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, 2019~~March 31, 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	~~Ticker~~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	☐		~~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 25, 2019~~May 1, 2020 was ~~156,678,101~~299,105,721.

GLOBAL PAYMENTS INC.

FORM 10-Q

For the quarterly period ended ~~June 30, 2019~~March 31, 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,~~March 31, 2020 and 2019 ~~and 2018~~	3
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	54
	Consolidated Balance Sheets at ~~June 30, 2019~~March 31, 2020 (unaudited) and December 31, ~~2018~~2019	65
	Unaudited Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	76
	Unaudited Consolidated Statements of Changes in Equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	97
	Notes to Unaudited Consolidated Financial Statements	108
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2622
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3530
ITEM 4.	Controls and Procedures	3531
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	3632
ITEM 1A.	Risk Factors	3632
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3833
ITEM 6.	Exhibits	3934
	Signatures	4035

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, 2019 June 30, 2018

Revenues $ 935,152
$ 833,164
Operating expenses:
Cost of service 302,276
264,544
Selling, general and administrative 411,150
377,883
713,426
642,427
Operating income 221,726
190,737

Interest and other income 6,176
2,568
Interest and other expense (65,616 ) (47,720 )
(59,440 ) (45,152 )
Income before income taxes 162,286
145,585
Provision for income taxes (32,247 ) (27,856 )
Net income 130,039
117,729
Net income attributable to noncontrolling interests, net of income tax (9,581 ) (8,660 )
Net income attributable to Global Payments $ 120,458
$ 109,069

Earnings per share attributable to Global Payments:
Basic earnings per share $ 0.77
$ 0.69
Diluted earnings per share $ 0.77
$ 0.68

~~See Notes to Unaudited Consolidated Financial Statements.~~

~~GLOBAL PAYMENTS INC.~~

~~UNAUDITED CONSOLIDATED STATEMENTS OF INCOME~~

~~(in thousands, except per share data)~~


	Six Months Ended						Three Months Ended
	June 30, 2019			June 30, 2018			March 31, 2020			March 31, 2019

Revenues	$	1,818,190		$	1,628,141		$	1,903,598		$	883,039
Operating expenses:
Cost of service	607,505			516,930			933,871			305,230
Selling, general and administrative	789,467			764,304			725,748			378,317
	1,396,972			1,281,234			1,659,619			683,547
Operating income	421,218			346,907			243,979			199,492

Interest and other income	9,112			14,262			2,506			2,934
Interest and other expense	(124,697		)	(93,325		)	(92,644		)	(59,081		)
	(115,585		)	(79,063		)	(90,138		)	(56,147		)
Income before income taxes	305,633			267,844
Provision for income taxes	(56,388		)	(52,529		)
Income before income taxes and equity in income of equity method investments							153,841			143,345
Income tax expense							(15,502		)	(24,140		)
Income before equity in income of equity method investments							138,339			119,205
Equity in income of equity method investments, net of tax							12,269			—
Net income	249,245			215,315			150,608			119,205
Net income attributable to noncontrolling interests, net of income tax	(16,445		)	(14,847		)
Net income attributable to noncontrolling interests, net of tax							(7,033		)	(6,864		)
Net income attributable to Global Payments	$	232,800		$	200,468		$	143,575		$	112,341

Earnings per share attributable to Global Payments:
Basic earnings per share	$	1.48		$	1.26		$	0.48		$	0.71
Diluted earnings per share	$	1.48		$	1.25		$	0.48		$	0.71

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Three Months Ended
June 30, 2019 June 30, 2018

Net income $ 130,039
$ 117,729
Other comprehensive income (loss):
Foreign currency translation adjustments 7,704
(78,550 )
Income tax benefit (provision) related to foreign currency translation adjustments 1,517
(763 )
Net unrealized gains (losses) on hedging activities (42,222 ) 2,932
Reclassification of net unrealized gains on hedging activities to interest expense (893 ) (1,104 )
Income tax benefit (provision) related to hedging activities 10,527
(445 )
Other, net of tax 17
52
Other comprehensive loss (23,350 ) (77,878 )

Comprehensive income 106,689
39,851
Comprehensive (income) loss attributable to noncontrolling interests (13,529 ) 2,551
Comprehensive income attributable to Global Payments $ 93,160
$ 42,402



	Three Months Ended
	March 31, 2020			March 31, 2019

Net income	$	150,608		$	119,205
Other comprehensive income (loss):
Foreign currency translation adjustments	(204,111		)	5,196
Income tax benefit related to foreign currency translation adjustments	1,007			34
Net unrealized losses on hedging activities	(47,896		)	(14,509		)
Reclassification of net unrealized losses (gains) on hedging activities to interest expense	4,671			(1,830		)
Income tax benefit related to hedging activities	10,346			3,985
Other, net of tax	121			111
Other comprehensive loss	(235,862		)	(7,013		)

Comprehensive (loss) income	(85,254		)	112,192
Comprehensive income attributable to noncontrolling interests	(380		)	(2,284		)
Comprehensive (loss) income attributable to Global Payments	$	(85,634	)	$	109,908

Six Months Ended
June 30, 2019 June 30, 2018

Net income $ 249,245
$ 215,315
Other comprehensive income (loss):
Foreign currency translation adjustments 12,902
(65,225 )
Income tax benefit (provision) related to foreign currency translation adjustments 1,551
(365 )
Net unrealized gains (losses) on hedging activities (56,731 ) 10,508
Reclassification of net unrealized gains on hedging activities to interest expense (2,723 ) (1,167 )
Income tax benefit (provision) related to hedging activities 14,512
(2,310 )
Other, net of tax 128
—
Other comprehensive loss (30,361 ) (58,559 )

Comprehensive income 218,884
156,756
Comprehensive income attributable to noncontrolling interests (15,815 ) (14,930 )
Comprehensive income attributable to Global Payments $ 203,069
$ 141,826

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,047,727		$	1,210,878		$	1,800,061		$	1,678,273
Accounts receivable, net	394,603			348,400			799,798			895,232
Settlement processing assets	2,844,267			1,600,222			1,046,288			1,353,778
Prepaid expenses and other current assets	261,082			216,708			423,523			439,165
Total current assets	4,547,679			3,376,208			4,069,670			4,366,448
Goodwill	6,345,563			6,341,355			23,662,373			23,759,740
Other intangible assets, net	2,308,333			2,488,618			12,814,791			13,154,655
Property and equipment, net	712,396			653,542			1,441,910			1,382,802
Deferred income taxes	6,950			8,128			6,778			6,292
Other noncurrent assets	663,151			362,923			1,854,076			1,810,225
Total assets	$	14,584,072		$	13,230,774		$	43,849,598		$	44,480,162
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit	$	736,209		$	700,486		$	375,182		$	463,237
Current portion of long-term debt	151,062			115,075			70,551			35,137
Accounts payable and accrued liabilities	1,117,938			1,176,703			1,636,823			1,822,166
Settlement processing obligations	2,478,373			1,276,356			953,723			1,258,806
Total current liabilities	4,483,582			3,268,620			3,036,279			3,579,346
Long-term debt	5,000,585			5,015,168			9,636,076			9,090,364
Deferred income taxes	556,130			585,025			3,024,409			3,145,641
Other noncurrent liabilities	368,659			175,618			632,401			609,822
Total liabilities	10,408,956			9,044,431			16,329,165			16,425,173
Commitments and contingencies
Equity:
Preferred stock, no par value; 5,000,000 shares authorized and none issued	—			—			—			—
Common stock, no par value; 200,000,000 shares authorized; 156,674,688 issued and outstanding at June 30, 2019 and 157,961,982 issued and outstanding at December 31, 2018	—			—
Common stock, no par value; 400,000,000 shares authorized at March 31, 2020 and December 31, 2019; 299,010,257 issued and outstanding at March 31, 2020 and 300,225,590 issued and outstanding at December 31, 2019							—			—
Paid-in capital	2,126,065			2,235,167			25,525,184			25,833,307
Retained earnings	2,204,445			2,066,415			2,335,407			2,333,011
Accumulated other comprehensive loss	(339,906		)	(310,175		)	(539,780		)	(310,571		)
Total Global Payments shareholders’ equity	3,990,604			3,991,407			27,320,811			27,855,747
Noncontrolling interests	184,512			194,936			199,622			199,242
Total equity	4,175,116			4,186,343			27,520,433			28,054,989
Total liabilities and equity	$	14,584,072		$	13,230,774		$	43,849,598		$	44,480,162

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended
June 30, 2019 June 30, 2018
Cash flows from operating activities:
Net income $ 249,245
$ 215,315
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 82,760
69,088
Amortization of acquired intangibles 210,993
176,303
Amortization of capitalized contract costs 31,965
23,835
Share-based compensation expense 27,914
30,104
Provision for operating losses and bad debts 18,637
22,942
Deferred income taxes (6,483 ) (3,061 )
Other, net 22,469
(6,228 )
Changes in operating assets and liabilities, net of the effects of business combinations:
Accounts receivable (49,774 ) (21,763 )
Settlement processing assets and obligations, net (41,715 ) 95,232
Prepaid expenses and other assets (148,435 ) (92,154 )
Accounts payable and other liabilities (150,223 ) (2,857 )
Net cash provided by operating activities 247,353
506,756
Cash flows from investing activities:
Acquisitions, net of cash acquired (78,245 ) —
Capital expenditures (133,312 ) (102,669 )
Other, net 13,182
(1,436 )
Net cash used in investing activities (198,375 ) (104,105 )
Cash flows from financing activities:
Net borrowings (repayments) of settlement lines of credit 32,163
(88,325 )
Proceeds from long-term debt 586,000
694,214
Repayments of long-term debt (569,119 ) (1,024,695 )
Payment of debt issuance costs —
(10,884 )
Repurchase of common stock (233,996 ) (177,261 )
Proceeds from stock issued under share-based compensation plans 12,952
6,340
Common stock repurchased - share-based compensation plans (11,167 ) (9,989 )
Distributions to noncontrolling interests (26,239 ) —
Dividends paid (3,137 ) (3,171 )
Net cash used in financing activities (212,543 ) (613,771 )
Effect of exchange rate changes on cash 414
(25,206 )
Decrease in cash and cash equivalents (163,151 ) (236,326 )
Cash and cash equivalents, beginning of the period 1,210,878
1,335,855
Cash and cash equivalents, end of the period $ 1,047,727
$ 1,099,529



	Three Months Ended
	March 31, 2020			March 31, 2019
Cash flows from operating activities:
Net income	$	150,608		$	119,205
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	83,573			41,155
Amortization of acquired intangibles	314,245			107,475
Amortization of capitalized contract costs	18,738			15,847
Share-based compensation expense	27,822			11,418
Provision for operating losses and bad debts	37,629			12,709
Noncash lease expense	25,924			8,976
Deferred income taxes	(47,957		)	(5,774		)
Other, net	(11,757		)	67
Changes in operating assets and liabilities, net of the effects of business combinations:
Accounts receivable	47,624			(36,493		)
Settlement processing assets and obligations, net	12,966			118,347
Prepaid expenses and other assets	(53,540		)	(76,740		)
Accounts payable and other liabilities	(169,301		)	(86,463		)
Net cash provided by operating activities	436,574			229,729
Cash flows from investing activities:
Acquisitions, net of cash acquired	(67,196		)	(74,830		)
Capital expenditures	(104,802		)	(55,123		)
Other, net	2,348			13,672
Net cash used in investing activities	(169,650		)	(116,281		)
Cash flows from financing activities:
Net repayments of settlement lines of credit	(78,092		)	(55,350		)
Proceeds from long-term debt	607,000			344,000
Repayments of long-term debt	(110,978		)	(173,060		)
Repurchases of common stock	(421,162		)	(155,997		)
Proceeds from stock issued under share-based compensation plans	28,283			7,848
Common stock repurchased - share-based compensation plans	(44,253		)	(9,507		)
Distributions to noncontrolling interests	—			(5,572		)
Dividends paid	(58,279		)	(1,571		)
Net cash used in financing activities	(77,481		)	(49,209		)
Effect of exchange rate changes on cash	(67,655		)	2,516
Increase in cash and cash equivalents	121,788			66,755
Cash and cash equivalents, beginning of the period	1,678,273			1,210,878
Cash and cash equivalents, end of the period	$	1,800,061		$	1,277,633

See Notes to Unaudited Consolidated Financial Statements.

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, 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 income (loss) (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 )
Repurchase of common stock (513 ) (45,753 ) (26,246 ) (71,999 ) (71,999 )
Dividends paid ($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



	Number of Shares		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Global Payments Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2019	300,226		$	25,833,307		$	2,333,011		$	(310,571	)	$	27,855,747		$	199,242		$	28,054,989
Cumulative effect of adoption of new accounting standard						(5,379		)				(5,379		)				(5,379		)
Net income						143,575						143,575			7,033			150,608
Other comprehensive loss									(229,209		)	(229,209		)	(6,653		)	(235,862		)
Stock issued under share-based compensation plans	1,082		28,283									28,283						28,283
Common stock repurchased - share-based compensation plans	(203	)	(37,787		)							(37,787		)				(37,787		)
Share-based compensation expense			27,822									27,822						27,822
Repurchases of common stock	(2,095	)	(326,441		)	(77,521		)				(403,962		)				(403,962		)
Cash dividends declared ($0.195 per share)						(58,279		)				(58,279		)				(58,279		)
Balance at March 31, 2020	299,010		$	25,525,184		$	2,335,407		$	(539,780	)	$	27,320,811		$	199,622		$	27,520,433


	Number of Shares		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Global Payments Shareholders’ Equity			Noncontrolling Interests			Total Equity			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, 2018	159,533		$	2,390,022		$	1,738,545		$	(176,961	)	$	3,951,606		$	188,184		$	4,139,790
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						109,069						109,069			8,660			117,729								112,341						112,341			6,864			119,205
Other comprehensive loss									(66,668		)	(66,668		)	(11,210		)	(77,878		)									(2,433		)	(2,433		)	(4,580		)	(7,013		)
Stock issued under share-based compensation plans	151		3,727									3,727						3,727			542		7,848									7,848						7,848
Common stock repurchased - share-based compensation plans	(10	)	(1,078		)							(1,078		)				(1,078		)	(79	)	(10,200		)							(10,200		)				(10,200		)
Share-based compensation expense			15,206									15,206						15,206					11,418									11,418						11,418
Repurchase of common stock	(1,603	)	(153,094		)	(26,823		)				(179,917		)				(179,917		)
Dividends paid ($0.01 per share)						(1,578		)				(1,578		)				(1,578		)
Balance at June 30, 2018	158,071		$	2,254,783		$	1,819,213		$	(243,629	)	$	3,830,367		$	185,634		$	4,016,001
Distributions to noncontrolling interest																																—			(5,572		)	(5,572		)
Repurchases of common stock																					(1,295	)	(92,610		)	(65,387		)				(157,997		)				(157,997		)
Cash dividends declared ($0.01 per share)																										(1,571		)				(1,571		)				(1,571		)
Balance at March 31, 2019																					157,130		$	2,151,623		$	2,111,798		$	(312,608	)	$	3,950,813		$	191,648		$	4,142,461

See Notes to Unaudited Consolidated Financial Statements.

~~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, 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

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, 2017 159,180
$ 2,379,774
$ 1,597,897
$ (183,144 ) $ 3,794,527
$ 170,704
$ 3,965,231
Cumulative effect of adoption of new accounting standard 50,970
(1,843 ) 49,127
49,127
Net income 200,468
200,468
14,847
215,315
Other comprehensive income (loss) (58,642 ) (58,642 ) 83
(58,559 )
Stock issued under share-based compensation plans 570
6,340

6,340
6,340
Common stock repurchased - share-based compensation plans (67 ) (7,489 ) (7,489 ) (7,489 )
Share-based compensation expense 30,104
30,104
30,104
Repurchase of common stock (1,612 ) (153,946 ) (26,951 ) (180,897 ) (180,897 )
Dividends paid ($0.02 per share) (3,171 ) (3,171 ) (3,171 )
Balance at June 30, 2018 158,071
$ 2,254,783
$ 1,819,213
$ (243,629 ) $ 3,830,367
$ 185,634
$ 4,016,001

~~See Notes to Unaudited Consolidated Financial Statements.~~

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 ~~worldwide provider of payment~~pure play payments technology ~~and~~company delivering innovative software ~~solutions delivering innovative~~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 ~~accept various payment types and~~ operate their businesses more ~~efficiently. We distribute our services~~efficiently across a variety of channels ~~in 32 countries throughout North America, Europe,~~around the ~~Asia-Pacific region and Brazil and~~world. We operate in ~~three~~3 reportable segments: ~~North America, Europe~~Merchant Solutions, Issuer Solutions and ~~Asia-Pacific.~~

~~We were incorporated~~Business and Consumer Solutions, which are described in ~~Georgia as Global Payments Inc. in~~ ~~2000~~ ~~and spun-off from our former parent company in~~ ~~2001. Including our time as part of our former parent company, we have been in the payment technology services business since~~ ~~1967~~."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, ~~2018~~2019 was derived from the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~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, ~~2018.~~2019.

~~On May 27, 2019, Global Payments~~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 ~~Total System Services, Inc. ("TSYS") entered into an Agreement and Plan of Merger ("Merger Agreement") providing for the merger of TSYS with and into Global Payments, with Global Payments~~markets worldwide as the ~~surviving entity (the "Merger"). TSYS is a leading global payments provider, offering seamless, secure~~virus continues to spread. A number of countries as well as many states and ~~innovative solutions across~~cities within the ~~payments spectrum - for issuers, merchants~~United States have enacted temporary closures of businesses, issued quarantine or shelter-in-place orders and ~~consumers. The Merger is subject~~taken other restrictive measures in response to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, including shareholder approval for both companies. Upon completion of the Merger, TSYS will no longer be a separate publicly traded corporation. Global Payments will continue to trade on the New York Stock Exchange. See "Note 2—Acquisitions" and "Note 7—Long-Term Debt and Lines of Credit" for further information about the proposed Merger and related debt financing.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

~~Recently Adopted~~ Accounting ~~Pronouncements~~Standards Update ("ASU") 2018-15— In ~~February 2016,~~August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, "Leases." ASU 2016-02 requires recognition of assets and liabilities for the rights and obligations created by leases and new disclosures about leases. We adopted ASU 2016-02, as well as other related clarifications and interpretive guidance issued by the FASB, on January 1, 2019 using the optional modified retrospective transition method. Under this transition method, we did not recast the prior period financial statements presented. We elected the transition package of three practical expedients, which among other things, allowed for the carryforward of historical lease classifications. We made accounting policy elections to not recognize assets or liabilities for leases with a term of less than twelve months and to account for all components in a lease arrangement as a single combined lease component.

The adoption of ASU 2016-02 resulted in the measurement and recognition of lease liabilities in the amount of $274.0 million and right-of-use assets in the amount of $236.0 million as of January 1, 2019. Lease liabilities were measured as the present value of remaining lease payments, and the corresponding right-of-use assets were measured at an amount equal to the lease liabilities

adjusted by the amounts of certain assets and liabilities, such as deferred lease obligations and prepaid rent, that we previously recognized on the balance sheet prior to the initial application of ASU 2016-02. To calculate the present value of remaining lease payments, we elected to use an incremental borrowing rate based on the remaining lease term at transition.

~~Recently Issued Pronouncements Not Yet Adopted~~— ~~In August 2018, the 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.

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 ~~for internal-use software projects~~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 ~~expect to~~ amortize deferred implementation costs to expense on a straight-line basis over the term of the applicable hosting arrangement. The amendments in this update also provide additional presentation and disclosure requirements, including requirements to disclose the nature of an entity’s hosting arrangements that are service contracts, as well as quantitative information about capitalized implementation costs and related amortization expense. The guidance will become effective for us on January 1, 2020. Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively.

ASU 2016-13— We are comparing the guidance in ASU 2018-15 to our current accounting practices for costs of implementation activities performed in cloud computing arrangements. We have not yet quantified the effect, if any, of ASU 2018-15 on our consolidated balance sheet or our statements of income and cash flows.

~~In June 2016, the FASB issued~~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 ~~change~~changed how ~~companies~~we measure and recognize credit impairment for ~~many~~certain financial instruments measured at amortized cost. ~~The new model for~~Under the current expected credit losses ("CECL") ~~will require us to immediately~~model, we recognize an estimate of credit losses expected to occur over the remaining life of ~~the~~each pool of financial ~~instruments that are within the scope of the update, including~~assets with similar risk characteristics.

We have exposure to credit losses for financial assets such as accounts receivable, ~~and~~certain settlement processing assets, ~~each~~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 ~~short-term~~deemed uncollectible. Recoveries are recorded when received as a direct credit to the credit loss expense in ~~nature. Under current GAAP,~~the consolidated statements of income. Prior to the adoption of ASU 2016-13, credit losses on these financial instruments ~~are not~~were recognized ~~until their~~when an occurrence iswas 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 ~~will become~~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 ~~us on January 1, 2020. In general, the new guidance will require modified retrospective application to all outstanding financial assets that are~~annual and interim periods beginning after December 15, 2020, with early adoption permitted in ~~the scope of the update, with a cumulative-effect adjustment, if~~ any ~~recorded to retained earnings as of the date of adoption.~~interim period. We are evaluating the effect of ASU 2016-13 on our consolidated financial statements, including comparing how we currently measure and recognize our allowance for doubtful accounts on accounts receivable and our reserve for operating losses and sales allowances to how we would make such measurements applying the new CECL model. We have not yet quantified the effect, if any, of ASU 2016-132019-12 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.

NOTE 2—ACQUISITIONS

~~Pending Merger with TSYS~~Total System Services, Inc.

In connection with the proposed Merger, we have determined that Global Payments would be the acquirer of TSYS for accounting purposes. In the proposed Merger, holders of TSYS common stock would receive 0.8101 shares of Global Payments common stock for each share of TSYS common stock they own at the effective time of the Merger ("Exchange Ratio").

The preliminary estimated Merger consideration to be transfered to TSYS shareholders is $23.7 billion based on the number of TSYS common shares outstanding and the closing price of our common stock on July 25, 2019. Merger consideration will include the amount of TSYS' unsecured revolving credit facility that we are required to repay upon consummation of the Merger. During the three and six months ended June 30,On September 18, 2019, we ~~incurred transaction costs related to the Merger of $12.2 million.~~merged with Total System Services, Inc. ("TSYS") (the "Merger"). We expect the Merger to close in the fourth quarter of 2019, subject to customary closing conditions, regulatory approvals and shareholder approval for both companies. See "Note 7—Long-Term Debt and Lines of Credit" for a description of related debt financing activities.

~~Business Combinations~~

~~The transactions described below were~~ accounted for this transaction as a business ~~combinations,~~combination, which generally requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date.

~~SICOM~~

On October 17, 2018, we acquired SICOM Systems, Inc. ("SICOM") for total purchase consideration of $410.2 million, which we funded with cash on hand and by drawing on our Revolving Credit Facility (described in "Note 7—Long-Term Debt and Lines of Credit"). SICOM is a provider of end-to-end enterprise, cloud-based software solutions and other technologies to quick service restaurants and food service management companies.

The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of ~~June 30,~~December 31, 2019 and March 31, 2020, including a reconciliation to the total purchase consideration, were as ~~follows (in thousands):~~follows:


				Provisional Amounts at December 31, 2019			Measurement-Period Adjustments			Provisional Amounts at March 31, 2020

				(in thousands)

Cash and cash equivalents	$	7,540		$	446,009		$	—		$	446,009
Accounts receivable				442,848			(2,910		)	439,938
Identified intangible assets				10,980,000			—			10,980,000
Property and equipment	5,838			644,084			—			644,084
Identified intangible assets	188,294
Other assets	22,275			1,474,825			(4,940		)	1,469,885
Deferred income taxes	(48,560		)
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	(31,350		)	(314,415		)	—			(314,415		)
Total identifiable net assets	144,037			7,076,100			54,742			7,130,842
Goodwill	266,164			17,398,853			(54,742		)	17,344,111
Total purchase consideration	$	410,201		$	24,474,953		$	—		$	24,474,953

~~During the six months ended June 30, 2019, we made an adjustment of $1.0 million to reflect an increase in the total purchase consideration.~~ As of ~~June 30, 2019,~~March 31, 2020, we considered these ~~balances~~amounts to be provisional because we were still in the process of ~~gathering and~~ 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.

~~Goodwill~~As of March 31, 2020, provisional goodwill arising from the acquisition of ~~$266.2 million,~~$17.3 billion was included in our reportable segments as follows: $7.1 billion in the ~~North America~~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 ~~businesses. We expect that approximately $40 million of the goodwill from this acquisition will be deductible for income tax purposes.~~

~~The following table reflects the estimated fair values of the identified intangible assets of SICOM and the respective aggregated weighted-average estimated amortization periods:~~

Estimated Fair Values Weighted-Average Estimated Amortization Periods

(in thousands) (years)
Customer-related intangible assets $ 104,900
14
Acquired technologies 65,312
6
Trademarks and trade names 11,202
3
Contract-based intangible assets 6,880
5
Total estimated identified intangible assets $ 188,294
10

~~AdvancedMD~~

On September 4, 2018, we acquired AdvancedMD, Inc. ("AdvancedMD") for total purchase consideration of $706.9 million, which we funded with cash on hand and by drawing on our Revolving Credit Facility. AdvancedMD is a provider of cloud-based enterprise software solutions to small-to-medium sized ambulatory care physician practices.

The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of June 30, 2019, including a reconciliation to the total purchase consideration, were as follows (in thousands):

Cash and cash equivalents $ 7,657
Property and equipment 5,672
Identified intangible assets 419,500
Other assets 11,785
Deferred income taxes (93,372 )
Other liabilities (15,647 )
Total identifiable net assets 335,595
Goodwill 371,290
Total purchase consideration $ 706,885

During the six months ended June 30, 2019, we made measurement period adjustments, including a $5.6 million reduction to deferred income tax liabilities, which resulted in a corresponding reduction to goodwill. As of June 30, 2019, we considered these balances to be provisional because we were still in the process of gathering and reviewing information to support the valuation of the assets acquired and liabilities assumed.

Goodwill arising from the acquisition of $371.3 million, included in the North America segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining our existing businesses.business. We expect that substantially all of the goodwill from this acquisition will not be deductible for income tax purposes.

The following ~~table~~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 ~~estimated fair values~~effects of applying our accounting policies and certain pro forma adjustments to the ~~identified intangible assets~~combined historical financial information of ~~AdvancedMD~~Global Payments and ~~the respective aggregated weighted-average estimated amortization periods:~~TSYS.

Estimated Fair Values Weighted-Average Estimated Amortization Periods

(in thousands) (years)
Customer-related intangible assets $ 303,100
11
Acquired technologies 83,700
5
Trademarks and trade names 32,700
15
Total estimated identified intangible assets $ 419,500
10



	Actual		Pro Forma

	(in thousands)

Total revenues	$	883,039	$	1,909,770
Net income attributable to Global Payments	$	112,341	$	187,865

~~Valuation of Identified Intangible Assets~~

For the ~~acquisitions discussed above,~~three months ended March 31, 2020, the ~~estimated fair values~~acquired operations of ~~customer-related intangible assets were determined using the income approach, which was based on projected cash flows discounted~~TSYS contributed $1,055.0 million to ~~their present value using discount rates that consider the timing~~our consolidated revenues and risk of the forecasted cash flows. The discount rates used represented the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics. Acquired technologies were valued using the replacement cost method, which required us$115.5 million to estimate the costs to construct an asset of equivalent utility at prices available at the time of the valuation analysis, with adjustments in value for physical deterioration and functional and economic obsolescence. Trademarks and trade names were valued using the "relief-from-royalty" approach. This method assumes that trademarks and trade names have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method required us to estimate the future revenues for the related brands, the appropriate royalty rate and the weighted-average cost of capital.our consolidated operating income.

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

NOTE 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 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 ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	Three Months Ended June 30, 2019								March 31, 2020		March 31, 2019
	North America		Europe		Asia-Pacific		Total
									(in thousands)
	(in thousands)

Direct:
Relationship-led	$	301,094	$	110,655	$	30,742	$	442,491	$	676,522	$	462,387
Technology-enabled	349,839		49,694		28,142		427,675		538,747		415,396
	650,933		160,349		58,884		870,166		$	1,215,269	$	877,783
Wholesale	64,986		—		—		64,986
	$	715,919	$	160,349	$	58,884	$	935,152

Three Months Ended June 30, 2018
North America Europe Asia-Pacific Total

(in thousands)

Direct:
Relationship-led $ 244,861
$ 102,960
$ 32,371
$ 380,192
Technology-enabled 296,419
52,671
23,361
372,451
541,280
155,631
55,732
752,643
Wholesale 80,521
—
—
80,521
$ 621,801
$ 155,631
$ 55,732
$ 833,164

Six Months Ended June 30, 2019
North America Europe Asia-Pacific Total

(in thousands)

Direct:
Relationship-led $ 571,637
$ 205,220
$ 64,161
$ 841,018
Technology-enabled 691,947
97,998
56,470
846,415
1,263,584
303,218
120,631
1,687,433
Wholesale 130,757
—
—
130,757
$ 1,394,341
$ 303,218
$ 120,631
$ 1,818,190

Six Months Ended June 30, 2018
North America Europe Asia-Pacific Total

(in thousands)

Direct:
Relationship-led $ 471,281
$ 195,174
$ 67,613
$ 734,068
Technology-enabled 579,776
103,734
45,790
729,300
1,051,057
298,908
113,403
1,463,368
Wholesale 164,773
—
—
164,773
$ 1,215,830
$ 298,908
$ 113,403
$ 1,628,141

Accounting Standards Codification Topic 606,

Revenues from Contracts with Customers ("ASC ~~606~~606") requires that we determine for each customer arrangement whether revenue should be recognized at a point in time or over time. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ substantially all of our revenues were recognized over time.

Supplemental balance sheet information related to contracts from customers as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 was as follows:


	Balance Sheet Location	June 30, 2019		December 31, 2018		Balance Sheet Location	March 31, 2020		December 31, 2019

		(in thousands)					(in thousands)

Assets:
Capitalized costs to obtain customer contracts, net	Other noncurrent assets	$	210,609	$	194,616	Other noncurrent assets	$	232,030	$	226,945
Capitalized costs to fulfill customer contracts, net	Other noncurrent assets	$	19,319	$	12,954	Other noncurrent assets	$	52,573	$	38,150

Liabilities:
Contract liabilities, net (current)	Accounts payable and accrued liabilities	$	156,930	$	146,947	Accounts payable and accrued liabilities	$	187,084	$	193,405
Contract liabilities, net (noncurrent)	Other noncurrent liabilities	$	9,532	$	8,595	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 ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ from contract liability balances at the beginning of each period was ~~$52.0~~$90.8 million and ~~$37.0 million, respectively. Revenue recognized for the six months ended June 30, 2019 and 2018 from contract liability balances at the beginning of each period was $97.1 million and $69.9~~$58.5 million, respectively.

~~NOTE 4—SETTLEMENT PROCESSING ASSETS AND OBLIGATIONS~~

~~As of June 30, 2019 and December 31, 2018, settlement processing assets and obligations consisted~~ASC 606 requires disclosure of the ~~following:~~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):

June 30, 2019 December 31, 2018

(in thousands)

Settlement processing assets:
Interchange reimbursement $ 260,103
$ 154,978
Receivable from members 176,687
228,107
Receivable from networks 2,412,382
1,221,060
Exception items 11,042
7,636
Merchant reserves (15,947 ) (11,559 )
$ 2,844,267
$ 1,600,222

Settlement processing obligations:
Interchange reimbursement $ 89,895
$ 193,235
Liability to members (23,815 ) (182,450 )
Liability to merchants (2,400,467 ) (1,144,249 )
Exception items 11,505
7,146
Merchant reserves (151,450 ) (145,826 )
Reserve for operating losses and sales allowances (4,041 ) (4,212 )
$ (2,478,373 ) $ (1,276,356 )



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

NOTE 5—4—GOODWILL AND OTHER INTANGIBLE ASSETS

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, goodwill and other intangible assets consisted of the following:


	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019

	(in thousands)				(in thousands)

Goodwill	$	6,345,563	$	6,341,355	$	23,662,373	$	23,759,740
Other intangible assets:
Customer-related intangible assets	$	2,496,055	$	2,486,217	$	9,176,861	$	9,238,728
Acquired technologies	920,398		896,701		2,745,024		2,732,218
Contract-based intangible assets					1,970,443		1,974,429
Trademarks and trade names	288,003		289,588		1,237,020		1,239,471
Contract-based intangible assets	175,397		178,391
	3,879,853		3,850,897		15,129,348		15,184,846
Less accumulated amortization:
Customer-related intangible assets	970,427		860,715		1,376,969		1,225,785
Acquired technologies	429,592		351,170		670,304		576,928
Contract-based intangible assets					88,788		82,225
Trademarks and trade names	97,964		83,234		178,496		145,253
Contract-based intangible assets	73,537		67,160
	1,571,520		1,362,279		2,314,557		2,030,191
	$	2,308,333	$	2,488,618	$	12,814,791	$	13,154,655

The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the ~~six~~three months ended ~~June 30, 2019:~~March 31, 2020:


	North America			Europe			Asia-Pacific			Total		Merchant Solutions			Issuer Solutions			Business and Consumer Solutions		Total

	(in thousands)											(in thousands)

Balance at December 31, 2018	$	5,530,087		$	484,761		$	326,507		$	6,341,355
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	4,878			(724		)	(570		)	3,584		(64,218		)	(13,318		)	—		(77,536		)
Measurement-period adjustments	(4,092		)	—			4,716			624		3,514			(60,984		)	2,728		(54,742		)
Balance at June 30, 2019	$	5,530,873		$	484,037		$	330,653		$	6,345,563
Balance at March 31, 2020												$	13,389,559		$	7,911,429		$	2,361,385	$	23,662,373

There were no0 accumulated impairment losses for goodwill as of ~~June 30, 2019~~March 31, 2020 or December 31, ~~2018.~~2019.

NOTE ~~6—LEASES~~

Our leases consist primarily of operating real estate leases for office space in the markets in which we conduct business. Many of our operating leases include escalating rental payments and incentives, as well as termination and renewal options. Certain of our lease agreements provide that we pay the cost of property taxes, insurance and maintenance. As described in "Note 1—Basis of Presentation and Summary of Significant Accounting Policies," we adopted ASU 2016-02 on January 1, 2019. Unless otherwise indicated, the following information in this footnote applies only to periods after December 31, 2018.

We evaluate each of our lease and service arrangements at inception to determine if the arrangement is, or contains, a lease and the appropriate classification of each identified lease. A lease exists if we obtain substantially all of the economic benefits of, and have the right to control the use of, an asset for a period of time. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease agreement. We recognize right-of-use assets and leases liabilities at the lease commencement date based on the present values of fixed lease payments over the term of the lease. Lease costs are recognized as expense on a straight-line basis over the lease term. We consider a termination or renewal option in the determination of the lease term when it is reasonably certain that we will exercise that option. The weighted-average remaining lease term at June 30, 2019 was 10.1 years. Because our leases generally do not provide a readily determinable implicit interest rate, we use an incremental borrowing rate to measure the lease liability and associated

right-of-use asset at the lease commencement date. The incremental borrowing rate used is a fully collateralized rate that considers our credit rating, market conditions and the term of the lease at the lease commencement date. As of June 30, 2019, the weighted-average discount rate used in the measurement of our lease liabilities was 5.0%.

The effects of adopting ASU 2016-02 on our balance sheet, as of January 1, 2019, are set forth in the table below. Adoption did not have a material effect on any line items in our consolidated statement of income or on our cash flows from operating activities, investing activities or financing activities included in our consolidated statement of cash flows. As of June 30, 2019 and January 1, 2019, right-of-use assets and lease liabilities consisted of the following (in thousands):

Balance Sheet Location June 30, 2019 January 1, 2019

Assets:
Operating lease right-of-use assets⁽¹⁾
Other noncurrent assets $ 219,006
$ 235,979

Liabilities:
Operating lease liabilities (current) Accounts payable and accrued liabilities $ 34,589
$ 37,339
Operating lease liabilities (noncurrent) Other noncurrent liabilities 224,751
236,697
Total operating lease liabilities $ 259,340
$ 274,036

⁽¹⁾~~Approximately 90% of our operating lease right-of-use assets are located in the United States.~~

~~As of June 30, 2019, maturities of lease liabilities were as follows (in thousands):~~

Year ending December 31,
2019 $ 24,694
2020 42,249
2021 35,221
2022 32,536
2023 28,964
2024 27,187
2025 and thereafter 147,981
Total lease payments⁽¹⁾
338,832
Imputed interest (79,492 )
Total operating lease liabilities $ 259,340

⁽¹⁾Total lease payments do not include approximately $86.0 million for operating leases that had not yet commenced at June 30, 2019. We expect the lease commencement dates for these leases to occur later in 2019 and in 2020.

Operating lease costs in our consolidated statement of income for the three months ended June 30, 2019 were $14.1 million, including $12.9 million in selling, general and administrative expenses and $1.2 million in cost of services.Operating lease costs in our consolidated statement of income for the six months ended June 30, 2019 were $29.8 million, including $27.4 million in selling, general and administrative expenses and $2.4 million in cost of services.Total lease costs for the three and six months ended June 30, 2019 include variable lease costs of approximately $2.6 million and $5.0 million, respectively, which are primarily comprised of the cost of property taxes, insurance and maintenance. Lease costs for leases with a term of less than twelve months were not material for the three and six months ended June 30, 2019.

Cash paid for amounts included in the measurement of operating lease liabilities for the six months ended June 30, 2019 was $26.1 million, which is included as a component of cash provided by operating activities in the consolidated statement of cash flows. Operating lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were approximately $4.0 million for the six months ended June 30, 2019.

~~Future minimum payments at December 31, 2018 for noncancelable operating leases were as follows (in thousands):~~

Year ending December 31:
2019 $ 50,095
2020 47,700
2021 40,035
2022 37,055
2023 33,298
2024 and thereafter 225,225
Total future minimum payments⁽¹⁾
$ 433,408

⁽¹⁾~~Future minimum lease payments include approximately $70 million for operating leases that had not commenced at December 31, 2018.~~

~~NOTE 7—~~5—LONG-TERM DEBT AND LINES OF CREDIT

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, long-term debt consisted of the following:

June 30, 2019 December 31, 2018

(in thousands)

Credit Facility:
Term loans (face amounts of $4,419,554 and $4,463,643 at June 30, 2019 and December 31, 2018, respectively, less unamortized debt issuance costs of $32,906 and $37,400 at June 30, 2019 and December 31, 2018, respectively) $ 4,386,647
$ 4,426,243
Revolving Credit Facility 765,000
704,000
Total long-term debt 5,151,647
5,130,243
Less current portion of Credit Facility 151,062
115,075
Long-term debt, excluding current portion $ 5,000,585
$ 5,015,168



	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 ~~maturity requirements~~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 ~~as of June 30, 2019 are~~(excluding finance lease liabilities) were as follows by year (in thousands):


Year ending December 31,
2019	$	80,087
2020	159,979

Remainder of 2020			$	50,726
2021	195,848		801,771
2022	267,587		58,403
2023	4,006,053		1,300,000
2024 and thereafter	475,000
2024			3,166,000
2025			1,000,000
2026 and thereafter			3,200,000
Total	$	5,184,554	$	9,576,900

Senior Unsecured Credit ~~Facility~~Facilities

Borrowings under the term loan ~~("Term A Loan"); (iii) a $1.37 billion term loan ("Term A-2 Loan"); (iv) a $1.14 billion term loan ("Term B-2 Loan");~~facility were made in U.S. dollars and ~~(v) a $500 million term loan ("Term B-4 Loan"). Substantially all of the assets of our domestic subsidiaries are pledged as collateral~~borrowings under the ~~Credit Facility.~~

~~The Credit Facility provides for an interest rate,~~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 ~~election,~~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 ~~either London Interbank Offered Rate~~interest set forth on the applicable LIBOR screen page designated by Bank of America or ~~a base~~(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 aan applicable margin.

As of ~~June 30, 2019,~~March 31, 2020, the interest rates on the ~~Term A Loan, the Term A-2 Loan, the Term B-2 Loan~~term loan facility and the ~~Term B-4 Loan~~revolving credit facility were ~~3.90%, 3.90%, 4.15%~~2.36% and ~~4.15%~~2.02%, respectively. ~~As of June 30, 2019, the interest rate on the Revolving Credit~~

~~Facility was 3.89%.~~ In addition, we are required to pay a quarterly commitment fee with respect to the unused portion of the ~~Revolving Credit Facility~~revolving credit facility at an applicable rate per annum ranging from ~~0.20%~~0.125% to ~~0.30%~~0.300% depending on our ~~leverage ratio.~~

~~The Term A Loan and the Term A-2 Loan mature, and the Revolving Credit Facility expires,~~credit rating. Beginning on January 20, 2023. The Term B-2 Loan matures on April 22, 2023. The Term B-4 Loan matures on October 18, 2025. The Term A Loan and Term A-2 Loan principal amounts must each be repaid in quarterly installments in the amount of 1.25% of principal through June 2021, increasing to 1.875% of principal through JuneDecember 31, 2022, and ~~increasing to 2.50%~~at the end of ~~principal through December 2022, with~~each quarter thereafter, the ~~remaining principal balance due upon maturity in January 2023. The Term B-2 Loan principal~~term loan facility must be repaid in quarterly installments in the amount of ~~0.25%~~2.50% of original principal through ~~March 2023,~~the maturity date with the remaining principal balance due upon maturity in ~~April 2023.~~September 2024. The ~~Term B-4 Loan principal must be repaid~~revolving credit facility also matures in ~~quarterly installments in the amount of 0.25% of principal through~~ September ~~2025, with the remaining principal balance due upon maturity in October 2025.~~2024.

We may issue standby letters of credit of up to ~~$100~~$250 million in the aggregate under the ~~Revolving Credit Facility.~~revolving credit facility. Outstanding letters of credit under the ~~Revolving Credit Facility~~revolving credit facility reduce the amount of borrowings available to us. ~~Borrowings available to us under the Revolving Credit Facility are further limited by the covenants described below under "Compliance with Covenants."~~ The total available commitments under the ~~Revolving Credit Facility~~revolving credit facility at ~~June 30, 2019~~March 31, 2020 were ~~$723.2 million.~~$1.6 billion.

~~The portions~~Senior Unsecured Notes

We have $3.0 billion in aggregate principal amount of ~~deferred debt issuance costs~~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 toindenture. We have an additional $3.0 billion in aggregate principal amount of senior unsecured notes consisting of the ~~Revolving Credit Facility are included in prepaid expenses~~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 ~~other current assets and other noncurrent assets,~~(v) $450 million aggregate principal amount of 4.450% senior notes due 2028. For the 3.800% senior notes due 2021 and the ~~portion~~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 ~~deferred debt issuance costs related to~~these senior notes at the ~~term loans~~date the Merger was consummated is ~~reported as a reduction to the carrying amount of the term loans. Debt issuance costs are amortized as an adjustment to interest expense~~recognized over the terms of the respective ~~facilities.~~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 ~~Credit Facility agreement contains~~senior unsecured term loan and revolving credit facility contain customary conditions to funding, affirmative ~~and restrictive~~ covenants, ~~including, among others,~~negative covenants, financial covenants ~~based on our leverage~~ and ~~interest coverage ratios, as defined in the agreement.~~events of default. As of ~~June 30, 2019,~~March 31, 2020, financial covenants under the ~~Credit Facility Agreement~~term loan facility required a leverage ratio ~~no greater than: (i) 5.00~~of 3.50 to 1.00 as of the end of any fiscal quarter ending during the period from April 1, 2018 through June 30, 2019; (ii) 4.75 to 1.00 as of the end of any fiscal quarter ending during the period from July 1, 2019 through June 30, 2020; and ~~(iii) 4.50 to 1.00 as of the end of any fiscal quarter ending thereafter. The~~an interest coverage ratio ~~is required~~of 3.00 to ~~be no less than 3.25 to~~ 1.00.

The Credit Facility agreement includes covenants, subject in each case to exceptions and qualifications that may restrict certain payments, including in certain circumstances, the repurchasing of our common stock and paying cash dividends in excess of our current rate of $0.01 per share per quarter. We were in compliance with all applicable covenants as of ~~June 30, 2019.~~

~~Bridge Facility and New Permanent Financing Arrangements~~

In connection with our entry into the Merger Agreement described in "Note 2—Acquisitions," on May 27, 2019, we obtained commitments for a $2.75 billion, 364-day senior unsecured bridge facility (the "Bridge Facility"). The Bridge Facility was established to refinance the Credit Facility and to refinance TSYS' unsecured revolving credit facility in order to establish an unsecured capital structure under which we can assume certain existing TSYS senior notes. We expect to execute permanent financing of $7.5 billion (a new $3.0 billion revolving credit facility and a new $2.0 billion term loan facility, which we entered into on July 9, 2019, as described below, and is expected to also include $2.5 billion of senior notes) prior to the closing of the Merger that will eliminate the need for the Bridge Facility commitments. Fees associated with the Bridge Facility of $11.7 million were capitalized and will be amortized to interest expense through the expected date of termination of the Bridge Facility commitment. For the three and six months ended June 30, 2019, we recognized $2.9 million of these fees as interest expense. The remaining unamortized portion of $8.8 million is included in prepaid expenses and other current assets on our consolidated balance sheet as of June 30, 2019.

credit facility ("Unsecured Revolving Credit Facility"). The Term Loan Facility and the Unsecured Revolving Credit Facility will be available for borrowing on the date on which the Merger becomes effective subject to customary limited conditionality for borrowings related to the Merger. The Unsecured Revolving Credit Facility will be otherwise available subject to customary conditionality. The Term Loan Credit Agreement and the Unsecured Revolving Credit Agreement will mature on the fifth anniversary of the closing date of the Merger.

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 ~~line~~lines of credit may exceed the stated credit limit. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, a total of ~~$68.9~~$58.0 million and ~~$70.6~~$74.5 million, respectively, of cash on deposit was used to determine the available credit.

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018, respectively,~~2019 we had ~~$736.2~~$375.2 million and ~~$700.5~~$463.2 million, respectively, outstanding under these lines of credit with additional capacity to fund settlement of ~~$628.1~~$1,092.1 million as of ~~June 30, 2019 to fund settlement. The weighted-average interest rate on these borrowings was 3.01% and 2.97% at June 30, 2019 and December~~March 31, ~~2018, respectively.~~2020. During the three months ended ~~June 30, 2019,~~March 31, 2020, the maximum and average outstanding balances under these lines of credit were ~~$873.0~~$679.0 million and ~~$440.5~~$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.~~

In addition, in June 2019, in anticipation of the expected issuance of the senior notes in connection with the Merger, as described earlier in this Note, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $1.0 billion. The forward-starting interest rate swaps, designated as cash flow hedges, are designed to manage the exposure to interest rate volatility with regard to the expected future issuances of senior notes. The effective portion of the gains or losses are reported as a component of other comprehensive loss. Beginning in the period in which the planned issuance occurs and the related derivatives are terminated, the effective portion of the gains or losses will be reclassified into interest expense over the term of the related debt.

income (loss). The fair values of ~~the~~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 ~~the fair values of~~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 June 30, 2019
Range of Maturity Dates at
June 30, 2019

June 30,
2019
December 31, 2018

(in thousands)

Interest rate swaps (Notional of $250 million at June 30, 2019 and $750 million at December 31, 2018) Prepaid expenses and other current assets 1.58% December 31, 2019 $ 582
$ 3,200
Interest rate swaps (Notional of $250 million at June 30, 2019 and $550 million at December 31, 2018) Other noncurrent assets 1.34% July 31, 2020 - March 31, 2021 $ 1,317
$ 8,256
Interest rate swaps (Notional of $1.0 billion at June 30, 2019) Accounts payable and accrued liabilities 2.09% December 31, 2019 $ 14,617
$ —
Interest rate swaps (Notional of $1.6 billion at June 30, 2019 and $950 million at December 31, 2018) Other noncurrent liabilities 2.57% March 31, 2021 - December 31, 2022 $ 49,886
$ 14,601



				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.

The table below presents the effects of our interest rate swaps on the consolidated statements of income and comprehensive income (loss) for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

Three Months Ended Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018

(in thousands)

Amount of net unrealized gains (losses) recognized in other comprehensive income $ (42,222 ) $ 2,932
$ (56,731 ) $ 10,508
Amount of net unrealized gains reclassified out of other comprehensive income to interest expense $ (893 ) $ (1,104 ) $ (2,723 ) $ (1,167 )



	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 ~~June 30, 2019,~~March 31, 2020, the amount of net unrealized ~~gains~~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 ~~approximately $9.7~~$41.4 million.

Interest Expense

Interest expense was ~~$65.5~~$81.1 million and ~~$48.1~~$55.4 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $123.9 million and $93.5 million for the six months ended June 30, 2019 and 2018,~~ respectively.

NOTE 8—6—INCOME TAX

Our effective income tax rates were 19.9% and 19.1% for the three months ended June 30, 2019 and 2018, respectively, and 18.4% and 19.6% for the six months ended June 30, 2019 and 2018, respectively. Our effective income tax rates for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~differs~~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 and the U.S. tax benefits associated with income derived from foreign customers.~~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 ~~May~~December 31, ~~2013~~2016 and U.K. federal income tax examinations for years ended on or before May 31, ~~2015.~~2016.

NOTE 9—7—SHAREHOLDERS’ EQUITY

We repurchase our common stock mainly through open market repurchase plans and, at times, through accelerated share repurchase programs. During the three months ended ~~June 30, 2019 and 2018,~~March 31, 2020, we repurchased and retired ~~513,116 shares and 1,603,248~~2,094,731 shares of our common stock at a cost, including commissions, of ~~$72.0~~$404.0 million, ~~and $179.9 million, respectively,~~ or ~~$140.32 per share and $112.20~~$192.85 per share. During the ~~six~~three months ended ~~June 30,~~March 31, 2019, ~~and 2018,~~ we repurchased and retired ~~1,808,398 shares and 1,612,174~~1,295,282 shares of our common stock at a cost, including commissions, of ~~$230.0~~$158.0 million, ~~and $180.9 million, respectively,~~ or ~~$127.18 per share and $112.19~~$121.98 per share. ~~As of June 30, 2019, we were authorized to repurchase up to $566.0 million of our common stock.~~

On ~~July 25, 2019,~~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 ~~$0.01~~$0.195 per share payable on ~~September 27, 2019~~June 26, 2020 to common shareholders of record as of ~~September 13, 2019.~~June 12, 2020.

~~Upon completion of the proposed Merger, our Articles of Incorporation would be amended to increase the number of authorized shares of Global Payments common stock from 200 million to 400 million.~~

NOTE ~~10—~~8—SHARE-BASED AWARDS AND STOCK OPTIONS

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


	Three Months Ended				Six Months Ended				Three Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018		March 31, 2020		March 31, 2019

	(in thousands)								(in thousands)

Share-based compensation expense	$	16,496	$	15,205	$	27,914	$	30,104	$	27,822	$	11,418
Income tax benefit	$	3,728	$	3,377	$	6,237	$	6,662	$	6,473	$	2,509

Share-Based Awards

The following table summarizes the changes in unvested restricted stock and performance awards for the ~~six~~three months ended ~~June 30, 2019:~~March 31, 2020:


	Shares		Weighted-Average Grant-Date Fair Value		Shares		Weighted-Average Grant-Date Fair Value

	(in thousands)				(in thousands)

Unvested at December 31, 2018	1,084			$108.51
Unvested at December 31, 2019					1,844			$149.96
Granted	475		133.58		546		193.36
Vested	(260	)	94.78		(553	)	116.66
Forfeited	(62	)	107.74		(18	)	152.88
Unvested at June 30, 2019	1,237			$121.06
Unvested at March 31, 2020					1,819			$173.12

The total fair value of restricted stock and performance awards vested during the ~~six~~three months ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~ was ~~$24.6~~$64.6 million and ~~$22.8~~$20.8 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of ~~$14.8~~$25.2 million and ~~$13.6~~$10.1 million during the three months ended ~~June 30,~~March 31, 2020 and March 31, 2019, ~~and June 30, 2018, respectively, and $24.9 million and $27.4 million during the six months ended June 30, 2019 and June 30, 2018,~~ respectively. As of ~~June 30, 2019,~~March 31, 2020, there was ~~$94.7~~$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 ~~2.2~~2.4 years. ~~Our restricted stock and performance award plans provide for accelerated vesting under certain conditions.~~

Stock Options

The following table summarizes ~~changes in~~ stock option activity for the ~~six~~three months ended ~~June 30, 2019:~~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, 2018 598

$59.16
6.2 $27.3
Granted 109
128.22

Exercised (193 ) 34.01

Outstanding at June 30, 2019 514

$83.31
7.1 $39.5

Options vested and exercisable at June 30, 2019 296

$61.73
5.8 $29.1



	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 ~~$0.9~~$1.9 million and $0.7 million during the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018 and $1.6 million and $1.5 million during the six months ended June 30, 2019 and 2018,~~ respectively. The aggregate intrinsic value of stock options exercised during the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ was ~~$18.9~~$53.6 million and ~~$4.6~~$15.9 million, respectively. As of ~~June 30, 2019,~~March 31, 2020, we had ~~$6.0~~$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 ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 was $54.85 and ~~2018 was~~ $39.60, ~~and $35.09,~~ respectively. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:


	Six Months Ended		Three Months Ended
	June 30, 2019	June 30, 2018	March 31, 2020	March 31, 2019

Risk-free interest rate	2.49%	2.60%	1.24%	2.49%
Expected volatility	30%	29%	30%	30%
Dividend yield	0.04%	0.04%	0.39%	0.04%
Expected term (years)	5	5	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.

NOTE ~~11—~~9—EARNINGS PER SHARE

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

124,888 shares, related to stock options that would have an antidilutive effect on the computation of diluted earnings per share. There were 0 such shares for the three months ended March 31, 2019.

The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	Three Months Ended		Six Months Ended		Three Months Ended
	June 30, 2019	June 30, 2018	June 30, 2019	June 30, 2018	March 31, 2020	March 31, 2019

	(in thousands)				(in thousands)

Basic weighted-average number of shares outstanding	156,768	159,003	157,141	159,161	299,388	157,519
Plus: Dilutive effect of stock options and other share-based awards	494	674	497	679	1,450	499
Diluted weighted-average number of shares outstanding	157,262	159,677	157,638	159,840	300,838	158,018

NOTE ~~12—~~10—ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in the accumulated balances for each component of other comprehensive income (loss) were as follows for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


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

	(in thousands)												(in thousands)

Balance at December 31, 2019													$	(241,899	)	$	(69,319	)	$	647		$	(310,571	)
Other comprehensive income (loss)													(196,451		)	(32,879		)	121			(229,209		)
Balance at March 31, 2020													$	(438,350	)	$	(102,198	)	$	768		$	(539,780	)

Balance at December 31, 2018													$	(304,274	)	$	(2,374	)	$	(3,527	)	$	(310,175	)
Other comprehensive income (loss)													9,807			(12,351		)	111			(2,433		)
Balance at March 31, 2019	$	(294,467	)	$	(14,725	)	$	(3,416	)	$	(312,608	)	$	(294,467	)	$	(14,725	)	$	(3,416	)	$	(312,608	)
Other comprehensive income (loss)	5,273			(32,588		)	17			(27,298		)
Balance at June 30, 2019	$	(289,194	)	$	(47,313	)	$	(3,399	)	$	(339,906	)

Balance at March 31, 2018	$	(185,269	)	$	12,647		$	(4,339	)	$	(176,961	)
Other comprehensive income (loss)	(68,103		)	1,383			52			(66,668		)
Balance at June 30, 2018	$	(253,372	)	$	14,030		$	(4,287	)	$	(243,629	)

Other comprehensive ~~income (loss)~~loss attributable to noncontrolling interests, which relates only to foreign currency translation, was ~~income of $3.9~~$6.7 million and ~~a loss of $11.2~~$4.6 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and June 30, 2018,~~ respectively.

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

(in thousands)

Balance at December 31, 2018 $ (304,274 ) $ (2,374 ) $ (3,527 ) $ (310,175 )
Other comprehensive income (loss) 15,080
(44,939 ) 128
(29,731 )
Balance at June 30, 2019 $ (289,194 ) $ (47,313 ) $ (3,399 ) $ (339,906 )

Balance at December 31, 2017 $ (185,856 ) $ 6,999
$ (4,287 ) $ (183,144 )
Cumulative effect of adoption of new accounting standard (1,843 ) —
—
(1,843 )
Other comprehensive income (loss) (65,673 ) 7,031
—
(58,642 )
Balance at June 30, 2018 $ (253,372 ) $ 14,030
$ (4,287 ) $ (243,629 )

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was a loss of $0.6 million and income of $0.1 million for the six months ended June 30, 2019 and 2018, respectively.

NOTE ~~13—~~11—SEGMENT INFORMATION

We operate in ~~three~~3 reportable segments: ~~North America, Europe~~Merchant Solutions, Issuer Solutions and ~~Asia-Pacific.~~Business and Consumer Solutions. We evaluate performance and allocate resources based on the operating income of each operating segment. The operating income of each operating segment includes the revenues of the segment less expenses that are directly related to those revenues. Operating overhead, shared costs and ~~certain~~share-based compensation costs are included in ~~Corporate in the following table.~~Corporate. Interest and other income, interest and other expense, income tax expense and ~~provision for~~equity in income ~~taxes~~of equity method investments, net of tax, are not allocated to the individual segments. We do not evaluate the performance of or allocate resources to our operating segments using asset data. The accounting policies of the reportable operating segments are the same as those described in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 and our summary of significant accounting policies in "Note 1— - Basis of Presentation and Summary of Significant Accounting Policies."

In connection with an organizational realignment implemented during the fourth quarter of 2019, the presentation of segment information for the three months ended March 31, 2019 has been recast to align with the segment presentation for the three months ended March 31, 2020. Information on segments and reconciliations to consolidated revenues, ~~and~~ consolidated operating income and consolidated depreciation and amortization was as follows for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

Three Months Ended Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018

(in thousands)

Revenues⁽¹⁾:

North America $ 715,919
$ 621,801
$ 1,394,341
$ 1,215,830
Europe 160,349
155,631
303,218
298,908
Asia-Pacific 58,884
55,732
120,631
113,403
Consolidated revenues $ 935,152
$ 833,164
$ 1,818,190
$ 1,628,141

Operating income (loss)⁽¹⁾:

North America $ 185,286
$ 147,184
$ 341,433
$ 272,588
Europe 86,345
82,682
158,306
153,230
Asia-Pacific 23,257
19,577
50,530
43,351
Corporate⁽²⁾
(73,162 ) (58,706 ) (129,051 ) (122,262 )
Consolidated operating income $ 221,726
$ 190,737
$ 421,218
$ 346,907

Depreciation and amortization⁽¹⁾:

North America $ 124,573
$ 105,433
$ 252,810
$ 207,958
Europe 13,101
11,775
26,095
24,520
Asia-Pacific 5,141
4,726
10,181
9,359
Corporate 2,308
1,714
4,667
3,555
Consolidated depreciation and amortization $ 145,123
$ 123,648
$ 293,753
$ 245,392



	Three Months Ended
	March 31, 2020			March 31, 2019



Revenues⁽¹⁾:
Merchant Solutions	$	1,215,269		$	877,783
Issuer Solutions	503,762			5,256
Business and Consumer Solutions	203,946			—
Segment revenues	1,922,977			883,039
Less: Intersegment Eliminations	(19,379		)	—
Consolidated revenues	$	1,903,598		$	883,039

Operating income (loss)⁽¹⁾⁽²⁾:
Merchant Solutions	$	304,153		$	238,129
Issuer Solutions	59,304			3,439
Business and Consumer Solutions	31,112			—
Corporate	(150,590		)	(42,076		)
Consolidated operating income	$	243,979		$	199,492

Depreciation and amortization⁽¹⁾:
Merchant Solutions	$	233,021		$	147,385
Issuer Solutions	136,737			182
Business and Consumer Solutions	23,641			—
Corporate	4,419			1,063
Consolidated depreciation and amortization	$	397,818		$	148,630

⁽¹⁾Revenues, operating income and depreciation and amortization reflect the effects of acquired businesses from the respective acquisition dates. For further discussion of our acquisitions, see "Note 2—Acquisitions."

⁽²⁾During the three months ended ~~June 30, 2019~~March 31, 2020, operating income for our Merchant Solutions segment reflected the effect of acquisition and ~~2018, operating~~integration expenses of $2.2 million. Operating loss for Corporate included acquisition and integration expenses of ~~$14.1~~$69.7 million and ~~$8.1~~$5.3 million, ~~respectively. The amount for~~during the three months ended ~~June 30,~~March 31, 2020 and 2019, included transaction costs related to the Merger of $12.2 million. During the six months ended June 30, 2019 and 2018, operating loss for Corporate included acquisition and integration expenses of $19.5 million and $26.4 million, respectively. ~~The amount for the six months ended June 30, 2019 included transaction costs related to the Merger of $12.2 million.~~

NOTE 12—COMMITMENTS AND CONTINGENCIES

Purchase Obligations

During the three months ended March 31, 2020, our purchase obligations increased as a result of our entry into an arrangement to acquire software and related services for $293.8 million. We financed $97.6 million of this amount utilizing a two-year vendor financing arrangement. As of March 31, 2020, the estimated remaining purchase commitments that are due for this acquisition are $47.6 million during the remainder of 2020, $64.9 million during 2021, $66.9 million during 2022 and $16.8 million during 2023.

Legal Matters

On September 23, 2019, a jury in the Superior Court of Dekalb County, Georgia, awarded Frontline Processing Corp. ("Frontline") $135.2 million in damages, costs and attorney's fees (plus interest) following a trial of a breach of contract dispute between Frontline and Global Payments, wherein Frontline alleged that Global Payments violated provisions of the parties' Referral Agreement and Master Services Agreement. The Superior Court entered a final judgment on the verdict in favor of Frontline on September 30, 2019. We believe the jury verdict is in error and Frontline’s case is completely without merit, and we are appealing the decision to the Georgia Court of Appeals. While it is reasonably possible that we will incur some loss between zero and the judgment amount plus interest, we have determined that it is not probable that Global Payments has incurred a loss under the applicable accounting standard (Accounting Standards Codification Topic 450, Contingencies) as of March 31, 2020. As a result, we have not recorded a liability on the consolidated balance sheet with respect to this litigation.

ITEM 2—MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report and the Management’s Discussion and Analysis of Financial Condition and Results of Operations and consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. This discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our actual results could differ materially from the results anticipated by our forward-looking statements. ~~See "Forward-Looking Statements" below for additional information.~~

Executive Overview

We are a leading ~~worldwide provider of payment~~pure play payments technology ~~services and software solutions~~company delivering innovative ~~solutions~~software and services to our customers globally. Our technologies, services and employee expertise enable us to provide a broad range of ~~services~~solutions that allow our customers to ~~accept various payment types and~~ operate their businesses more ~~efficiently. We distribute our services~~efficiently across a variety of channels ~~in 32 countries throughout North America, Europe,~~around the ~~Asia-Pacific region and Brazil and operate in three reportable segments: North America, Europe and Asia-Pacific.~~

world. On ~~May 27,~~September 18, 2019, ~~Global Payments and~~we merged with Total System Services, Inc. ("TSYS") ~~entered into~~(the "Merger").

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. This outbreak is causing major disruptions to businesses and markets worldwide as the virus continues to spread. A number of countries as well as certain 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. We are closely monitoring the effects of the COVID-19 pandemic. We are currently operating normally, and, at this time, we do not anticipate any significant operational effects as a result of the pandemic.

Our first quarter performance in January, February and through the first two weeks of March exceeded our internal expectations, excluding an ~~Agreement~~immaterial revenue effect from COVID-19 in our Asia Pacific region. However, starting in mid-March, the COVID-19 pandemic began to affect our results significantly in North America and ~~Plan~~Europe as governments took actions to encourage social distancing and implement shelter-in-place directives. The deterioration in our financial results accelerated toward the end of ~~Merger ("Merger Agreement") providing~~March as the pandemic spread further and the number of countries and localities adopting restrictive measures meaningfully increased. We expect that the COVID-19 pandemic will have an adverse effect on our revenues and financial results for the ~~merger~~remainder of ~~TSYS with~~2020, although the magnitude and into Global Payments, with Global Payments as the surviving entity (the "Merger"). TSYS is a leading global payments provider, offering seamless, secure and innovative solutions across the payments spectrum - for issuers, merchants and consumers. The Merger is subject to the satisfaction or waiverduration of the ~~closing conditions set forth in the Merger Agreement, including shareholder approval for both companies. Upon completion~~ultimate effects as a result of the ~~Merger, TSYS will no longer be a separate publicly traded corporation. Global Payments~~COVID-19 pandemic are not possible to predict at this time. We have taken and will continue to ~~trade~~implement cost-saving actions, such as reductions in employee compensation costs, business travel and marketing initiatives, to help mitigate the financial effects of the COVID-19 pandemic.

For a further discussion of trends, uncertainties and other factors that could affect our continuing operating results related to the effects of the COVID-19 pandemic, see the section entitled "Risk Factors" in Item 1A in this Quarterly Report on Form 10-Q.

Consolidated Results

Highlights related to our financial condition at March 31, 2020 and results of operations for the ~~New York Stock Exchange. The preliminary estimated~~three months then ended include the following:

Consolidated revenue increased to $1,903.6 million, compared to $883.0 million for the prior-year period, primarily due to additional revenues from the acquired operations of TSYS.


•	Consolidated operating income increased to $244.0 million, compared to $199.5 million for the prior-year period. Operating margin decreased to 12.8%, compared to 22.6% for the prior-year period, primarily due to an increase in acquisition and integration expenses associated with the Merger.

Net income attributable to Global Payments increased to $143.6 million, compared to $112.3 million for the prior-year period, primarily due to additional income from the acquired operations of TSYS, partially offset by increases in acquisition and integration expenses and interest expense.

Diluted earnings per share decreased to $0.48, compared to $0.71 for the prior-year period, reflecting the additional earnings from the acquired operations of TSYS, as well as an increase in the number of weighted-average number of shares outstanding as a result of issuing common shares as purchase consideration ~~to be transfered to TSYS shareholders is $23.7 billion~~in the Merger.

Results of Operations

We operate in three reportable segments: Merchant Solutions, Issuer Solutions and Business and Consumer Solutions. We evaluate performance and allocate resources based on the ~~number~~operating income of ~~TSYS common shares outstanding and~~each operating segment. In connection with an organizational realignment implemented after the ~~closing price of our common stock on July 25, 2019.~~ Merger ~~consideration will include the amount of TSYS' unsecured revolving credit facility that we are required to repay upon consummation of the Merger. We expect the Merger to close~~ in the fourth quarter of 2019, ~~subject~~the presentation of segment information for the three months ended March 31, 2019 has been recast to ~~customary closing conditions, regulatory approvals and shareholder approval~~align with the segment presentation for ~~both companies. See "Note 2—Acquisitions"~~the three months ended March 31, 2020. For further information about our reportable segments, see "Item 1. Business—Business Segments" within our Annual Report on Form 10-K for the year ended December 31, 2019, incorporated herein by reference, and "Note ~~7—Long-Term Debt and Lines of Credit"~~11—Segment Information" in the notes to the accompanying unaudited consolidated financial ~~statements for further information about the proposed Merger and related debt financing.~~

On October 17, 2018, we acquired SICOM Systems, Inc. ("SICOM") for total purchase consideration of $410.2 million, which we funded with cash on hand and by drawing on our Revolving Credit Facility (described in "Note 7—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements). SICOM is a provider of end-to-end enterprise, cloud-based software solutions and other technologies to quick service restaurants and food service management companies.

~~Highlights related to our financial condition and results of operations for the three and six months ended June 30, 2019 are:~~

Consolidated revenues for the three and six months ended June 30, 2019 increased to $935.2 million and $1,818.2 million, respectively, compared to $833.2 million and $1,628.1 million for the prior-year periods, primarily due to additional revenues from businesses acquired in the second half of 2018.

Consolidated operating income for the three and six months ended June 30, 2019 increased to $221.7 million and $421.2 million, respectively, compared to $190.7 million and $346.9 million for the prior-year periods. Operating margin for the three and six months ended June 30, 2019 was 23.7% and 23.2%, respectively, compared to 22.9% and 21.3% for the prior-year periods.

Net income attributable to Global Payments for the three and six months ended June 30, 2019 increased to $120.5 million and $232.8 million, respectively, compared to $109.1 million and $200.5 million for the prior-year periods.

~~Diluted earnings per share for the three and six months ended June 30, 2019 increased to $0.77 and $1.48, respectively, compared to $0.68 and $1.25 for the prior-year periods.~~

~~Results of Operations~~statements.

The following table sets forth key selected financial data for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ this data as a percentage of total revenues and the changes between the periods in dollars and as a percentage of the prior-year amount. The income statement data for the three months ended March 31, 2020 and 2019 are derived from the accompanying unaudited consolidated financial statements included in Part I, Item 1 - Financial Statements.

Three Months Ended June 30, 2019
% of Revenues⁽¹⁾
Three Months Ended June 30, 2018
% of Revenues⁽¹⁾
Change % Change

(dollar amounts in thousands)

Revenues⁽²⁾:

North America $ 715,919
76.6 % $ 621,801
74.6 % $ 94,118
15.1 %
Europe 160,349
17.1 % 155,631
18.7 % 4,718
3.0 %
Asia-Pacific 58,884
6.3 % 55,732
6.7 % 3,152
5.7 %
Total revenues $ 935,152
100.0 % $ 833,164
100.0 % $ 101,988
12.2 %

Consolidated operating expenses⁽²⁾:

Cost of service $ 302,276
32.3 % $ 264,544
31.8 % $ 37,732
14.3 %
Selling, general and administrative 411,150
44.0 % 377,883
45.4 % 33,267
8.8 %
Operating expenses $ 713,426
76.3 % $ 642,427
77.1 % $ 70,999
11.1 %

Operating income (loss)⁽²⁾:

North America $ 185,286

$ 147,184

$ 38,102
25.9 %
Europe 86,345
82,682
3,663
4.4 %
Asia-Pacific 23,257
19,577
3,680
18.8 %
Corporate⁽³⁾
(73,162 ) (58,706 ) (14,456 ) 24.6 %
Operating income $ 221,726
23.7 % $ 190,737
22.9 % $ 30,989
16.2 %

Operating margin⁽²⁾:

North America 25.9 % 23.7 %
2.2 %
Europe 53.8 % 53.1 % 0.7 %
Asia-Pacific 39.5 % 35.1 %
4.4 %



	Three Months Ended March 31, 2020			% of Revenues⁽¹⁾		Three Months Ended March 31, 2019			% of Revenues⁽¹⁾		Change			% Change

	(dollar amounts in thousands)

Revenues⁽²⁾:
Merchant Solutions	$	1,215,269		63.8	%	$	877,783		99.4	%	$	337,486		38.4	%
Issuer Solutions	503,762			26.5	%	5,256			0.6	%	498,506			NM
Business and Consumer Solutions	203,946			10.7	%	—			—	%	203,946			NM
Segment revenues	1,922,977			101.0	%	883,039			100.0	%	1,039,938			117.8	%
Less: intersegment revenues	(19,379		)	(1.0	)%	—			—	%	(19,379		)	NM
Consolidated revenues	$	1,903,598		100.0	%	$	883,039		100.0	%	$	1,020,559		115.6	%

Consolidated operating expenses⁽²⁾:
Cost of service	$	933,871		49.1	%	$	305,230		34.6	%	$	628,641		206.0	%
Selling, general and administrative	725,748			38.1	%	378,317			42.8	%	347,431			91.8	%
Operating expenses	$	1,659,619		87.2	%	$	683,547		77.4	%	$	976,072		142.8	%

Operating income (loss)⁽²⁾:
Merchant Solutions	$	304,153		16.0	%	$	238,129		27.0	%	$	66,024		27.7	%
Issuer Solutions	59,304			3.1	%	3,439			0.4	%	55,865			NM
Business and Consumer Solutions	31,112			1.6	%	—			—	%	31,112			NM
Corporate⁽³⁾	(150,590		)	(7.9	)%	(42,076		)	(4.8	)%	(108,514		)	257.9	%
Operating income	$	243,979		12.8	%	$	199,492		22.6	%	$	44,487		22.3	%

Operating margin⁽²⁾:
Merchant Solutions	25.0		%			27.1		%			(2.1		)%
Issuer Solutions	11.8		%			NM					NM
Business and Consumer Solutions	15.3		%			NM					NM

NM = not meaningful.

⁽¹⁾Percentage amounts may not sum to the total due to rounding.

⁽²⁾ Revenues, consolidated operating expenses, operating income (loss) and operating margin reflect the effects of acquired businesses from the respective acquisition dates. For further discussion of our acquisitions, see "Note 2—~~Acquisitions."~~Acquisitions" in the notes to the accompanying unaudited consolidated financial statements.

⁽³⁾ During the three months ended ~~June 30, 2019~~March 31, 2020, operating income for our Merchant Solutions segment reflected the effect of acquisition and ~~2018, operating~~integration expenses of $2.2 million. Operating loss for Corporate included acquisition and integration expenses of ~~$14.1~~$69.7 million and ~~$8.1~~$5.3 million, ~~respectively. The amount for~~during the three months ended ~~June 30,~~March 31, 2020 and 2019, included transaction costs related to the Merger of $12.2 million. These expenses are included primarily in selling, general and administrative expenses in the unaudited consolidated statements of income.

The following table sets forth key selected financial data for the six months ended June 30, 2019 and 2018, this data as a percentage of total revenues and the changes between the periods in dollars and as a percentage of the prior-year amount.

Six Months Ended June 30, 2019
% of Revenues⁽¹⁾
Six Months Ended June 30, 2018
% of Revenues⁽¹⁾
Change % Change

(dollar amounts in thousands)

Revenues⁽²⁾:

North America $ 1,394,341
76.7 % $ 1,215,830
74.7 % $ 178,511
14.7 %
Europe 303,218
16.7 % 298,908
18.4 % 4,310
1.4 %
Asia-Pacific 120,631
6.6 % 113,403
7.0 % 7,228
6.4 %
Total revenues $ 1,818,190
100.0 % $ 1,628,141
100.0 % $ 190,049
11.7 %

Consolidated operating expenses⁽²⁾:

Cost of service $ 607,505
33.4 % $ 516,930
31.7 % $ 90,575
17.5 %
Selling, general and administrative 789,467
43.4 % 764,304
46.9 % 25,163
3.3 %
Operating expenses $ 1,396,972
76.8 % $ 1,281,234
78.7 % $ 115,738
9.0 %

Operating income (loss)⁽²⁾:

North America $ 341,433

$ 272,588

$ 68,845
25.3 %
Europe 158,306
153,230
5,076
3.3 %
Asia-Pacific 50,530
43,351
7,179
16.6 %
Corporate⁽³⁾
(129,051 ) (122,262 ) (6,789 ) 5.6 %
Operating income $ 421,218
23.2 % $ 346,907
21.3 % $ 74,311
21.4 %

Operating margin⁽²⁾:

North America 24.5 % 22.4 % 2.1 %
Europe 52.2 % 51.3 % 0.9 %
Asia-Pacific 41.9 % 38.2 % 3.7 %

⁽¹⁾~~Percentage amounts may not sum to the total due to rounding.~~respectively.

⁽³⁾ During the six months ended June 30, 2019 and 2018, operating loss for Corporate included acquisition and integration expenses of $19.5 million and $26.4 million, respectively. The amount for the six months ended June 30, 2019 included transaction costs related to the Merger of $12.2 million. These expenses are included primarily in selling, general and administrative expenses in the unaudited consolidated statements of income.

Revenues

Consolidated revenues for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased by ~~12.2% and 11.7%, respectively,~~115.6% to ~~$935.2~~$1,903.6 million, and $1,818.2 million, despite the unfavorable effect of fluctuations in foreign currency exchange rates. For the three and six months ended June 30, 2019, currency exchange rate fluctuations reduced our consolidated revenues by $17.1 million and $39.0 million, respectively, compared to ~~the prior year, calculated by converting revenues for the current period~~$883.0 million in ~~local currencies using exchange rates for~~ the prior-year ~~period.~~period, primarily due to additional revenues of $1,055.0 million from the acquired operations of TSYS, partially offset by the adverse effect on our revenues resulting from the COVID-19 pandemic.

~~North America~~Merchant Solutions Segment. Revenues from our ~~North America~~Merchant Solutions segment for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased by ~~15.1% and 14.7%, respectively,~~38.4% to ~~$715.9~~$1,215.3 million, ~~and $1,394.3~~compared to $877.8 million in the prior-year period, primarily due to additional revenues from the ~~acquisitions~~acquired operations of ~~AdvancedMD~~TSYS. As revenue from the Merchant Solutions segment is predominantly generated from core merchant acquiring, we experienced significant revenue declines starting in mid-March due to a reduction in consumer spending and ~~SICOM in~~closures of certain of our merchant customer businesses, including those who operate restaurants, retail locations, schools and universities and casinos, as well as the ~~second half~~cancellation of ~~2018.~~events involving large groups of people throughout North America and Europe.

~~Europe~~Issuer Solutions Segment. Revenues from our ~~Europe~~Issuer Solutions segment for the three ~~and six~~ months ended ~~June 30, 2019 increased by 3.0% and 1.4%, respectively, to $160.3~~March 31, 2020 was $503.8 million, ~~and $303.2 million,~~primarily reflecting revenues from the acquired operations of TSYS. Starting in mid-March, we experienced revenue declines as a result of lower transaction volumes, particularly in our commercial cards due to ~~organic growth, partially offset by the unfavorable effect of fluctuations in foreign currency exchange rates of $11.6 million~~reduced travel and ~~$26.0 million, respectively.~~entertainment spending.

~~Asia-Pacific~~Business and Consumer Solutions Segment. Revenues from our ~~Asia-Pacific~~Business and Consumer segment for the three ~~and six~~ months ended ~~June 30, 2019 increased by 5.7%~~March 31, 2020 was $203.9 million, reflecting revenues from the acquired operations of TSYS. Our Business and ~~6.4%, respectively, to $58.9 million and $120.6 million, primarily~~Consumer Solutions segment experienced revenue declines starting in mid-March due to ~~organic growth,~~decreased consumer spending, lower load activity and fewer new funded accounts. These revenue declines were partially ~~offset~~mitigated by ~~the unfavorable effect~~positive trends in consumer adoption of ~~fluctuations in foreign currency exchange rates of $2.5 million and $6.3 million, respectively.~~our demand deposit account product.

Operating Expenses

Cost of Service. Cost of service for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased by ~~14.3% and 17.5%, respectively,~~206.0% to ~~$302.3~~$933.9 million, ~~and $607.5 million.~~compared to $305.2 million for the prior-year period, primarily due to additional costs associated with the acquired operations of TSYS. Cost of service for the three months ended March 31, 2020 reflects amortization of acquired intangibles of $314.2 million, compared to $107.5 million for the prior-year period. Cost of service as a percentage of revenues ~~was 32.3% and 33.4%, respectively,~~increased to 49.1% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~31.8% and 31.7%~~34.6% for the prior-year ~~periods. These increases were~~period, primarily due to ~~additional costs associated with revenue growth and an~~the increase in amortization of acquired ~~intangibles of $15.0 million and $34.7 million, respectively.~~intangibles.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased by ~~8.8%~~91.8% to $725.7 million, compared to $378.3 million for the prior-year period. The increase in selling, general and ~~3.3%, respectively, to $411.2 million and $789.5 million,~~administrative expenses was primarily due to additional costs associated with the acquired operations of TSYS, and included acquisition and integration expenses of $71.6 million, primarily related to ~~support~~ the ~~growth of our business.~~Merger, compared to $5.3 million for the prior-year period. Selling, general and administrative expenses as a percentage of revenues was ~~44.0% and 43.4%, respectively,~~38.1% for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~45.4% and 46.9%~~42.8% for the prior-year ~~periods.~~

~~Operating Income and Operating Margin~~

~~North America Segment~~. Operating income in our North America segment for the three and six months ended June 30, 2019 increased by 25.9% and 25.3%, respectively, to $185.3 million and $341.4 million, primarily due to revenue growth. Operating margin for the three and six months ended June 30, 2019 increased to 25.9% and 24.5%, respectively, compared to 23.7% and 22.4% for the prior-year periods.

~~Europe Segment~~. Operating income in our Europe segment for the three and six months ended June 30, 2019 increased by 4.4% and 3.3%, respectively, to $86.3 million and $158.3 million. Operating margin for the three and six months ended June 30, 2019 increased to 53.8% and 52.2%, respectively, compared to 53.1% and 51.3% for the prior-year periods.

~~Asia-Pacific Segment~~. Operating income in our Asia-Pacific segment for the three and six months ended June 30, 2019 increased by 18.8% and 16.6%, respectively, to $23.3 million and $50.5 million, primarily due to revenue growth. Operating margin for the three and six months ended June 30, 2019 increased to 39.5% and 41.9%, respectively, compared to 35.1% and 38.2% for the prior-year periods.period.

Corporate. Corporate expenses increased by ~~$14.5~~$108.5 million ~~and $6.8~~to $150.6 million ~~respectively, to $73.2 million and $129.1 million, respectively,~~ for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to $42.1 million for the prior-year period, primarily due to additional expenses associated with the acquired operations of TSYS and an increase in acquisition and integration expenses primarily due to the Merger. During the three months ended March 31, 2020, Corporate expenses included acquisition and integration expenses of $69.7 million, compared to $5.3 million for the prior-year period. Certain of these Merger-related integration activities resulted in the recognition of employee termination benefits. During the three months ended March 31, 2020, we recognized charges of $17.6 million for actions taken, which included $2.6 million of share-based compensation expense. We expect to incur additional charges as Merger-related integration activities continue in 2020.

Operating Income and Operating Margin

Consolidated operating income for the three months ended March 31, 2020 increased to $244.0 million, compared to $199.5 million for the prior year due to additional income from the acquired operations of TSYS of $115.5 million, partially offset by the increase in acquisition and integration expenses. Operating margin for the three months ended March 31, 2020 decreased to 12.8%, compared to 22.6% for the prior-year period. Consolidated operating income for the three months ended March 31, 2020 reflects an increase in amortization of acquired intangibles of $206.7 million and an increase in acquisition and integration expenses of $66.6 million, primarily due to the Merger, compared to the prior-year ~~periods. The increases reflect additional costs to support the growth of our business and the effects of acquisition and integration expenses, including expenses associated with the Merger.~~period.

Other Income/Expense, Net

Interest and other ~~income decreased by $5.2 million~~expense for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020 increased by $33.6 million to $92.6 million, compared to the prior-year ~~period. Interest and other income for the six months ended June 30, 2018 included~~period, as a ~~gain~~result of ~~$9.6 million recognized on the reorganization of a debit network association of which we were a member through one of our Canadian subsidiaries.~~

Interest and other expense increased by $17.9 million and $31.4 million, respectively, for the three and six months ended June 30, 2019, compared to the prior-year periods. The increases in interest expense for the three and six months ended June 30, 2019 primarily reflect the increase in our outstanding ~~long-term debt.~~borrowings.

~~Provision for~~ Income ~~Taxes~~Tax Expense

~~Our effective tax rates for the three and six months ended June 30, 2019 were 19.9% and 18.4%, respectively, compared to 19.1% and 19.6%, respectively, for the prior-year periods.~~ Our effective income tax rates for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 were ~~different~~10.1% and 16.8%, respectively. The change in our effective tax rate for the three months ended March 31, 2020 from ~~those in~~ the ~~prior year primarily due to changes in~~prior-year period reflects the ~~amounts~~effect of ~~excess~~ tax credits and benefits ofassociated with share-based ~~awards that are recognized upon vesting or settlement.~~awards.

Liquidity and Capital Resources

In the ordinary course of our business, a significant portion of our liquidity comes from operating cash ~~flows.~~flows and borrowings, including the capacity under our credit facilities. Cash flow from operating activities is used to make planned capital investments in our business, to pursue acquisitions that meet our corporate objectives, to pay dividends, to pay principal and interest on our outstanding debt and to repurchase shares of our common stock. Accumulated cash balances are invested in high-quality, marketable short-term instruments. ~~See below under "Bridge Facility and New Permanent Financing Arrangements" for a description of our planned financing in connection with the proposed Merger.~~

Our capital plan objectives are to support our operational needs and strategic plan for long-term growth while maintaining a low cost of capital. We use ~~our~~a combination of bank financing, such as ~~term loans~~borrowings under our credit facilities and ~~our Revolving Credit Facility,~~senior note issuances, for general corporate purposes and to fund acquisitions. In addition, specialized lines of credit are also used in certain of our markets to fund merchant settlement prior to receipt of funds from the card network.

We believe that our current level of cash and borrowing capacity under our senior unsecured revolving credit facility, together with expected future cash flows from operations, will be sufficient to meet the needs of our existing operations and planned requirements for the foreseeable future. We have implemented measures to manage liquidity in future periods, including the reductions of planned capital expenditures and repurchases of our common stock. We regularly evaluate our liquidity and capital position relative to cash requirements, and we may elect to raise additional funds in the future through the issuance of debt or equity or by other means.

At ~~June 30, 2019,~~March 31, 2020, we had cash and cash equivalents totaling ~~$1,047.7~~$1,800.1 million. Of this amount, we ~~consider $437.2~~considered $1,297.8 million to be available for general purposes, of which ~~approximately $26~~$29.0 million iswas undistributed foreign earnings considered to be indefinitely reinvested outside the United States. The available cash of ~~$437.2~~$1,297.8 million ~~does~~did not include the following: (i) settlement-related cash balances, (ii) funds held as collateral for merchant losses ("Merchant Reserves") and (iii) funds held for customers. Settlement-related cash balances represent funds that we hold when the incoming amount from the card networks precedes the funding obligation to the merchant. Settlement-related cash balances are not restricted; however, these funds are generally paid out in satisfaction of settlement processing obligations the following day. Merchant Reserves serve as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant's agreement. While this cash is not restricted in its use, we believe that designating this cash to collateralize Merchant Reserves strengthens our fiduciary standing with our member sponsors and is in accordance with the guidelines set by the card networks. Funds held for customers and the corresponding liability that we record in customer deposits include amounts collected prior to remittance on our customers' behalf.

Operating activities provided net cash of ~~$247.4~~$436.6 million and ~~$506.8~~$229.7 million for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, which reflect net income adjusted for noncash items, including depreciation and amortization and changes in operating assets and liabilities. Fluctuations in operating assets and liabilities are affected primarily by timing of month-end and transaction volume, especially changes in settlement processing assets and ~~obligations, and by the effects of businesses we acquire that have different working capital requirements.~~obligations. Changes in settlement processing assets and obligations ~~decreased operating cash flows by $41.7 million during the six months ended June 30, 2019 and~~ increased operating cash flows by ~~$95.2~~$13.0 million and $118.3 million during the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2020 and 2019, respectively. The ~~decrease~~increase in cash flows from operating activities from the prior-year period was primarily due to the ~~effect~~increase in earnings before certain noncash items, including amortization of ~~changes in settlement processing assets~~acquired intangibles and ~~obligations, as well as the timing~~depreciation and amortization of ~~supplier payments~~property and ~~customer receipts.~~equipment.

We used net cash in investing activities of ~~$198.4~~$169.7 million and ~~$104.1~~$116.3 million during the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Cash used for investing activities primarily represents cash used to fund acquisitions, net of cash acquired, and capital expenditures. During the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, we used cash of ~~$78.2~~$68.2 million ~~to complete~~and $74.8 million, respectively, for acquisitions.

We made capital expenditures of ~~$133.3~~$104.8 million and ~~$102.7~~$55.1 million to purchase property and equipment during the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. These investments include software and hardware to support the development of new technologies, continued consolidation and enhancement of our operating platforms and infrastructure to support our growing business. ~~During~~Consistent with our first quarter, we will continue to make significant capital investments in the ~~year ending December 31, 2019, we expect aggregate capital expenditures for property and equipment to approximate $230 million.~~business but in light of COVID-19, will do so at a reduced rate from our initial expectations.

Financing activities include borrowings and repayments made under our ~~Credit Facility (described in "Note 7—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements),~~various debt arrangements, as well as borrowings and repayments made under specialized lines of credit to fund daily settlement activities. Our borrowing arrangements are further described in "Note 5—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements and below under "Long-Term Debt and Lines of ~~Credit" and "Bridge Facility and New Permanent Financing Arrangements.~~Credit." Financing activities also include cash flows associated with common stock repurchase programs and share-based compensation programs, as well as cash distributions made to noncontrolling interests and our shareholders. ~~Cash flows from financing activities~~We used net cash in financing activities of ~~$212.5~~$77.5 million and ~~$613.8~~$49.2 million during the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, primarily as a result of repayments of borrowings under our Credit Facility and settlement lines of credit, as well as funds used to repurchase shares of our common stock.~~respectively.

Proceeds from long-term debt were $607.0 million and $344.0 million for the three months ended March 31, 2020 and 2019, respectively. Repayments of long-term debt were ~~$569.1~~$111.0 million and ~~$1,024.7~~$173.1 million for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, respectively. Proceeds from and ~~2018, respectively. Repayments~~repayments of long-term debt consist of borrowings and repayments that we make with available cash, from time-to-time, under our Revolving Credit Facility, as well as scheduled principal repayments we make on our term loans.

Activity under our settlement lines of credit is affected primarily by timing of month-end and transaction volume. During the ~~six~~three months ended ~~June 30, 2019, we had net borrowings of settlement lines of credit of $32.2 million,~~March 31, 2020 and ~~during the six months ended June 30,~~ 2019, we had net repayments of settlement lines of credit of ~~$88.3 million.~~$78.1 million and $55.4 million, respectively.

We repurchase our common stock mainly through open market repurchase ~~plans and, at times, through accelerated share repurchase programs.~~plans. During the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ we used ~~$234.0~~$421.2 million and ~~$177.3~~$156.0 million, respectively, to repurchase shares of our common stock. As of ~~June 30, 2019,~~March 31, 2020, we had ~~$566.0~~$880.0 million of share repurchase authority remaining under a share repurchase program authorized by the board of directors.

We ~~believe that~~paid dividends to our ~~current level~~common shareholders in the amounts of ~~cash~~$58.3 million and ~~borrowing capacity under our existing long-term debt~~$1.6 million during the three months ended March 31, 2020 and lines of credit, with consideration given to the completion of our expected permanent financing arrangements, described below under "Bridge Financing and New Permanent Financing Arrangements," together with expected future cash flows from operations, will be sufficient to meet the needs of our existing operations and planned requirements for the foreseeable future.2019, respectively.

Long-Term Debt and Lines of Credit

Senior Unsecured Credit Facilities

We ~~are party to~~have a term loan credit ~~facility~~ 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 (as amended from time to time, the "Credit Facility"). As of June 30, 2019, the~~agents. The Term Loan Credit ~~Facility provided~~Agreement provides for ~~secured financing comprised of (i)~~ a ~~$1.5~~senior unsecured $2.0 billion term loan facility. The Unsecured Revolving Credit Agreement provides for a senior unsecured $3.0 billion revolving credit ~~facility "Revolving Credit Facility"); (ii) a $1.5 billion term loan ("Term A Loan"); (iii) a $1.37 billion term loan ("Term A-2 Loan"); (iv) a $1.14 billion~~facility. Borrowings under the term loan facility ~~(Term B-2 Loan");~~were made in U.S. dollars and ~~(v) a $500 million term loan ("Term B-4 Loan"). Substantially all of the assets of our domestic subsidiaries are pledged as collateral~~borrowings under the ~~Credit Facility. As of June 30, 2019, the aggregate outstanding balance on the term loans was $4.4 billion,~~revolving credit facility are available to be made in U.S. dollars, euros, sterling, Canadian dollars and, ~~the outstanding balance on the Revolving Credit Facility was $765.0 million.~~

~~The Credit Facility provides for an interest rate,~~subject to certain conditions, certain other currencies at our ~~election, of either the~~option. Borrowings in U.S. dollars and certain other London Interbank Offered Rate ("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 ~~a base~~(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 aan applicable margin. As of ~~June 30, 2019,~~March 31, 2020, borrowings outstanding under the term loan facility and the revolving credit facility were $2.0 billion and $1.4 billion, respectively.

We continue to monitor developments related to the anticipated transition from LIBOR to an alternative benchmark reference rate, such as the Secured Overnight Financing Rate ("SOFR"), beginning January 1, 2022. Additionally, we maintain contact with our lenders and other stakeholders to evaluate the potential effects of these changes on our future financing activities.

As of March 31, 2020, the interest rates on the ~~Term A Loan, the Term A-2 Loan, the Term B-2 Loan~~term loan facility and the ~~Term B-4 Loan~~revolving credit facility were ~~3.90%, 3.90%, 4.15%~~2.36% and ~~4.15%~~2.02%, respectively. ~~As of June 30, 2019, the interest rate on the Revolving Credit Facility was 3.89%.~~ In addition, we are required to pay a quarterly commitment fee with respect to the unused portion of the ~~Revolving Credit Facility~~revolving credit facility at an applicable rate per annum ranging from ~~0.20%~~0.125% to ~~0.30%,~~0.300% depending on our ~~leverage ratio.~~

~~The Term A Loan~~credit rating. Beginning on December 31, 2022, and at the end of each quarter thereafter, the Term ~~A-2~~ Loan ~~mature, and the Revolving Credit~~ Facility ~~expires, on January 20, 2023. The Term B-2 Loan matures on April 22, 2023. The Term B-4 Loan matures on October 18, 2025. The Term A Loan and Term A-2 Loan~~

principal amounts must each be repaid in quarterly installments in the amount of 1.25% of principal through June 2021, increasing to 1.875% of principal through June 2022 and increasing to 2.50% of principal through December 2022, with the remaining principal balance due upon maturity` in January 2023. The Term B-2 Loan principal must be repaid in quarterly installments in the amount of ~~0.25%~~2.50% of original principal through ~~March 2023,~~the maturity date with the remaining principal balance due upon maturity in ~~April 2023.~~September 2024. The ~~Term B-4 Loan principal must be repaid~~revolving credit facility also matures in ~~quarterly installments in the amount of 0.25% of principal through~~ September ~~2025, with the remaining principal balance due upon maturity in October 2025.~~2024.

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) $750.0 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 ~~30, 2019 were $723.2 million.~~1 and December 1.

Compliance with Covenants

The ~~Credit Facility agreement contains~~senior unsecured term loan and revolving credit facility contain customary conditions to funding, affirmative ~~and restrictive~~ covenants, ~~including, among others,~~negative covenants, financial covenants ~~based on our leverage~~ and ~~interest coverage ratios as defined in the agreement.~~events of default. As of ~~June 30, 2019,~~March 31, 2020, financial covenants under the ~~Credit Facility Agreement~~term loan facility required a leverage ratio ~~no greater than: (i) 5.00~~of 3.50 to 1.00 as of the end of any fiscal quarter ending during the period from April 1, 2018 through June 30, 2019; (ii) 4.75 to 1.00 as of the end of any fiscal quarter ending during the period from July 1, 2019 through June 30, 2020; and ~~(iii) 4.50 to 1.00 as of the end of any fiscal quarter ending thereafter. The~~an interest coverage ratio ~~is required to be no less than 3.25~~of 3.00 to 1.00. We were in compliance with all applicable covenants as of ~~June 30, 2019.~~March 31, 2020.

The Credit Facility agreement includes covenants, subject in each case to exceptions and qualifications that may restrict certain payments, including, in certain circumstances, the repurchasing of our common stock and paying cash dividends in excess of our current rate of $0.01 per share per quarter.

~~Bridge Facility and New Permanent Financing Arrangements~~

On July 9, 2019, we entered into a term loan credit agreement ("Term Loan Credit Agreement") and a credit agreement ("Unsecured Revolving Credit Agreement" and, together with the Term Loan Credit Agreement, the "Agreements"), in each case with a syndicate of financial institutions. Upon entry into the Agreements, the aggregate commitments under the Bridge Facility described above were reduced to approximately $2.1 billion. The Term Loan Credit Agreement provides for a senior unsecured $2.0 billion term loan facility and we, at our discretion, have the ability to seek to increase the term loan capacity by an additional $1.0 billion ("Term Loan Facility"). The Unsecured Revolving Credit Agreement provides for a senior unsecured $3.0 billion revolving credit facility ("Unsecured Revolving Credit Facility"). The Term Loan Facility and the Unsecured Revolving Credit Facility will be available for borrowing on the date on which the Merger becomes effective subject to customary limited conditionality for borrowings related to the Merger. The Unsecured Revolving Credit Facility will be otherwise available subject to customary conditionality. The Term Loan Credit Agreement and the Unsecured Revolving Credit Agreement will mature on the fifth anniversary of the closing date of the Merger.

Settlement Lines of Credit

credit may exceed the stated credit limit. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, a total of ~~$68.9~~$58.0 million and ~~$70.6~~$74.5 million, respectively, of cash on deposit was used to determine the available credit.

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, we had ~~$736.2~~$375.2 million and ~~$700.5~~$463.2 million outstanding under these lines of credit with additional capacity to fund settlement of ~~$628.1~~$1,092.1 million as of ~~June 30, 2019 to fund settlement. The weighted-average interest rate on these borrowings was 3.01% and 2.97% at June 30, 2019 and December~~March 31, ~~2018, respectively.~~2020. During the three months ended ~~June 30, 2019,~~March 31, 2020, the maximum and average outstanding balances under these lines of credit were ~~$873.0~~$679.0 million and ~~$440.5~~$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.

See "Note 7—5—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements for further ~~discussion~~information about our borrowing agreements and our lease liabilities.

Commitments and Contractual Obligations

During the three months ended March 31, 2020, our commitments and contractual obligations increased from the amounts disclosed in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations-Commitments and Contractual Obligations" in our Annual Report on Form 10-K for the year ended December 31, 2019. The increase primarily relates to the acquisition of software and related services for $293.8 million. We financed $97.6 million of this amount utilizing a two-year vendor financing arrangement. As of March 31, 2020, the estimated remaining purchase commitments for this acquisition are $47.6 million during the remainder of 2020, $64.9 million during 2021, $66.9 million during 2022 and $16.8 million during 2023.

Effects of the COVID-19 Pandemic on our Critical Accounting Policies

Because of the effects of the COVID-19 pandemic on our business beginning in mid-March, we evaluated the potential effects on our financial statements as of and for the three months ended March 31, 2020. However, the magnitude and duration of the ultimate effect of the COVID-19 pandemic are not possible to predict at this time, and our assessments are therefore subject to material revision.

Goodwill- We considered a variety of factors that might indicate that it is more likely than not that the fair value of any reporting unit is below its carrying amount at March 31, 2020, including general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of our ~~borrowing arrangements.~~reporting units, events or changes affecting the composition or carrying amount of the net assets of our reporting units, our share price and other relevant events. For certain of our reporting units that were recently acquired in the Merger, we also considered the expected near term impact of the COVID-19 pandemic on revenues and our cost mitigation efforts as well as longer term performance expectations. Based on the analyses completed, we believe it is not more likely than not that the carrying amount of any our reporting units exceeded the fair value as of March 31, 2020.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our financial condition, revenues, results of operations, liquidity, capital expenditures or capital resources.

Effect of New Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted

From time-to-time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standards setting bodies that may affect our current and/or future financial statements. See "Note 1—Basis of Presentation and Summary of Significant Accounting Policies" in the notes to the accompanying unaudited consolidated financial statements for a discussion of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.

Forward-Looking Statements

Investors are cautioned that some of the statements we use in this report contain forward-looking statements and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve ~~a number of~~ risks, ~~and~~ uncertainties and ~~depend upon~~assumptions that could significantly affect the financial condition, results of operations, business plans and the future ~~events or conditions.~~performance of Global Payments. Actual events or results might differ materially from those expressed or forecasted in these forward-looking statements. Accordingly, we cannot guarantee ~~you~~ that our plans and expectations will be achieved. Such statements may include, but are not limited to, statements about the effects of the COVID-19 pandemic on our business, including estimates of the effects of the pandemic on our revenues and financial operating results, the effects of actions taken by us in response to the pandemic, statements about the anticipated benefits of the Merger, including our ~~acquisitions, including~~ future financial and operating results, the combined company’s plans, objectives, expectations and intentions, statements about our expected financial and operating results, projected future growth of business, and other statements that are not historical facts. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

~~Important~~In addition to factors ~~associated~~previously disclosed in Global Payments’ reports filed with the ~~Merger~~SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual ~~events or~~ results to differ materially from ~~those anticipated by our~~ forward-looking statements or historical ~~performance,~~performance: the effects and duration of global economic, political, market, health and social events or other conditions, including ~~among others,~~ the ~~failure to consummate the Merger or failing to consummate it on the expected terms or timing, failure to realize the expected benefits~~effects and duration of the ~~Merger~~COVID-19 pandemic; regulatory measures or voluntary actions, including social distancing, shelter-in-place orders, shutdowns of nonessential businesses and similar measures imposed or undertaken in an effort to combat the spread of the COVID-19 pandemic; management’s assumptions and projections used in their estimates of the timing and severity of the effects of the COVID-19 pandemic on our future revenues and results of operations; our ability to meet our liquidity needs in light of the effects of the COVID-19 pandemic; the outcome of any legal proceedings that may be instituted against Global Payments or its or TSYS’ current or former directors; difficulties, delays and higher than anticipated costs related to integrating the businesses of Global Payments and TSYS, including with respect to implementing systems to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; failing to fully realize anticipated cost savings and other anticipated benefits of the Merger when expected or at all; business disruptions ~~related~~from the Merger or integration that will harm our business, including current plans and operations; potential adverse reactions or changes to business relationships resulting from the Merger, including as it relates to the ~~Merger and uncertainty as to the value of Global Payments' common stock following completion of the Merger.~~

~~Additional important factors, among others, that may otherwise cause actual events or results to differ materially from those anticipated by such forward-looking statements include our~~businesses’ ability to ~~safeguard our data; increased competition from larger companies~~successfully renew existing client contracts on favorable terms or at all and ~~non-traditional competitors, our ability~~obtain new clients; failing to ~~update our services~~comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in ~~a timely manner; our~~those requirements; the ability to maintain Visa and ~~MasterCard~~Mastercard registration and financial institution sponsorship; ~~our reliance on financial institutions~~the ability to ~~provide clearing services~~retain and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing following the Merger; the business, economic and political conditions in ~~connection with our settlement activities; our potential failure to comply with card network requirements; potential systems interruptions or failures; software defects or undetected errors;~~the markets in which we operate; increased ~~attrition of merchants, referral partners or independent sales organizations;~~competition in the markets in which we operate and our ability to increase our market share ofin existing markets and expand into new markets; development of market trends and technologies; a decline in the use of cards for payment generally; unanticipated increases in chargeback liability; increases in credit card network fees; change in laws, regulations or network rules or interpretations thereof;our ability to safeguard our data; risks associated with our indebtedness, foreign currency exchange and interest rate risks; ~~political, economic and regulatory~~the effects of new or changes in ~~the foreign countries in which we operate; future performance, integration~~current laws, regulations, credit card association rules or other industry standards, including privacy and ~~conversion~~cybersecurity laws and regulations; and events beyond our control, such as acts of ~~acquired operations, including without limitation difficulties and delays in integrating or fully realizing cost savings~~terrorism, and other ~~benefits of our acquisitions at all or within~~factors included in the ~~expected time period; fully realizing anticipated annual interest expense savings from refinancing our Credit Facility; our loss of key personnel and other risk factors presented~~“Risk Factors” in ~~Item 1- Risk Factors of~~ our Annual Report on Form

10-K for the year ended December 31, ~~2018~~2019, and in ~~the joint proxy statement/prospectus filed~~other documents that we file with the SEC, ~~on July 25, 2019 and any subsequent SEC filings,~~ which ~~we advise you to review.~~

~~Our~~are available at http://www.sec.gov. Any forward-looking statements speak only as of the date of this communication or as of the date they ~~are~~were made, and ~~should not be relied upon as representing our plans and expectations as of any subsequent date. While~~ we ~~may elect~~undertake no obligation to update ~~or revise forward-looking statements at some time in the future, we specifically disclaim any obligation to publicly release the results of any revisions to our~~ forward-looking statements, except as required by law.

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There has been no significant change in our exposure to market risk during the quarter ended June 30, 2019.~~ For a discussion of our exposure to market risk, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," contained in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

ITEM 4—CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~June 30, 2019,~~March 31, 2020, management carried out, under the supervision and with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of ~~June 30, 2019,~~March 31, 2020, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

~~There were no changes~~During the quarter ended March 31, 2020, as part of our ongoing integration activities following the Merger, we continued to apply our controls and procedures to the acquired operations of TSYS and to augment our company-wide controls to address the risks inherent in an acquisition of this magnitude. In response to the COVID-19 pandemic, our teams worldwide have been working remotely since the middle of March. We took precautionary measures to ensure our internal control over financial reporting ~~during~~addressed risks working in a remote environment. We are continually monitoring and assessing the ~~quarter ended June 30, 2019 that materially affected, or are reasonably likely to materially affect,~~COVID-19 potential effects on the design and operating effectiveness of our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1—LEGAL PROCEEDINGS

~~Litigation Related~~We are party to a number of claims and lawsuits incidental to our business. In our opinion, the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, are not expected to have a material adverse effect on our financial position, liquidity, results of operations or cash flows. See "Note 12—Commitments and Contingencies" in the notes to the ~~Merger~~

~~As of the date of this report, three putative class action lawsuits challenging the Merger have been filed. Two of these lawsuits, captioned~~ ~~Peters v. Total System Services, Inc. et al.~~ ~~(Case No. 4:19-cv-00114) and~~ ~~Wolf v. Total System Services, Inc., et al.~~ ~~(Case No. 4:19-cv-00115), were filed in the United States District Court~~accompanying unaudited consolidated financial statements for ~~the Middle District of Georgia on July 18, 2019. The third lawsuit, captioned~~ ~~Drulias v. Global Payments Inc., et. al~~ ~~(Case No. 60774/2019) was filed in the Supreme Court of the State of New York, County of Westchester on July 19, 2019.~~

~~The~~ ~~Peters~~ ~~lawsuit names as defendants TSYS, the current members of the TSYS board of directors and~~information about certain ~~former members of the TSYS board of directors. The~~ ~~Wolf~~ ~~lawsuit names as defendants TSYS, members of the TSYS board of directors and Global Payments. The~~ ~~Drulias~~ lawsuit names as defendants Global Payments and members of its board. The complaints filed in the lawsuits assert, among other things, claims against the members of the TSYS board of directors (and in the case of the ~~Wolf~~ ~~action and the~~ ~~Drulias~~ action, against Global Payments) for filing a materially incomplete registration statement with the SEC. The plaintiffs in the lawsuits seek, among other things, an injunction barring the Merger, rescission of the Merger or rescissory damages to the extent they have already been implemented, and an award of damages and attorney’s fees. We believe that the claims asserted in the lawsuits are without merit.legal matters.

ITEM 1A—RISK FACTORS

~~On May 27, 2019, we entered into the Merger Agreement with TSYS, pursuant~~The following represent material changes to which TSYS will merge with and into us, subject to the terms and conditions set forth therein. There are a number of risks and uncertainties relating to the Merger. Because of these risks, we have supplemented the risk factors ~~previously disclosed~~included in our Annual Report on Form 10-K for the year ended December 31, ~~2018, to add the following risk factors:~~2019.

~~Regulatory approvals~~Our business has been and is likely to continue to be negatively affected by the recent COVID-19 outbreak.

The recent outbreak of COVID-19 in many countries and regions, including the United States, Europe and Asia-Pacific, which was declared a pandemic by the World Health Organization on March 11, 2020, continues to adversely affect global commercial activity and has contributed to significant volatility in the financial markets. Starting in mid-March 2020, COVID-19 began to affect our results significantly. The deterioration accelerated toward the end of March and has adversely affected and is likely to have a further negative effect on our near-term financial results due to reduced consumer, business and government spending upon which our revenues depend.

In particular, we may experience financial losses due to a number of operational factors, including:

Merchant temporary closures and failures;

Continued unemployment which may negatively influence consumer spending;

Third-party disruptions, including potential outages at network providers, call centers and other suppliers;

Increased cyber and payment fraud risk related to COVID-19, as cybercriminals attempt to profit from the disruption, given increased online banking, e-commence and other online activity; and

Challenges to the availability and reliability of our solutions and services due to changes to operations, including the possibility of one or more clusters of COVID-19 cases occurring at our data centers, contact centers or operations centers, affecting our employees or affecting the systems or employees of our clients or other third parties on which we depend.

These factors may remain prevalent for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the COVID-19 pandemic has subsided. The full effects of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and are difficult to predict at this time, including, but not limited to, the duration and spread of the pandemic, its severity, the restrictive actions taken to contain the virus or treat its effects, its effects on our customers and how quickly and to what extent normal economic and operating conditions, operations and demand for our services can resume. It is also likely that the current outbreak or continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession. Accordingly, the ultimate effects on our operations, financial condition and cash flows cannot be ~~received, may take longer than expected or may require conditions~~determined at this time. Nevertheless, despite the uncertainty of the COVID-19 situation, we expect that ~~are not presently anticipated or that could~~the COVID-19 pandemic will have an adverse effect on ~~the combined company following the Merger.~~

~~Before the Merger may be completed, various authorizations, consents, clearances, orders~~our revenues and approvals must be obtained from various antitrust and regulatory authorities in the United States and in foreign jurisdictions. The governmental entities from which these approvals are required may refuse to approve the Merger or impose requirementsfinancial results for the ~~completion~~remainder of the Merger. Any conditions or requirements imposed could have the effect of delaying or preventing completion of the Merger or imposing additional costs on or limiting the revenues of the combined company following the Merger, any of which might have an adverse effect on the combined company following the Merger.2020.

~~We expect to incur substantial costs related to~~Furthermore, the ~~Merger and integration.~~

We have incurred and expect to incur a significant amount of non-recurring costs associated with the Merger. These costs include financial advisory, legal, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, printing costs and other related costs. Some of these costs are payable by us regardless of whether or not the Merger is completed.

The combined company is expected to incur substantial costs in connection with the related integration. There are a large number of processes, policies, procedures, operations, technologies and systems that may need to be integrated, including purchasing, accounting and finance, sales, payroll, pricing and benefits. While we have assumed that a certain level of costs will be incurred, there are many factors beyond our control that could affect the total amount or the timing of the integration costs. Moreover, many of the costs that will be incurred are, by their nature, difficult to estimate accurately. These costs could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative costsCOVID-19 pandemic and the ~~realization~~resulting adverse and unpredictable economic conditions are likely to implicate or exacerbate other risks identified in our Annual Report on Form 10-K for the year ended December 31, 2019, which in turn could materially adversely affect our business, financial condition, results of ~~economies of scale~~operations and cost savings. These integration costs may result in the combined company taking significant charges against earnings following the completion of the Merger, and the amount and timing of such charges are uncertain at present.liquidity.

~~Combining with TSYS may be more difficult, costly or time consuming than expected and we may fail to realize the anticipated benefits of the Merger.~~

The success of the Merger will depend, in part, on the ability to realize the anticipated cost savings from combining our business with TSYS. To realize the anticipated benefits and cost savings from the Merger, we and TSYS must successfully integrate and combine our businesses in a manner that permits those cost savings to be realized. If we and TSYS are not able to successfully achieve these objectives, the anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings and anticipated benefits of the Merger could be less than anticipated.

We have operated and, until the completion of the Merger, must continue to operate, independently of TSYS. It is possible that the integration process could result in the loss of key employees, the disruption of our ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, commercial counterparties and employees or to achieve the anticipated benefits and cost savings of the Merger. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on us during this transition period and for an undetermined period after completion of the Merger on the combined company.

~~The future results of the combined company following the Merger may suffer if the combined company does not effectively manage its expanded operations.~~

Following the Merger, the size of the business of the combined company will increase significantly beyond the current size of our business. The combined company’s future success will depend, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. The combined company may also face increased scrutiny from governmental authorities as a result of the significant increase in the size of its business. There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements or other benefits currently anticipated from the Merger.

~~The combined company may be unable to retain our and/or TSYS personnel successfully after the Merger is completed.~~

The success of the Merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by us and TSYS. It is possible that these employees may decide not to remain with us or TSYS, as applicable, while the Merger is pending or with the combined company after the Merger is consummated. If key employees terminate their employment, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating us and TSYS to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, we may not be able to locate or retain suitable replacements for any key employees who leave.

~~Termination of the Merger Agreement could negatively affect us.~~

If the Merger Agreement is terminated, there may be various consequences. For example, our business may have been affected adversely by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the anticipated benefits of completing the Merger. Additionally, if the Merger Agreement is terminated, the market price of our common stock could decline to the extent that the current market prices reflect a market assumption that the Merger will be completed. If the Merger Agreement is terminated under certain circumstances, we may be required to pay a termination fee of $860 million to TSYS.

Additionally, we have incurred and will incur substantial costs in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs of filing, printing and mailing the joint proxy statement/prospectus, and all filing and other fees paid to the SEC in connection with the Merger. If the Merger is not completed, we would have to recognize these as expense without realizing the expected benefits of the Merger.

~~We will incur indebtedness in connection with the Merger, which could adversely affect us, including by decreasing our business flexibility.~~

In connection with the consummation of the Merger, we intend to refinance our existing indebtedness and to assume and refinance certain indebtedness of TSYS. We have entered into credit agreements with respect to a $2.0 billion term loan facility and a $3.0 billion revolving facility that can be used, among other things, (a) to refinance certain of our outstanding indebtedness and certain outstanding indebtedness of TSYS in connection with the Merger, (b) to pay any cash payments in lieu of fractional shares payable in accordance with the terms of the Merger Agreement, (c) to pay the related transaction fees and expenses and (d)

in certain cases, for general corporate purposes, subject in each case to the customary conditions set forth in such credit agreements. We may also issue senior notes in connection with the Merger. Our increased level of debt and the covenants to which we will agree in connection with the debt financing could have negative consequences on us, including, among other things, (1) requiring us to dedicate a larger portion of our cash flow from operations to servicing and repayment of the debt, (2) reducing funds available for strategic initiatives and opportunities, working capital and other general corporate needs and (3) limiting our ability to incur certain kinds or amounts of additional indebtedness, which could restrict our flexibility to react to changes in our business, our industry and economic conditions.

~~Holders of our common stock will have a reduced ownership percentage and voting interest in the combined company after the Merger and may exercise less influence over management.~~

Holders of our common stock currently have the right to vote in the election of the board of directors and on other matters affecting us. Following the completion of the Merger, the former holders of TSYS common stock are estimated to own approximately forty-eight percent (48%) of the fully diluted shares of the combined company immediately after the Merger and current holders of our common stock as a group are estimated to own approximately fifty-two percent (52%) of the fully diluted shares of the combined company immediately after the Merger. Because of this, holders of our common stock may have less influence on the management and policies of the combined company than they now have on the management and policies of us.

~~Issuance of shares of our common stock in connection with the Merger may adversely affect the market price of our common stock.~~

In connection with the payment of the Merger consideration, we expect to issue approximately 143.4 million shares of common stock to TSYS shareholders. The issuance of these new shares of our common stock may result in fluctuations in the market price our common stock, including a stock price decrease.

ITEM 2—UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Information about the shares of our common stock that we repurchased during the quarter ended ~~June 30, 2019~~March 31, 2020 is set forth below:

Period
Total Number of
Shares Purchased ⁽¹⁾
Average Price Paid per Share Total Number of
Shares Purchased as Part of
Publicly Announced
Plans or Programs
Maximum
Number (or
Approximate
Dollar Value) of
Shares that May Yet Be Purchased Under
the Plans or
Programs ⁽²⁾
(in millions)
April 2019 451,609
$ 139.63
451,169
$ 575.0
May 2019 63,588
145.34
61,947
566.0
June 2019 6,949
158.80
—
566.0
Total 522,146
$ 140.58
513,116
$ 566.0



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
					(in millions)
January 1-31, 2020	934,051	$	194.08	930,401	$	473.4
February 1-29, 2020	924,996	194.57		839,676	292.8
March 1-31, 2020	439,042	183.37		324,654	940.0
Total	2,298,089	$	192.23	2,094,731	$	880.0

⁽¹⁾

Our board of directors has authorized us to repurchase shares of our common stock through any combination of Rule 10b5-1 open-market repurchase plans, accelerated share repurchase plans, discretionary open-market purchases or privately negotiated transactions. During the quarter ended March 31, 2020, pursuant to our employee incentive plans, we withheld 203,358 shares, at an average price per share of $185.81 in order to satisfy employees' tax withholding and payment obligations in connection with the vesting of awards of restricted stock.

During the quarter ended June 30, 2019, pursuant to our employee incentive plans, we withheld 9,030 shares at an average price per share of $155.74 in order to satisfy employees' tax withholding and payment obligations in connection with the vesting of awards of restricted stock, which we withheld at fair market value on the vesting date.

⁽²⁾

On February ~~13, 2019, we announced that~~26, 2020, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to ~~$750 million.~~$1.0 billion. As of ~~June 30, 2019,~~March 31, 2020, the ~~approximate dollar value of shares~~amount that may yet be purchased under our share repurchase program was ~~$566.0~~$880.0 million. The board authorization does not expire, but could be revoked at any time. In addition, we are not required by the board’s authorization or otherwise to complete any repurchases by any specific time or at all.

ITEM 6—EXHIBITS

List of Exhibits



~~2.1~~3.1		~~Agreement~~Third Amended and ~~Plan~~Restated Articles of ~~Merger by and between Total System Services, Inc. and~~Incorporation of Global Payments Inc., ~~dated as of May 27, 2019,~~ incorporated by reference to Exhibit ~~2.1~~4.1 to Global Payment Inc.’s Post-Effective Amendment No. 1 on Form S-8 to the ~~Company’s~~Registration Statement on Form S-4 filed on September 18, 2019.
3.2		Articles of Amendment to the Third Amended and Restated Articles of Incorporation of Global Payments Inc., incorporated by reference to Exhibit 3.1 to Global Payments Inc.'s Current Report on Form 8-K filed on May ~~31, 2019.~~1, 2020. ++
~~3.1~~3.3		~~Second~~Tenth Amended and Restated ~~Articles~~Bylaws of ~~Incorporation of the Company,~~Global Payments Inc., incorporated by reference to Exhibit ~~3.1~~3.2 to ~~the Company’s Annual Report on Form 10-K filed July 25, 2013.~~
~~3.2~~		~~Eighth Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.1 to the Company’s~~Global Payment Inc.’s Current Report on Form 8-K filed on May ~~4, 2017.~~1, 2020.
~~4.1~~10.1*		~~Stockholders Agreement, dated August 31, 2017, by and among Global Payments Inc. and the stockholders party thereto, incorporated by reference to Exhibit 10.1~~Form of Restricted Stock Award pursuant to the ~~Company's Current Report on Form 8-K filed on September 6, 2017.~~2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2020).
~~10.1~~10.2*		~~Global Payments Inc. Fifth~~Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated ~~Non-Employee Director Compensation~~Incentive Plan ~~dated April 25, 2019, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 26, 2019.~~for Executive Officers (calendar 2020).
~~10.2~~10.3*		~~Seventh Amendment~~Form of Stock Option Award pursuant to ~~Second~~the 2011 Amended and Restated Credit Agreement, dated as of May 31, 2019, among the Company, the other borrowers thereto, the guarantors thereto, the lenders thereto and Bank of America, N.A., as administrative agent, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 31, 2019.
~~10.3~~		Term Loan Credit Agreement, dated as of July 9, 2019, among the Company, as borrower, Bank of America, N.A., as administrative agent, and the other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 16, 2019.
~~10.4~~		Credit Agreement, dated as of July 9, 2019, among Global Payments Inc., as borrower, the other borrowers party thereto, Bank of America, N.A., as administrative agent, swing line lender and an L/C/ Issuer and the other lenders and L/C/ issuers party thereto, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 16, 2019.Incentive Plan for Executive Officers (calendar 2020).
31.1*		Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following financial information from the Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2019,~~March 31, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) the Unaudited Consolidated Statements of Income; (ii) the Unaudited Consolidated Statements of Comprehensive ~~Income;~~Income (Loss); (iii) the Consolidated Balance Sheets; (iv) the Unaudited Consolidated Statements of Cash Flows; (v) the Unaudited Consolidated Statements of Changes in Equity; and (vi) the Notes to Unaudited Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

______________________



*		Filed herewith.
++		Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K and Global Payments Inc. agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule and/or exhibit upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Global Payments Inc.
		(Registrant)

Date: ~~July 30, 2019~~May 6, 2020		/s/ ~~Cameron~~Paul M. ~~Bready~~Todd
		~~Cameron~~Paul M. ~~Bready~~Todd
		Senior Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

4035



	Estimated Fair Values		Weighted-Average Estimated Amortization Periods

	(in thousands)		(years)
Customer-related intangible assets	$	104,900	14
Acquired technologies	65,312		6
Trademarks and trade names	11,202		3
Contract-based intangible assets	6,880		5
Total estimated identified intangible assets	$	188,294	10



Cash and cash equivalents	$	7,657
Property and equipment	5,672
Identified intangible assets	419,500
Other assets	11,785
Deferred income taxes	(93,372		)
Other liabilities	(15,647		)
Total identifiable net assets	335,595
Goodwill	371,290
Total purchase consideration	$	706,885



	Three Months Ended June 30, 2018
	North America		Europe		Asia-Pacific		Total

	(in thousands)

Direct:
Relationship-led	$	244,861	$	102,960	$	32,371	$	380,192
Technology-enabled	296,419		52,671		23,361		372,451
	541,280		155,631		55,732		752,643
Wholesale	80,521		—		—		80,521
	$	621,801	$	155,631	$	55,732	$	833,164



	Six Months Ended June 30, 2019
	North America		Europe		Asia-Pacific		Total

	(in thousands)

Direct:
Relationship-led	$	571,637	$	205,220	$	64,161	$	841,018
Technology-enabled	691,947		97,998		56,470		846,415
	1,263,584		303,218		120,631		1,687,433
Wholesale	130,757		—		—		130,757
	$	1,394,341	$	303,218	$	120,631	$	1,818,190



	Six Months Ended June 30, 2018
	North America		Europe		Asia-Pacific		Total

	(in thousands)

Direct:
Relationship-led	$	471,281	$	195,174	$	67,613	$	734,068
Technology-enabled	579,776		103,734		45,790		729,300
	1,051,057		298,908		113,403		1,463,368
Wholesale	164,773		—		—		164,773
	$	1,215,830	$	298,908	$	113,403	$	1,628,141



	Balance Sheet Location	June 30, 2019		January 1, 2019



Assets:
Operating lease right-of-use assets⁽¹⁾	Other noncurrent assets	$	219,006	$	235,979

Liabilities:
Operating lease liabilities (current)	Accounts payable and accrued liabilities	$	34,589	$	37,339
Operating lease liabilities (noncurrent)	Other noncurrent liabilities	224,751		236,697
Total operating lease liabilities		$	259,340	$	274,036



Year ending December 31,
2019	$	24,694
2020	42,249
2021	35,221
2022	32,536
2023	28,964
2024	27,187
2025 and thereafter	147,981
Total lease payments⁽¹⁾	338,832
Imputed interest	(79,492		)
Total operating lease liabilities	$	259,340



Year ending December 31:
2019	$	50,095
2020	47,700
2021	40,035
2022	37,055
2023	33,298
2024 and thereafter	225,225
Total future minimum payments⁽¹⁾	$	433,408

3550 Lenox Road

(Address of principal executive offices)

(Zip Code)