These accruals are included in accrued liabilities in our consolidated balance sheets.
Depending on the nature of item, transaction processing provisions are either included as a reduction of the transaction price and recognized as a reduction in revenues as the related services are provided to the customer, or recognized as a component of cost of service, in our consolidated statements of income.
−Removed: Reserve for cardholder losses — Through services offered in our Business and Consumer Solutions segment, we are exposed to losses due to cardholder fraud, payment defaults and other forms of cardholder activity as well as losses due to nonperformance of third parties who receive cardholder funds for transmittal to the issuing financial institutions.
+Added: Reserve for cardholder losses — Through services offered in our Consumer Solutions segment, we are exposed to losses due to cardholder fraud, payment defaults and other forms of cardholder activity as well as losses due to nonperformance of
+Added: third parties who receive cardholder funds for transmittal to the issuing financial institutions.
We establish a reserve for losses we estimate will arise from processing customer transactions, debit card overdrafts, chargebacks for unauthorized card use and merchant-related chargebacks due to nondelivery of goods and services.
These reserves are established based upon historical loss and recovery rates and cardholder activity for which specific losses can be identified.
−Removed: These reserves are included in accounts payable and accrued liabilities in our consolidated balance sheets, and the provision for cardholder losses is included as a component of cost of service in our consolidated statements of income.
+Added: Prior to presentation of the consumer business as held for sale as of December 31, 2022, as further discussed in "Note 3—Business Dispositions," these reserves were included in accrued liabilities in our consolidated balance sheet.
+Added: The provision for cardholder losses is included as a component of cost of service in our consolidated statements of income.
Property and equipment — Property and equipment are stated at cost less accumulated depreciation and amortization.
2 unchanged sentences
We develop software that is used to provide services to customers.
−Removed: Capitalization of internal-use software, primarily associated with operating platforms, occurs when we have completed the preliminary project stage, management authorizes the project, management commits to funding the project, it is probable the project will be completed and the project will be used to perform the function intended.
−Removed: The preliminary project stage consists of the conceptual formulation of alternatives, the evaluation of alternatives, the determination of existence of needed technology and the final selection of alternatives.
+Added: Capitalization of internal-use software costs, primarily associated with operating platforms, occurs when we have completed the preliminary project stage, management authorizes the project, management commits to funding the project, it is probable the project will be completed and the project will be used to perform the function intended.
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 five to ten years , in a manner that best reflects the pattern of economic use of the assets.
−Removed: Goodwill — We perform our annual goodwill impairment test as of October 1 each year.
−Removed: 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 is below its carrying amount.
+Added: Goodwill — We test goodwill for impairment at the reporting unit level annually (in the fourth quarter) and more often if an event occurs or circumstances change that indicate the fair value of a reporting unit is below its carrying amount.
We have the option of performing a qualitative assessment of impairment to determine whether any further quantitative assessment for impairment is necessary.
−Removed: The option of whether or not to perform a qualitative assessment is made annually and may vary by reporting unit.
+Added: The election of whether or not to perform a qualitative assessment is made annually and may vary by reporting unit.
Factors we consider in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount of the net assets of our reporting units, sustained decrease in our share price, and other relevant entity-specific events.
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.
−Removed: 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
−Removed: total amount of goodwill allocated to that reporting unit.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Our reporting units consist of the following:
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: 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 estimated fair value, without exceeding the total amount of goodwill allocated to that reporting unit.
+Added: A sustained decline in our share price and 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 our former Business and Consumer Solutions reporting units for potential impairment as of June 30, 2022.
+Added: Furthermore, the estimated sales price for the consumer business, which is held for sale, also indicated a potential decline in fair value of our former Business and Consumer Solutions reporting unit as of June 30, 2022.
+Added: We determined on the basis of the quantitative assessment that the fair value of our Issuer Solutions reporting unit was still greater than its carrying amount as of June 30, 2022, indicating no impairment.
+Added: Based on the quantitative assessment of our former 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 during the three months ended June 30, 2022.
+Added: During 2022, as a result of the pending divestiture of our consumer business and changes in how our business is managed, we realigned the businesses previously comprising our Business and Consumer Solutions segment to include the B2B portion within our Issuer Solutions segment and the consumer portion forming our new Consumer Solutions segment.
+Added: In connection with the change in presentation of segment information, the B2B portion of our former Business and Consumer Solutions reporting unit was realigned into the Issuer Solutions reporting unit, including a reallocation of goodwill and accumulated impairment losses based on relative fair value .
+Added: As of October 1, 2022, our reporting units consisted of the following:
+Added: North America Payment Solutions, Integrated Solutions, Vertical Market Software Solutions, Europe Merchant Solutions, Spain Merchant Solutions, Asia-Pacific Merchant Solutions and Issuer Solutions.
+Added: As of October 1, 2022, we performed a quantitative assessment of impairment for our North
+Added: America Payments Solutions, Integrated Solutions and Issuer Solutions reporting units and a qualitative assessment for all other reporting units.
+Added: We determined on the basis of the quantitative assessments of our North America Payments Solutions, Integrated Solutions and Issuer Solutions reporting units that the fair value of each reporting unit was greater than its respective carrying amount, indicating no impairment.
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.
−Removed: 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.
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.
4 unchanged sentences
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.
−Removed: We use the straight-line method of amortization for our amortizable acquired technologies, trademarks and trade names and certain contract-based intangibles.
−Removed: Amortization for most of our customer-related intangible assets and certain contract-based intangibles is determined using an accelerated method.
+Added: We use the straight-line method of amortization for our amortizable acquired technologies, trademarks and trade names and certain contract-based intangible assets.
+Added: Amortization for most of our customer-related intangible assets and certain contract-based intangible assets 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.
11 unchanged sentences
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.
+Added: We have made an accounting policy election to not recognize assets or liabilities for leases with a term of less than 12 months and to account for all components in a lease arrangement as a single combined lease component for all asset classes with the exception of computer equipment, for which we account for lease and nonlease components separately.
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.
−Removed: When factors indicate that these long-lived assets should be evaluated for possible impairment, we assess the
−Removed: 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.
+Added: 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.
−Removed: If the carrying amount of the asset group is determined not to be recoverable, a write-down to fair value is recorded.
+Added: If the carrying amount of the asset group is determined to be not 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.
+Added: Assets held for sale — We classify an asset or business as a held for sale disposal group if we have committed to a plan to sell the asset or business within one year and are actively marketing the asset or business in its current condition for a price that is reasonable in comparison to its estimated fair value.
+Added: Disposal groups held for sale are reported at the lower of carrying
+Added: amount or fair value less costs to sell.
+Added: Long-lived assets classified as held for sale are not subject to depreciation or amortization, and both the assets and any liabilities directly associated with the disposal group are presented net within separate current and noncurrent held for sale line items in our consolidated balance sheet.
+Added: Subsequent changes to the estimated selling price of an asset or disposal group held for sale are recorded as gains or losses in our consolidated statement of income and any subsequent gains are limited to the cumulative losses previously recognized.
Equity method investments — We have certain investments, including a 45 % interest in China UnionPay Data Co., Ltd.
1 unchanged sentence
Equity method investments are recorded initially at cost and subsequently adjusted for equity in earnings, cash contributions and distributions, and foreign currency translation adjustments.
+Added: As of December 31, 2022 and 2021, we had total equity method investments of $ 957.2 million and $ 976.4 million, respectively, presented within other noncurrent assets in the consolidated balance sheets.
Accrued buyout liability — Certain of our Merchant Solutions salespersons in the United States are paid residual commissions based on the profitability generated by certain merchant customers.
3 unchanged sentences
Therefore, we recognize a liability for the amount that we would have to pay (the "settlement cost") to buy out related commissions in their entirety from vested salespersons, and an estimated amount for unvested salespersons based on their progress towards vesting and the expected percentage that will become vested.
−Removed: As noted above, as the liability increases over the first year of the related merchant contract, we record a related asset.
+Added: As the liability increases over the first year of the related merchant contract, we record a related asset.
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.
17 unchanged sentences
Fluctuations in the value of these instruments generally are offset by changes in the forecasted cash flows of the underlying exposures being hedged.
−Removed: offset is driven by the high degree of effectiveness between the exposure being hedged and the hedging instrument.
−Removed: We designated each of our active interest rate swap agreements as a cash flow hedge of interest payments on variable rate borrowings.
+Added: is driven by the high degree of effectiveness between the exposure being hedged and the hedging instrument.
+Added: Prior to their settlement in 2022, we designated each of our active interest rate swap agreements as a cash flow hedge of interest payments on variable rate borrowings.
See "Note 9 — Long-Term Debt and Lines of Credit" for more information about our interest rate swaps.
6 unchanged sentences
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.
+Added: The estimated fair value of our convertible notes was based on a lattice pricing model and is considered to be a Level 3 measurement of the valuation hierarchy.
Certain of our long-term debt arrangements include variable interest rates.
The carrying amount of long-term debt with variable interest rates, exclusive of debt issuance costs, approximated fair value, which is calculated using Level 2 inputs.
−Removed: The fair values of our swap agreements 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, and classified within Level 2 of the valuation hierarchy.
+Added: Prior to their settlement, the fair values of our swap agreements 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, and classified within Level 2 of the valuation hierarchy.
See "Note 9 — Long-Term Debt and Lines of Credit" for further information.
9 unchanged sentences
For the years ended December 31, 2022, 2021 and 2020, our transaction gains and losses were insignificant.
−Removed: Transaction gains and losses on intercompany balances of a long-term investment nature are presented as a component of other comprehensive income and included in accumulated comprehensive income within equity in our consolidated balance sheets.
+Added: Transaction gains and losses on intercompany balances of a long-term investment nature are presented as a component of other comprehensive income (loss) and included in accumulated comprehensive income (loss) within equity in our consolidated balance sheets.
+Added: When a foreign subsidiary is divested in its entirety, the associated accumulated foreign currency translation gains or losses are reclassified from the separate component of equity into our consolidated statement of income.
Earnings per share — Basic earnings per share ("EPS") is computed by dividing reported net income attributable to Global Payments by the weighted-average number of shares outstanding during the period.
Earnings available to common shareholders is the same as reported net income attributable to Global Payments for all periods presented.
−Removed: Diluted EPS is computed by dividing net income attributable to Global Payments by the weighted-average number of shares outstanding during the period, including the effect of share-based awards that would have a dilutive effect on earnings per share.
+Added: Diluted EPS is computed by dividing net income attributable to Global Payments by the weighted-average number of shares outstanding during the period, including the effect of share-based awards, convertible notes or other potential securities 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.
−Removed: 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.
−Removed: During the year ended December 31, 2019, there were no stock options that would have an antidilutive effect on the computation of diluted EPS.
+Added: The dilutive share base for the years ended December 31, 2022, 2021 and 2020 excluded approximately 700,119 , 234,813 and 124,888 , respectively, shares related to stock options that would have an antidilutive effect on the computation of diluted EPS.
+Added: The effect of the potential shares needed to settle the conversion spread on our convertible notes is included in diluted EPS if the effect is dilutive.
+Added: The effect depends on the market share price of our common stock at the time of conversion and would be dilutive if the average market share price of our common stock for the period exceeds the conversion price.
+Added: For the year ended December 31, 2022, the convertible notes were not included in the computation of diluted EPS as the effect would have been anti-dilutive.
+Added: Furthermore, the effect of the related capped call transactions is not included in the computation of diluted EPS as it is always anti-dilutive.
The following table sets forth the computation of the diluted weighted-average number of shares outstanding for all periods presented:
9 unchanged sentences
We use a last-in, first-out cost flow assumption to identify the original issue proceeds of the shares repurchased.
−Removed: Recently issued pronouncements not yet adopted
−Removed: ASU 2021-08 — In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805):
−Removed: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.
−Removed: " 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Early adoption is permitted, including adoption in an interim period.
−Removed: 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.
−Removed: We are evaluating the potential effects of ASU 2021-08 on our consolidated financial statements.
NOTE 2— ACQUISITIONS
−Removed: 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.
−Removed: Zego’s real estate software and payments solutions support property managers and residents throughout the real estate lifecycle.
−Removed: This acquisition aligns with our technology-enabled, software driven strategy and expands our business into a new vertical market.
−Removed: We paid cash consideration of approximately $ 933 million, which we funded with cash on hand and by drawing on our revolving credit facility.
−Removed: 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:
−Removed: Provisional Amounts at Acquisition Date Measurement-Period Adjustments Provisional Amounts at December 31, 2021
+Added: Pending Acquisition of EVO Payments, Inc.
+Added: On August 1, 2022, we entered into a merger agreement to acquire all outstanding equity of EVO Payments, Inc.
+Added: (“EVO”) for $ 34 per share, or approximately $ 3.4 billion in preliminary estimated cash consideration to be paid to EVO shareholders, which equates to an enterprise value of approximately $ 4 billion.
+Added: EVO is a leading payment technology and services provider, offering an array of payment solutions to merchants ranging from small and middle market enterprises to multinational companies and organizations across the Americas and Europe.
+Added: The acquisition aligns with our technology-enabled payments strategy, expands our geographic presence and augments our business-to-business software and payment solutions business.
+Added: The acquisition is expected to close in the first quarter of 2023, subject to customary closing conditions.
+Added: 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, which we funded with cash on hand and by drawing on our revolving credit facility.
+Added: 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.
+Added: 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:
+Added: Final Amounts
(in thousands)
10 unchanged sentences
Total purchase consideration $ 933,246
−Removed: 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.
−Removed: 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.
−Removed: We made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $ 50.8 million.
−Removed: The effects of the measurement-period adjustments on our consolidated statement of income for the year ended December 31, 2021 were not material.
+Added: During the year ended December 31, 2022, we made measurement-period adjustments that decreased the amount of deferred income tax liabilities and provisional goodwill by $ 3.2 million.
+Added: The decrease in deferred income tax liabilities for the year ended December 31, 2022 primarily related to finalizing the evaluation of the differences in the bases of assets and liabilities for financial reporting and tax purposes.
+Added: The effects of the measurement-period adjustments on our consolidated statements of income for the year ended December 31, 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.
−Removed: We expect that substantially all of the goodwill will be deductible for income tax purposes.
−Removed: The following table reflects the provisional estimated fair values of the identified intangible assets of Zego and the respective weighted-average estimated amortization periods:
+Added: Substantially all of the goodwill is deductible for income tax purposes.
+Added: 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
8 unchanged sentences
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.
−Removed: See "Note 5 — Goodwill and Intangible Assets" for the aggregate allocation of goodwill to the respective segments.
+Added: See "Note 6 — Goodwill and Other 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.
−Removed: Total System Services, Inc.
−Removed: On September 18, 2019, we acquired all of the outstanding common stock of TSYS.
−Removed: Prior to the Merger, TSYS was a leading global payments provider, offering seamless, secure and innovative solutions to issuers, merchants and consumers.
−Removed: Holders of TSYS common stock received 0.8101 shares of Global Payments common stock for each share of TSYS common stock they owned at the effective time of the Merger (the "Exchange Ratio").
−Removed: In addition, certain TSYS equity awards held by employees who were not executive officers, pursuant to their terms, vested automatically at closing ("Single-Trigger Awards") and were converted into the right to receive a number of shares of Global Payments common stock determined based on the Exchange Ratio.
−Removed: Also, pursuant to the Merger Agreement, we granted equity awards for approximately 2.2 million shares of Global Payments common stock to certain TSYS equity awards holders ("Replacement Awards").
−Removed: Each such Replacement Award is subject to the same terms and conditions (including vesting and exercisability or payment terms) as applied to the corresponding TSYS equity award.
−Removed: We apportioned the fair value of the Replacement Awards between purchase consideration and amounts to be recognized in periods following the Merger as share-based compensation expense over the requisite service period of the Replacement Awards.
−Removed: The purchase consideration transferred to TSYS shareholders was valued at $ 23.8 billion.
−Removed: Total purchase consideration also included the amount of borrowings outstanding under TSYS' unsecured revolving credit facility together with accrued interest and fees that we were required to repay upon consummation of the Merger.
−Removed: The fair value of total purchase consideration was determined as follows (in thousands, except per share data):
−Removed: Shares of TSYS common stock issued and outstanding (including Single-Trigger Awards) 177,643
−Removed: Exchange Ratio 0.8101
−Removed: Shares of Global Payments common stock issued to TSYS shareholders 143,909
−Removed: Price per share of Global Payments common stock $ 163.74
−Removed: Fair value of common stock issued to TSYS shareholders (1)
−Removed: Value of Replacement Awards attributable to purchase consideration 207,821
−Removed: Cash paid to TSYS shareholders in lieu of fractional shares 1,352
−Removed: Total purchase consideration transferred to TSYS shareholders 23,772,741
−Removed: Repayment of TSYS' unsecured revolving credit facility (including accrued interest and fees) 702,212
−Removed: Total purchase consideration $ 24,474,953
−Removed: (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.
−Removed: 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):
−Removed: Provisional Amounts at December 31, 2019 Measurement- Period Adjustments Final
−Removed: (in thousands)
−Removed: Cash and cash equivalents $ 446,009 $ — $ 446,009
−Removed: Accounts receivable 442,848 ( 2,660 ) 440,188
−Removed: Identified intangible assets 10,980,000 978 10,980,978
−Removed: Property and equipment 644,084 ( 978 ) 643,106
−Removed: Other assets 1,474,825 ( 2,969 ) 1,471,856
−Removed: Accounts payable and accrued liabilities ( 614,060 ) ( 11,899 ) ( 625,959 )
−Removed: Debt ( 3,295,342 ) 4,787 ( 3,290,555 )
−Removed: Deferred income tax liabilities ( 2,687,849 ) 52,598 ( 2,635,251 )
−Removed: Other liabilities ( 314,415 ) ( 173 ) ( 314,588 )
−Removed: Total identifiable net assets 7,076,100 39,684 7,115,784
−Removed: Goodwill 17,398,853 ( 39,684 ) 17,359,169
−Removed: Total purchase consideration $ 24,474,953 $ — $ 24,474,953
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The effects of the measurement-period adjustments on our consolidated statement of income for the year ended December 31, 2020 were not material.
−Removed: As of December 31, 2020, goodwill arising from the acquisition of $ 17.4 billion was included in our reportable segments as follows:
−Removed: $ 7.1 billion in the Merchant Solutions segment, $ 7.9 billion in the Issuer Solutions segment and $ 2.4 billion in the Business and Consumer Solutions segment.
−Removed: Goodwill was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining the acquired business into our existing business.
−Removed: Substantially all of the goodwill from this acquisition is not deductible for income tax purposes.
−Removed: The following table reflects the estimated fair values of the identified intangible assets of TSYS and the respective weighted-average estimated amortization periods:
−Removed: Estimated Fair Values Weighted-Average Estimated Amortization Periods
−Removed: (in thousands) (years)
−Removed: Customer-related intangible assets $ 6,420,000 15
−Removed: Contract-based intangible assets 1,800,000 18
−Removed: Acquired technologies 1,810,000 7
−Removed: Trademarks and trade names 950,000 11
−Removed: Total estimated identified intangible assets $ 10,980,000 13
−Removed: For the year ended December 31, 2020, the acquired operations of TSYS contributed $ 4,205.2 million to our consolidated revenues and $ 538.0 million to our consolidated operating income.
−Removed: From the acquisition date through December 31, 2019, the acquired operations of TSYS contributed $ 1,215.0 million to our consolidated revenues and $ 78.7 million to operating income.
−Removed: Transaction costs directly related to the Merger were $ 68.9 million for the year ended December 31, 2019.
−Removed: 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.
−Removed: 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.
−Removed: The unaudited pro forma information is also not intended to be a projection of future results due to the integration of the acquired operations of TSYS.
−Removed: The unaudited pro forma information reflects the effects of applying our accounting policies and certain pro forma adjustments to the combined historical financial information of Global Payments and TSYS.
−Removed: The pro forma adjustments include:
−Removed: • incremental amortization expense associated with identified intangible assets;
−Removed: • a reduction of revenues and operating expenses associated with fair value adjustments made to acquired assets and assumed liabilities, such as contract cost assets and contract liabilities;
−Removed: • a reduction of interest expense resulting from financing of the Merger, the repayment of TSYS' secured revolving credit facility and fair value adjustments applied to TSYS debt that we assumed;
−Removed: • the income tax effects of the pro forma adjustments.
−Removed: December 31, 2019
−Removed: Actual Pro Forma
−Removed: (in thousands)
−Removed: Total revenues $ 4,911,892 $ 7,854,282
−Removed: Net income attributable to Global Payments $ 430,613 $ 711,658
Valuation of Identified Intangible Assets
5 unchanged sentences
This method required us to estimate the future revenues for the related brands, the appropriate royalty rate and the weighted-average cost of capital.
+Added: NOTE 3— BUSINESS DISPOSITIONS
+Added: Sale of Merchant Solutions Business in Russia
+Added: We sold our Merchant Solutions business in Russia effective April 29, 2022 for cash proceeds of $ 9 million.
+Added: During the year ended December 31, 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.
+Added: The loss was presented within loss on business dispositions in our consolidated statement of income.
+Added: Businesses Held for Sale
+Added: Consumer Business.
+Added: On July 31, 2022, we entered into a definitive agreement to sell the consumer portion of our Netspend business, which comprises the Consumer Solutions segment, for $ 1 billion, subject to certain closing adjustments.
+Added: In connection with the sale, we will provide seller financing, consisting of a first lien seven-year secured term loan facility in an aggregate principal amount of $ 350 million bearing interest at a fixed annual rate of 9 % and a second lien twenty-five year secured term loan facility in an aggregate principal amount of $ 325 million bearing interest at a fixed annual rate of 13 %.
+Added: In addition, we will provide the purchasers a first lien five-year $ 50 million secured revolving facility that will be available from the date of closing of the sale.
+Added: The transaction is expected to close in the first quarter of 2023 subject to required regulatory approvals and other customary closing conditions.
+Added: The assets and liabilities of our consumer business are classified as held for sale and the disposal group is reported at fair value less costs to sell in our consolidated balance sheet as of December 31, 2022.
+Added: As further discussed in "Note 1— Summary of Significant Accounting Policies," we recognized a goodwill impairment charge of $ 833.1 million during the year ended December 31, 2022 related to our former Business and Consumer Solutions reporting unit, which included the consumer business.
+Added: We also recognized charges within loss on business dispositions in our consolidated statement of income of $ 71.9 million during the year ended December 31, 2022, respectively, to reduce the carrying amount of the disposal group to estimated fair value less costs to sell.
+Added: The charges relate primarily to estimated costs to sell and changes in the estimated fair value of the fixed rate seller financing commitment through December 31, 2022.
+Added: Gaming Business.
+Added: On December 6, 2022, we entered into a definitive agreement to sell our gaming business for approximately $ 400 million, which includes $ 32 million of seller financing and is subject to certain closing adjustments.
+Added: The transaction is expected to close in the first quarter of 2023 and is subject to customary terms and conditions, including any required regulatory approvals.
+Added: The assets and liabilities of our gaming business met the criteria for classification as held for sale in our consolidated balance sheet as of December 31, 2022, and we performed an impairment assessment of the respective assets and determined that no impairment was indicated.
+Added: Assets and Liabilities Held for Sale.
+Added: The major classes of assets presented as held for sale in the consolidated balance sheet as of December 31, 2022, include cash of $ 70.6 million, accounts receivable of $ 18.4 million, other current assets of $ 42.3 million, goodwill of $ 529.5 million, other intangible assets of $ 717.9 million, property and equipment of $ 82.9 million, other noncurrent assets of $ 44.9 million and an asset group valuation allowance of $ 71.9 million.
+Added: The major classes of liabilities presented as held for sale in the consolidated balance sheet as of December 31, 2022 include accounts payable and accrued liabilities of $ 125.9 million and other noncurrent liabilities of $ 4.5 million.
NOTE 4— REVENUES
−Removed: The following tables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the years ended December 31, 2021, 2020 and 2019:
+Added: The following tables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the years ended December 31, 2022, 2021 and 2020 and has been recast to align with the change in the presentation of segment information as further described in “Note 17—Segment Information:”
Year Ended December 31, 2022
−Removed: Merchant Solutions Issuer Solutions Business and Consumer Solutions Intersegment Revenues Total
+Added: Merchant Solutions Issuer Solutions Consumer Solutions Intersegment Eliminations Total
(in thousands)
4 unchanged sentences
Year Ended December 31, 2021
−Removed: Merchant Solutions Issuer Solutions Business and Consumer Solutions Intersegment Revenues Total
+Added: Merchant Solutions Issuer Solutions Consumer Solutions Intersegment Eliminations Total
(in thousands)
4 unchanged sentences
Year Ended December 31, 2020
−Removed: Merchant Solutions Issuer Solutions Business and Consumer Solutions Intersegment Revenues Total
+Added: Merchant Solutions Issuer Solutions Consumer Solutions Intersegment Eliminations Total
(in thousands)
50 unchanged sentences
$ 1,838,809 $ 1,687,586
−Removed: 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.
−Removed: We continue to evaluate our physical footprint and additional charges may be incurred as these facilities exit activities continue in 2022.
−Removed: 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.
+Added: As of December 31, 2022, approximately $ 75.4 million of property and equipment assets have been classified as assets held for sale in connection with the presentation of the consumer and gaming businesses as held for sale.
+Added: See “Note 3—Business Dispositions” for further discussion.
+Added: As a result of actions taken during the years ended December 31, 2022 and 2021 to reduce our facility footprint in certain markets around the world, we recognized charges of $ 7.5 million and $ 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.
NOTE 6— GOODWILL AND OTHER INTANGIBLE ASSETS
15 unchanged sentences
$ 9,658,374 $ 11,633,709
−Removed: On December 31, 2019, we acquired a merchant portfolio from Desjardins Group, a cooperative financial group in Canada.
−Removed: We accounted for the acquisition as an asset purchase and recognized customer-related intangible assets of $ 307.9 million in the consolidated balance sheet at the acquisition date.
−Removed: The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the years ended December 31, 2021, 2020 and 2019:
−Removed: Merchant Solutions Issuer Solutions Business and Consumer Solutions Total
+Added: As of December 31, 2022, approximately $ 717.9 million of intangible assets have been classified as assets held for sale in connection with the presentation of the consumer and gaming businesses as held for sale.
+Added: See “Note 3—Business Dispositions” for further discussion.
+Added: The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the years ended December 31, 2022, 2021 and 2020 and has been recast to align with the change in the presentation of segment information as further described in “Note 17—Segment Information:”
+Added: Merchant Solutions Issuer Solutions Consumer Solutions Total
(in thousands)
10 unchanged sentences
Effect of foreign currency translation ( 66,251 ) ( 29,009 ) — ( 95,260 )
+Added: Goodwill derecognized in connection with the sale of a business (1)
+Added: ( 17,719 ) — — ( 17,719 )
+Added: Impairment of goodwill (2)
+Added: — — ( 833,075 ) ( 833,075 )
+Added: Reallocation of accumulated impairment losses due to change in reporting units (2)
+Added: — ( 357,933 ) 357,933 —
+Added: Reclassification of goodwill to assets held for sale (3)
+Added: ( 163,105 ) — ( 366,436 ) ( 529,541 )
Measurement-period adjustments ( 2,958 ) ( 17,281 ) — ( 20,239 )
Balance at December 31, 2022 $ 13,816,945 $ 9,503,791 $ — $ 23,320,736
−Removed: There were no accumulated impairment losses for goodwill at any balance sheet date reflected in the table above.
+Added: (1) Reflects goodwill derecognized in connection with the sale of our Merchant Solutions business in Russia.
+Added: See “Note 3—Business Dispositions” for further discussion.
+Added: (2) Reflects a goodwill impairment charge related to our former Business and Consumer Solutions reporting unit.
+Added: In connection with the change in presentation of segment information, accumulated impairment losses associated with our former Business and Consumer Solutions reporting unit were reallocated to our new reporting units based on relative fair value.
+Added: See "Note 1— Summary of Significant Accounting Policies" for further discussion.
+Added: (3) Reflects the reclassification of goodwill in connection with the presentation of the consumer and gaming businesses as held for sale.
+Added: See “Note 3—Business Dispositions” for further discussion.
+Added: Accumulated impairment losses for goodwill as of December 31, 2022 were $ 833.1 million.
+Added: There were no accumulated impairment losses for goodwill as of December 31, 2021.
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 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.
−Removed: 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.
−Removed: Amortization expense of acquired intangibles was $ 1,295.0 million for the year ended December 31, 2021, $ 1,256.9 million for the year ended December 31, 2020 and $ 667.1 million for the year ended December 31, 2019.
+Added: Amortization expense of acquired intangibles was $ 1,263.0 million for the year ended
+Added: December 31, 2022, $ 1,295.0 million for the year ended December 31, 2021 and $ 1,256.9 million for the year ended December 31, 2020.
The estimated amortization expense of acquired intangibles as of December 31, 2022 for the next five years, calculated using the currency exchange rate at the date of acquisition, if applicable, is as follows (in thousands):
2 unchanged sentences
2025 1,092,260
−Removed: 2025 1,110,748
NOTE 7— LEASES
3 unchanged sentences
Certain of our lease agreements provide that we pay the cost of property taxes, insurance and maintenance.
−Removed: As described in "Note 1—Basis of Presentation and Summary of Significant Accounting Policies," we adopted ASU 2016-02 on January 1, 2019.
As of December 31, 2022 and 2021, right-of-use assets and lease liabilities consisted of the following:
−Removed: Balance Sheet Location December 31, 2021 December 31, 2020
+Added: Balance Sheet Location (2)
+Added: December 31, 2022 December 31, 2021
(in thousands)
23 unchanged sentences
(1) As of December 31, 2022 and 2021, approximately 73 % and 75 % of our right-of-use assets were located in the United States.
+Added: (2) As of December 31, 2022, operating lease assets and liabilities of approximately $ 4.9 million and $ 5.0 million have been classified as assets held for sale in connection with the presentation of the consumer and gaming businesses as held for sale.
+Added: See “Note 3—Business Dispositions” for further discussion.
The weighted-average remaining lease term for operating and finance leases at December 31, 2022 was 8.8 years and 2.7 years, respectively.
17 unchanged sentences
(1) Total operating lease payments do not include approximately $ 4.3 million for operating leases that had not yet commenced at December 31, 2022.
−Removed: 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, 2022 were $ 137.8 million, including $ 105.7 million in selling, general and administrative expenses and $ 32.1 million in cost of services.
8 unchanged sentences
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.
−Removed: 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.
−Removed: 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.
+Added: F inance lease costs for the year ended December 31, 2020 were $ 16.3 million, including $ 14.6 million of amortization on right-of use assets and $ 1.6 million of interest on lease liabilities.
+Added: Lease costs for leases with a term of less than 12 months were not material for the year ended December 31, 2020.
+Added: Opportunities were identified during the years ended December 31, 2022 and 2021 to reduce our facility footprint in certain markets around the world.
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.
−Removed: 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.
−Removed: We continue to evaluate our physical footprint and additional charges may be incurred as these facilities exit activities continue in 2022.
+Added: As a result, we recognized charges of $ 22.9 million and $ 42.1 million in selling, general and administrative expenses in our consolidated statement of income for the years ended December 31, 2022 and 2021, respectively.
Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2022, 2021 and 2020 w as $ 120.7 million , $ 123.6 million and $ 117.7 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 $ 25.8 million, $ 200.1 million and $ 158.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.
−Removed: 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 $ 22.6 million and $ 11.2 million for the years ended December 31, 2021 and 2020, respectively.
−Removed: 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.
−Removed: 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.
+Added: 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 $ 21.2 million, $ 22.6 million and $ 11.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.
+Added: Finance lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were $ 8.2 million, $ 7.9 million and $ 51.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.
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.
−Removed: 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.
+Added: During the year ended December 31, 2022, we entered into a new agreement to acquire hardware, software and related services, including the purchase of certain assets previously leased.
+Added: The reduction in operating and finance lease liabilities arising from the termination of the related right-of-use assets was $ 44.2 million and $ 9.7 million, respectively.
NOTE 8 - OTHER ASSETS
+Added: Visa Preferred Shares
Through certain of our subsidiaries in Europe, we were a member and shareholder of Visa Europe Limited ("Visa Europe").
4 unchanged sentences
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).
−Removed: 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.
−Removed: 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.
−Removed: The shares were subsequently sold in October 2020.
−Removed: The remaining Series B and C convertible preferred shares continue to be carried at an assigned value of zero based on the aforementioned factors.
+Added: In connection with the first and second mandatory release assessment, a portion of the Series B and C convertible preferred shares was converted by Visa in September 2020 and July 2022 representing approximately one half and one quarter, respectively, of the original potential conversion rate.
+Added: We recognized gains of $ 27.7 million and $ 13.2 million during the years ended December 31, 2020 and 2022, respectively, reported in interest and other income in our consolidated statement of income based on the fair value of the shares received.
+Added: The shares received were subsequently sold, and 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 9— LONG-TERM DEBT AND LINES OF CREDIT
3 unchanged sentences
Long-term Debt
−Removed: 3.800 % senior notes due April 1, 2021
−Removed: $ — $ 752,199
3.750 % senior notes due June 1, 2023
3 unchanged sentences
1.500 % senior notes due November 15, 2024
+Added: 498,164 497,185
2.650 % senior notes due February 15, 2025
1 unchanged sentence
1.200 % senior notes due March 1, 2026
+Added: 1,093,932 1,092,016
4.800 % senior notes due April 1, 2026
1 unchanged sentence
2.150 % senior notes due January 15, 2027
+Added: 744,945 743,695
+Added: 4.950 % senior notes due August 15, 2027
4.450 % senior notes due June 1, 2028
2 unchanged sentences
1,239,588 1,238,006
+Added: 5.300 % senior notes due August 15, 2029
2.900 % senior notes due May 15, 2030
1 unchanged sentence
2.900 % senior notes due November 15, 2031
+Added: 742,555 741,716
5.400 % senior notes due August 15, 2032
+Added: 4.150 % senior notes due August 15, 2049
740,503 740,146
−Removed: Unsecured term loan facility 1,989,793 1,985,776
+Added: 5.950 % senior notes due August 15, 2052
+Added: 1.000 % convertible notes due August 15, 2029
+Added: Unsecured term loan facility (outstanding under our Prior Credit Facility) — 1,989,793
Unsecured revolving credit facility — —
4 unchanged sentences
Long-term debt, excluding current portion $ 12,289,248 $ 11,414,809
−Removed: 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.
−Removed: 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.
−Removed: At December 31, 2020, unamortized discount on senior notes was $ 8.5 million, and unamortized debt issuance costs on our senior notes and unsecured term loans were $ 47.4 million.
+Added: The carrying amounts of our senior notes, convertible notes and unsecured term loan facility in the table above are presented net of unamortized discount and unamortized debt issuance costs, as applicable.
+Added: At December 31, 2022, the unamortized discount on senior notes and convertible notes was $ 50.8 million, and unamortized debt issuance costs on senior notes and convertible notes was $ 85.4 million.
+Added: At December 31, 2021, the 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.
−Removed: At December 31, 2021, unamortized debt issuance costs on the unsecured revolving credit facility were $ 9.9 million, and, at December 31, 2020, unamortized debt issuance costs on the secured revolving credit facility were $ 13.8 million.
+Added: At December 31, 2022, unamortized debt issuance costs on the unsecured revolving credit facility were $ 23.5 million, and, at December 31, 2021, unamortized debt issuance costs on the unsecured revolving credit facility were $ 9.9 million.
The amortization of debt discounts and debt issuance costs is recognized as an increase to interest expense over the terms of the respective debt instruments.
6 unchanged sentences
2027 1,250,000
−Removed: 2026 1,850,000
2028 and thereafter 7,700,000
1 unchanged sentence
See "Note 7—Leases" for more information about our finance lease liabilities, including maturities.
−Removed: Senior Unsecured Notes
−Removed: 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.
+Added: We have $ 11.9 billion in aggregate principal amount of senior unsecured notes outstanding, as presented in the table above, which are comprised of senior notes issued in 2022, 2021, 2020 and 2019, and senior notes assumed in our merger with Total System Services, Inc.
+Added: ("TSYS") in September 2019 (the "TSYS 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
+Added: On August 22, 2022, we issued $ 2.5 billion aggregate principal amount of senior unsecured notes consisting of the following:
+Added: (i) $ 500.0 million aggregate principal amount of 4.950 % senior notes due August 2027;
+Added: (ii) $ 500.0 million aggregate principal amount of 5.300 % senior notes due August 2029;
+Added: (iii) $ 750.0 million aggregate principal amount of 5.400 % senior notes due August 2032;
+Added: and (iv) $ 750.0 million aggregate principal amount of 5.950 % senior notes due August 2052.
+Added: We issued the senior notes at a total discount of $ 5.2 million, and we incurred debt issuance costs of $ 24.8 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, 2022.
+Added: Interest on the senior unsecured notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing February 15, 2023.
+Added: The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness.
+Added: The net proceeds from the offering have been or will used to refinance the outstanding indebtedness under our credit facility, to make cash payments and pay transaction fees and expenses in connection with the pending acquisition of EVO, to refinance certain outstanding indebtedness of EVO in connection with the acquisition and for general corporate purposes.
+Added: In the event that the EVO acquisition is not consummated, we will be required to redeem the notes due 2027 and 2029 at a redemption price equal to 101 % of the principal amount of the notes due 2027 and 2029 then outstanding plus accrued and unpaid interest, if any.
On November 22, 2021, we issued $ 2.0 billion aggregate principal amount of senior unsecured notes consisting of the following:
5 unchanged sentences
The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness.
−Removed: We used the net proceeds from the offering to repay the outstanding indebtedness under our revolving credit facility and for general corporate purposes.
+Added: We used the net proceeds from the offering to repay the outstanding indebtedness under our prior 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, 2022.
−Removed: Interest on the notes is payable semi-annually in arrears on March 1 and September 1 of each year, commencing September 1, 2021.
+Added: Interest on the notes is payable semi-annually in arrears on March 1 and
+Added: 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.
−Removed: 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.
+Added: 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 prior 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.
2 unchanged sentences
The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness.
−Removed: 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.
+Added: We used the net proceeds from the offering to repay a portion of the outstanding indebtedness on our prior credit facility and for general corporate purposes.
On August 14, 2019, we issued $ 3.0 billion aggregate principal amount of senior unsecured notes, consisting of the following:
5 unchanged sentences
We issued the senior notes at a total discount of $ 6.1 million and capitalized related debt issuance costs of $ 29.6 million.
−Removed: 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.
−Removed: 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.
−Removed: 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:
+Added: In addition, in connection with the TSYS 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, which were redeemed in February 2021;
4 unchanged sentences
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.
−Removed: 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
−Removed: semi-annually each June 1 and December 1.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The fair value of other long-term debt approximated its carrying amount at December 31, 2021.
−Removed: Senior Unsecured Credit Facilities
−Removed: 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.
−Removed: 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.
−Removed: We capitalized debt issuance costs of $ 12.8 million in connection with the issuances of these term loan and revolving credit facilities.
−Removed: 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.
−Removed: Borrowings under the term loan facility were made in U.S.
−Removed: dollars and borrowings under the revolving credit facility are available to be made in U.S.
−Removed: dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option.
−Removed: Borrowings in U.S.
−Removed: 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.
−Removed: 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.
−Removed: As of December 31, 2021, the interest rate on the term loan facility was 1.48 %.
+Added: 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.
+Added: The difference between the acquisition-date fair value and face value of senior notes assumed in the TSYS Merger is recognized over the terms of the respective notes as a reduction of interest expense.
+Added: The amortization of this fair value adjustment was $ 27.4 million, $ 29.6 million and 36.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.
+Added: Convertible Notes
+Added: On August 8, 2022, we issued $ 1.5 billion in aggregate principal amount of 1.000 % convertible unsecured senior notes (the "Convertible Notes”) due August 2029 in a private placement pursuant to an investment agreement with Silver Lake Partners.
+Added: The net proceeds from this offering were approximately $ 1.44 billion, reflecting an issuance discount of $ 37.5 million and $ 20.4 million of debt issuance costs, which were capitalized and reflected as a reduction of the related carrying amount of the Convertible Notes in our consolidated balance sheet at December 31, 2022.
+Added: Interest on the Convertible Notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2023, to the holders of record on the preceding February 1 and August 1, respectively.
+Added: The Convertible Notes are convertible at the option of the holder at any time after the date that is 18 months after issuance (or earlier, upon the occurrence of certain corporate events) until the scheduled trading day prior to the maturity date.
+Added: The Convertible Notes are convertible into cash and shares of our common stock based on an initial conversion rate of 7.1089 shares of common stock per $1,000 principal amount of the Convertible Notes (which is equal to an initial conversion price of approximately $ 140.67 per share), subject to customary anti-dilution and other adjustments upon the occurrence of certain events.
+Added: Upon conversion, the principal amount of, and interest due on, the Convertible Notes are required to be settled in cash and any other amounts may be settled in shares, cash or a combination of shares and cash at our election.
+Added: The Convertible Notes are not redeemable by us.
+Added: If certain corporate events that constitute a fundamental change (as defined in the indenture governing the Convertible Notes) occur, any holder of the Convertible Notes may require that we
+Added: repurchase all or any portion of their notes for cash at a purchase price of par plus accrued and unpaid interest to, but excluding, the repurchase date.
+Added: In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture governing the Convertible Notes) occur, then the conversion rate will in certain circumstances be increased for a specified period of time.
+Added: The Convertible Notes include customary covenants for convertible notes of this type, as well as customary events of default, which may result in the acceleration of the maturity of the Convertible Notes.
+Added: On August 8, 2022, in connection with the issuance of the Convertible Notes, we entered into privately negotiated capped call transactions with certain financial institutions to cover, subject to customary adjustments, the number of shares of common stock initially underlying the Convertible Notes.
+Added: The economic effect of the capped call transactions is to hedge the potential dilutive effect upon conversion of the Convertible Notes, or offset our cash obligation if the cash settlement option is elected, up to a cap price determined based on a hedging period that commenced on August 9, 2022 and concluded on August 25, 2022.
+Added: The capped call has an initial strike price of $ 140.67 per share and a cap price of $ 229.26 per share.
+Added: The capped call transactions meet the accounting criteria to be reflected in stockholders’ equity and not accounted for as derivatives.
+Added: The cost of $ 302.4 million incurred in connection with the capped call transactions was recorded as a reduction to paid-in-capital in our consolidated balance sheet at December 31, 2022, net of applicable income taxes.
+Added: New Credit Facility
+Added: On August 19, 2022, we entered into a credit agreement (the “Revolving Credit Agreement”) with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents.
+Added: The Revolving Credit Agreement provides for an unsubordinated unsecured $ 5.75 billion revolving credit facility (the “Revolving Credit Facility”).
+Added: We capitalized debt issuance costs of $ 12.3 million in connection with the issuances under the Revolving Credit Facility.
+Added: The Revolving Credit Facility matures in August 2027.
+Added: Borrowings under the Revolving Credit Facility may be repaid prior to maturity without premium or penalty, subject to payment of certain customary expenses of lenders and customary notice provisions.
+Added: Borrowings under the Revolving Credit Facility will be available to be made in US dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option.
+Added: Borrowings under the Revolving Credit Facility will bear interest, at our option, at a rate equal to (i) for Secured Overnight Financing Rate ("SOFR") based currencies or certain alternative currencies, a secured overnight financing rate (subject to a 0.00 % floor) plus a 0.10 % credit spread adjustment or an alternative currency term rate (subject to a 0.00 % floor), as applicable, (ii) for US dollar borrowings, a base rate, (iii) for US dollar borrowings, a daily floating secured overnight financing rate (subject to a 0.00 % floor on or after January 1, 2023) plus a 0.10 % credit spread adjustment or (iv) for certain alternative currencies, a daily alternative currency rate (subject to a 0.00 % floor), in each case, plus an applicable margin.
+Added: The applicable margin for borrowings under the Revolving Credit Facility will range from 1.125 % to 1.875 % depending on our credit rating and is initially 1.375 %.
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.
−Removed: Beginning on December 31, 2022, and at the end of each quarter thereafter, the term loan facility must be repaid in quarterly installments in the amount of 2.50 % of original principal through the maturity date with the remaining principal balance due upon maturity in September 2024.
−Removed: The revolving credit facility also matures in September 2024.
We may issue standby letters of credit of up to $ 250 million in the aggregate under the Revolving Credit Facility.
1 unchanged sentence
The amounts available to borrow under the Revolving Credit Facility are also determined by a financial leverage covenant.
−Removed: As of December 31, 2021, the total available commitments under the revolving credit facility wer e $ 1.9 billion .
+Added: As of December 31, 2022, there were no borrowing outstanding under the Revolving Credit Facility, and the total available commitments under the Revolving Credit Facility were $ 2.4 billion.
+Added: Prior Credit Facility
+Added: Prior to the Revolving Credit Facility, 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 (as amended from time to time, the “Prior Credit Facility”).
+Added: The Prior Credit Facility provided for a senior unsecured $ 2.0 billion term loan facility and a senior unsecured $ 3.0 billion revolving credit facility.
+Added: In August 2022, all borrowings outstanding and other amounts due under the Prior Credit Facility were repaid and the Prior Credit Facility was terminated.
+Added: Bridge Facility
+Added: On August 1, 2022, in connection with our entry into the EVO merger agreement, we obtained commitments for a $ 4.3 billion, 364-day senior unsecured bridge facility (the "Bridge Facility").
+Added: Upon the execution of permanent financing, including the issuance of our senior unsecured notes and entry into the Revolving Credit Facility described above, the aggregate commitments under the Bridge Facility were reduced to zero and terminated.
+Added: For the year ended December 31, 2022, we recognized expense of $ 17.3 million related to commitment fees associated with the Bridge Facility, which was presented within interest expense in our consolidated statement of income.
+Added: Fair Value of Long-Term Debt
+Added: As of December 31, 2022, our senior notes had a total carrying amount of $ 11.9 billion and an estimated fair value of $ 10.7 billion.
+Added: 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.
+Added: As of December 31, 2022, our Convertible Notes had a total carrying amount of $ 1.4 billion and an estimated fair value of $ 1.4 billion.
+Added: The estimated fair value of our Convertible Notes was based on a lattice pricing model and is considered to be a Level 3 measurement of the valuation hierarchy.
+Added: The fair value of other long-term debt approximated its carrying amount at December 31, 2022.
Compliance with Covenants
−Removed: The term loan facility and the revolving credit facility contain customary conditions to funding, affirmative covenants, negative covenants, financial covenants and events of default.
−Removed: 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.
+Added: The Convertible Notes include customary covenants and events of default for convertible notes of this type.
+Added: The Revolving Credit Agreement contains customary affirmative covenants and restrictive covenants, including, among others, financial covenants based on net leverage and interest coverage ratios, and customary events of default.
+Added: As of December 31, 2022, financial covenants under the Revolving Credit Agreement required a leverage ratio of 3.75 to 1.00 and an interest coverage ratio of 3.00 to 1.00.
We were in compliance with all applicable covenants as of December 31, 2022.
4 unchanged sentences
Accordingly, the amount of the outstanding line of credit may exceed the stated credit limit.
−Removed: 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.
+Added: As of December 31, 2022 and 2021, a total of $ 81.9 million and $ 76.3 million, respectively, of cash on deposit was used to determine the available credit.
As of December 31, 2022, we had $ 747.1 million outstanding under these lines of credit with additional capacity to fund settlement of $ 1,654.5 million.
1 unchanged sentence
The weighted-average interest rate on these borrowings was 4.97 % at December 31, 2022.
+Added: Commercial Paper
+Added: In January 2023, we established a $ 2.0 billion commercial paper program pursuant to which we may issue senior unsecured commercial paper ("Commercial Paper") with maturities of up to 397 days from the date of issue.
+Added: The program is backstopped by our Revolving Credit Agreement, in that the amount of commercial paper outstanding cannot exceed the undrawn portion on the Revolving Credit Facility.
+Added: Commercial Paper is expected to be issued at a discount from par, but may also bear interest, each at commercial paper market rates.
+Added: The proceeds from issuances of Commercial Paper are expected to be used for general corporate purposes but may also be used for acquisitions, to pay dividends or for debt refinancing or other purposes.
Derivative Instruments
−Removed: 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.
−Removed: Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense.
−Removed: 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).
+Added: We had previously entered into 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.
+Added: Net amounts to be received or paid under the swap agreements were reflected as adjustments to interest expense.
+Added: Since we had designated the interest rate swap agreements as portfolio cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value were recorded as components of other comprehensive income (loss).
+Added: 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.
+Added: These derivative instruments were classified within Level 2 of the valuation hierarchy.
+Added: In August 2022, in connection with entry into the Revolving Credit Agreement and repayment of amounts outstanding under the Prior Credit Facility, we terminated and settled our existing interest rate swap agreements.
+Added: The termination resulted in the recognition of a net gain of $ 1.2 million, including the reclassification of $ 0.5 million of accumulated losses from the separate component of equity.
+Added: The net gain was presented in interest expense in our consolidated statement of income for the year ended December 31, 2022.
+Added: As of December 31, 2021, accounts payable and accrued liabilities included $ 28.8 million related to the interest rate swaps.
In addition, in June 2019, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $ 1.0 billion.
1 unchanged sentence
During the period from the commencement of the swaps through the date upon which our senior unsecured notes were issued, the effective portion of the unrealized losses on the swaps was included in other comprehensive loss.
−Removed: 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.
−Removed: The table below presents information about our derivative financial instruments, designated as cash flow hedges, included in the consolidated balance sheets.
−Removed: 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.
−Removed: Weighted-Average Fixed Rate of Interest at Range of Maturity Dates at Fair Value
−Removed: Derivative Financial Instruments Balance Sheet Location December 31, 2021 December 31, 2021 December 31, 2021 December 31, 2020
−Removed: (in thousands)
−Removed: Interest rate swaps (Notional of $ 1,250.0 million at December 31, 2021 and $ 300.0 million at December 31, 2020)
−Removed: Accounts payable & accrued liabilities 2.73 % December 31, 2022 $ 28,777 $ 1,330
−Removed: Interest rate swaps (Notional of $ 1,250 million at December 31, 2020)
−Removed: Other noncurrent liabilities N/A N/A $ — $ 65,490
−Removed: N/A - not applicable.
+Added: Upon issuance of our senior unsecured notes, we terminated the forward-starting swap agreements and made settlement payments of $ 48.3 million.
+Added: 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 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, 2022, 2021 and 2020:
4 unchanged sentences
Net unrealized losses reclassified out of other comprehensive loss to interest expense $ 21,327 $ 40,094 $ 36,510
−Removed: 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.
+Added: As of December 31, 2022, the amount of net unrealized losses in accumulated other comprehensive loss related to our forward-starting interest rate swaps that is expected to be reclassified into interest expense during the next 12 months was approximately $ 5.5 million.
Interest Expense
8 unchanged sentences
Compensation and benefits 209,630 184,580
−Removed: Operating lease liabilities 103,554 103,706
−Removed: Third-party commissions 88,109 74,391
−Removed: Audit and legal 82,108 44,146
−Removed: Miscellaneous taxes and withholdings 68,323 68,048
Interest 128,308 64,591
+Added: Third-party commissions 95,192 88,109
+Added: Operating lease liabilities 80,208 103,554
Income taxes payable 61,949 51,818
+Added: Miscellaneous taxes and withholdings 42,198 68,323
Unclaimed property 31,734 34,744
−Removed: Interest rate swap liabilities 28,777 1,330
+Added: Audit and legal 28,548 82,108
Third-party processing fees 25,509 27,345
1 unchanged sentence
16,116 22,204
−Removed: Settlement of common share repurchases — 20,000
+Added: Interest rate swap liabilities — 28,777
Other 288,904 332,789
1 unchanged sentence
(1) The noncurrent portion of accrued buyout liability of $ 45.4 million and $ 44.6 million is included in other noncurrent liabilities in the consolidated balance sheets as of December 31, 2022 and 2021, respectively.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: 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 the TSYS Merger.
+Added: During the years ended December 31, 2021 and 2020, we recognized charges for employee termination benefits of $ 43.4 million and $ 83.3 million, respectively, which included $ 1.2 million and $ 6.7 million, respectively, 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.
−Removed: 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.
+Added: Employee termination benefits from TSYS Merger-related integration activities were substantially complete as of December 31, 2021.
+Added: There were no significant charges recognized during the year ended December 31, 2022 and no significant remaining obligations to be paid as of December 31, 2022.
NOTE 11— INCOME TAX
15 unchanged sentences
Income tax expense allocated to noncontrolling interests was $ 9.8 million, $ 6.8 million and $ 8.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.
−Removed: The following table presents income before income taxes for the years ended December 31, 2021, 2020 and 2019:
+Added: The following table presents income (loss) before income taxes for the years ended December 31, 2022, 2021 and 2020:
Years Ended December 31,
12 unchanged sentences
statutory rate 21.0 % 21.0 % 21.0 %
−Removed: Foreign interest income not subject to tax ( 4.2 ) ( 4.2 ) ( 4.5 )
−Removed: Tax credits ( 3.8 ) ( 5.3 ) ( 3.9 )
+Added: Goodwill impairment 78.0 — —
+Added: Sale of Russian business 12.1 — —
State income taxes, net of federal income tax benefit 9.0 3.4 0.7
−Removed: Foreign-derived intangible income deduction ( 1.9 ) ( 2.8 ) ( 2.7 )
−Removed: Valuation allowance ( 1.7 ) ( 0.1 ) 4.6
+Added: Foreign inclusion, net of foreign tax credits 8.2 1.0 0.9
Nondeductible executive compensation 4.7 1.0 1.7
+Added: Share-based compensation expense 2.0 ( 0.2 ) ( 2.7 )
+Added: Foreign income taxes 1.4 0.3 0.6
+Added: Deemed royalty 1.2 — —
Equity method investment partnership income 0.1 0.9 1.1
+Added: Valuation allowance ( 0.2 ) ( 1.7 ) ( 0.1 )
Uncertain tax positions ( 0.7 ) ( 0.3 ) 1.1
−Removed: Foreign income taxes 0.3 0.6 ( 0.7 )
−Removed: Share-based compensation expense ( 0.2 ) ( 2.7 ) ( 2.5 )
+Added: Foreign-derived intangible income deduction ( 12.4 ) ( 1.9 ) ( 2.8 )
+Added: Tax credits ( 19.5 ) ( 3.3 ) ( 5.2 )
+Added: Foreign interest income not subject to tax ( 29.9 ) ( 4.2 ) ( 4.2 )
Other ( 0.7 ) 0.2 0.9
5 unchanged sentences
Deferred income tax assets:
−Removed: Lease liabilities $ 130,328 $ 105,959
+Added: Research and development costs $ 148,023 $ —
Foreign net operating loss carryforwards 129,882 104,499
+Added: Lease liabilities 106,884 130,328
+Added: Financial instruments 92,477 37,928
Credit carryforwards 48,930 49,875
Accrued expenses 44,819 42,839
−Removed: Financial instruments 37,928 60,340
Share-based compensation expense 41,344 36,086
35 unchanged sentences
Balance at December 31, 2022 $ ( 110,043 )
+Added: The decrease in the valuation allowance for the year ended December 31, 2022 is primarily related to the utilization of state tax credit carryforwards.
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.
−Removed: The increases in the valuation allowance related to both the state and foreign credit carryforwards for the year ended December 31, 2019 relate primarily to carryforward assets recognized in connection with the Merger .
Foreign net operating loss carryforwards of $ 129.2 million will expire between December 31, 2024 and December 31, 2040, if not utilized.
4 unchanged sentences
In the normal course of business, we are subject to examination by taxing authorities around the world.
−Removed: We are no longer subject to state income tax examinations for years ended on or before May 31, 2007, U.S.
+Added: We are no longer subject to state income tax examinations for years ended on or before December 31, 2013, U.S.
federal income tax examinations for years ended on or before December 31, 2016 and U.K.
12 unchanged sentences
As of December 31, 2022, the total amount of gross unrecognized income tax benefits that, if recognized, would affect the provision for income taxes is $ 29.8 million.
+Added: On August 16, 2022, the U.S.
+Added: government enacted the Inflation Reduction Act (the "IRA") into law.
+Added: The IRA, among other things, implements a 15% corporate alternative minimum tax based on global adjusted financial statement income and a 1% excise tax on share repurchases, which shall take effect in tax years beginning after December 31, 2022.
+Added: We are continuing to evaluate the provisions of the IRA, but we do not currently believe the IRA will have a material effect on our reported results, cash flows or financial position when it becomes effective.
+Added: We expect to reflect the excise tax within equity as part of the repurchase price of common stock.
NOTE 12— SHAREHOLDERS’ EQUITY
8 unchanged sentences
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.
−Removed: 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.
−Removed: As of December 31, 2021, the amount that may yet be purchased under our share repurchase program was $ 1,540.0 million.
+Added: As of December 31, 2022, the amount available under our share repurchase program was $ 1,089.9 million.
On January 26, 2023, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to $ 1.5 billion.
1 unchanged sentence
NOTE 13— SHARE-BASED AWARDS AND OPTIONS
−Removed: We have granted nonqualified stock options and restricted stock awards to key employees, officers and directors under a long-term incentive plan, which permits grants of equity to employees, officers, directors and consultants.
+Added: We have granted nonqualified stock options, restricted stock and performance unit awards to key employees, officers and directors under a long-term incentive plan, which permits grants of equity to employees, officers, directors and consultants.
A total of 14.0 million shares of our common stock has been reserved and made available for issuance pursuant to awards granted under the plan.
−Removed: The awards are held in escrow and released upon the grantee's satisfaction of conditions of the award certificate.
The following table summarizes share-based compensation expense and the related income tax benefit recognized for our share-based awards and stock options:
5 unchanged sentences
Restricted Stock
−Removed: Restricted stock awards vest in equal annual installments over a three-year period or in some cases vest at the end of a three-year service period.
+Added: Restricted stock awards vest in approximately equal annual installments on each of the first three anniversaries of the grant date or, in some cases, in one installment on the third anniversary of the grant date, in either case subject to the holder's continued service on each applicable vesting date.
Restricted shares cannot be sold or transferred until they have vested.
The grant date fair value of restricted stock awards, which is based on the quoted market value of our common stock on the grant date, is recognized as share-based compensation expense on a straight-line basis over the vesting period.
+Added: Our restricted stock agreements provide for accelerated vesting under certain conditions.
Performance Units
−Removed: Certain of our executives have been granted performance-based restricted stock units that, after a performance period, may convert into common shares ("performance units").
−Removed: The number of common shares is dependent upon the level of achievement of certain performance measures during the performance period.
+Added: Certain of our executives have been granted performance-based restricted stock units ("performance units") that, after a performance period, may convert on a 1 -for-1 basis into shares of our common stock based upon the level of achievement of certain pre-established performance measures during the performance period and subject to the holders' continued service on the vesting date.
The Compensation Committee of our board of directors ("Compensation Committee") establishes performance measures and may set a range of possible performance-based outcomes for performance units.
−Removed: Performance units are converted only after the Compensation Committee certifies performance based on pre-established measures.
+Added: The performance periods generally range from one to three years .
+Added: Performance units are converted into shares of common stock only after the Compensation Committee certifies the level of achievement against the performance measures.
+Added: Our performance unit agreements provide for accelerated vesting under certain conditions.
For these awards, we recognize compensation expense on a straight-line basis over the applicable performance or service period using the grant date fair value of the award and the number of shares expected to be earned according to the level of achievement of performance measures.
5 unchanged sentences
Unvested at December 31, 2019 1,844 $ 149.96
−Removed: Replacement Awards 894 163.74
Granted 607 191.20
10 unchanged sentences
Unvested at December 31, 2022 2,145 $ 159.04
−Removed: 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.
−Removed: 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.
+Added: The total fair value of restricted stock and performance units vested was $ 129.2 million, $ 194.6 million, and $ 107.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.
+Added: For restricted stock and performance units, we recognized compensation expense of $ 151.5 million, $ 167.3 million, and $ 135.4 million for the years ended December 31, 2022, 2021 and 2020, 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, 2022, there was $ 196.3 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.
−Removed: Our restricted stock and performance unit plans provide for accelerated vesting under certain conditions.
Stock Options
Stock options are granted with an exercise price equal to 100 % of fair market value of our common stock on the date of grant and have a term of ten years .
−Removed: Stock options vest in equal installments on each of the first three anniversaries of the grant date.
−Removed: Our stock option plans provide for accelerated vesting under certain conditions.
+Added: Stock options vest in equal installments on each of the first three anniversaries of the grant date, subject to the holder's continued service on each applicable vesting date.
+Added: Our stock option agreements provide for accelerated vesting under certain conditions.
The following table summarizes changes in stock option activity for the years ended December 31, 2022, 2021 and 2020:
2 unchanged sentences
Outstanding at December 31, 2019 1,755 $ 74.06 6.5 $ 190.3
−Removed: Replacement Awards 1,336 68.96
Granted 124 200.42
11 unchanged sentences
Options vested and exercisable at December 31, 2022 907 $ 98.76 4.5 $ 17.3
−Removed: We recognized compensation expense for stock opti ons of $ 7.9 million , $ 8.4 million and $ 12.5 million during the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $ 24.1 million, $ 85.8 million and $ 28.8 million.
+Added: We recognized compensation expense for stock options of $ 6.4 million, $ 7.9 million and $ 8.4 million during the years ended December 31, 2022, 2021 and 2020, respectively.
As of December 31, 2022, we had $ 7.4 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 1.8 years.
−Removed: The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2021, 2020 and 2019, including the Replacement Awards granted during the year ended December 31, 2019, was $ 65.99 , $ 54.85 , and $ 99.56 , respectively.
+Added: The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2022, 2021 and 2020 was $ 48.88 , $ 65.99 and $ 54.85 , respectively.
Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:
41 unchanged sentences
Other comprehensive income (loss) 139,727 ( 12,224 ) ( 7,150 ) 120,353
−Removed: Balance at December 31, 2019 ( 241,899 ) ( 69,319 ) 647 ( 310,571 )
−Removed: Other comprehensive income (loss) 139,727 ( 12,224 ) ( 7,150 ) 120,353
Effect of purchase of subsidiary shares from noncontrolling interest ( 12,055 ) — — ( 12,055 )
Balance at December 31, 2020 ( 114,227 ) ( 81,543 ) ( 6,503 ) ( 202,273 )
−Removed: Other comprehensive income (loss) ( 68,814 ) 33,053 3,760 ( 32,001 )
+Added: Other comprehensive (loss) income ( 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 )
−Removed: 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.
+Added: Other comprehensive (loss) income ( 197,635 ) 26,070 ( 222 ) ( 171,787 )
+Added: Balance at December 31, 2022 $ ( 380,584 ) $ ( 22,420 ) $ ( 2,965 ) $ ( 405,969 )
+Added: Other comprehensive (loss) income attributable to noncontrolling interests, which relates only to foreign currency translation, was $( 13.3 ) million, $( 10.3 ) million and $ 14.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.
NOTE 17— SEGMENT INFORMATION
Information About Profit and Assets
−Removed: We operate in three reportable segments:
−Removed: Merchant Solutions, Issuer Solutions and Business and Consumer Solutions.
+Added: During 2022, as a result of the pending divestiture of our consumer business and changes in how our business is managed, we have realigned the businesses previously comprising our Business and Consumer Solutions segment to include the B2B portion within our Issuer Solutions segment and the consumer portion forming our new Consumer Solutions segment.
+Added: Our three reportable segments now are:
+Added: Merchant Solutions, Issuer Solutions and Consumer Solutions.
+Added: The presentation of segment information for the years ended December 31, 2021 and 2020 has been recast to align with the segment presentation for the year ended December 31, 2022.
Our payment technology solutions are similar around the world in that we enable our customers to accept card, check and digital-based payments.
1 unchanged sentence
In addition, we offer a wide array of enterprise software solutions that streamline business operations to customers in numerous vertical markets.
−Removed: 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.
+Added: We also provide a variety of value-added solutions and services, including specialty point-of-sale software, analytics 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.
−Removed: In addition, we provide flexible commercial payments and ePayables solutions that support business-to-business payment processes for businesses and governments.
+Added: In addition, we provide flexible commercial payments, accounts payable and electronic payment alternative solutions that support B2B payment processes for businesses and governments.
We also offer complementary services including account management and servicing, fraud solution services, analytics and business intelligence, cards, statements and correspondence, customer contact solutions and risk management solutions.
−Removed: 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.
−Removed: 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.
+Added: Additionally, our Issuer Solutions segment provides B2B payment
+Added: services and other financial service solutions marketed to corporations, including SaaS offerings that enable accounts payables automation, integrated payments, employer disbursement solutions, and virtual card capabilities.
+Added: Through our 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.
We evaluate performance and allocate resources based on the operating income of each operating segment.
1 unchanged sentence
Operating overhead, shared costs and share-based compensation costs are included in Corporate.
+Added: Impairment of goodwill and gains or losses on business dispositions are not included in determining segment operating income.
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.
8 unchanged sentences
Issuer Solutions 2,245,623 2,165,747 2,061,372
−Removed: Business and Consumer Solutions 886,443 829,505 227,440
+Added: Consumer Solutions 620,482 783,625 747,886
Intersegment eliminations ( 95,507 ) ( 91,167 ) ( 74,035 )
4 unchanged sentences
Issuer Solutions 356,215 333,355 298,389
−Removed: Business and Consumer Solutions 167,777 138,630 19,473
+Added: Consumer Solutions 53,594 135,541 117,892
Corporate (2)
+Added: ( 777,744 ) ( 836,010 ) ( 685,069 )
+Added: Impairment of goodwill (3)
+Added: ( 833,075 ) — —
+Added: Loss on business dispositions (4)
+Added: ( 199,094 ) — —
Consolidated operating income
3 unchanged sentences
Issuer Solutions 623,755 589,394 555,850
−Removed: Business and Consumer Solutions 85,108 95,720 34,914
+Added: Consumer Solutions 35,773 76,018 87,169
Corporate 21,630 32,744 22,623
1 unchanged sentence
$ 1,662,455 $ 1,691,384 $ 1,614,440
−Removed: (1) Revenues, operating income and depreciation and amortization reflect the effects of acquired businesses from the respective acquisition dates.
+Added: (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.
+Added: See “Note 2—Acquisitions” and “Note 3—Business Dispositions” for further discussion.
(2) During the years ended December 31, 2022, 2021 and 2020, operating loss for Corporate included acquisition and integration expenses of $ 254.2 million, $ 335.5 million, and $ 313.0 million, respectively.
−Removed: 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.
−Removed: 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.
+Added: During the years ended December 31, 2022 and 2021, operating loss for Corporate also included $ 47.1 million and $ 56.8 million, respectively, of other charges related to facilities exit activities.
+Added: (3) During the year ended December 31, 2022, consolidated operating income included a $ 833.1 million goodwill impairment charge related to our former Business and Consumer Solutions reporting unit.
+Added: See “Note 6—Goodwill and Other Intangible Assets” for further discussion.
+Added: (4) During the year ended December 31, 2022, consolidated operating income included a $ 127.2 million loss on the sale of our Merchant Solutions business in Russia and a charge of $ 71.9 million to reduce the carrying amount of the consumer business disposal group to estimated fair value less costs to sell.
Entity-Wide Information
15 unchanged sentences
Total future minimum payments $ 2,109,221
−Removed: During the year ended December 31, 2020, we entered into a new agreement to acquire software and related services, of which $ 97.6 million was financed utilizing a two-year vendor financing arrangement.
+Added: During the year ended December 31, 2022, we entered into new agreements to acquire hardware, software and related services, of which $ 112.0 million was financed utilizing two-year supplier financing arrangements.
+Added: One of the agreements included the purchase of certain assets previously leased.
+Added: The reduction in operating and finance lease liabilities arising from the termination of the related right-of-use assets was $ 44.2 million and $ 9.7 million, respectively.
+Added: During the year ended December 31, 2020, we entered into a new agreement to acquire software and related services, of which $ 97.6 million was financed utilizing a two-year supplier financing arrangement.
Legal Matters
1 unchanged sentence
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.
−Removed: On September 23, 2019, a jury in the Superior Court of Dekalb County Georgia, awarded Frontline Processing Corp.
−Removed: ("Frontline") $ 135.2 million in damages, costs and attorney's fees (plus interest) following a trial of a breach of contract dispute between Frontline and Global Payments, wherein Frontline alleged that Global Payments violated provisions of the parties' Referral Agreement and Master Services Agreement.
−Removed: The Superior Court entered a final judgment on the verdict in favor of Frontline on September 30, 2019.
−Removed: We appealed the decision to the Georgia Court of Appeals.
−Removed: On June 30, 2021, a panel of the Georgia Court of Appeals unanimously reversed the judgment, including the entire damages award.
−Removed: 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.
−Removed: We previously determined that it was not probable that a loss had been incurred under the applicable accounting standard (ASC Topic 450, Contingencies );
−Removed: therefore, the reversal of the judgment did not affect our consolidated financial statements.
Operating Taxes
3 unchanged sentences
BIN/ICA Agreements
−Removed: We have entered into sponsorship or depository and processing agreements with certain banks.
+Added: In certain markets, we enter into sponsorship or depository and processing agreements with banks.
These agreements allow us to use the banks' identification numbers, referred to as Bank Identification Number ("BIN") for Visa transactions and an Interbank Card Association ("ICA") number for Mastercard transactions, to clear credit card transactions through Visa and Mastercard.
11 unchanged sentences
December 31, 2022 (3)
+Added: $ 17,389 $ 14,951 $ 11,320 $ 21,020
Allowance for credit losses - settlement assets (1)
10 unchanged sentences
December 31, 2022 (3)
+Added: $ 2,536 $ 12,291 $ 11,383 $ 3,444
Reserve for contract contingencies and processing errors
6 unchanged sentences
December 31, 2022 (3)
+Added: $ 10,058 $ 58,673 $ 58,541 $ 10,190
Deferred income tax asset valuation allowance
4 unchanged sentences
(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.
+Added: (3) Includes certain amounts within our consumer and gaming business disposal groups that are presented as held for sale in the consolidated balance sheet as of December 31, 2022.
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.