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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") 2018-15— In 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.

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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 2019-12—In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which is intended to enhance and simplify various aspects of the accounting for income taxes. The amendments in this update remove certain exceptions to the general principles in 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 2020-04—In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)," which provides optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. 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.

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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

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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.

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.

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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

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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.

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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

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Senior Unsecured Credit Facilities

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

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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.

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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.

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.

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.

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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.

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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		March 31, 2019
Risk-free interest rate	1.24%		2.49%
Expected volatility	30%		30%
Dividend yield	0.39%		0.04%
Expected term (years)	5		5

The risk-free interest rate was based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. Our assumption on expected volatility was based on our historical volatility. The dividend yield assumption was determined using our average stock price over the preceding year and the annualized amount of our most current quarterly dividend per share. We based our assumptions on the expected term of the options on our analysis of the historical exercise patterns of the options and our assumption on the future exercise pattern of options.

Basic earnings per share ("EPS") was computed by dividing net income attributable to Global Payments by the weighted-average number of shares outstanding during the period. Earnings available to common shareholders was the same as reported net income attributable to Global Payments for all periods presented.

Diluted EPS is computed by dividing net income attributable to Global Payments by the weighted-average number of shares outstanding during the period, including the effect of share-based awards that would have a dilutive effect on EPS. All stock options with an exercise price lower than the average market share price of our common stock for the period are assumed to have a dilutive effect on EPS. The dilutive share base for the three months ended March 31, 2020 excludes approximately

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