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Table of Contents

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 June 30, 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
globalpaymentswordmarkrgba35.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 July 26, 2020 was 299,243,280.


Table of Contents

GLOBAL PAYMENTS INC.
FORM 10-Q
For the quarterly period ended June 30, 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

Table of Contents

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
 
June 30, 2020
 
June 30, 2019
 
 
 
 
Revenues
$
1,671,952

 
$
935,152

Operating expenses:
 
 
 
Cost of service
893,740

 
302,276

Selling, general and administrative
670,638

 
411,150

 
1,564,378

 
713,426

Operating income
107,574

 
221,726

 
 
 
 
Interest and other income
2,787

 
6,176

Interest and other expense
(82,855
)
 
(65,616
)
 
(80,068
)
 
(59,440
)
Income before income taxes and equity in income of equity method investments
27,506

 
162,286

Income tax expense
(836
)
 
(32,247
)
Income before equity in income of equity method investments
26,670

 
130,039

Equity in income of equity method investments, net of tax
12,774

 

Net income
39,444

 
130,039

Net income attributable to noncontrolling interests, net of tax
(2,113
)
 
(9,581
)
Net income attributable to Global Payments
$
37,331

 
$
120,458

 
 
 
 
Earnings per share attributable to Global Payments:
 
 
 
Basic earnings per share
$
0.12

 
$
0.77

Diluted earnings per share
$
0.12

 
$
0.77

See Notes to Unaudited Consolidated Financial Statements.

3

Table of Contents

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

 
Six Months Ended
 
June 30, 2020
 
June 30, 2019
 
 
 
 
Revenues
$
3,575,550

 
$
1,818,190

Operating expenses:
 
 
 
Cost of service
1,827,611

 
607,505

Selling, general and administrative
1,396,386

 
789,467

 
3,223,997

 
1,396,972

Operating income
351,553

 
421,218

 
 
 
 
Interest and other income
5,293

 
9,112

Interest and other expense
(175,499
)
 
(124,697
)
 
(170,206
)
 
(115,585
)
Income before income taxes and equity in income of equity method investments
181,347

 
305,633

Income tax expense
(16,338
)
 
(56,388
)
Income before equity in income of equity method investments
165,009

 
249,245

Equity in income of equity method investments, net of tax
25,041

 

Net income
190,050

 
249,245

Net income attributable to noncontrolling interests, net of tax
(9,147
)
 
(16,445
)
Net income attributable to Global Payments
$
180,903

 
$
232,800

 
 
 
 
Earnings per share attributable to Global Payments:
 
 
 
Basic earnings per share
$
0.60

 
$
1.48

Diluted earnings per share
$
0.60

 
$
1.48

See Notes to Unaudited Consolidated Financial Statements.


4

Table of Contents

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

 
Three Months Ended
 
June 30, 2020
 
June 30, 2019
 
 
 
 
Net income
$
39,444

 
$
130,039

Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustments
82,458

 
7,704

Income tax benefit related to foreign currency translation adjustments
154

 
1,517

Net unrealized losses on hedging activities
(5,630
)
 
(42,222
)
Reclassification of net unrealized losses (gains) on hedging activities to interest expense
9,982

 
(893
)
Income tax (expense) benefit related to hedging activities
(1,057
)
 
10,527

Other, net of tax
122

 
17

Other comprehensive income (loss)
86,029

 
(23,350
)
 
 
 
 
Comprehensive income
125,473

 
106,689

Comprehensive income attributable to noncontrolling interests
(7,508
)
 
(13,529
)
Comprehensive income attributable to Global Payments
$
117,965

 
$
93,160



 
Six Months Ended
 
June 30, 2020
 
June 30, 2019
 
 
 
 
Net income
$
190,050

 
$
249,245

Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustments
(121,653
)
 
12,902

Income tax benefit related to foreign currency translation adjustments
1,160

 
1,551

Net unrealized losses on hedging activities
(53,526
)
 
(56,731
)
Reclassification of net unrealized losses (gains) on hedging activities to interest expense
14,653

 
(2,723
)
Income tax benefit related to hedging activities
9,289

 
14,512

Other, net of tax
243

 
128

Other comprehensive loss
(149,834
)
 
(30,361
)
 
 
 
 
Comprehensive income
40,216

 
218,884

Comprehensive income attributable to noncontrolling interests
(7,888
)
 
(15,815
)
Comprehensive income attributable to Global Payments
$
32,328

 
$
203,069


See Notes to Unaudited Consolidated Financial Statements.



5

Table of Contents

GLOBAL PAYMENTS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
June 30, 2020
 
December 31, 2019
 
(Unaudited)
 
 
ASSETS
 
  
 

Current assets:
 
  
 

Cash and cash equivalents
$
1,825,625

 
$
1,678,273

Accounts receivable, net
788,697

 
895,232

Settlement processing assets
1,314,811

 
1,353,778

Prepaid expenses and other current assets
422,208

 
439,165

Total current assets
4,351,341

  
4,366,448

Goodwill
23,679,923

  
23,759,740

Other intangible assets, net
12,538,621

  
13,154,655

Property and equipment, net
1,477,635

  
1,382,802

Deferred income taxes
6,220

 
6,292

Other noncurrent assets
1,947,737

  
1,810,225

Total assets
$
44,001,477

  
$
44,480,162

LIABILITIES AND EQUITY
 
  
 
Current liabilities:
 
  
 
Settlement lines of credit
$
439,474

 
$
463,237

Current portion of long-term debt
833,334

 
35,137

Accounts payable and accrued liabilities
1,606,028

  
1,822,166

Settlement processing obligations
1,350,507

 
1,258,806

Total current liabilities
4,229,343

  
3,579,346

Long-term debt
8,440,267

 
9,090,364

Deferred income taxes
2,972,142

  
3,145,641

Other noncurrent liabilities
726,736

  
609,822

Total liabilities
16,368,488

  
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 June 30, 2020 and December 31, 2019; 299,244,326 issued and outstanding at June 30, 2020 and 300,225,590 issued and outstanding at December 31, 2019

  

Paid-in capital
25,570,582

  
25,833,307

Retained earnings
2,314,423

  
2,333,011

Accumulated other comprehensive loss
(459,146
)
  
(310,571
)
Total Global Payments shareholders’ equity
27,425,859

  
27,855,747

Noncontrolling interests
207,130

 
199,242

Total equity
27,632,989

 
28,054,989

Total liabilities and equity
$
44,001,477

  
$
44,480,162


See Notes to Unaudited Consolidated Financial Statements.

6

Table of Contents

GLOBAL PAYMENTS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Six Months Ended
 
June 30, 2020
 
June 30, 2019
Cash flows from operating activities:
 
 
 
Net income
$
190,050

 
$
249,245

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization of property and equipment
172,229

 
82,760

Amortization of acquired intangibles
628,264

 
210,993

Amortization of capitalized contract costs
38,070

 
31,965

Share-based compensation expense
62,805

 
27,914

Provision for operating losses and bad debts
66,921

 
18,637

Noncash lease expense
47,770

 
17,989

Deferred income taxes
(96,458
)
 
(6,483
)
Other, net
(14,218
)
 
4,480

Changes in operating assets and liabilities, net of the effects of business combinations:
 
 
 
Accounts receivable
56,186

 
(49,774
)
Settlement processing assets and obligations, net
136,453

 
(41,715
)
Prepaid expenses and other assets
(97,653
)
 
(148,435
)
Accounts payable and other liabilities
(230,130
)
 
(150,223
)
Net cash provided by operating activities
960,289

 
247,353

Cash flows from investing activities:
 
 
 
Acquisitions, net of cash acquired
(74,095
)
 
(78,245
)
Capital expenditures
(208,384
)
 
(133,312
)
Other, net
12,188

 
13,182

Net cash used in investing activities
(270,291
)
 
(198,375
)
Cash flows from financing activities:
 
 
 
Net (repayments of) borrowings from settlement lines of credit
(25,546
)
 
32,163

Proceeds from long-term debt
1,867,008

 
586,000

Repayments of long-term debt
(1,809,199
)
 
(569,119
)
Payments of debt issuance costs
(8,006
)
 

Repurchases of common stock
(421,162
)
 
(233,996
)
Proceeds from stock issued under share-based compensation plans
42,632

 
12,952

Common stock repurchased - share-based compensation plans
(39,226
)
 
(11,167
)
Distributions to noncontrolling interests

 
(26,239
)
Dividends paid
(116,591
)
 
(3,137
)
Net cash used in financing activities
(510,090
)
 
(212,543
)
Effect of exchange rate changes on cash
(32,556
)
 
414

Increase (decrease) in cash and cash equivalents
147,352

 
(163,151
)
Cash and cash equivalents, beginning of the period
1,678,273

 
1,210,878

Cash and cash equivalents, end of the period
$
1,825,625

 
$
1,047,727


See Notes to Unaudited Consolidated Financial Statements.

7

Table of Contents

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 March 31, 2020
299,010

 
$
25,525,184

 
$
2,335,407

 
$
(539,780
)
 
$
27,320,811

 
$
199,622

 
$
27,520,433

Net income
 
 
 
 
37,331

 
 
 
37,331

 
2,113

 
39,444

Other comprehensive income
 
 
 
 
 
 
80,634

 
80,634

 
5,395

 
86,029

Stock issued under share-based compensation plans
257

 
14,349

 
 
 
 
 
14,349

 
 
 
14,349

Common stock repurchased - share-based compensation plans
(23
)
 
(3,934
)
 
 
 
 
 
(3,934
)
 
 
 
(3,934
)
Share-based compensation expense
 
 
34,983

 
 
 
 
 
34,983

 
 
 
34,983

Cash dividends declared ($0.195 per share)
 
 
 
 
(58,315
)
 
 
 
(58,315
)
 
 
 
(58,315
)
Balance at June 30, 2020
299,244

 
$
25,570,582

 
$
2,314,423

 
$
(459,146
)
 
$
27,425,859

 
$
207,130

 
$
27,632,989


 
Number of Shares 
 
Paid-in Capital 
 
Retained Earnings 
 
Accumulated Other Comprehensive Loss
 
Total Global Payments Shareholders’ Equity 
 
Noncontrolling Interests
 
Total Equity
Balance at March 31, 2019
157,130

 
$
2,151,623

 
$
2,111,798

 
$
(312,608
)
 
$
3,950,813

 
$
191,648

 
$
4,142,461

Net income
 
 
 
 
120,458

 
 
 
120,458

 
9,581

 
130,039

Other comprehensive (loss) income
 
 
 
 
 
 
(27,298
)
 
(27,298
)
 
3,948

 
(23,350
)
Stock issued under share-based compensation plans
67

 
5,104

 
 
 
 
 
5,104

 
 
 
5,104

Common stock repurchased - share-based compensation plans
(9
)
 
(1,406
)
 
 
 
 
 
(1,406
)
 
 
 
(1,406
)
Share-based compensation expense
 
 
16,497

 
 
 
 
 
16,497

 
 
 
16,497

Distributions to noncontrolling interest

 


 


 


 

 
(20,665
)
 
(20,665
)
Repurchases of common stock
(513
)
 
(45,753
)
 
(26,246
)
 
 
 
(71,999
)
 
 
 
(71,999
)
Cash dividends declared ($0.01 per share)
 
 
 
 
(1,565
)
 
 
 
(1,565
)
 
 
 
(1,565
)
Balance at June 30, 2019
156,675

 
$
2,126,065

 
$
2,204,445

 
$
(339,906
)
 
$
3,990,604

 
$
184,512

 
$
4,175,116


See Notes to Unaudited Consolidated Financial Statements.




8

Table of Contents

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
 
 
 
 
180,903

 
 
 
180,903

 
9,147

 
190,050

Other comprehensive loss
 
 
 
 
 
 
(148,575
)
 
(148,575
)
 
(1,259
)
 
(149,834
)
Stock issued under share-based compensation plans
1,339

 
42,632

 
 
 
 
 
42,632

 
 
 
42,632

Common stock repurchased - share-based compensation plans
(226
)
 
(41,721
)
 
 
 
 
 
(41,721
)
 
 
 
(41,721
)
Share-based compensation expense
 
 
62,805

 
 
 
 
 
62,805

 
 
 
62,805

Repurchase of common stock
(2,095
)
 
(326,441
)
 
(77,521
)
 
 
 
(403,962
)
 
 
 
(403,962
)
Dividends paid ($0.39 per share)
 
 
 
 
(116,591
)
 
 
 
(116,591
)
 
 
 
(116,591
)
Balance at June 30, 2020
299,244

 
$
25,570,582

 
$
2,314,423

 
$
(459,146
)
 
$
27,425,859

 
$
207,130

 
$
27,632,989


 
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
 
 
 
 
232,800

 
 
 
232,800

 
16,445

 
249,245

Other comprehensive loss
 
 
 
 
 
 
(29,731
)
 
(29,731
)
 
(630
)
 
(30,361
)
Stock issued under share-based compensation plans
609

 
12,952

 
 
 
 
 
12,952

 
 
 
12,952

Common stock repurchased - share-based compensation plans
(88
)
 
(11,606
)
 
 
 
 
 
(11,606
)
 
 
 
(11,606
)
Share-based compensation expense
 
 
27,914

 
 
 
 
 
27,914

 
 
 
27,914

Distributions to noncontrolling interest
 
 
 
 
 
 
 
 

 
(26,239
)
 
(26,239
)
Repurchase of common stock
(1,808
)
 
(138,362
)
 
(91,633
)
 
 
 
(229,995
)
 
 
 
(229,995
)
Dividends paid ($0.02 per share)
 
 
 
 
(3,137
)
 
 
 
(3,137
)
 
 
 
(3,137
)
Balance at June 30, 2019
156,675

 
$
2,126,065

 
$
2,204,445

 
$
(339,906
)
 
$
3,990,604

 
$
184,512

 
$
4,175,116


See Notes to Unaudited Consolidated Financial Statements.


9

Table of Contents

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.

COVID-19 Update

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 implemented measures in an effort to contain the virus, including physical distancing, travel restrictions, border closures, limitations on public gatherings, work from home and closure of nonessential businesses. The effects of the outbreak are still evolving, and the ultimate severity and duration of the pandemic and the implications on global economic conditions remains uncertain.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. 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.


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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 following the internal-use software capitalization criteria within Accounting Standards Codification ("ASC") Subtopic 350-40.

We adopted ASU 2018-15 on January 1, 2020, applying the guidance prospectively to all implementation costs incurred on or 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 capitalized 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 model required by ASU 2016-13, we recognize at asset inception and each subsequent reporting date an estimate of credit losses expected to occur over the remaining life of each pool of financial assets with similar risk characteristics.
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 June 30, 2020, the total allowance for credit losses was approximately $39.9 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 to be 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 ASC 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 consistency in 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. Based upon the analysis performed to date, we do not believe the adoption of ASU 2019-12 will have a material effect 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

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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 ASC Topic or Industry Subtopic that contains the guidance that otherwise would be required to be applied. The amendments in this update were effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are evaluating the effect of ASU 2020-04 on our consolidated financial statements.

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 June 30, 2020, including a reconciliation to the total purchase consideration, were as follows:
 
 
Provisional Amounts at December 31, 2019
 
Measurement-Period Adjustments
 
Provisional Amounts at
June 30, 2020
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
446,009

 
$

 
$
446,009

Accounts receivable
 
442,848

 
(2,860
)
 
439,988

Identified intangible assets
 
10,980,000

 
978

 
10,980,978

Property and equipment
 
644,084

 
(978
)
 
643,106

Other assets
 
1,474,825

 
(4,120
)
 
1,470,705

Accounts payable and accrued liabilities
 
(614,060
)
 
4,333

 
(609,727
)
Debt
 
(3,295,342
)
 
4,787

 
(3,290,555
)
Deferred income tax liabilities
 
(2,687,849
)
 
63,419

 
(2,624,430
)
Other liabilities
 
(314,415
)
 

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

 
65,559

 
7,141,659

Goodwill
 
17,398,853

 
(65,559
)
 
17,333,294

Total purchase consideration
 
$
24,474,953

 
$

 
$
24,474,953



As of June 30, 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. During the six months ended June 30, 2020, we made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $65.6 million. The decrease in deferred income tax liabilities for the six months ended June 30, 2020 primarily relates to a refined analysis of the outside bases of partnerships. The effects of the measurement-period adjustments on our consolidated statements of income for the three and six months ended June 30, 2020 were not material.

As of June 30, 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 and six months ended June 30, 2019 as if the Merger had occurred on January 1, 2018. The unaudited pro forma information is presented for informational purposes

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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.
 
Three Months Ended
June 30, 2019
 
Six Months Ended
June 30, 2019
 
Actual
 
Pro Forma
 
Actual
 
Pro Forma
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
Total revenues
$
935,152

 
$
1,963,663

 
$
1,818,190

 
$
3,873,433

Net income attributable to Global Payments
$
120,458

 
$
207,336

 
$
232,800

 
$
395,201



For the three and six months ended June 30, 2020, the acquired operations of TSYS contributed $997.0 million and $2,052.0 million, respectively, to our consolidated revenues and $103.8 million and $219.3 million, respectively, to our consolidated operating income.

At June 30, 2020, accounts payable and accrued liabilities in the consolidated balance sheet included obligations totaling $37.7 million for employee termination benefits resulting from Merger-related integration activities. During the three months ended June 30, 2020, we recognized charges for employee termination benefits of $24.1 million, which included $1.7 million of share-based compensation expense. During the six months ended June 30, 2020, we recognized charges for employee termination benefits of $41.7 million, which included $4.2 million of share-based compensation expense. As of June 30, 2020, the cumulative amount of recognized charges for employee termination benefits resulting from Merger-related integration activities was $98.8 million, which included $21.6 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.


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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 and six months ended June 30, 2020 and 2019:
 
Three Months Ended June 30, 2020
 
Merchant Solutions
 
Issuer
Solutions
 
Business and Consumer Solutions
 
Intersegment Eliminations
 
Total
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Americas
$
862,927

 
$
363,140

 
$
216,722

 
$
(14,728
)
 
$
1,428,061

Europe
102,460

 
105,263

 

 

 
207,723

Asia Pacific
36,168

 
1,622

 

 
(1,622
)
 
36,168

 
$
1,001,555

 
$
470,025

 
$
216,722

 
$
(16,350
)
 
$
1,671,952



 
Three Months Ended June 30, 2019
 
Merchant Solutions
 
Issuer
Solutions
 
Business and Consumer Solutions
 
Intersegment Eliminations
 
Total
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Americas
$
715,919

 
$

 
$

 
$

 
$
715,919

Europe
155,111

 
5,238

 

 

 
160,349

Asia Pacific
58,884

 

 

 

 
58,884

 
$
929,914

 
$
5,238

 
$

 
$

 
$
935,152




 
Six Months Ended June 30, 2020
 
Merchant Solutions
 
Issuer
Solutions
 
Business and Consumer Solutions
 
Intersegment Eliminations
 
Total
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Americas
$
1,887,433

 
$
756,893

 
$
420,668

 
$
(32,461
)
 
$
3,032,533

Europe
238,459

 
213,626

 

 

 
452,085

Asia Pacific
90,932

 
3,268

 

 
(3,268
)
 
90,932

 
$
2,216,824

 
$
973,787

 
$
420,668

 
$
(35,729
)
 
$
3,575,550


 
Six Months Ended June 30, 2019
 
Merchant Solutions
 
Issuer
Solutions
 
Business and Consumer Solutions
 
Intersegment Eliminations
 
Total
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Americas
$
1,394,341

 
$

 
$

 
$

 
$
1,394,341

Europe
292,724

 
10,494

 

 

 
303,218

Asia Pacific
120,631

 

 

 

 
120,631

 
$
1,807,696

 
$
10,494

 
$

 
$

 
$
1,818,190



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The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three and six months ended June 30, 2020 and 2019:
 
Three Months Ended
 
Six Months Ended
 
June 30, 2020
 
June 30, 2019
 
June 30, 2020
 
June 30, 2019
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
Relationship-led
$
566,414

 
$
502,239

 
$
1,242,935