What changed in this filing

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Item 1. Financial Statements

2023-10-31 compared with 2023-08-01 · 231 added, 192 removed, 604 unchanged (41% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

Revenues $ 2,475,691 $ 2,285,371

4 unchanged sentences

1,001,964 918,757

Impairment of goodwill — 833,075

(Gain) loss on business dispositions ( 105,738 ) 152,211

Loss on business dispositions — 48,933

1,917,495 1,898,939

Operating income (loss) 602,741 ( 529,858 )

Operating income 558,196 386,432

Interest and other income 35,732 20,393

1 unchanged sentence

( 140,362 ) ( 114,791 )

Income (loss) before income taxes and equity in income of equity method investments 439,262 ( 626,090 )

Income before income taxes and equity in income of equity method investments 417,834 271,641

Income tax expense 58,936 14,255

Income (loss) before equity in income of equity method investments 267,051 ( 678,866 )

Income before equity in income of equity method investments 358,898 257,386

Equity in income of equity method investments, net of tax 17,707 42,780

Net income (loss) 284,206 ( 665,051 )

Net income 376,605 300,166

Net income attributable to noncontrolling interests, net of tax ( 14,775 ) ( 9,712 )

Net income (loss) attributable to Global Payments $ 274,148 $ ( 672,999 )

Earnings (loss) per share attributable to Global Payments:

Basic earnings (loss) per share $ 1.05 $ ( 2.42 )

Diluted earnings (loss) per share $ 1.05 $ ( 2.42 )

Net income attributable to Global Payments $ 361,830 $ 290,454

Earnings per share attributable to Global Payments:

Basic earnings per share $ 1.39 $ 1.06

Diluted earnings per share $ 1.39 $ 1.05

See Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except per share data)

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

Revenues $ 7,220,607 $ 6,722,531

7 unchanged sentences

6,002,937 6,490,010

Operating income (loss) 659,475 ( 153,911 )

Operating income 1,217,670 232,521

Interest and other income 74,830 25,060

16 unchanged sentences

Three Months Ended

June 30, 2023 June 30, 2022

Net income (loss) $ 284,206 $ ( 665,051 )

September 30, 2023 September 30, 2022

Net income $ 376,605 $ 300,166

Other comprehensive income (loss):

Foreign currency translation adjustments ( 125,254 ) ( 249,562 )

Reclassification of accumulated foreign currency translation losses to net loss as a result of the sale of a foreign entity — 62,925

Income tax (expense) benefit related to foreign currency translation adjustments ( 343 ) 963

Net unrealized gains on hedging activities 40,078 5,051

Income tax benefit (expense) related to foreign currency translation adjustments 890 ( 183 )

Net unrealized gains (losses) on hedging activities 22,993 ( 1,070 )

Reclassification of net unrealized (gains) losses on hedging activities to interest expense ( 2,375 ) 2,980

1 unchanged sentence

Other, net of tax ( 22 ) —

Other comprehensive income (loss) 34,264 ( 137,461 )

Comprehensive income (loss) 318,470 ( 802,512 )

Comprehensive income (loss) attributable to noncontrolling interests 11,906 ( 5,540 )

Comprehensive income (loss) attributable to Global Payments $ 306,564 $ ( 796,972 )

Six Months Ended

June 30, 2023 June 30, 2022

Other comprehensive loss ( 108,722 ) ( 248,165 )

Comprehensive income 267,883 52,001

Comprehensive loss attributable to noncontrolling interests ( 1,410 ) ( 5,130 )

Comprehensive income attributable to Global Payments $ 269,293 $ 57,131

Nine Months Ended

September 30, 2023 September 30, 2022

Net income (loss) $ 656,390 $ ( 115,250 )

2 unchanged sentences

Reclassification of accumulated foreign currency translation losses to net loss as a result of the sale of a foreign entity — 62,925

Income tax (expense) benefit related to foreign currency translation adjustments ( 530 ) 1,634

Net unrealized gains (losses) on hedging activities ( 7,973 ) 13,985

Reclassification of net unrealized losses on hedging activities to interest expense 485 16,979

Income tax (expense) benefit related to hedging activities 1,806 ( 7,508 )

Income tax benefit related to foreign currency translation adjustments 360 1,451

Net unrealized gains on hedging activities 15,020 12,915

Reclassification of net unrealized (gains) losses on hedging activities to interest expense ( 1,890 ) 19,959

Income tax expense related to hedging activities ( 3,148 ) ( 7,838 )

Other, net of tax ( 66 ) —

7 unchanged sentences

(in thousands, except share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

31 unchanged sentences

Common stock, no par value;

400,000,000 shares authorized at June 30, 2023 and December 31, 2022;

259,962,485 issued and outstanding at June 30, 2023 and 263,081,872 issued and outstanding at December 31, 2022

400,000,000 shares authorized at September 30, 2023 and December 31, 2022;

260,359,506 issued and outstanding at September 30, 2023 and 263,081,872 issued and outstanding at December 31, 2022

Paid-in capital 19,751,734 19,978,095

9 unchanged sentences

(in thousands)

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

Cash flows from operating activities:

9 unchanged sentences

Equity in income of equity method investments, net of tax ( 54,101 ) ( 74,074 )

Facilities exit charges 5,164 27,662

Impairment of goodwill — 833,075

11 unchanged sentences

Issuance of notes receivable ( 50,000 ) —

Repayment of notes receivable 50,000 —

Net cash from sales of businesses 478,695 ( 29,755 )

Proceeds from sale of investments — 31,046

Other, net 2,187 101

1 unchanged sentence

Cash flows from financing activities:

Net borrowings from (repayments of) settlement lines of credit ( 233,075 ) 4,139

Net repayments of settlement lines of credit ( 33,328 ) ( 2,770 )

Net borrowings from commercial paper notes 1,896,513 —

7 unchanged sentences

Payment of contingent consideration in business combination — ( 15,726 )

Purchase of capped calls related to issuance of convertible notes — ( 302,375 )

Dividends paid ( 195,611 ) ( 208,082 )

1 unchanged sentence

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 35,730 ) ( 208,529 )

Decrease in cash, cash equivalents and restricted cash ( 101,255 ) ( 23,182 )

Increase (decrease) in cash, cash equivalents and restricted cash ( 105,741 ) 34,470

Cash, cash equivalents and restricted cash, beginning of the period 2,215,606 2,123,023

9 unchanged sentences

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

Balance at March 31, 2023 261,771 $ 19,839,506 $ 2,654,589 $ ( 410,817 ) $ 22,083,278 $ 243,481 $ 22,326,759 $ 556,070

Net income (loss) 274,148 274,148 10,062 284,210 ( 4 )

Other comprehensive income 32,416 32,416 717 33,133 1,131

Balance at June 30, 2023 259,962 $ 19,686,035 $ 2,863,852 $ ( 378,401 ) $ 22,171,486 $ 244,494 $ 22,415,980 $ 499,479

Net income 361,830 361,830 13,015 374,845 1,760

Other comprehensive loss ( 92,537 ) ( 92,537 ) ( 8,767 ) ( 101,304 ) ( 7,418 )

Stock issued under share-based compensation plans 424 31,803 31,803 31,803

1 unchanged sentence

Share-based compensation expense 36,624 36,624 36,624

Repurchases of common stock ( 2,006 ) ( 207,495 ) ( 207,495 ) ( 207,495 )

Excise tax on net share repurchases 303 303 303

Distributions to noncontrolling interests — ( 5,422 ) ( 5,422 ) ( 1,638 )

2 unchanged sentences

( 64,977 ) ( 64,977 ) ( 64,977 )

Balance at June 30, 2023 259,962 $ 19,686,035 $ 2,863,852 $ ( 378,401 ) $ 22,171,486 $ 244,494 $ 22,415,980 $ 499,479

Balance at September 30, 2023 260,360 $ 19,751,734 $ 3,160,705 $ ( 470,938 ) $ 22,441,501 $ 243,320 $ 22,684,821 $ 473,132

Shareholders' Equity

4 unchanged sentences

Nonredeemable Noncontrolling Interests Total Equity

Balance at March 31, 2022 281,434 $ 22,338,086 $ 3,068,683 $ ( 247,205 ) $ 25,159,564 $ 235,241 $ 25,394,805

Net income (loss) ( 672,999 ) ( 672,999 ) 7,948 ( 665,051 )

Balance at June 30, 2022 277,033 $ 21,800,574 $ 2,326,259 $ ( 371,178 ) $ 23,755,655 $ 220,872 $ 23,976,527

Net income 290,454 290,454 9,712 300,166

Other comprehensive loss ( 233,323 ) ( 233,323 ) ( 14,842 ) ( 248,165 )

4 unchanged sentences

Distributions to noncontrolling interest — ( 3,366 ) ( 3,366 )

Purchase of capped calls related to issuance of convertible notes, net of taxes of $ 72,778

( 229,597 ) ( 229,597 ) ( 229,597 )

Cash dividends declared ($ 0.25 per common share)

( 68,766 ) ( 68,766 ) ( 68,766 )

Balance at June 30, 2022 277,033 $ 21,800,574 $ 2,326,259 $ ( 371,178 ) $ 23,755,655 $ 220,872 $ 23,976,527

Balance at September 30, 2022 270,308 $ 20,717,133 $ 2,547,947 $ ( 604,501 ) $ 22,660,579 $ 212,376 $ 22,872,955

See Notes to Unaudited Consolidated Financial Statements.

8 unchanged sentences

Balance at December 31, 2022 263,082 $ 19,978,095 $ 2,731,380 $ ( 405,969 ) $ 22,303,506 $ 236,704 $ 22,540,210 $ —

Net income (loss) 263,107 263,107 16,683 279,790 ( 4 )

Other comprehensive income 27,568 27,568 7,091 34,659 1,131

Net income 624,936 624,936 29,698 654,634 1,756

Other comprehensive loss ( 64,969 ) ( 64,969 ) ( 1,676 ) ( 66,645 ) ( 6,287 )

Stock issued under share-based compensation plans 1,697 51,085 51,085 51,085

8 unchanged sentences

( 195,611 ) ( 195,611 ) ( 195,611 )

Balance at June 30, 2023 259,962 $ 19,686,035 $ 2,863,852 $ ( 378,401 ) $ 22,171,486 $ 244,494 $ 22,415,980 $ 499,479

Balance at September 30, 2023 260,360 $ 19,751,734 $ 3,160,705 $ ( 470,938 ) $ 22,441,501 $ 243,320 $ 22,684,821 $ 473,132

Shareholders' Equity

12 unchanged sentences

Distributions to noncontrolling interest — ( 17,729 ) ( 17,729 )

Purchase of capped calls related to issuance of convertible notes, net of taxes of $ 72,778

( 229,597 ) ( 229,597 ) ( 229,597 )

Cash dividends declared ($ 0.75 per common share)

( 208,082 ) ( 208,082 ) ( 208,082 )

Balance at June 30, 2022 277,033 $ 21,800,574 $ 2,326,259 $ ( 371,178 ) $ 23,755,655 $ 220,872 $ 23,976,527

Balance at September 30, 2022 270,308 $ 20,717,133 $ 2,547,947 $ ( 604,501 ) $ 22,660,579 $ 212,376 $ 22,872,955

See Notes to Unaudited Consolidated Financial Statements.

35 unchanged sentences

(2) Pursuant to the merger agreement, we cash settled vested options and certain unvested equity awards of EVO equity award holders.

(3) Pursuant to the merger agreement, we granted equity awards for approximately 0.3 million shares of Global Payments common stock to certain EVO equity awards holders.

(3) Pursuant to the merger agreement, we granted equity awards for approximately 0.3 million shares of Global Payments common stock to certain EVO equity award holders.

Each such replacement award is subject to the same terms and conditions (including vesting and exercisability) that applied to the corresponding EVO equity award.

2 unchanged sentences

The cash portion of the purchase consideration was funded through cash on hand and borrowings under our revolving credit facility.

The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of June 30, 2023, including a reconciliation to the total purchase consideration, were as follows:

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

Provisional Amounts at

1 unchanged sentence

Adjustments Provisional Amounts at

June 30, 2023

September 30, 2023

(in thousands)

15 unchanged sentences

Total purchase consideration $ 4,269,620 $ — $ 4,269,620

As of June 30, 2023, we considered these amounts to be provisional because we were still in the process of gathering and reviewing information to support the valuations of the assets acquired, liabilities assumed and related tax positions.

We made measurement-period adjustments as shown in the table above, and the effects of the measurement-period adjustments on our consolidated statement of income for the second quarter of 2023 were not material.

Goodwill arising from the acquisition was included in the Merchant Solutions segment as of June 30, 2023 and was attributable to expected growth opportunities, potential synergies from combining the acquired business into our existing business and an assembled workforce.

As of September 30, 2023, we considered these amounts to be provisional because we were still in the process of gathering and reviewing information to support the valuations of the assets acquired, liabilities assumed and related tax positions.

We made measurement-period adjustments as shown in the table above, and the effects of the measurement-period adjustments on our consolidated statements of income for the three and nine months ended September 30, 2023 were not material.

Goodwill arising from the acquisition was included in the Merchant Solutions segment as of September 30, 2023 and was attributable to expected growth opportunities, potential synergies from combining the acquired business into our existing business and an assembled workforce.

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

8 unchanged sentences

Total estimated identifiable intangible assets $ 1,499,995 11

From the acquisition date through June 30, 2023, the acquired operations of EVO contributed less than 10 % to our consolidated revenues and operating income.

From the acquisition date through September 30, 2023, the acquired operations of EVO contributed less than 10 % to our consolidated revenues and operating income.

The historical revenue and earnings of EVO were not material for the purpose of presenting pro forma information.

1 unchanged sentence

NOTE 3— BUSINESS DISPOSITIONS

Gaming Business.

On April 1, 2023, we completed the sale of our gaming business for approximately $ 400 million, subject to certain closing adjustments.

Gaming Business - On April 1, 2023, we completed the sale of our gaming business for approximately $ 400 million, subject to certain closing adjustments.

The gaming business was included in our Merchant Solutions segment prior to disposition, and had been presented as held for sale in our consolidated balance sheet since December 31, 2022.

In connection with the sale, we provided $ 32 million of seller financing as described below.

We recognized a gain on the sale of $ 104.1 million during the three and six months ended June 30, 2023, and the sale is subject to certain additional final closing adjustments.

The gain was presented within gain on business dispositions in the consolidated statement of income.

Consumer Business.

On April 26, 2023, we completed the sale of the consumer portion of our Netspend business for approximately $ 1 billion, subject to certain closing adjustments.

We recognized a gain on the sale of $ 104.1 million during the nine months ended September 30, 2023, and the sale is subject to certain additional final closing adjustments.

The gain was presented within net loss on business dispositions in the consolidated statements of income.

Consumer Business - On April 26, 2023, we completed the sale of the consumer portion of our Netspend business for approximately $ 1 billion, subject to certain closing adjustments.

The consumer business comprised our former Consumer Solutions segment prior to disposition, and had been presented as held for sale with certain adjustments to report the disposal group at fair value less costs to sell in our consolidated balance sheet since June 30, 2022.

In connection with the sale, we provided $ 675 million of seller financing as described below.

We recognized a gain (loss) on business dispositions in our consolidated statement of income of $ 1.6 million and $( 243.2 ) million during the three and six months ended June 30, 2023, respectively.

The gain (loss) during the three and six months ended June 30, 2023 included the effects of incremental negotiated closing adjustments, changes in the estimated fair value of the seller financing and the effects of the final tax structure of the transaction.

As further discussed in "Note 5— Goodwill and Other Intangible Assets," we recognized a goodwill impairment charge of $ 833.1 million during the three and six months ended June 30, 2022 related to our former Business and Consumer Solutions reporting unit.

We also recognized a charge of $ 25.0 million during the three and six months ended June 30, 2022 to reduce the disposal group to estimated fair value less costs to sell, which was presented within net loss on business dispositions in our consolidated statement of income.

We recognized a loss on business dispositions in our consolidated statement of income of $ 243.2 million during the nine months ended September 30, 2023, and the sale is subject to certain additional final closing adjustments.

The loss during the nine months ended September 30, 2023 included the effects of incremental negotiated closing adjustments, changes in the estimated fair value of the seller financing and the effects of the final tax structure of the transaction.

As further discussed in "Note 5— Goodwill and Other Intangible Assets," we recognized a goodwill impairment charge of $ 833.1 million during the nine months ended September 30, 2022 related to our former Business and Consumer Solutions reporting unit.

We also recognized charges of $ 48.9 million and $ 73.9 million during the three and nine months ended September 30, 2022, respectively, to reduce the disposal group to estimated fair value less costs to sell, which was presented within net loss on business dispositions in our consolidated statements of income.

The charge recognized during the three months ended September 30, 2022 related primarily to a change in the estimated fair value of the fixed rate seller financing.

Notes Receivable and Allowance for Credit Losses

4 unchanged sentences

In addition, we provided the purchasers a five-year $ 50 million secured revolving facility available from the date of closing of the sale, bearing interest at a fixed annual rate of 9.0 % payable quarterly in cash.

There was no outstanding balance on the revolving facility as of September 30, 2023.

In connection with the sale of our gaming business, we also provided seller financing consisting of an unsecured promissory note due April 1, 2030 with an aggregate principal amount of $ 32 million bearing interest at a fixed annual rate of 11.0 %.

We classify the notes as held for investment based on the intent and ability to hold for foreseeable future or until maturity or payoff, and the notes are presented at amortized cost within notes receivable in our consolidated balance sheet.

We classify the notes as held for investment based on the intent and ability to hold for the foreseeable future or until maturity or payoff, and the notes are presented at amortized cost within notes receivable in our consolidated balance sheet.

Interest income is recognized using the effective interest method, which includes the accretion of the difference between the fair value at inception and the face value of the notes.

We recognized interest income of $ 14.9 million during the three and six months ended June 30, 2023 as a component of interest and other income in the consolidated statements of income.

The issuance of the notes in connection with the sale transactions was a noncash investing activity in our consolidated statement of cash flows for the six months ended June 30, 2023.

We recognized interest income of $ 21.4 million and $ 37.1 million during the three and nine months ended September 30, 2023, respectively, as a component of interest and other income in the consolidated statements of income.

The issuance of the notes in connection with the sale transactions was a noncash investing activity in our consolidated statement of cash flows for the nine months ended September 30, 2023.

We are exposed to credit losses on the notes.

3 unchanged sentences

Expected credit losses are estimated over the life of the loans, adjusted for expected prepayments when appropriate.

Upon issuance of the notes in connection with the sales of the two businesses, we recognized an allowance for credit losses and a noncash charge of $ 18.2 million, which is included as a component of interest and other expenses in our consolidated statements of income for the three and six months ended June 30, 2023.

As of June 30, 2023, there was an aggregate principal amount of $ 769.2 million outstanding on the notes, including PIK, and the notes are presented net of the allowance for credit losses of $ 18.2 million within notes receivable in our consolidated balance sheet.

The estimated fair value of the notes receivable was $ 714.4 million as of June 30, 2023.

We recognized a noncash credit loss expense of $ 18.2 million for the nine months ended September 30, 2023, which is included as a component of interest and other expenses in our consolidated statements of income.

As of September 30, 2023, there was an aggregate principal amount of $ 736.1 million outstanding on the notes, including PIK, and the notes are presented net of the allowance for credit losses of $ 18.2 million within notes receivable in our consolidated balance sheet.

The estimated fair value of the notes receivable was $ 692.0 million as of September 30, 2023.

The estimated fair value of notes receivable was based on a discounted cash flow approach and is considered to be a Level 3 measurement of the valuation hierarchy.

Assets and Liabilities Held for Sale.

The assets and liabilities of our consumer and gaming businesses were classified as held for sale in our consolidated balance sheets as of December 31, 2022.

Assets and Liabilities Held for Sale - The assets and liabilities of our consumer and gaming businesses were classified as held for sale in our consolidated balance sheets as of December 31, 2022.

The major classes of assets presented as held for sale in the consolidated balance sheet as of December 31, 2022 included 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.

The major classes of liabilities presented as held for sale in the consolidated balance sheet as of December 31, 2022 included accounts payable and accrued liabilities of $ 125.9 million and other noncurrent liabilities of $ 4.5 million.

Sale of Merchant Solutions Business in Russia.

We sold our Merchant Solutions business in Russia effective April 29, 2022 for cash proceeds of $ 9 million.

During the three months ended June 30, 2022, we recognized a loss of $ 127.2 million associated with the sale, comprised of the difference between the consideration received and the net carrying amount of the business and the reclassification of $ 63 million of associated accumulated foreign currency translation losses from the separate component of equity.

Sale of Merchant Solutions Business in Russia - We sold our Merchant Solutions business in Russia effective April 29, 2022 for cash proceeds of $ 9 million.

During the nine months ended September 30, 2022, we recognized a loss of $ 127.2 million associated with the sale, comprised of the difference between the consideration received and the net carrying amount of the business and the reclassification of $ 62.9 million of associated accumulated foreign currency translation losses from the separate component of equity.

The loss was presented within net loss on business dispositions in our consolidated statement of income.

NOTE 4— REVENUES

The following tables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the three and six months ended June 30, 2023 and 2022 and have been recast to align with the change in the presentation of segment information during 2022 as further described in “Note 15 — Segment Information:”

Three Months Ended June 30, 2023

The following tables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, 2023

Solutions Issuer

Solutions Consumer

Solutions Intersegment

5 unchanged sentences

$ 1,884,006 $ 607,848 $ ( 16,163 ) $ 2,475,691

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Solutions Issuer

7 unchanged sentences

$ 1,596,326 $ 566,039 $ 147,337 $ ( 24,331 ) $ 2,285,371

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Solutions Issuer

7 unchanged sentences

$ 5,331,909 $ 1,769,196 $ 182,740 $ ( 63,238 ) $ 7,220,607

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Solutions Issuer

7 unchanged sentences

$ 4,651,061 $ 1,663,008 $ 478,082 $ ( 69,620 ) $ 6,722,531

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three and six months ended June 30, 2023 and 2022:

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

(in thousands)

3 unchanged sentences

ASC Topic 606, Revenues from Contracts with Customers ("ASC 606") requires that we determine for each customer arrangement whether revenue should be recognized at a point in time or over time.

For the three and six months ended June 30, 2023 and 2022, substantially all of our revenues were recognized over time.

Supplemental balance sheet information related to contracts from customers as of June 30, 2023 and December 31, 2022 was as follows:

Balance Sheet Location June 30, 2023 December 31, 2022

For the three and nine months ended September 30, 2023 and 2022, substantially all of our revenues were recognized over time.

Supplemental balance sheet information related to contracts from customers as of September 30, 2023 and December 31, 2022 was as follows:

Balance Sheet Location September 30, 2023 December 31, 2022

(in thousands)

5 unchanged sentences

Contract liabilities, net (noncurrent) Other noncurrent liabilities $ 52,934 $ 45,613

Net contract assets were not material at June 30, 2023 or at December 31, 2022.

Revenue recognized for the three months ended June 30, 2023 and 2022 from contract liability balances at the beginning of each period was $ 85.2 million and $ 83.2 million, respectively.

Revenue recognized for the six months ended June 30, 2023 and 2022 from contract liability balances at the beginning of each period was $ 142.9 million and $ 149.8 million, respectively.

Net contract assets were not material at September 30, 2023 or at December 31, 2022.

Revenue recognized for the three months ended September 30, 2023 and 2022 from contract liability balances at the beginning of each period was $ 85.2 million and $ 74.2 million, respectively.

Revenue recognized for the nine months ended September 30, 2023 and 2022 from contract liability balances at the beginning of each period was $ 181.3 million and $ 189.3 million, respectively.

ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations.

The purpose of this disclosure is to provide additional information about the amounts and expected timing of revenue to be recognized from the remaining performance obligations in our existing contracts.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at June 30, 2023.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at September 30, 2023.

However, as permitted, we have elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria.

Accordingly, the total amount

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

Accordingly, the total

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

Year Ending December 31,

3 unchanged sentences

NOTE 5— GOODWILL AND OTHER INTANGIBLE ASSETS

As of June 30, 2023 and December 31, 2022, goodwill and other intangible assets consisted of the following:

June 30, 2023 December 31, 2022

As of September 30, 2023 and December 31, 2022, goodwill and other intangible assets consisted of the following:

September 30, 2023 December 31, 2022

(in thousands)

13 unchanged sentences

$ 10,259,055 $ 9,658,374

The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the six months ended June 30, 2023:

The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the nine months ended September 30, 2023:

Solutions Issuer

5 unchanged sentences

Measurement period adjustments ( 236 ) — ( 236 )

Balance at June 30, 2023 $ 16,974,392 $ 9,516,768 $ 26,491,160

Balance at September 30, 2023 $ 17,012,823 $ 9,504,954 $ 26,517,777

We test goodwill for impairment at the reporting unit level annually and more often if an event occurs or circumstances change that indicate the fair value of a reporting unit may be below its carrying amount.

6 unchanged sentences

Based on the quantitative assessment of the 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 for the three and six months ended June 30, 2022.

Accumulated impairment losses for goodwill as of June 30, 2023 were $ 357.9 million.

we recognized a goodwill impairment charge of $833.1 million in our consolidated statement of income for the three months ended June 30, 2022.

Accumulated impairment losses for goodwill as of September 30, 2023 were $ 357.9 million.

Accumulated impairment losses for goodwill as of December 31, 2022 were $ 833.1 million, of which $ 475.2 million related to assets held for sale.

NOTE 6— LONG-TERM DEBT AND LINES OF CREDIT

As of June 30, 2023 and December 31, 2022, long-term debt consisted of the following:

June 30, 2023 December 31, 2022

As of September 30, 2023 and December 31, 2022, long-term debt consisted of the following:

September 30, 2023 December 31, 2022

(in thousands)

41 unchanged sentences

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

At June 30, 2023, the unamortized discount on senior notes and convertible notes was $ 49.9 million, and unamortized debt issuance costs on senior notes and convertible notes were $ 85.6 million.

At September 30, 2023, the unamortized discount on senior notes and convertible notes was $ 47.9 million , and unamortized debt issuance costs on senior notes and convertible notes were $ 81.8 million .

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 were $ 85.4 million.

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

At June 30, 2023 and December 31, 2022, unamortized debt issuance costs on the unsecured revolving credit facility were $ 21.0 million and $ 23.5 million, respectively.

At June 30, 2023, future maturities of long-term debt (excluding finance lease liabilities) are as follows by year (in thousands):

At September 30, 2023 and December 31, 2022, unamortized debt issuance costs on the unsecured revolving credit facility were $ 19.7 million and $ 23.5 million, respectively.

At September 30, 2023, future maturities of long-term debt (excluding finance lease liabilities) are as follows by year (in thousands):

Year Ending December 31,

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On March 17, 2023, we issued € 800 million aggregate principal amount of 4.875 % senior unsecured notes due March 2031 and received net proceeds of € 790.6 million, or $ 843.6 million based on the exchange rate on the issuance date.

We issued the senior notes at a discount of $ 2.8 million, and we incurred debt issuance costs of $ 7.2 million, including underwriting fees, professional services fees and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet at June 30, 2023.

Interest on the senior unsecured notes is payable annually in arrears on March 17 of each year, commencing March 17, 2024.

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The net proceeds from the offering were used for general corporate purposes.

During the three months ended June 30, 2023, we used borrowings under the revolving credit facility to fund the redemption in full of the 3.750 % and 4.000 % senior unsecured notes that were due June 1, 2023.

During the nine months ended September 30, 2023, we used borrowings under the revolving credit facility to fund the redemption in full of the 3.750 % and 4.000 % senior unsecured notes that were due June 1, 2023.

Commercial Paper

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The proceeds from issuances of commercial paper notes will be used primarily for general corporate purposes but may also be used for acquisitions, to pay dividends, for debt refinancing or for other purposes.

As of June 30, 2023, we had net borrowings under our comm ercial paper program of $ 1,841.7 million outstanding, presented within long-term debt in our consolidated balance sheet based on our intent and ability to continually refinance on a long-term basis, with a weighted average annual interest rate of 5.96 %.

As of September 30, 2023, we had net borrowings under our comm ercial paper program of $ 1,900.0 million outstanding, presented within long-term debt in our consolidated balance sheet based on our intent and ability to continually refinance on a long-term basis, with a weighted average annual interest rate of 6.07 %.

The commercial program is backstopped by our revolving credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility.

As suc h, we could draw on the revolving credit facility to repay commercial paper notes that cannot be rolled over or refinanced with similar debt .

Prior Year Debt Refinancing Activities

On August 8, 2022, we issued $ 1.5 billion in aggregate principal amount of 1.000 % convertible unsecured senior notes due 2029 in a private placement pursuant to an investment agreement with Silver Lake Partners.

In connection with the issuance of the convertible notes, we entered into privately negotiated capped call transactions with certain financial institutions to hedge the potential dilutive effect upon conversion of the convertible notes or offset our cash obligation if the cash settlement option were to be elected.

The capped call transactions meet the accounting criteria to be reflected in stockholders’ equity and not accounted for as derivatives.

The cost of $ 302.4 million incurred in connection with the capped call transactions was recorded as a reduction to paid-in-capital, net of applicable income taxes.

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.

Upon the execution of permanent financing in August 2022, including the issuance of our senior unsecured notes and entry into a new revolving credit facility, the aggregate commitments under the bridge facility were reduced to zero and terminated.

For the three and nine months ended September 30, 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.

Fair Value of Long-Term Debt

As of June 30, 2023, our senior notes had a total carrying amount of $ 11.6 billion and an estimated fair value of $ 10.6 billion.

As of September 30, 2023, our senior notes had a total carrying amount of $ 11.6 billion and an estimated fair value of $ 10.4 billion.

The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy.

As of June 30, 2023, our convertible notes had a total carrying amount of $ 1.4 billion and an estimated fair value of $ 1.4 billion.

As of September 30, 2023, our convertible notes had a total carrying amount of $ 1.5 billion and an estimated fair value of $ 1.5 billion.

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.

The fair value of other long-term debt approximated its carrying amount at June 30, 2023.

The fair value of other long-term debt approximated its carrying amount at September 30, 2023.

Compliance with Covenants

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The required leverage ratio was increased to 4.50 to 1.00 as a result of the qualifying acquisition of EVO, which will remain in effect for up to eight consecutive quarters with a gradual step-down to 3.75 to 1.00, and the required interest coverage ratio is 3.00 to 1.00.

We were in compliance with all applicable covenants as of June 30, 2023.

We were in compliance with all applicable covenants as of September 30, 2023.

Interest Expense

Interest expense was $ 172.3 million and $ 97.1 million for the three months ended June 30, 2023 and 2022, respectively, and $ 291.3 million and $ 186.4 million for the six months ended June 30, 2023 and 2022, respectively.

Interest expense was $ 173.3 million and $ 132.4 million for the three months ended September 30, 2023 and 2022, respectively, and $ 464.6 million and $ 318.8 million for the nine months ended September 30, 2023 and 2022, respectively.

NOTE 7— DERIVATIVES AND HEDGING INSTRUMENTS

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Net investment hedge accounting offers protection from this risk, and the foreign currency remeasurement gains and losses associated with the Euro-denominated senior notes are presented within the same components of other comprehensive income and accumulated comprehensive income.

We recognized a gain (loss) of $ 1.8 million and $( 16.5 ) million within foreign currency translation adjustments in other comprehensive income in our consolidated statement of comprehensive income during the three and six months ended June 30, 2023, respectively.

We recognized a gain of $ 26.8 million and $ 10.3 million within foreign currency translation adjustments in other comprehensive income in our consolidated statements of comprehensive income during the three and nine months ended September 30, 2023, respectively.

Interest Rate Swaps

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Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense.

Since we have designated the interest rate swap agreements as cash

flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recorded as components of other comprehensive income.

Since we have designated the interest rate swap agreements as cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recorded as components of other comprehensive income.

The fair values of our interest rate swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date.

These derivative instruments were classified within Level 2 of the valuation hierarchy.

In August 2022, in connection with entry into the revolving credit agreement and repayment of amounts outstanding under our prior credit facility, we terminated and settled our interest rate swap agreements existing at that time.

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.

The net gain was presented in interest expense in our consolidated statements of income for the three and nine months ended September 30, 2022.

The table below presents information about our interest rate swaps, designated as cash flow hedges, included in the consolidated balance sheets:

Derivative Financial Instruments Balance Sheet Location Weighted-Average Fixed Rate of Interest at June 30, 2023

Range of Maturity Dates at June 30, 2023

June 30, 2023 December 31, 2022

Derivative Financial Instruments Balance Sheet Location Weighted-Average Fixed Rate of Interest at September 30, 2023

Range of Maturity Dates at September 30, 2023

September 30, 2023 December 31, 2022

(in thousands)

Interest rate swaps (Notional of $ 1.5 billion at June 30, 2023)

Other noncurrent liabilities 4.26 % April 17, 2027 - August 17, 2027 $ 8,585 $ —

The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the three and six months ended June 30, 2023 and 2022:

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Interest rate swaps (Notional of $ 1.5 billion at September 30, 2023)

Other current assets 4.26 % April 17, 2027 - August 17, 2027 $ 10,646 $ —

The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

(in thousands)

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Net unrealized gains (losses) reclassified out of other comprehensive income (loss) to interest expense $ 2,375 $ ( 2,980 ) $ 1,890 $ ( 19,959 )

As of June 30, 2023, the amount of net unrealized gains 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 $ 9.4 million.

As of September 30, 2023, the amount of net unrealized gains 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 $ 10.6 million.

NOTE 8— INCOME TAX

For the three and six months ended June 30, 2023, we reported a tax expense of 39.2 % and 36.7 %, respectively, of the reported income before taxes.

For the three and six months ended June 30, 2023, tax expense was greater than the U.S.

statutory tax rate as a result of a gain on the dispositions of our consumer and gaming businesses for income tax reporting purposes, while a net loss on the dispositions was recognized for financial reporting purposes.

These effects were partially offset by the favorable effect on the rate of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

For the three and six months ended June 30, 2022, we incurred income tax expense in spite of reporting a loss before income taxes, primarily due to the unfavorable effects of the goodwill impairment charge and loss on the sale of our Merchant Solutions business in Russia for which no tax benefit was recognized.

These unfavorable effects were partially offset by the favorable effects of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

For the three months ended September 30, 2023, our effective income tax rate of 14.1 % was lower than the U.S.

statutory rate primarily due to the favorable effects of foreign-derived intangible income deductions, tax credits and foreign interest income not subject to tax.

For the nine months ended September 30, 2023, our effective income tax rate of 24.9 % was higher than the U.S.

statutory rate primarily as a result of a gain on the dispositions of our consumer and gaming businesses for income tax reporting purposes, while a net loss on the dispositions was recognized for financial reporting purposes, which was partially offset by the favorable effect on the rate of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

For the three months ended September 30, 2022, our effective income tax rate of 5.2 % differed from the U.S.

statutory rate primarily due to the favorable effects of foreign interest income not subject to tax, tax credits, and the foreign-derived intangible income deduction.

The effective rate also included the favorable effects of adjustments to unrecognized income tax benefits related to certain U.S.

federal income tax positions and remeasurement of state deferred taxes to reflect enacted tax law changes.

For the nine months ended September 30, 2022, we incurred income tax expense in spite of reporting a loss before income taxes primarily due to the unfavorable effects of the goodwill impairment charge and loss on the sale of our Merchant Solutions business in Russia for which no tax benefit was recognized.

These effects were partially offset by the same items that favorably affected the rate for the three months ended September 30, 2022.

On August 16, 2022, the U.S.

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We do not expect the corporate alternative minimum tax will have a material effect on our reported results, cash flows or financial position.

During the three and six months ended June 30, 2023, we reflected excise taxes of $ 2.0 million and $ 4.3 million, respectively, within equity as part of the price of common stock repurchased during the periods.

During the nine months ended September 30, 2023, we reflected excise taxes of $ 4.0 million within equity as part of the cost of common stock repurchased, net of share issuances, during the period.

NOTE 9— REDEEMABLE NONCONTROLLING INTERESTS

Through the acquisition of EVO, we have certain redeemable noncontrolling interests related to the portion of equity in our consolidated subsidiaries in Poland, Greece, and Chile, not attributable, directly or indirectly, to us, that is redeemable upon the occurrence of an event that is not solely within our control.

Through the acquisition of EVO, the portions of equity in our consolidated subsidiaries in Poland, Greece, and Chile that are not attributable, directly or indirectly, to us, are redeemable upon the occurrence of an event that is not solely within our control.

We own 66 % of our subsidiary in Poland, 51 % of our subsidiary in Greece and 50.1 % of our subsidiary in Chile.

Under the shareholder agreements, the minority shareholders have the option to compel us to purchase their shares at a price per share based on the fair value of the shares, or under certain limited circumstances, at a price determined as stipulated in the shareholder agreement.

Under the shareholder agreements, the minority shareholders have the option to compel us to purchase their shares at a price per share based on the fair value of the shares, or under certain circumstances for our subsidiary in Greece, at a price determined by calculations stipulated in the shareholder agreement.

The option held by the minority shareholder in Poland expires on January 1, 2024.

The other options have no expiration date.

Because the exercise of each of these redemption options is not solely within our control, the redeemable noncontrolling interests are presented in the mezzanine section between total liabilities and shareholders’ equity, as temporary equity, in our consolidated balance sheet as of June 30, 2023.

The redeemable noncontrolling interest for each subsidiary is reflected at the higher of:

(i) the initial carrying amount, increased or decreased for the noncontrolling interest's share of comprehensive income (loss), c apital contributions and distributions or (ii) the redemption price .

(i) the initial carrying amount, increased or decreased for the noncontrolling interest's share of comprehensive income (loss), capital contributions and distributions or (ii) the redemption price.

Estimates of redemption price are based on projected operating performance of each subsidiary, including key assumptions - revenue growth rates, current and expected market conditions and weighted-average cost of capital.

Each of the redeemable noncontrolling interests was presented at the respective carrying amount as of September 30, 2023, and no adjustments to estimated redemption price were recognized during the three and nine months ended September 30, 2023.

NOTE 10— SHAREHOLDERS’ EQUITY

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

During the three months ended June 30, 2023 and 2022, we repurchased and retired 2,006,016 and 4,523,563 shares of our common stock, respectively, at a cost, including commissions and applicable excise taxes, of $ 207.5 million and $ 600.3 million, or $ 103.44 and $ 132.64 per share, respectively.

During the six months ended June 30, 2023 and 2022, we repurchased and retired 4,064,918 and 9,039,189 shares of our common stock, respectively, at a cost, including commissions and applicable excise taxes, of $ 414.0 million and $ 1,250.0 million, or $ 101.86 and $ 138.29 per share, respectively.

As of June 30, 2023, the remaining amount available under our share repurchase program was $ 1,090.2 million.

On July 27, 2023, our board of directors declared a dividend of $ 0.25 per share payable on September 29, 2023 to common shareholders of record as of September 15, 2023.

During the nine months ended September 30, 2023, we repurchased and retired 4,064,918 shares of our common stock at a cost, including commissions and applicable excise taxes, of $ 413.7 million, or $ 101.79 per share.

During the three and nine months ended September 30, 2022, we repurchased and retired 6,907,090 and 15,946,279 shares of our common stock, respectively, at a cost, including commissions and applicable excise taxes, of $ 889.7 million and $ 2,139.7 million, or $ 128.82 and $ 134.18 per share, respectively.

As of September 30, 2023, the remaining amount available under our share repurchase program was $ 1,090.2 million.

On October 26, 2023, our board of directors declared a dividend of $ 0.25 per share payable on December 29, 2023 to common shareholders of record as of December 15, 2023.

NOTE 11— SHARE-BASED AWARDS AND STOCK OPTIONS

The following table summarizes share-based compensation expense and the related income tax benefit recognized for our share-based awards and stock options:

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

(in thousands)

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Share-Based Awards

The following table summarizes the changes in unvested restricted stock and performance awards for the six months ended June 30, 2023:

The following table summarizes the changes in unvested restricted stock and performance awards for the nine months ended September 30, 2023:

Shares Weighted-Average

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Forfeited ( 119 ) 130.88

Unvested at June 30, 2023 2,573 $ 131.35

The total fair value of restricted stock and performance awards vested during the six months ended June 30, 2023 and June 30, 2022 was $ 151.1 million and $ 96.4 million, respectively.

For restricted stock and performance awards, we recognized compensation expens e of $ 44.7 million and $ 43.6 million during the three months ended June 30, 2023 and 2022, respectively, and $ 119.9 million and $ 78.7 million during the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, there was $ 222.7 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 2.0 years.

Unvested at September 30, 2023 2,533 $ 131.27

The total fair value of restricted stock and performance awards vested during the nine months ended September 30, 2023 and September 30, 2022 was $ 159.9 million and $ 128.8 million, respectively.

For restricted stock and performance awards, we recognized compensation expens e of $ 33.7 million and $ 34.5 million during the three months ended September 30, 2023 and 2022, respectively, and $ 153.6 million and $ 113.2 million during the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, there was $ 190.6 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 1.9 years.

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 2023:

The following table summarizes stock option activity for the nine months ended September 30, 2023:

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

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Exercised ( 280 ) 89.98

Outstanding at June 30, 2023 1,461 $ 109.07 3.7 $ 19.0

Options vested and exercisable at June 30, 2023 1,155 $ 110.39 2.4 $ 16.5

We recognized compensation expense for stock options of $ 1.1 million and $ 1.8 million during the three months ended June 30, 2023 and 2022, respectively, and $ 13.9 million and $ 3.6 million during the six months ended June 30, 2023 and 2022, respectively.

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2023 and 2022 was $ 0.9 million and $ 3.8 million, respectively.

As of June 30, 2023, we had $ 3.6 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.0 y ears.

The weighted-average grant-date fair value of stock options granted, including replacement awards granted in connection with the EVO acquisition, during the six months ended June 30, 2023 and 2022 was $ 46.17 and $ 48.88 , respectively.

Outstanding at September 30, 2023 937 $ 99.09 5.2 $ 24.3

Options vested and exercisable at September 30, 2023 654 $ 96.03 3.8 $ 19.7

We recognized compensation expense for stock options of $ 1.7 million and $ 1.2 million during the three months ended September 30, 2023 and 2022, respectively, and $ 15.5 million and $ 4.8 million during the nine months ended September 30, 2023 and 2022, respectively.

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2023 and 2022 was $ 8.7 million and $ 4.2 million, respectively.

As of September 30, 2023, we had $ 7.1 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 1.9 y ears.

The weighted-average grant-date fair value of stock options granted, including replacement awards granted in connection with the EVO acquisition, during the nine months ended September 30, 2023 and 2022 was $ 46.17 and $ 48.88 , respectively.

Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

Risk-free interest rate 3.84 % 1.87 %

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All stock options with an exercise price lower than the average market share price of our common stock for the period are assumed to have a dilutive effect on EPS.

The dilutive share base for the three and six months ended June 30, 2023 excluded approximately 0.9 million shares related to stock options that would have an antidilutive effect on the computation of diluted earnings per share.

Due to a net loss for the three and six months ended June 30, 2022, no incremental shares were included in the computation of diluted earnings per share because the effect would be antidilutive.

Approximately 2.0 million shares related to stock options and share-based awards were therefore excluded from the diluted share base for the three and six months ended June 30, 2022.

The dilutive share base for the three and nine months ended September 30, 2023 excluded approximately 0.2 million shares related to stock options that would have an antidilutive effect on the computation of diluted earnings per share.

The dilutive share base for the three months ended September 30, 2022 excluded approximately 467,770 shares related to stock options that would have an antidilutive effect on the computation of diluted earnings per share.

Due to a net loss for the nine months ended September 30, 2022, no incremental shares were included in the computation of diluted earnings per share because the effect would be antidilutive.

Approximately 1.9 million shares related to stock options and share-based awards were therefore excluded from the diluted share base for the nine months ended September 30, 2022.

The effect of the potential shares needed to settle the conversion spread on the convertible notes is included in diluted EPS if the effect is dilutive.

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.

For the three and six months ended June 30, 2023, the convertible notes were not included in the computation of diluted EPS as the effect would have been anti-dilutive.

For the three and nine months ended September 30, 2023, the convertible notes were not included in the computation of diluted EPS as the effect would have been anti-dilutive.

Further, 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 diluted weighted-average number of shares outstanding for the three and six months ended June 30, 2023 and 2022:

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

(in thousands)

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We regularly maintain cash balances with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit or the equivalent outside the U.S.

As of June 30, 2023, approximately 75 % of our total balance of cash and cash equivalents was held within a small group of financial institutions, primarily large money center banks.

As of September 30, 2023, approximately 75 % of our total balance of cash and cash equivalents was held within a small group of financial institutions, primarily large money center banks.

Although we currently believe that the financial institutions with whom we do business will be able to fulfill their commitments to us, there is no assurance that those institutions will be able to continue to do so.

We have not experienced any losses associated with our balances in such accounts for the six months ended June 30, 2023.

We have not experienced any losses associated with our balances in such accounts for the nine months ended September 30, 2023.

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

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(in thousands)

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Cash included in assets held for sale 1,218 70,618

Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 2,114,351 $ 2,215,606

Cash, cash equivalents and restricted cash shown in the statements of cash flows $ 2,109,865 $ 2,215,606

Long-lived assets

During the six months ended June 30, 2023, we entered into a new agreement to acquire software, of which $ 48.0 million was financed utilizing a five-year vendor financing arrangement.

In connection with the completion of the EVO acquisition, we acquired right-of-use assets for operating leases of approximately $ 40.0 million, primarily related to real estate leases, and assumed the associated lease liabilities.

As of June 30, 2023, maturities of the acquired operating lease liabilities were as follows:

During the three and nine months ended September 30, 2023, we entered into agreements to acquire hardware, software and related services, of which $ 19.6 million and $ 67.6 million, respectively, was financed utilizing under four to five-year vendor financing arrangements.

Certain of the agreements included the purchase of assets previously leased.

During the three months ended September 30, 2022, we entered into an agreement to acquire hardware, software and related services, of which $ 83.5 million was financed utilizing a two-year vendor financing arrangement.

The agreement included the purchase of certain assets previously leased.

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.

In connection with the completion of the EVO acquisition during the nine months ended September 30, 2023, we acquired right-of-use assets for operating leases of approximately $ 40.0 million, primarily related to real estate leases, and assumed the associated lease liabilities.

As of September 30, 2023, maturities of the acquired operating lease liabilities were as follows:

$ 2.0 million in 2023, $ 8.8 million in 2024, $ 8.1 million in 2025, $ 7.5 million in 2026, $ 6.2 million in 2027, $ 3.2 million in 2028 and $ 0.8 million thereafter.

As a result of actions taken in the third quarter of 2022 to reduce our facility footprint in certain markets around the world, we recognized charges of $ 27.7 million, primarily related to certain lease right-of-use assets, leasehold improvements, furniture and fixtures and equipment, to reduce the carrying amount of each asset group to estimated fair value.

The charges were presented within selling, general and administrative expenses in our consolidated statements of income for the three and nine months ended September 30, 2022.

Visa preferred shares

Through certain of our subsidiaries in Europe, we were a member and shareholder of Visa Europe Limited ("Visa Europe").

In June 2016, Visa Inc.

("Visa") acquired all of the membership interests in Visa Europe, and we received consideration in the form of cash and Series B and C convertible preferred shares of Visa.

We assigned the preferred shares received a value of zero based on transfer restrictions, Visa's ability to adjust the conversion rate and the estimation uncertainty associated with those factors.

Based on the outcome of any current or potential litigation involving Visa Europe in the United Kingdom and elsewhere in Europe, the conversion rate of the preferred shares could be adjusted down such that the number of Visa common shares we receive could be as low as zero .

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

In July 2022, in connection with the second mandatory release assessment, a portion of the Series B and C convertible preferred shares was converted by Visa representing approximately one quarter of the original potential conversion rate.

We recognized a gain of $ 13.2 million reported in interest and other income in our consolidated statements of income for the three and nine months ended September 30, 2022 based on the fair value of the shares received and subsequently sold.

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

Through the acquisition of EVO in 2023, we obtained Series A and C convertible preferred shares of Visa.

The Series C preferred shares are carried at an assigned value of zero based on the aforementioned factors.

The Series A convertible preferred shares are not restricted and are convertible into a fixed number of Visa Class A common shares.

The Series A convertible preferred shares are presented at a fair value of $ 39.7 million in other current assets in our consolidated balance sheet as of September 30, 2023.

The fair value of the Visa Series A convertible preferred shares is determined using a market approach based on the quoted market price of Visa Class A common stock into which the Series A preferred shares are convertible, and as a result is classified as Level 2 of the fair value hierarchy.

NOTE 14— ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in the accumulated balances for each component of other comprehensive income (loss) were as follows for the three and six months ended June 30, 2023 and 2022:

The changes in the accumulated balances for each component of other comprehensive income (loss) were as follows for the three and nine months ended September 30, 2023 and 2022:

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

(in thousands)

Balance at March 31, 2023 $ ( 349,695 ) $ ( 58,135 ) $ ( 2,987 ) $ ( 410,817 )

Other comprehensive income (loss) 2,405 30,033 ( 22 ) 32,416

Balance at June 30, 2023 $ ( 347,290 ) $ ( 28,102 ) $ ( 3,009 ) $ ( 378,401 )

Balance at March 31, 2022 $ ( 209,895 ) $ ( 34,567 ) $ ( 2,743 ) $ ( 247,205 )

Other comprehensive income (loss) ( 108,179 ) 15,664 ( 22 ) ( 92,537 )

Balance at September 30, 2023 $ ( 455,469 ) $ ( 12,438 ) $ ( 3,031 ) $ ( 470,938 )

Balance at June 30, 2022 $ ( 343,401 ) $ ( 25,034 ) $ ( 2,743 ) $ ( 371,178 )

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 1.8 million and $( 13.5 ) million for the three months ended June 30, 2023 and 2022, respectively.

Other comprehensive income (loss) ( 234,903 ) 1,580 — ( 233,323 )

Balance at September 30, 2022 $ ( 578,304 ) $ ( 23,454 ) $ ( 2,743 ) $ ( 604,501 )

Other comprehensive loss attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 16.2 million and $ 14.8 million for the three months ended September 30, 2023 and 2022, respectively.

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

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Other comprehensive income (loss) ( 74,885 ) 9,982 ( 66 ) ( 64,969 )

Balance at June 30, 2023 $ ( 347,290 ) $ ( 28,102 ) $ ( 3,009 ) $ ( 378,401 )

Balance at September 30, 2023 $ ( 455,469 ) $ ( 12,438 ) $ ( 3,031 ) $ ( 470,938 )

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

Other comprehensive income (loss) ( 395,355 ) 25,036 — ( 370,319 )

Balance at June 30, 2022 $ ( 343,401 ) $ ( 25,034 ) $ ( 2,743 ) $ ( 371,178 )

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 8.2 million and $( 18.8 ) million for the six months ended June 30, 2023 and 2022, respectively.

Balance at September 30, 2022 $ ( 578,304 ) $ ( 23,454 ) $ ( 2,743 ) $ ( 604,501 )

Other comprehensive loss attributable to noncontrolling interests, which relates only to foreign currency translation, was $ 8.0 million and $ 33.7 million for the nine months ended September 30, 2023 and 2022, respectively.

NOTE 15— SEGMENT INFORMATION

During 2022, as a result of the pending divestiture of the consumer business and changes in how the business is managed, we realigned the businesses previously comprising our Business and Consumer Solutions segment to include the business-to-business portion within our Issuer Solutions segment and the consumer portion forming our Consumer Solutions segment.

The presentation of segment information for the three months ended June 30, 2022 has been recast to align with the segment presentation for the three months ended June 30, 2023.

As described in "Note 3 - Business Dispositions," during the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised of our former Consumer Solutions segment.

Our reportable segments now include:

We operate in two reportable segments:

Merchant Solutions and Issuer Solutions.

Our former Consumer Solutions segment is presented below for periods prior to disposition.

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

Impairment of goodwill and

gains or losses on business dispositions are not included in segment operating income.

Impairment of goodwill and gains or losses on business dispositions are not included in segment operating income.

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

1 unchanged sentence

The accounting policies of the reportable operating segments are the same as those described in our Annual Report on Form 10-K for the year ended December 31, 2022 and our summary of significant accounting policies in "Note 1—Basis of Presentation and Summary of Significant Accounting Policies."

Information on segments and reconciliations to consolidated revenues, consolidated operating income (loss) and consolidated depreciation and amortization were as follows for the three and six months ended June 30, 2023 and 2022:

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

(in thousands)

Revenues (1) :

Merchant Solutions $ 1,884,006 $ 1,596,326 $ 5,331,909 $ 4,651,061

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Impairment of goodwill — — — ( 833,075 )

Net gain (loss) on business dispositions 105,738 ( 152,211 ) ( 139,095 ) ( 152,211 )

Consolidated operating income (loss) $ 602,741 $ ( 529,858 ) $ 659,475 $ ( 153,911 )

Net loss on business dispositions — ( 48,933 ) ( 139,095 ) ( 201,144 )

Consolidated operating income $ 558,196 $ 386,432 $ 1,217,670 $ 232,521

Depreciation and amortization (1) :

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Consolidated depreciation and amortization $ 458,624 $ 405,502 $ 1,328,051 $ 1,261,761

(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.

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

See “Note 2—Acquisition” and “Note 3—Business Dispositions” for further discussion.

(2) Operating loss for Corporate included acquisition and integration expenses of $ 60.2 million and $ 61.4 million for the three months ended June 30, 2023 and 2022, respectively.

Operating loss for Corporate included acquisition and integration expenses of $ 148.0 million and $ 109.5 million for the six months ended June 30, 2023 and 2022, respectively.

(2) Operating loss for Corporate included acquisition and integration expenses of $ 74.4 million and $ 75.3 million for the three months ended September 30, 2023 and 2022, respectively.

Operating loss for Corporate included acquisition and integration expenses of $ 222.4 million and $ 184.8 million for the nine months ended September 30, 2023 and 2022, respectively.

During the three and nine months ended September 30, 2022, operating loss for Corporate also included $ 31.7 million and $ 40.0 million, respectively, of other charges related to facilities exit activities, while facilities exit actions resulted in charges during the three and nine months ended September 30, 2023 of $ 3.7 million and $ 15.0 million, respectively.

NOTE 16— COMMITMENTS AND CONTINGENCIES

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements