Document
false--12-31Q1202000011233603.003.50P2Y0.010.19500400000000400000000300225590299010257300225590299010257155000000025000000055000000012500000000005000000500000000P9MP1YP1YP1YP1YP5Y 0001123360 2020-01-01 2020-03-31 0001123360 gpn:TotalSystemServicesInc.Member 2020-01-01 2020-03-31 0001123360 2020-05-01 0001123360 2019-01-01 2019-03-31 0001123360 2020-03-31 0001123360 2019-12-31 0001123360 2019-03-31 0001123360 2018-12-31 0001123360 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001123360 us-gaap:ParentMember 2020-01-01 2020-03-31 0001123360 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001123360 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001123360 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-03-31 0001123360 us-gaap:CommonStockMember 2020-03-31 0001123360 us-gaap:ParentMember 2020-03-31 0001123360 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001123360 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001123360 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001123360 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001123360 us-gaap:CommonStockMember 2019-12-31 0001123360 gpn:CumulativeEffectPeriodofAdoptionAdjustmentMember us-gaap:RetainedEarningsMember 2020-01-01 0001123360 gpn:CumulativeEffectPeriodofAdoptionAdjustmentMember us-gaap:ParentMember 2020-01-01 0001123360 us-gaap:ParentMember 2019-12-31 0001123360 us-gaap:NoncontrollingInterestMember 2020-03-31 0001123360 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001123360 us-gaap:NoncontrollingInterestMember 2019-12-31 0001123360 us-gaap:RetainedEarningsMember 2019-12-31 0001123360 gpn:CumulativeEffectPeriodofAdoptionAdjustmentMember 2020-01-01 0001123360 us-gaap:RetainedEarningsMember 2020-03-31 0001123360 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001123360 us-gaap:ParentMember 2019-01-01 2019-03-31 0001123360 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001123360 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001123360 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001123360 us-gaap:ParentMember 2018-12-31 0001123360 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001123360 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0001123360 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001123360 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001123360 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001123360 us-gaap:ParentMember 2019-03-31 0001123360 us-gaap:RetainedEarningsMember 2019-03-31 0001123360 us-gaap:NoncontrollingInterestMember 2018-12-31 0001123360 us-gaap:CommonStockMember 2019-03-31 0001123360 us-gaap:RetainedEarningsMember 2018-12-31 0001123360 us-gaap:CommonStockMember 2018-12-31 0001123360 us-gaap:NoncontrollingInterestMember 2019-03-31 0001123360 gpn:CumulativeEffectPeriodofAdoptionAdjustmentMember us-gaap:AccountingStandardsUpdate201613Member us-gaap:RetainedEarningsMember 2020-01-01 0001123360 gpn:TotalSystemServicesInc.Member 2019-09-18 2020-03-31 0001123360 gpn:TotalSystemServicesInc.Member gpn:BusinessandConsumerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 gpn:TotalSystemServicesInc.Member gpn:IssuerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 gpn:TotalSystemServicesInc.Member gpn:MerchantSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 gpn:TotalSystemServicesInc.Member 2020-03-31 0001123360 gpn:TotalSystemServicesInc.Member 2019-01-01 2019-03-31 0001123360 gpn:TotalSystemServicesInc.Member 2019-12-31 0001123360 us-gaap:OperatingSegmentsMember gpn:MerchantSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember us-gaap:TechnologyServiceMember gpn:MerchantSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember gpn:RelationshipLedMember gpn:MerchantSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember us-gaap:TechnologyServiceMember gpn:MerchantSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember gpn:RelationshipLedMember gpn:MerchantSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember gpn:MerchantSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 2025-01-01 2020-03-31 0001123360 2020-04-01 2020-03-31 0001123360 2022-01-01 2020-03-31 0001123360 2024-01-01 2020-03-31 0001123360 2021-01-01 2020-03-31 0001123360 2023-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AmericasMember gpn:BusinessandConsumerSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:IntersegmentEliminationMember srt:EuropeMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AmericasMember gpn:IssuerSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:EuropeMember gpn:MerchantSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 srt:EuropeMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:EuropeMember gpn:IssuerSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 srt:AsiaPacificMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember gpn:IssuerSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:EuropeMember gpn:BusinessandConsumerSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:IntersegmentEliminationMember srt:AmericasMember 2019-01-01 2019-03-31 0001123360 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0001123360 srt:AmericasMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AmericasMember gpn:MerchantSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember gpn:BusinessandConsumerSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AsiaPacificMember gpn:IssuerSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:IntersegmentEliminationMember srt:AsiaPacificMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AsiaPacificMember gpn:BusinessandConsumerSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AsiaPacificMember gpn:MerchantSolutionsSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:IntersegmentEliminationMember srt:AmericasMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AsiaPacificMember gpn:IssuerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 srt:AsiaPacificMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:EuropeMember gpn:MerchantSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AsiaPacificMember gpn:BusinessandConsumerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:EuropeMember gpn:BusinessandConsumerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:EuropeMember gpn:IssuerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AmericasMember gpn:IssuerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AmericasMember gpn:MerchantSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember gpn:IssuerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:IntersegmentEliminationMember srt:EuropeMember 2020-01-01 2020-03-31 0001123360 srt:EuropeMember 2020-01-01 2020-03-31 0001123360 us-gaap:IntersegmentEliminationMember 2020-01-01 2020-03-31 0001123360 srt:AmericasMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AmericasMember gpn:BusinessandConsumerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:IntersegmentEliminationMember srt:AsiaPacificMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember srt:AsiaPacificMember gpn:MerchantSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember gpn:BusinessandConsumerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 gpn:ObtainContractMember 2020-03-31 0001123360 gpn:FulfillContractMember 2019-12-31 0001123360 gpn:FulfillContractMember 2020-03-31 0001123360 gpn:ObtainContractMember 2019-12-31 0001123360 us-gaap:ContractBasedIntangibleAssetsMember 2020-03-31 0001123360 us-gaap:CustomerRelatedIntangibleAssetsMember 2020-03-31 0001123360 us-gaap:TrademarksAndTradeNamesMember 2020-03-31 0001123360 us-gaap:TechnologyBasedIntangibleAssetsMember 2020-03-31 0001123360 us-gaap:ContractBasedIntangibleAssetsMember 2019-12-31 0001123360 us-gaap:TechnologyBasedIntangibleAssetsMember 2019-12-31 0001123360 us-gaap:TrademarksAndTradeNamesMember 2019-12-31 0001123360 us-gaap:CustomerRelatedIntangibleAssetsMember 2019-12-31 0001123360 gpn:IssuerSolutionsSegmentMember 2019-12-31 0001123360 gpn:BusinessandConsumerSolutionsSegmentMember 2019-12-31 0001123360 gpn:MerchantSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 gpn:BusinessandConsumerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 gpn:MerchantSolutionsSegmentMember 2020-03-31 0001123360 gpn:IssuerSolutionsSegmentMember 2020-01-01 2020-03-31 0001123360 gpn:BusinessandConsumerSolutionsSegmentMember 2020-03-31 0001123360 gpn:MerchantSolutionsSegmentMember 2019-12-31 0001123360 gpn:IssuerSolutionsSegmentMember 2020-03-31 0001123360 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:InterestRateSwapMember 2019-12-31 0001123360 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateSwapMember 2019-12-31 0001123360 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:InterestRateSwapMember 2019-12-31 0001123360 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:InterestRateSwapMember 2020-03-31 0001123360 us-gaap:AccountsPayableAndAccruedLiabilitiesMember us-gaap:InterestRateSwapMember 2020-03-31 0001123360 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:InterestRateSwapMember 2020-03-31 0001123360 gpn:TotalSystemServicesInc.Member gpn:SeniorUnsecuredNotesMember us-gaap:SeniorNotesMember 2019-09-18 0001123360 gpn:TermLoanFacilityMember gpn:FiveYearSeniorUnsecuredCreditFacilityMember us-gaap:UnsecuredDebtMember us-gaap:FederalFundsEffectiveSwapRateMember 2020-01-01 2020-03-31 0001123360 us-gaap:LineOfCreditMember 2019-12-31 0001123360 us-gaap:LineOfCreditMember 2020-03-31 0001123360 us-gaap:LineOfCreditMember 2020-01-01 2020-03-31 0001123360 gpn:A4.800SeniorNotesdueApril012026Member us-gaap:SeniorNotesMember 2019-09-18 0001123360 gpn:A4.150SeniorNotesdueAugust152049Member us-gaap:SeniorNotesMember 2019-08-14 0001123360 gpn:UnsecuredRevolvingCreditFacilityMember us-gaap:UnsecuredDebtMember 2020-03-31 0001123360 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember gpn:FourthAmendmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:SeniorNotesMember 2020-03-31 0001123360 gpn:SeniorUnsecuredNotesMember us-gaap:SeniorNotesMember 2019-08-14 0001123360 gpn:TermLoanFacilityMember us-gaap:UnsecuredDebtMember 2020-03-31 0001123360 us-gaap:LineOfCreditMember 2019-01-01 2019-12-31 0001123360 gpn:A4.450SeniorNotesdueJune012028Member us-gaap:SeniorNotesMember 2019-09-18 0001123360 gpn:A4.150SeniorNotesdueAugust152049Member us-gaap:SeniorNotesMember 2020-03-31 0001123360 us-gaap:LetterOfCreditMember us-gaap:LineOfCreditMember 2020-03-31 0001123360 gpn:A3.750SeniorNotesdueJune012023Member us-gaap:SeniorNotesMember 2020-03-31 0001123360 us-gaap:LineOfCreditMember 2019-12-31 0001123360 srt:ScenarioForecastMember gpn:TermLoanFacilityMember gpn:FiveYearSeniorUnsecuredCreditFacilityMember us-gaap:UnsecuredDebtMember 2020-12-31 0001123360 gpn:A2.650SeniorNotesdueFebruary152025Member us-gaap:SeniorNotesMember 2020-03-31 0001123360 srt:ScenarioForecastMember us-gaap:RevolvingCreditFacilityMember gpn:FiveYearSeniorUnsecuredCreditFacilityMember us-gaap:UnsecuredDebtMember 2020-12-31 0001123360 srt:ScenarioForecastMember gpn:TermLoanAMember us-gaap:SecuredDebtMember 2017-05-02 2021-06-30 0001123360 gpn:A3.750SeniorNotesdueJune012023Member us-gaap:SeniorNotesMember 2019-09-18 0001123360 gpn:A4.450SeniorNotesdueJune012028Member us-gaap:SeniorNotesMember 2020-03-31 0001123360 us-gaap:StandbyLettersOfCreditMember us-gaap:LineOfCreditMember 2020-03-31 0001123360 gpn:A4.000SeniorNotesdueJune012023Member us-gaap:SeniorNotesMember 2019-09-18 0001123360 gpn:A3.800SeniorNotesdueApril012021Member us-gaap:SeniorNotesMember 2020-03-31 0001123360 us-gaap:InterestRateSwapMember 2020-03-31 0001123360 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember gpn:FourthAmendmentMember 2020-01-01 2020-03-31 0001123360 gpn:TermLoanFacilityMember gpn:FiveYearSeniorUnsecuredCreditFacilityMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0001123360 gpn:A4.800SeniorNotesdueApril012026Member us-gaap:SeniorNotesMember 2020-03-31 0001123360 gpn:A3.800SeniorNotesdueApril012021Member us-gaap:SeniorNotesMember 2019-09-18 0001123360 gpn:SeniorNotesandSecuredDebtMember 2020-03-31 0001123360 gpn:A3.200SeniorNotesdueAugust152029Member us-gaap:SeniorNotesMember 2019-08-14 0001123360 us-gaap:RevolvingCreditFacilityMember us-gaap:UnsecuredDebtMember 2020-03-31 0001123360 gpn:TotalSystemServicesInc.Member us-gaap:SeniorNotesMember 2020-01-01 2020-03-31 0001123360 gpn:A2.650SeniorNotesdueFebruary152025Member us-gaap:SeniorNotesMember 2019-08-14 0001123360 us-gaap:SecuredDebtMember 2019-12-31 0001123360 gpn:A4.000SeniorNotesdueJune012023Member us-gaap:SeniorNotesMember 2020-03-31 0001123360 gpn:A3.200SeniorNotesdueAugust152029Member us-gaap:SeniorNotesMember 2020-03-31 0001123360 gpn:A4.800SeniorNotesdueApril012026Member us-gaap:SeniorNotesMember 2019-12-31 0001123360 gpn:A4.150SeniorNotesdueAugust152049Member us-gaap:SeniorNotesMember 2019-12-31 0001123360 gpn:A4.000SeniorNotesdueJune012023Member us-gaap:SeniorNotesMember 2019-12-31 0001123360 gpn:A2.650SeniorNotesdueFebruary152025Member us-gaap:SeniorNotesMember 2019-12-31 0001123360 gpn:A4.450SeniorNotesdueJune012028Member us-gaap:SeniorNotesMember 2019-12-31 0001123360 gpn:OtherLongTermDebtMember 2019-12-31 0001123360 gpn:UnsecuredRevolvingCreditFacilityMember 2019-12-31 0001123360 gpn:OtherLongTermDebtMember 2020-03-31 0001123360 gpn:A3.800SeniorNotesdueApril012021Member us-gaap:SeniorNotesMember 2019-12-31 0001123360 gpn:UnsecuredRevolvingCreditFacilityMember 2020-03-31 0001123360 gpn:A3.750SeniorNotesdueJune012023Member us-gaap:SeniorNotesMember 2019-12-31 0001123360 gpn:UnsecuredTermLoanFacilityMember 2019-12-31 0001123360 gpn:UnsecuredTermLoanFacilityMember 2020-03-31 0001123360 gpn:A3.200SeniorNotesdueAugust152029Member us-gaap:SeniorNotesMember 2019-12-31 0001123360 us-gaap:RevolvingCreditFacilityMember gpn:FourthAmendmentMember 2020-03-31 0001123360 us-gaap:SubsequentEventMember 2020-04-29 2020-04-29 0001123360 gpn:OtherThanAcceleratedShareRepurchaseProgramMember 2020-03-31 0001123360 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0001123360 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0001123360 gpn:ShareBasedAwardsMember 2020-01-01 2020-03-31 0001123360 gpn:ShareBasedAwardsMember 2019-01-01 2019-03-31 0001123360 us-gaap:EmployeeStockOptionMember 2020-03-31 0001123360 gpn:ShareBasedAwardsMember 2020-03-31 0001123360 us-gaap:EmployeeStockOptionMember 2019-03-31 0001123360 us-gaap:EmployeeStockOptionMember 2019-12-31 0001123360 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-12-31 0001123360 gpn:ShareBasedAwardsMember 2019-12-31 0001123360 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2020-03-31 0001123360 us-gaap:AccumulatedTranslationAdjustmentMember 2020-03-31 0001123360 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-12-31 0001123360 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0001123360 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-03-31 0001123360 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2020-01-01 2020-03-31 0001123360 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-31 0001123360 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0001123360 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-03-31 0001123360 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0001123360 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-12-31 0001123360 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-03-31 0001123360 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-12-31 0001123360 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0001123360 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:CorporateNonSegmentMember 2020-01-01 2020-03-31 0001123360 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-03-31 0001123360 us-gaap:OperatingSegmentsMember 2020-01-01 2020-03-31 0001123360 us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0001123360 gpn:FrontlineCaseMember us-gaap:PerformanceGuaranteeMember 2019-09-23 2019-09-23 iso4217:USD iso4217:USD xbrli:shares xbrli:shares xbrli:pure gpn:reporting_units

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             

Commission file number: 001-16111
https://cdn.kscope.io/31b9cbdd9246c46b48536125e03d3ae3-globalpaymentswordmarkrgba21.jpg
GLOBAL PAYMENTS INC.
(Exact name of registrant as specified in charter)
Georgia
 
58-2567903
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
3550 Lenox Road
,
Atlanta
,
Georgia
 
30326
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (770) 829-8000
Securities registered pursuant to Section 12(b) of the Act
Title of each class
Trading symbol
Name of exchange on which registered
Common stock, no par value
GPN
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
Emerging growth company
 
 


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes
 
No
 
The number of shares of the issuer’s common stock, no par value, outstanding as of May 1, 2020 was 299,105,721.



GLOBAL PAYMENTS INC.
FORM 10-Q
For the quarterly period ended March 31, 2020

TABLE OF CONTENTS
 
 
 
Page
PART I - FINANCIAL INFORMATION
ITEM 1.
 
 
 
 
 
 
 
 
 
 
 
ITEM 2.
 
ITEM 3.
 
ITEM 4.
 
PART II - OTHER INFORMATION
ITEM 1.
 
ITEM 1A.
 
ITEM 2.
 
ITEM 6.
 
 
 



2


PART 1 - FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

GLOBAL PAYMENTS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
 
 
 
 
Revenues
$
1,903,598

 
$
883,039

Operating expenses:
 
 
 
Cost of service
933,871

 
305,230

Selling, general and administrative
725,748

 
378,317

 
1,659,619

 
683,547

Operating income
243,979

 
199,492

 
 
 
 
Interest and other income
2,506

 
2,934

Interest and other expense
(92,644
)
 
(59,081
)
 
(90,138
)
 
(56,147
)
Income before income taxes and equity in income of equity method investments
153,841

 
143,345

Income tax expense
(15,502
)
 
(24,140
)
Income before equity in income of equity method investments
138,339

 
119,205

Equity in income of equity method investments, net of tax
12,269

 

Net income
150,608

 
119,205

Net income attributable to noncontrolling interests, net of tax
(7,033
)
 
(6,864
)
Net income attributable to Global Payments
$
143,575

 
$
112,341

 
 
 
 
Earnings per share attributable to Global Payments:
 
 
 
Basic earnings per share
$
0.48

 
$
0.71

Diluted earnings per share
$
0.48

 
$
0.71

See Notes to Unaudited Consolidated Financial Statements.

3


GLOBAL PAYMENTS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)

 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
 
 
 
 
Net income
$
150,608

 
$
119,205

Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustments
(204,111
)
 
5,196

Income tax benefit related to foreign currency translation adjustments
1,007

 
34

Net unrealized losses on hedging activities
(47,896
)
 
(14,509
)
Reclassification of net unrealized losses (gains) on hedging activities to interest expense
4,671

 
(1,830
)
Income tax benefit related to hedging activities
10,346

 
3,985

Other, net of tax
121

 
111

Other comprehensive loss
(235,862
)
 
(7,013
)
 
 
 
 
Comprehensive (loss) income
(85,254
)
 
112,192

Comprehensive income attributable to noncontrolling interests
(380
)
 
(2,284
)
Comprehensive (loss) income attributable to Global Payments
$
(85,634
)
 
$
109,908



See Notes to Unaudited Consolidated Financial Statements.



4


GLOBAL PAYMENTS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
March 31, 2020
 
December 31, 2019
 
(Unaudited)
 
 
ASSETS
 
  
 

Current assets:
 
  
 

Cash and cash equivalents
$
1,800,061

 
$
1,678,273

Accounts receivable, net
799,798

 
895,232

Settlement processing assets
1,046,288

 
1,353,778

Prepaid expenses and other current assets
423,523

 
439,165

Total current assets
4,069,670

  
4,366,448

Goodwill
23,662,373

  
23,759,740

Other intangible assets, net
12,814,791

  
13,154,655

Property and equipment, net
1,441,910

  
1,382,802

Deferred income taxes
6,778

 
6,292

Other noncurrent assets
1,854,076

  
1,810,225

Total assets
$
43,849,598

  
$
44,480,162

LIABILITIES AND EQUITY
 
  
 
Current liabilities:
 
  
 
Settlement lines of credit
$
375,182

 
$
463,237

Current portion of long-term debt
70,551

 
35,137

Accounts payable and accrued liabilities
1,636,823

  
1,822,166

Settlement processing obligations
953,723

 
1,258,806

Total current liabilities
3,036,279

  
3,579,346

Long-term debt
9,636,076

 
9,090,364

Deferred income taxes
3,024,409

  
3,145,641

Other noncurrent liabilities
632,401

  
609,822

Total liabilities
16,329,165

  
16,425,173

Commitments and contingencies


  


Equity:
 
  
 
Preferred stock, no par value; 5,000,000 shares authorized and none issued

  

Common stock, no par value; 400,000,000 shares authorized at March 31, 2020 and December 31, 2019; 299,010,257 issued and outstanding at March 31, 2020 and 300,225,590 issued and outstanding at December 31, 2019

  

Paid-in capital
25,525,184

  
25,833,307

Retained earnings
2,335,407

  
2,333,011

Accumulated other comprehensive loss
(539,780
)
  
(310,571
)
Total Global Payments shareholders’ equity
27,320,811

  
27,855,747

Noncontrolling interests
199,622

 
199,242

Total equity
27,520,433

 
28,054,989

Total liabilities and equity
$
43,849,598

  
$
44,480,162

See Notes to Unaudited Consolidated Financial Statements.

5


GLOBAL PAYMENTS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Cash flows from operating activities:
 
 
 
Net income
$
150,608

 
$
119,205

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization of property and equipment
83,573

 
41,155

Amortization of acquired intangibles
314,245

 
107,475

Amortization of capitalized contract costs
18,738

 
15,847

Share-based compensation expense
27,822

 
11,418

Provision for operating losses and bad debts
37,629

 
12,709

Noncash lease expense
25,924

 
8,976

Deferred income taxes
(47,957
)
 
(5,774
)
Other, net
(11,757
)
 
67

Changes in operating assets and liabilities, net of the effects of business combinations:
 
 
 
Accounts receivable
47,624

 
(36,493
)
Settlement processing assets and obligations, net
12,966

 
118,347

Prepaid expenses and other assets
(53,540
)
 
(76,740
)
Accounts payable and other liabilities
(169,301
)
 
(86,463
)
Net cash provided by operating activities
436,574

 
229,729

Cash flows from investing activities:
 
 
 
Acquisitions, net of cash acquired
(67,196
)
 
(74,830
)
Capital expenditures
(104,802
)
 
(55,123
)
Other, net
2,348

 
13,672

Net cash used in investing activities
(169,650
)
 
(116,281
)
Cash flows from financing activities:
 
 
 
Net repayments of settlement lines of credit
(78,092
)
 
(55,350
)
Proceeds from long-term debt
607,000

 
344,000

Repayments of long-term debt
(110,978
)
 
(173,060
)
Repurchases of common stock
(421,162
)
 
(155,997
)
Proceeds from stock issued under share-based compensation plans
28,283

 
7,848

Common stock repurchased - share-based compensation plans
(44,253
)
 
(9,507
)
Distributions to noncontrolling interests

 
(5,572
)
Dividends paid
(58,279
)
 
(1,571
)
Net cash used in financing activities
(77,481
)
 
(49,209
)
Effect of exchange rate changes on cash
(67,655
)
 
2,516

Increase in cash and cash equivalents
121,788

 
66,755

Cash and cash equivalents, beginning of the period
1,678,273

 
1,210,878

Cash and cash equivalents, end of the period
$
1,800,061

 
$
1,277,633

See Notes to Unaudited Consolidated Financial Statements.

6


GLOBAL PAYMENTS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 (in thousands)

 
 
Number of Shares 
 
Paid-in Capital 
 
Retained Earnings 
 
Accumulated Other Comprehensive Loss
 
Total Global Payments Shareholders’ Equity
 
Noncontrolling Interests
 
Total Equity
Balance at December 31, 2019
300,226

 
$
25,833,307

 
$
2,333,011

 
$
(310,571
)
 
$
27,855,747

 
$
199,242

 
$
28,054,989

Cumulative effect of adoption of new accounting standard
 
 
 
 
(5,379
)
 
 
 
(5,379
)
 
 
 
(5,379
)
Net income
 
 
 
 
143,575

 
 
 
143,575

 
7,033

 
150,608

Other comprehensive loss
 
 
 
 
 
 
(229,209
)
 
(229,209
)
 
(6,653
)
 
(235,862
)
Stock issued under share-based compensation plans
1,082

 
28,283

 
 
 
 
 
28,283

 
 
 
28,283

Common stock repurchased - share-based compensation plans
(203
)
 
(37,787
)
 
 
 
 
 
(37,787
)
 
 
 
(37,787
)
Share-based compensation expense
 
 
27,822

 
 
 
 
 
27,822

 
 
 
27,822

Repurchases of common stock
(2,095
)
 
(326,441
)
 
(77,521
)
 
 
 
(403,962
)
 
 
 
(403,962
)
Cash dividends declared ($0.195 per share)
 
 
 
 
(58,279
)
 
 
 
(58,279
)
 
 
 
(58,279
)
Balance at March 31, 2020
299,010

 
$
25,525,184

 
$
2,335,407

 
$
(539,780
)
 
$
27,320,811

 
$
199,622

 
$
27,520,433


 
Number of Shares 
 
Paid-in Capital 
 
Retained Earnings 
 
Accumulated Other Comprehensive Loss
 
Total Global Payments Shareholders’ Equity 
 
Noncontrolling Interests
 
Total Equity
Balance at December 31, 2018
157,962

 
$
2,235,167

 
$
2,066,415

 
$
(310,175
)
 
$
3,991,407

 
$
194,936

 
$
4,186,343

Net income
 
 
 
 
112,341

 
 
 
112,341

 
6,864

 
119,205

Other comprehensive loss
 
 
 
 
 
 
(2,433
)
 
(2,433
)
 
(4,580
)
 
(7,013
)
Stock issued under share-based compensation plans
542

 
7,848

 
 
 
 
 
7,848

 
 
 
7,848

Common stock repurchased - share-based compensation plans
(79
)
 
(10,200
)
 
 
 
 
 
(10,200
)
 
 
 
(10,200
)
Share-based compensation expense
 
 
11,418

 
 
 
 
 
11,418

 
 
 
11,418

Distributions to noncontrolling interest

 


 


 


 

 
(5,572
)
 
(5,572
)
Repurchases of common stock
(1,295
)
 
(92,610
)
 
(65,387
)
 
 
 
(157,997
)
 
 
 
(157,997
)
Cash dividends declared ($0.01 per share)
 
 
 
 
(1,571
)
 
 
 
(1,571
)
 
 
 
(1,571
)
Balance at March 31, 2019
157,130

 
$
2,151,623

 
$
2,111,798

 
$
(312,608
)
 
$
3,950,813

 
$
191,648

 
$
4,142,461

See Notes to Unaudited Consolidated Financial Statements.




7


NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Business, consolidation and presentation

We are a leading pure play payments technology company delivering innovative software and services to our customers globally. Our technologies, services and employee expertise enable us to provide a broad range of solutions that allow our customers to operate their businesses more efficiently across a variety of channels around the world. We operate in three reportable segments: Merchant Solutions, Issuer Solutions and Business and Consumer Solutions, which are described in "Note 11—Segment Information." Global Payments Inc. and its consolidated subsidiaries are referred to herein collectively as "Global Payments," the "Company," "we," "our" or "us," unless the context requires otherwise.

These unaudited consolidated financial statements include our accounts and those of our majority-owned subsidiaries, and all intercompany balances and transactions have been eliminated in consolidation. These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The consolidated balance sheet as of December 31, 2019 was derived from the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 but does not include all disclosures required by GAAP for annual financial statements.

In the opinion of our management, all known adjustments necessary for a fair presentation of the results of the interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amount of assets and liabilities. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Recent developments relating to the outbreak of the coronavirus pandemic ("COVID-19")

In March 2020, the World Health Organization declared the outbreak of the COVID-19 virus a global pandemic. The pandemic is causing major disruptions to businesses and markets worldwide as the virus continues to spread. A number of countries as well as many states and cities within the United States have enacted temporary closures of businesses, issued quarantine or shelter-in-place orders and taken other restrictive measures in response to COVID-19.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. In particular, the 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. These unaudited consolidated financial statements reflect the financial statement effects of COVID-19 based upon management’s estimates and assumptions utilizing the most currently available information.

Recently adopted accounting pronouncements

Accounting Standards Update ("ASU") 2018-15In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (A Consensus of the FASB Emerging Issues Task Force)." ASU 2018-15 provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract. The new guidance amends the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain implementation costs as if the arrangement was an internal-use software project.


8


We adopted ASU 2018-15 on January 1, 2020, applying the guidance prospectively to all implementation costs incurred after the date of adoption. The adoption of this standard did not have a material effect on our consolidated financial statements. We have historically capitalized implementation costs associated with cloud computing arrangements that are service contracts following the guidance in Subtopic 350-40 and will continue to do so pursuant to the clarifications provided in the new guidance. We amortize deferred implementation costs to expense on a straight-line basis over the term of the applicable hosting arrangement.
ASU 2016-13 We adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" on January 1, 2020 using the modified retrospective transition method. The adoption of this standard resulted in a cumulative-effect adjustment to decrease retained earnings by $5.4 million, net of tax. The amendments in this update changed how we measure and recognize credit impairment for certain financial instruments measured at amortized cost. Under the current expected credit losses ("CECL") model, we recognize an estimate of credit losses expected to occur over the remaining life of each pool of financial assets with similar risk characteristics.
We have exposure to credit losses for financial assets such as accounts receivable, certain settlement processing assets, check guarantee claims receivable assets and advances to sales representatives. We utilize a combination of aging or loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool. 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.
As of March 31, 2020, the total allowance for credit losses was approximately $29.3 million. Financial assets are presented net of the allowance for credit losses in the consolidated balance sheets. The measurement of the allowance for credit losses is recognized through credit loss expense. Depending on the nature of the underlying asset, credit loss expense is included as a component of cost of service or selling, general and administrative expense in the consolidated statements of income. Write-offs are recorded in the period in which the asset is deemed uncollectible. Recoveries are recorded when received as a direct credit to the credit loss expense in the consolidated statements of income. Prior to the adoption of ASU 2016-13, credit losses on these financial instruments were recognized when an occurrence was deemed to be probable.
Recently issued pronouncements not yet adopted

ASU 2019-12In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which is intended to enhance and simplify various aspects of the accounting for income taxes. The amendments in this update remove certain exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and amends existing guidance to improve consistent application of the accounting for franchise taxes, enacted changes in tax laws or rates and transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted in any interim period. We are evaluating the effect of ASU 2019-12 on our consolidated financial statements.

ASU 2020-04In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)," which provides optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity has elected certain optional expedients and are retained through the end of the hedging relationship. The amendments in this update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. If elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant Topic or Industry Subtopic within the Codification that contains the guidance that otherwise would be required to be applied. The amendments in this update can be adopted anytime beginning March 12, 2020 through December 31, 2022. We are evaluating the effect of ASU 2020-04 on our consolidated financial statements.


9


NOTE 2ACQUISITIONS

Total System Services, Inc.

On September 18, 2019, we merged with Total System Services, Inc. ("TSYS") (the "Merger"). We accounted for this transaction as a business combination, which generally requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date. The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of December 31, 2019 and March 31, 2020, including a reconciliation to the total purchase consideration, were as follows:
 
 
Provisional Amounts at December 31, 2019
 
Measurement-Period Adjustments
 
Provisional Amounts at
March 31, 2020
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
446,009

 
$

 
$
446,009

Accounts receivable
 
442,848

 
(2,910
)
 
439,938

Identified intangible assets
 
10,980,000

 

 
10,980,000

Property and equipment
 
644,084

 

 
644,084

Other assets
 
1,474,825

 
(4,940
)
 
1,469,885

Accounts payable and accrued liabilities
 
(614,060
)
 
236

 
(613,824
)
Debt
 
(3,295,342
)
 
4,787

 
(3,290,555
)
Deferred income tax liabilities
 
(2,687,849
)
 
57,569

 
(2,630,280
)
Other liabilities
 
(314,415
)
 

 
(314,415
)
Total identifiable net assets
 
7,076,100

 
54,742

 
7,130,842

Goodwill
 
17,398,853

 
(54,742
)
 
17,344,111

Total purchase consideration
 
$
24,474,953

 
$

 
$
24,474,953



As of March 31, 2020, we considered these amounts to be provisional because we were still in the process of reviewing information to support the valuations of the assets acquired and liabilities assumed. We made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $54.7 million. The decrease in deferred income tax liabilities for the three months ended March 31, 2020 primarily relates to a refined analysis of the outside bases of partnerships. The effects of the measurement-period adjustments on our consolidated statement of income for the three months ended March 31, 2020 were not material.

As of March 31, 2020, provisional goodwill arising from the acquisition of $17.3 billion was included in our reportable segments as follows: $7.1 billion in the Merchant Solutions segment, $7.9 billion in the Issuer Solutions segment and $2.3 billion in the Business and Consumer Solutions segment. Goodwill was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining the acquired business into our existing business. We expect that substantially all of the goodwill from this acquisition will not be deductible for income tax purposes.

The following unaudited pro forma information shows the results of our operations for the three months ended March 31, 2019 as if the Merger had occurred on January 1, 2018. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of what would have occurred if the Merger had occurred as of that date. The unaudited pro forma information is also not intended to be a projection of future results due to the integration of TSYS. 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.
 
Actual
 
Pro Forma
 
 
 
 
 
(in thousands)
 
 
 
 
Total revenues
$
883,039

 
$
1,909,770

Net income attributable to Global Payments
$
112,341

 
$
187,865



10



For the three months ended March 31, 2020, the acquired operations of TSYS contributed $1,055.0 million to our consolidated revenues and $115.5 million to our consolidated operating income.

At March 31, 2020, accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $48.3 million for employee termination benefits resulting from Merger-related integration activities. During the three months ended March 31, 2020, we recognized charges for employee termination benefits of $17.6 million, which included $2.6 million of share-based compensation expense. As of March 31, 2020, the cumulative amount of recognized charges for employee termination benefits resulting from Merger-related integration activities was $74.7 million, which included $19.9 million of share-based compensation expense. These charges are recorded within selling, general and administrative expenses in our consolidated statements of income and included within Corporate expenses for segment reporting purposes. New obligations may arise as Merger-related integration activities continue in 2020.

NOTE 3REVENUES

The following tables present a disaggregation of our revenue from contracts with customers by geography for each of our reportable segments for the three months ended March 31, 2020 and 2019:
 
Three Months Ended March 31, 2020
 
Merchant Solutions
 
Issuer
Solutions
 
Business and Consumer Solutions
 
Intersegment Revenue
 
Total
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Americas
$
1,024,504

 
$
393,754

 
$
203,946

 
$
(17,733
)
 
$
1,604,471

Europe
135,999

 
108,362

 

 

 
244,361

Asia Pacific
54,766

 
1,646

 

 
(1,646
)
 
54,766

 
$
1,215,269

 
$
503,762

 
$
203,946

 
$
(19,379
)
 
$
1,903,598



 
Three Months Ended March 31, 2019
 
Merchant Solutions
 
Issuer
Solutions
 
Business and Consumer Solutions
 
Intersegment Revenue
 
Total
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Americas
$
678,423

 
$

 
$

 
$

 
$
678,423

Europe
137,613

 
5,256

 

 

 
142,869

Asia Pacific
61,747

 

 

 

 
61,747

 
$
877,783

 
$
5,256

 
$

 
$

 
$
883,039



The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three months ended March 31, 2020 and 2019:
 
March 31, 2020
 
March 31, 2019
 
 
 
 
 
(in thousands)
 
 
 
 
Relationship-led
$
676,522

 
$
462,387

Technology-enabled
538,747

 
415,396

 
$
1,215,269

 
$
877,783



Accounting Standards Codification 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 months ended March 31, 2020 and 2019, substantially all of our revenues were recognized over time.


11


Supplemental balance sheet information related to contracts from customers as of March 31, 2020 and December 31, 2019 was as follows:
 
Balance Sheet Location
 
March 31, 2020
 
December 31, 2019
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
Assets:
 
 
 
 
 
Capitalized costs to obtain customer contracts, net
Other noncurrent assets
 
$
232,030

 
$
226,945

Capitalized costs to fulfill customer contracts, net
Other noncurrent assets
 
$
52,573

 
$
38,150

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
Contract liabilities, net (current)
Accounts payable and accrued liabilities
 
$
187,084

 
$
193,405

Contract liabilities, net (noncurrent)
Other noncurrent liabilities
 
$
42,556

 
$
35,272



Net contract assets were not material at March 31, 2020 or at December 31, 2019. Revenue recognized for the three months ended March 31, 2020 and 2019 from contract liability balances at the beginning of each period was $90.8 million and $58.5 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 March 31, 2020. However, as permitted, we have elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. Accordingly, the total unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amounts disclosed in the table below (in thousands):
Year ending December 31,
 
 
 
Remainder of 2020
$
687,211

2021
795,626

2022
603,497

2023
396,016

2024
245,923

2025-2029
564,501

Total
$
3,292,774




12


NOTE 4GOODWILL AND OTHER INTANGIBLE ASSETS

As of March 31, 2020 and December 31, 2019, goodwill and other intangible assets consisted of the following:  
 
March 31, 2020
 
December 31, 2019
 
 
 
 
 
(in thousands)
 
 
 
 
Goodwill
$
23,662,373

 
$
23,759,740

Other intangible assets:
 
 
 
Customer-related intangible assets
$
9,176,861

 
$
9,238,728

Acquired technologies
2,745,024

 
2,732,218

Contract-based intangible assets
1,970,443

 
1,974,429

Trademarks and trade names
1,237,020

 
1,239,471

 
15,129,348

 
15,184,846

Less accumulated amortization:
 
 
 
Customer-related intangible assets
1,376,969

 
1,225,785

Acquired technologies
670,304

 
576,928

Contract-based intangible assets
88,788

 
82,225

Trademarks and trade names
178,496

 
145,253

 
2,314,557

 
2,030,191

 
$
12,814,791

 
$
13,154,655



The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the three months ended March 31, 2020:
 
Merchant Solutions
 
Issuer
Solutions
 
Business and Consumer Solutions
 
Total
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
Balance at December 31, 2019
$
13,415,352

 
$
7,985,731

 
$
2,358,657

 
$
23,759,740

Goodwill acquired
34,911

 

 

 
34,911

Effect of foreign currency translation
(64,218
)
 
(13,318
)
 

 
(77,536
)
Measurement-period adjustments
3,514

 
(60,984
)
 
2,728

 
(54,742
)
Balance at March 31, 2020
$
13,389,559

 
$
7,911,429

 
$
2,361,385

 
$
23,662,373



There were no accumulated impairment losses for goodwill as of March 31, 2020 or December 31, 2019.


13


NOTE 5LONG-TERM DEBT AND LINES OF CREDIT

As of March 31, 2020 and December 31, 2019, long-term debt consisted of the following:
 
March 31, 2020
 
December 31, 2019
 
 
 
 
 
(in thousands)
 
 
 
 
3.800% senior notes due April 1, 2021
$
758,797

 
$
760,996

3.750% senior notes due June 1, 2023
566,062

 
567,330

4.000% senior notes due June 1, 2023
570,874

 
572,522

2.650% senior notes due February 15, 2025
991,844

 
991,423

4.800% senior notes due April 1, 2026
817,799

 
820,623

4.450% senior notes due June 1, 2028
485,883

 
486,982

3.200% senior notes due August 15, 2029
1,235,238

 
1,234,843

4.150% senior notes due August 15, 2049
739,521

 
739,431

Unsecured term loan facility
1,982,763

 
1,981,758

Unsecured revolving credit facility
1,416,000

 
903,000

Finance lease liabilities
30,798

 
32,996

Other borrowings
111,048

 
33,597

Total long-term debt
9,706,627

 
9,125,501

Less current portion
70,551

 
35,137

Long-term debt, excluding current portion
$
9,636,076

 
$
9,090,364



The carrying amounts of our senior notes and term loans are presented net of unamortized discount and unamortized debt issuance costs, as applicable. At March 31, 2020, unamortized discount on senior notes was $5.8 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were $44.9 million. Unamortized debt issuance costs on our senior notes and unsecured term loans at December 31, 2019 were $46.6 million. The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets. At March 31, 2020, unamortized debt issuance costs on the unsecured revolving credit facility were $16.7 million, and, at December 31, 2019, unamortized debt issuance costs on the unsecured revolving credit facility were $17.6 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. Amortization of discounts and debt issuance costs for the three months ended March 31, 2020 and 2019 was $2.8 million and $3.1 million, respectively.

At March 31, 2020, maturities of long-term debt (excluding finance lease liabilities) were as follows by year (in thousands):
Year ending December 31,
 
 
 
Remainder of 2020
$
50,726

2021
801,771

2022
58,403

2023
1,300,000

2024
3,166,000

2025
1,000,000

2026 and thereafter
3,200,000

Total
$
9,576,900





14


Senior Unsecured Credit Facilities

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

Borrowings under the term loan facility were made in U.S. dollars and borrowings under the revolving credit facility are available to be made in U.S. dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option. Borrowings in U.S. dollars and certain other LIBOR quoted currencies will bear interest, at our option, at a rate equal to either (1) the rate (adjusted for any statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits in the London interbank market, (2) a floating rate of interest set forth on the applicable LIBOR screen page designated by Bank of America or (3) the highest of (a) the federal funds effective rate plus 0.5%, (b) the rate of interest as publicly announced by Bank of America as its "prime rate" or (c) LIBOR plus 1.0%, in each case, plus an applicable margin. 

As of March 31, 2020, the interest rates on the term loan facility and the revolving credit facility were 2.36% and 2.02%, respectively. 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. 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. 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. Outstanding letters of credit under the revolving credit facility reduce the amount of borrowings available to us. The total available commitments under the revolving credit facility at March 31, 2020 were $1.6 billion.

Senior Unsecured Notes
 
We have $3.0 billion in aggregate principal amount of senior unsecured notes, consisting of the following: (i) $1.0 billion aggregate principal amount of 2.650% senior notes due 2025; (ii) $1.25 billion aggregate principal amount of 3.200% senior notes due 2029; and (iii) $750 million aggregate principal amount of 4.150% senior notes due 2049. Interest on the senior notes is payable semi-annually in arrears on each February 15 and August 15. 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. We have an additional $3.0 billion in aggregate principal amount of senior unsecured notes consisting of the following: (i) $750 million aggregate principal amount of 3.800% senior notes due 2021; (ii) $550 million aggregate principal amount of 3.750% senior notes due 2023; (iii) $550 million aggregate principal amount of 4.000% senior notes due 2023; (iv) $750 million aggregate principal amount of 4.800% senior notes due 2026; and (v) $450 million aggregate principal amount of 4.450% senior notes due 2028. For the 3.800% senior notes due 2021 and the 4.800% senior notes due 2026, interest is payable semi-annually each April 1 and October 1. For the 3.750% senior notes due 2023, the 4.000% senior notes due 2023 and the 4.450% senior notes due 2028, interest is payable semi-annually each June 1 and December 1. The difference between the fair value and face value of these senior notes at the date the Merger was consummated is recognized over the terms of the respective notes as a reduction of interest expense. The amortization of this fair value adjustment was $9.0 million for the three months ended March 31, 2020.

As of March 31, 2020, our senior notes had a total carrying amount of $6.2 billion and an estimated fair value of $6.2 billion. The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy. The fair value of other long-term debt approximated its carrying amount at March 31, 2020.

Compliance with Covenants

The senior unsecured term loan and revolving credit facility contain customary conditions to funding, affirmative covenants, negative covenants, financial covenants and events of default. As of March 31, 2020, financial covenants under the term loan facility required a leverage ratio of 3.50 to 1.00 and an interest coverage ratio of 3.00 to 1.00. We were in compliance with all applicable covenants as of March 31, 2020.

15



Settlement Lines of Credit

In various markets where we do business, we have specialized lines of credit, which are restricted for use in funding settlement. The settlement lines of credit generally have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. For certain of our lines of credit, the available credit is increased by the amount of cash we have on deposit in specific accounts with the lender. Accordingly, the amount of the outstanding lines of credit may exceed the stated credit limit. As of March 31, 2020 and December 31, 2019, a total of $58.0 million and $74.5 million, respectively, of cash on deposit was used to determine the available credit.

As of March 31, 2020 and December 31, 2019 we had $375.2 million and $463.2 million, respectively, outstanding under these lines of credit with additional capacity to fund settlement of $1,092.1 million as of March 31, 2020. During the three months ended March 31, 2020, the maximum and average outstanding balances under these lines of credit were $679.0 million and $376.4 million, respectively. The weighted-average interest rate on these borrowings was 1.99% and 3.16% at March 31, 2020 and December 31, 2019, respectively.

Derivative Agreements

We have interest rate swap agreements with financial institutions to hedge changes in cash flows attributable to interest rate risk on a portion of our variable-rate debt instruments. Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. Since we have designated the interest rate swap agreements as portfolio cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recorded as components of other comprehensive income (loss). The fair values of our interest rate swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. These derivative instruments were classified within Level 2 of the valuation hierarchy.

The table below presents information about our derivative financial instruments, designated as cash flow hedges, included in the consolidated balance sheets:
 
 
 
 
 
 
 
 
Fair Values
Derivative Financial Instruments
 
Balance Sheet Location
 
Weighted-Average Fixed Rate of Interest at March 31, 2020
 
Range of Maturity Dates at
March 31, 2020
 
March 31,
2020
 
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps (Notional of $250 million at December 31, 2019)
 
Prepaid expenses and other current assets
 
NA
 
NA
 
$

 
$
472

Interest rate swaps (Notional of $550 million at March 31, 2020)
 
Accounts payable and accrued liabilities
 
1.65%
 
July 31, 2020 - March 31, 2021
 
$
5,365

 
$

Interest rate swaps (Notional of $1.25 billion at March 31, 2020 and $1.55 billion at December 31, 2019)
 
Other noncurrent liabilities
 
2.73%
 
December 31, 2022
 
$
84,361

 
$
45,604



NA = not applicable.

16



The table below presents the effects of our interest rate swaps on the consolidated statements of income and comprehensive income (loss) for the three months ended March 31, 2020 and 2019:
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
 
 
 
 
 
(in thousands)
 
 
 
 
Net unrealized losses recognized in other comprehensive loss
$
47,896

 
$
14,509

Net unrealized losses (gains) reclassified out of other comprehensive loss to interest expense
$
4,671

 
$
(1,830
)

As of March 31, 2020, 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 $41.4 million.

Interest Expense

Interest expense was $81.1 million and $55.4 million for the three months ended March 31, 2020 and 2019, respectively.

NOTE 6—INCOME TAX

Our effective income tax rates for the three months ended March 31, 2020 and 2019 were 10.1% and 16.8%, respectively. Our effective income tax rate for the three months ended March 31, 2020 differed from the U.S. statutory rate primarily as a result of tax credits, excess tax benefits of share-based awards that are recognized upon vesting or settlement and the foreign-derived intangible income deduction. For the three months ended March 31, 2019, our effective income tax rate differed from the U.S. statutory rate primarily due to the excess tax benefits of share-based awards that are recognized upon vesting or settlement.

We conduct business globally and file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities around the world, including, without limitation, the United States and the United Kingdom. We are no longer subject to state income tax examinations for years ended on or before May 31, 2010, U.S. federal income tax examinations for years ended on or before December 31, 2016 and U.K. federal income tax examinations for years ended on or before May 31, 2016.

NOTE 7—SHAREHOLDERS’ EQUITY

We repurchase our common stock mainly through open market repurchase plans and, at times, through accelerated share repurchase programs. During the three months ended March 31, 2020, we repurchased and retired 2,094,731 shares of our common stock at a cost, including commissions, of $404.0 million, or $192.85 per share. During the three months ended March 31, 2019, we repurchased and retired 1,295,282 shares of our common stock at a cost, including commissions, of $158.0 million, or $121.98 per share.

On February 26, 2020, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to $1.0 billion. As of March 31, 2020, the amount that may yet be purchased under our share repurchase program was $880.0 million.

On April 29, 2020, our board of directors declared a dividend of $0.195 per share payable on June 26, 2020 to common shareholders of record as of June 12, 2020.


17


NOTE 8—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
 
March 31, 2020
 
March 31, 2019
 
 
 
 
 
(in thousands)
 
 
 
 
Share-based compensation expense
$
27,822

 
$
11,418

Income tax benefit
$
6,473

 
$
2,509


 
Share-Based Awards

The following table summarizes the changes in unvested restricted stock and performance awards for the three months ended March 31, 2020:
 
Shares
 
Weighted-Average
Grant-Date
Fair Value
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
Unvested at December 31, 2019
1,844

 

$149.96

Granted
546

 
193.36

Vested
(553
)
 
116.66

Forfeited
(18
)
 
152.88

Unvested at March 31, 2020
1,819

 

$173.12



The total fair value of restricted stock and performance awards vested during the three months ended March 31, 2020 and March 31, 2019 was $64.6 million and $20.8 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of $25.2 million and $10.1 million during the three months ended March 31, 2020 and March 31, 2019, respectively. As of March 31, 2020, there was $216.8 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 2.4 years.


18


Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2020: 
 
Options
 
Weighted-Average Exercise Price
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
(years)
 
(in millions)
 
 
 
 
 
 
 
 
Outstanding at December 31, 2019
1,755

 

$74.06

 
6.5
 
$190.3
Granted
125

 
200.42

 
 
 
 
Forfeited
(2
)
 
113.48

 
 
 
 
Exercised
(383
)
 
64.38

 
 
 
 
Outstanding at March 31, 2020
1,495

 

$87.05

 
6.8
 
$85.5
 
 
 
 
 
 
 
 
Options vested and exercisable at March 31, 2020
1,097

 

$66.97

 
5.9
 
$84.8


We recognized compensation expense for stock options of $1.9 million and $0.7 million during the three months ended March 31, 2020 and 2019, respectively. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2020 and 2019 was $53.6 million and $15.9 million, respectively. As of March 31, 2020, we had $14.7 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.2 years.

The weighted-average grant-date fair value of stock options granted, including Replacement Awards, during the three months ended March 31, 2020 and 2019 was $54.85 and $39.60, respectively. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:
 
Three Months Ended
 
March 31, 2020