Document

3550 Lenox Road

(Address of principal executive offices)

(Zip Code)

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



☐		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

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.)

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.

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GLOBAL PAYMENTS INC.

FORM 10-Q

For the quarterly period ended June 30, 2020

TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Unaudited Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2019	3
	Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019	5
	Consolidated Balance Sheets at June 30, 2020 (unaudited) and December 31, 2019	6
	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	7
	Unaudited Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2020 and 2019	8
	Notes to Unaudited Consolidated Financial Statements	10
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	36
ITEM 4.	Controls and Procedures	36
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	37
ITEM 1A.	Risk Factors	37
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
ITEM 6.	Exhibits	39
	Signatures	40

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—BASIS 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") 2018-15— 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 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 2019-12—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 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 2020-04—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

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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 2—ACQUISITIONS

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 3—REVENUES

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