Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
☑
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

March 31, 2024
OR
☐
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             


Commission file number: 001-16111
image1a02a14.gifGlobalPayments_Wordmark_CMYK.jpg
GLOBAL PAYMENTS INC.
(Exact name of registrant as specified in charter)
Georgia58-2567903
Georgia58-2567903
(State or other jurisdiction of

incorporation or organization)		(I.R.S. Employer

Identification No.)
3550 Lenox Road, Atlanta, Georgia30326
(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (770) 829-8000

Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading symbolName of exchange on which registered
Common stock, no par valueGPNNew York Stock Exchange
4.875% Senior Notes due 2031GPN31ANew 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒☑No ☐

Indicate by check mark whether the Registrantregistrant 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",filer," "accelerated filer",filer," "smaller reporting company"company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒☑Accelerated filer☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)☐Smaller reporting company☐
Emerging growth company☐

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



Table of Contents
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes☐
NoYes ☐   No ☒☑
The number of shares of the issuer’s common stock, no par value, outstanding as of November 2, 2017April 26, 2024 was 159,142,431.255,249,780.


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GLOBAL PAYMENTS INC.
FORM 10-Q
For the quarterly period ended September 30, 2017March 31, 2024


TABLE OF CONTENTS
Page
Page
PART I - FINANCIAL INFORMATION
ITEM 1.
Unaudited Consolidated Statements of Income for the three months ended March 31, 2024and nine months ended September 30, 2017 and 20162023
34
Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2024 and 20162023
5
Consolidated Balance Sheets at September 30, 2017March 31, 2024 (unaudited) and December 31, 20162023
6
Unaudited Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2024 and 20162023
7
Unaudited Consolidated Statements of Changes in Equity for the ninethree months ended September 30, 2017March 31, 2024 and 20162023
8
Notes to Unaudited Consolidated Financial Statements
9
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
2426
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
3236
ITEM 4.
Controls and Procedures
3336
PART II - OTHER INFORMATION
ITEM 1.
Legal Proceedings
3437
ITEM 1A.
Risk Factors
3437
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
3437
ITEM 6.5.
ExhibitsOther Information
3537
ITEM 6.
SignaturesExhibits
3638
Signatures
39





3
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PART 1I - FINANCIAL INFORMATION


ITEM 1—FINANCIAL STATEMENTS


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


Three Months Ended
March 31, 2024March 31, 2023
Revenues$2,420,187 $2,292,447 
Operating expenses:
Cost of service922,390 947,753 
Selling, general and administrative1,045,545 1,043,126 
    Loss on business disposition— 244,833 
 1,967,935 2,235,712 
Operating income452,252 56,735 
Interest and other income35,928 11,153 
Interest and other expense(162,147)(122,945)
 (126,219)(111,792)
Income (loss) before income taxes and equity in income of equity method investments326,033 (55,057)
Income tax expense (benefit)19,382 (31,399)
Income (loss) before equity in income of equity method investments306,651 (23,658)
Equity in income of equity method investments, net of tax16,411 19,238 
Net income (loss)323,062 (4,420)
Net income attributable to noncontrolling interests(9,755)(6,621)
Net income (loss) attributable to Global Payments$313,307 $(11,041)
Earnings (loss) per share attributable to Global Payments:
Basic earnings (loss) per share$1.22 $(0.04)
Diluted earnings (loss) per share$1.22 $(0.04)
 Three Months Ended
 September 30, 2017 September 30, 2016
    
Revenues$1,038,907
 $951,885
Operating expenses:   
Cost of service493,883
 469,980
Selling, general and administrative372,553
 361,516
 866,436
 831,496
Operating income172,471
 120,389
    
Interest and other income2,347
 1,465
Interest and other expense(40,764) (45,609)
 (38,417) (44,144)
Income before income taxes134,054
 76,245
Provision for income taxes(15,692) (14,021)
Net income118,362
 62,224
Less: Net income attributable to noncontrolling interests, net of income tax(7,622) (6,714)
Net income attributable to Global Payments$110,740
 $55,510
    
Earnings per share attributable to Global Payments:   
Basic earnings per share$0.72
 $0.36
Diluted earnings per share$0.71
 $0.36

See Notes to Unaudited Consolidated Financial Statements.


















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

4
 Nine Months Ended
 September 30, 2017 September 30, 2016
    
Revenues$2,920,910
 $2,420,789
Operating expenses:   
Cost of service1,418,969
 1,125,041
Selling, general and administrative1,092,648
 1,019,626
 2,511,617
 2,144,667
Operating income409,293
 276,122
    
Interest and other income5,787
 45,312
Interest and other expense(130,422) (95,280)
 (124,635) (49,968)
Income before income taxes284,658
 226,154
Provision for income taxes(40,893) (33,350)
Net income243,765
 192,804
Less: Net income attributable to noncontrolling interests, net of income tax(17,302) (15,150)
Net income attributable to Global Payments$226,463
 $177,654
    
Earnings per share attributable to Global Payments:   
Basic earnings per share$1.48
 $1.24
Diluted earnings per share$1.47
 $1.23
See Notes to Unaudited Consolidated Financial Statements.
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GLOBAL PAYMENTS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)


Three Months Ended
March 31, 2024March 31, 2023
Net income (loss)$323,062 $(4,420)
Other comprehensive income (loss):
Foreign currency translation adjustments(84,360)37,450 
Income tax (expense) benefit related to foreign currency translation adjustments2,694 (187)
Net unrealized gains (losses) on hedging activities29,116 (48,051)
Reclassification of net unrealized (gains) losses on hedging activities to interest expense(2,662)1,386 
Income tax (expense) benefit related to hedging activities(6,388)10,950 
Other, net of tax— (22)
Other comprehensive income (loss)(61,600)1,526 
Comprehensive income (loss)261,462 (2,894)
Comprehensive income (loss) attributable to noncontrolling interests(13,332)12,995 
Comprehensive income (loss) attributable to Global Payments$274,794 $(15,889)
 Three Months Ended
 September 30, 2017 September 30, 2016
    
Net income$118,362
 $62,224
Other comprehensive income:   
Foreign currency translation adjustments42,417
 1,694
Unrealized gains on hedging activities341
 3,429
Reclassification of unrealized losses on hedging activities to net income1,172
 1,853
Income tax provision related to hedging activities(670) (1,951)
Other18
 23
Other comprehensive income, net of tax43,278
 5,048
    
Comprehensive income161,640
 67,272
Less: comprehensive income attributable to noncontrolling interests(9,950) (5,902)
Comprehensive income attributable to Global Payments$151,690
 $61,370


 Nine Months Ended
 September 30, 2017 September 30, 2016
    
Net income$243,765
 $192,804
Other comprehensive income (loss):   
Foreign currency translation adjustments133,921
 (9,259)
Income tax benefit related to foreign currency translation adjustments—
 5,816
Unrealized losses on hedging activities(2,214) (12,665)
Reclassification of unrealized losses on hedging activities to net income4,667
 5,733
Income tax (provision) benefit related to hedging activities(919) 2,618
Other(196) (803)
Other comprehensive income (loss), net of tax135,259
 (8,560)
    
Comprehensive income379,024
 184,244
Less: comprehensive income attributable to noncontrolling interests(32,352) (18,926)
Comprehensive income attributable to Global Payments$346,672
 $165,318
See Notes to Unaudited Consolidated Financial Statements.

5


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GLOBAL PAYMENTS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, 2024December 31, 2023
(Unaudited)
ASSETS  
Current assets:  
Cash and cash equivalents$2,167,616 $2,088,887 
Accounts receivable, net1,054,193 1,120,078 
Settlement processing assets5,617,576 4,097,417 
Prepaid expenses and other current assets830,548 767,377 
Total current assets9,669,933 8,073,759 
Goodwill26,728,023 26,743,523 
Other intangible assets, net9,797,023 10,168,046 
Property and equipment, net2,200,366 2,190,005 
Deferred income taxes80,241 111,712 
Notes receivable731,429 713,123 
Other noncurrent assets2,567,735 2,570,018 
Total assets$51,774,750 $50,570,186 
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit$1,095,901 $981,244 
Current portion of long-term debt1,579,357 620,585 
Accounts payable and accrued liabilities2,630,789 2,824,979 
Settlement processing obligations5,209,972 3,698,921 
Total current liabilities10,516,019 8,125,729 
Long-term debt15,565,705 15,692,297 
Deferred income taxes2,062,885 2,242,105 
Other noncurrent liabilities643,996 722,540 
Total liabilities28,788,605 26,782,671 
Commitments and contingencies
Redeemable noncontrolling interests143,069 507,965 
Equity:
Preferred stock, no par value; 5,000,000 shares authorized and none issued— — 
Common stock, no par value; 400,000,000 shares authorized at March 31, 2024 and December 31, 2023; 255,130,560 issued and outstanding at March 31, 2024 and 260,382,746 issued and outstanding at December 31, 2023— — 
Paid-in capital18,806,396 19,800,953 
Retained earnings3,706,873 3,457,182 
Accumulated other comprehensive loss(297,438)(258,925)
Total Global Payments shareholders’ equity22,215,831 22,999,210 
Nonredeemable noncontrolling interests627,245 280,340 
Total equity22,843,076 23,279,550 
Total liabilities, redeemable noncontrolling interests and equity$51,774,750 $50,570,186 
 September 30, 2017 December 31, 2016
 (Unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents$1,186,050
  $1,162,779
Accounts receivable, net of allowances for doubtful accounts of $1,423 and $1,092, respectively296,366
  275,032
Settlement processing assets1,847,232
  1,546,854
Prepaid expenses and other current assets220,649
  131,341
Total current assets3,550,297
  3,116,006
Goodwill5,616,414
  4,807,594
Other intangible assets, net2,328,709
  2,085,292
Property and equipment, net577,188
  526,370
Deferred income taxes16,736
 15,789
Other noncurrent assets192,205
  113,299
Total assets$12,281,549
  $10,664,350
LIABILITIES AND EQUITY    
Current liabilities:    
Settlement lines of credit$487,513
 $392,072
Current portion of long-term debt93,408
 177,785
Accounts payable and accrued liabilities992,363
  804,887
Settlement processing obligations1,550,627
 1,477,212
Total current liabilities3,123,911
  2,851,956
Long-term debt4,677,910
 4,260,827
Deferred income taxes632,648
  676,472
Other noncurrent liabilities152,127
  95,753
Total liabilities8,586,596
  7,885,008
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; 158,762,894 issued and outstanding at September 30, 2017 and 152,185,616 issued and outstanding at December 31, 2016—
  —
Paid-in capital2,376,331
  1,816,278
Retained earnings1,357,526
  1,137,230
Accumulated other comprehensive loss(202,508)  (322,717)
Total Global Payments shareholders’ equity3,531,349
  2,630,791
Noncontrolling interests163,604
 148,551
Total equity3,694,953
 2,779,342
Total liabilities and equity$12,281,549
  $10,664,350

See Notes to Unaudited Consolidated Financial Statements.

6
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GLOBAL PAYMENTS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30, 2017 September 30, 2016
Three Months EndedThree Months Ended
March 31, 2024March 31, 2024March 31, 2023
Cash flows from operating activities:   
Net income$243,765
 $192,804
Adjustments to reconcile net income to net cash provided by operating activities:
 
Net income (loss)
Net income (loss)
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of property and equipment
Depreciation and amortization of property and equipment
Depreciation and amortization of property and equipment80,868
 62,964
Amortization of acquired intangibles249,095
 173,345
Amortization of capitalized contract costs
Share-based compensation expense30,771
 26,060
Provision for operating losses and bad debts37,203
 26,069
Amortization of capitalized customer acquisition costs32,863
 9,337
Provision for operating losses and credit losses
Noncash lease expense
Deferred income taxes(51,093) (30,504)
Gain on sale of investments—
 (41,150)
Equity in income of equity method investments, net of tax
Facilities exit charges
Loss on business disposition
Other, net34,190
 26,790
Changes in operating assets and liabilities, net of the effects of acquisitions:   
Changes in operating assets and liabilities, net of the effects of business combinations:
Accounts receivable
Accounts receivable
Accounts receivable(6,070) 14,216
Settlement processing assets and obligations, net(232,713) (109)
Prepaid expenses and other assets(12,605) (27,474)
Capitalized customer acquisition costs(65,697) (45,425)
Accounts payable and other liabilities19,546
 (19,491)
Net cash provided by operating activities360,123
 367,432
Cash flows from investing activities:   
Business acquisitions, net of cash acquired(563,009) (1,825,975)
Business combinations and other acquisitions, net of cash and restricted cash acquired
Business combinations and other acquisitions, net of cash and restricted cash acquired
Business combinations and other acquisitions, net of cash and restricted cash acquired
Capital expenditures(136,612) (102,442)
Proceeds from sale of investments—
 37,783
Proceeds from sales of property and equipment37,520
 —
Other, net(48,056) (1,409)
Net cash used in investing activities(710,157) (1,892,043)
Cash flows from financing activities:   
Net proceeds from (repayments of) settlement lines of credit77,397
 (952)
Net borrowings from (repayments of) settlement lines of credit
Net borrowings from (repayments of) settlement lines of credit
Net borrowings from (repayments of) settlement lines of credit
Net borrowings from (repayments of) commercial paper notes
Proceeds from long-term debt1,713,324
 3,263,045
Repayments of long-term debt(1,386,721) (1,110,258)
Payment of debt issuance costs(9,520) (58,448)
Repurchase of common stock(32,811) (130,314)
Payments of debt issuance costs
Repurchases of common stock
Proceeds from stock issued under share-based compensation plans7,068
 5,614
Common stock repurchased - share-based compensation plans(21,171) (15,622)
Proceeds from sale of subsidiary shares to noncontrolling interest—
 16,374
Distributions to noncontrolling interests(9,301) (10,216)
Contributions from noncontrolling interests
Purchase of capped calls related to issuance of convertible notes
Dividends paid(5,141) (4,376)
Net cash provided by financing activities333,124
 1,954,847
Effect of exchange rate changes on cash40,181
 (7,142)
Increase in cash and cash equivalents23,271
 423,094
Cash and cash equivalents, beginning of the period1,162,779
 587,751
Cash and cash equivalents, end of the period$1,186,050
 $1,010,845
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of the period
Cash, cash equivalents and restricted cash, end of the period

See Notes to Unaudited Consolidated Financial Statements.

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


Shareholders' Equity
 
Number of Shares
Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive LossTotal Global Payments Shareholders’ EquityNonredeemable Noncontrolling InterestsTotal EquityRedeemable Noncontrolling Interests
Balance at December 31, 2023260,383 $19,800,953 $3,457,182 $(258,925)$22,999,210 $280,340 $23,279,550 $507,965 
Net income313,307 313,307 7,693 321,000 2,062 
Other comprehensive loss(38,513)(38,513)(15,001)(53,514)(8,086)
Stock issued under share-based compensation plans1,132 11,031 11,031 11,031 
Common stock repurchased - share-based compensation plans(322)(42,663)(42,663)(42,663)
Share-based compensation expense40,117 40,117 40,117 
Repurchases of common stock(6,062)(808,365)(808,365)(808,365)
Distributions to noncontrolling interests— (4,748)(4,748)
Contributions from noncontrolling interests— 89 89 
Reclassification of redeemable noncontrolling interest to nonredeemable noncontrolling interest— 358,872 358,872 (358,872)
Purchase of capped calls related to issuance of convertible notes, net of taxes of $61,573(194,677)(194,677)(194,677)
Cash dividends declared ($0.25 per common share)(63,616)(63,616)(63,616)
Balance at March 31, 2024255,131 $18,806,396 $3,706,873 $(297,438)$22,215,831 $627,245 $22,843,076 $143,069 
 
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, 2016152,186
 $1,816,278
 $1,137,230
 $(322,717) $2,630,791
 $148,551
 $2,779,342
Net income    226,463
   226,463
 17,302
 243,765
Other comprehensive income, net of tax      120,209
 120,209
 15,050
 135,259
Stock issued under share-based compensation plans851
 7,068
     7,068
   7,068
Common stock repurchased - share-based compensation plans(256) (24,078) 

   (24,078)   (24,078)
Share-based compensation expense  30,771
     30,771
   30,771
Issuance of common stock in connection with a business combination6,358
 572,079
     572,079
   572,079
Dissolution of a subsidiary    7,998
   7,998
 (7,998) —
Distributions to noncontrolling interest        —
 (9,301) (9,301)
Repurchase of common stock(376) (25,787) (9,024)   (34,811)   (34,811)
Dividends paid ($0.03133 per share)    (5,141)   (5,141)   (5,141)
Balance at September 30, 2017158,763
 $2,376,331
 $1,357,526
 $(202,508) $3,531,349
 $163,604
 $3,694,953


 
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, 2015129,274
 $133,345
 $943,879
 $(247,190) $830,034
 $112,176
 $942,210
Net income    177,654
   177,654
 15,150
 192,804
Other comprehensive income (loss), net of tax      (12,336) (12,336) 3,776
 (8,560)
Stock issued under share-based compensation plans761
 5,614
   

 5,614
   5,614
Common stock repurchased - share-based compensation plans(258) (19,850)   

 (19,850) 

 (19,850)
Tax benefit from employee share-based compensation plans  13,896
     13,896
   13,896
Share-based compensation expense  26,060
     26,060
   26,060
Issuance of common stock in connection with a business combination25,644
 1,879,458
     1,879,458
   1,879,458
Purchase of subsidiary shares from noncontrolling interest        —
 42,027
 42,027
Contribution of subsidiary shares to noncontrolling interest related to a business combination  (820)     (820) (3,925) (4,745)
Distributions to noncontrolling interest        —
 (10,216) (10,216)
Repurchase of common stock(1,816) (127,816) (2,498)   (130,314)   (130,314)
Dividends paid ($0.03 per share)    (4,376)   (4,376)   (4,376)
Balance at September 30, 2016153,605
 $1,909,887
 $1,114,659
 $(259,526) $2,765,020
 $158,988
 $2,924,008
Shareholders' Equity
 
Number of Shares
Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Total Global Payments Shareholders’ Equity
Nonredeemable Noncontrolling InterestsTotal EquityRedeemable Noncontrolling Interests
Balance at December 31, 2022263,082 $19,978,095 $2,731,380 $(405,969)$22,303,506 $236,704 $22,540,210 $— 
Net income (loss)(11,041)(11,041)6,621 (4,420)
Other comprehensive income (loss)(4,848)(4,848)6,374 1,526 
Stock issued under share-based compensation plans1,014 6,103 6,103 6,103 
Common stock repurchased - share-based compensation plans(266)(30,189)(30,189)(30,189)
Share-based compensation expense89,566 89,566 89,566 
Redeemable noncontrolling interests acquired in a business combination— — 556,070 
Issuance of share-based awards in connection with a business combination2,484 2,484 2,484 
Repurchases of common stock(2,059)(206,553)(206,553)(206,553)
Distributions to noncontrolling interest— (6,218)(6,218)
Cash dividends declared ($0.25 per common share)(65,750)(65,750)(65,750)
Balance at March 31, 2023261,771 $19,839,506 $2,654,589 $(410,817)$22,083,278 $243,481 $22,326,759 $556,070 
See Notes to Unaudited Consolidated Financial Statements.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Business, consolidation and presentation— - We are a leading worldwide provider of paymentpayments technology servicescompany delivering innovative solutionssoftware and services to our customers globally. Our technologies, services and employeeteam member expertise enableallow us to provide a broad range of servicessolutions that allowenable our customers to accept various payment types. We distribute our servicesoperate their businesses more efficiently across a variety of channels to customers in 30 countries throughout North America, Europe,around the Asia-Pacific region and Brazil andworld. We operate in threetwo reportable segments: North America, EuropeMerchant Solutions and Asia-Pacific.
We were incorporatedIssuer Solutions. As described in Georgia as Global Payments Inc. in 2000 and spun-off from"Note 3—Business Disposition," during the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former parent company in 2001. Including our time as partConsumer Solutions segment. Our consolidated financial statements include the results of our former parent company, we have been in the payment technology services business since 1967.Consumer Solutions segment for periods prior to disposition. See "Note 15—Segment Information" for further 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. Investments in entities that we do not control are accounted for using the equity or cost method, based on whether or not we have the ability to exercise significant influence over operating and financial policies. 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 (the "SEC"("SEC"). The consolidated balance sheet as of December 31, 20162023 was derived from the audited financial statements included in our TransitionAnnual Report on Form 10-K for the seven monthsyear ended December 31, 20162023 but does not include all disclosures required by GAAP for annual financial statements. As a result of the change in our fiscal year end from May 31 to December 31, we presented our interim financial information for the three and nine months ended September 30, 2016 on the basis of the new fiscal year for comparative purposes. 


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 TransitionAnnual Report on Form 10-K for the seven monthsyear ended December 31, 2016.2023.


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, uncertainty resulting from global events and other macroeconomic conditions 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 based upon management’s estimates and assumptions utilizing the most currently available information.


SEC Rule Changes - On March 6, 2024, the SEC adopted final rules that require disclosure of certain climate-related information, including disclosures relating to material climate-related risks, targets or goals, risk management and governance activities and greenhouse gas emissions. In addition, the rules require disclosure of certain climate-related financial metrics in the notes to the audited financial statements. The new disclosures are required on a prospective basis and a phased-in compliance period becomes effective for us beginning with our Annual Report on Form 10-K for the year ending December 31, 2025. However, pending the resolution of legal challenges that were subsequently filed against these rules, in April 2024, the SEC stayed the effectiveness of the rules. Therefore, the enforceability of these rules or the timing of their effectiveness is uncertain.

Recently Adopted Accounting Pronouncementsissued accounting pronouncements not yet adopted


ASU 2023-09 - In March 2016,December 2023, the Financial Accounting Standards Board ("FASB")FASB issued Accounting Standards Update ("ASU") 2016-09, "Compensation - Stock CompensationASU 2023-09, "Income Taxes (Topic 718)740): ImprovementsImprovement to Employee Share-Based Payment Accounting.Income Tax Disclosures," which is intended to enhance the transparency and decision usefulness of income tax information through improvements to income tax disclosures, primarily related to the rate reconciliation and income taxes paid. The amendments in this update changed how companies accountare effective for certain aspects of share-based payments to employees. We adopted the various amendments in ASU 2016-09 in our unaudited consolidated financial statements effective January 1, 2017 with no material effect at the date of adoption. On a prospective basis, as required, we recognize the income tax effects of the excess benefits or deduction deficiencies of share-based awards in the statement of income when the awards vest or are settled. Previously, these amounts were recorded as an adjustment to additional paid-in capital. In addition, these excess tax benefits or deduction deficiencies from share-based compensation plans, which were previously presented as a financing activity in our consolidated statement of cash flows, are now presented as an operating activity using a retrospective transition method for all periods presented. Finally, we have elected to account for forfeitures of share-based awards with service conditions as they occur.

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which makes clarifications to how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. We adopted ASU 2016-15 on a retrospective basis effective January 1, 2017 with no effect on our unaudited consolidated statements of cash flows for any period presented.

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The ASU eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of

goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We adopted ASU 2017-04 on a prospective basis effective January 1, 2017. The adoption of this standard had no effect on our unaudited consolidated financial statements.

Recently Issued Pronouncements Not Yet Adopted

Accounting Standard Codification ("ASC") 606 - New Revenue Standard

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP and permits the use of either the retrospective or modified retrospective transition method. The update requires significant additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09, as amended by ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," is effective forfiscal years beginning after December 15, 2017, including2024. Early adoption is permitted. The amendments should be applied on a prospective basis with the option to apply the standard retrospectively. We are evaluating how the enhanced disclosure requirements of ASU 2023-09 will affect our presentation, and we will include the incremental disclosures upon the effective date.
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ASU 2023-07 - In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, inclusion of all annual disclosures in interim periods with early adoption permittedand disclosure of the title and position of the chief operating decision maker. The amendments in this update are effective for fiscal years beginning after December 15, 2016. Since the issuance of ASU 2014-09, the FASB has issued additional interpretive guidance, including new accounting standards updates, that clarifies certain points of the standard2023 and modifies certain requirements.

We have performed a review of the requirements of the new revenue standard and are monitoring the activity of the FASB and the transition resource group as it relatesfor interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to specific interpretive guidance. We have established a cross-functional implementation team to assess the effects of the new revenue standard in a multi-phase approach. In the first phase, we analyzed customer contracts for our most significant contract categories, applied the five-step model of the new standard to each contract category and compared the results to our current accounting practices. We are nearing completion of the second phase, which includes quantifying the potential effects, assessing additional contract categories and principal agent considerations, revising accounting policies and considering the effects on related disclosures and/or internal control over financial reporting. The third phase, which will complete our adoption and implementation of the new revenue standard, includes activities such as implementing parallel accounting and reporting for areas affected by the new standard, quantifying the cumulative effect adjustment (including tax effects), evaluating and testing modified and newly implemented internal controls and revising financial statement disclosures.

The new standard could change the amount and timing of revenue and expenses to be recognized under certain of our arrangement types. In addition, it could increase the administrative burden on our operations to properly account for customer contracts and provide the more expansive required disclosures. More judgment and estimates may be required within the process of applying the requirements of the new standard than are required under existing GAAP, such as identifying performance obligations in contracts, estimating the amount of variable consideration to include in transaction price, allocating transaction price to each separate performance obligation and estimating expected customer lives. We have not completed our assessment or quantified the effect the new guidance will have on our consolidated financial statements, related disclosures and/or our internal control over financial reporting. This will occur during the third and final phase of our implementation as discussed in the previous paragraph. Our preliminary view is that we expect the amount and timing of revenue to be recognized under ASU 2014-09 for our most significant contract category, core payment services, will be similar to the amount and timing of revenue recognized under our current accounting practices. However, we are still evaluating principal agent considerations for certain amounts that we pay to third parties and currently recognize as a component of operating expense, which could result in such amounts being recorded as a reduction of revenue under ASU 2014-09. This change would not affect operating income. We also expect to be required to capitalize additional costs to obtain contracts with customers, and, in some cases, may be required to amortize these costs and costs that we currently capitalize (such as capitalized customer acquisition costs) over a longer time period. Finally, we expect disclosures about our revenues and related customer acquisition costs will be more extensive.

We plan to adopt ASU 2014-09, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on January 1, 2018. We will likely apply the modified retrospective transition method, which would result in an adjustment to retained earnings for the cumulative effect, if any, of applying the standard to contracts that are not completed at the

date of initial application. Under this method, we would not restate theall prior financial statementsperiods presented therefore the new standard requires us to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018, as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any.

Other Accounting Standards Updates

In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The ASU expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. In addition,We are evaluating how the amendments in this update modifyenhanced disclosure requirements of ASU 2023-07 will affect our presentation, and we will include the incremental disclosures upon the effective date.

NOTE 2—ACQUISITION

EVO Payments, Inc.

On March 24, 2023, we acquired all of the outstanding common stock of EVO Payments, Inc. (“EVO”). EVO is a payment technology and services provider, offering payment solutions to merchants ranging from small and middle market enterprises to multinational companies and organizations across the Americas and Europe. The acquisition aligns with our technology-enabled payments strategy, expands our geographic presence in attractive markets and augments our business-to-business software and payment solutions business.

Total purchase consideration was $4.3 billion, which consisted of the following (in thousands):
Cash paid to EVO shareholders (1)
$3,273,951 
Cash paid for equity awards attributable to purchase consideration (2)
58,510 
Value of replacement awards attributable to purchase consideration (3)
2,484 
Total purchase consideration transferred to EVO shareholders3,334,945 
Repayment of EVO's unsecured revolving credit facility (including accrued interest and fees)665,557 
Payment of certain acquiree transaction costs and other liabilities on behalf of EVO (4)
269,118 
Total purchase consideration$4,269,620 

(1) Holders of EVO common stock, convertible preferred stock and common units received $34 for presentationeach share of hedging activities. Those modifications include a tabular disclosure relatedEVO common stock held at the effective time of the transaction.

(2) Pursuant to the effect onmerger agreement, we cash settled vested options and certain unvested equity awards of EVO equity award holders.

(3) Pursuant to the income statementmerger agreement, we granted equity awards for approximately 0.3 million shares of Global Payments common stock to certain EVO equity award holders. Each such replacement award is subject to the same terms and conditions (including vesting and exercisability) that applied to the corresponding EVO equity award. We apportioned the fair value of the replacement awards between purchase consideration (the portion attributable to pre-acquisition services in relation to the total vesting term of the award) and cash flow hedgesamounts to be recognized in periods following the acquisition as share-based compensation expense over the requisite service period of the replacement awards.

(4) Certain acquiree transaction costs and eliminateliabilities, including amounts outstanding under EVO’s tax receivable agreement, were required to be repaid by us upon consummation of the requirement to disclose the ineffectiveacquisition.

The cash portion of the change in fair value of hedging instruments, if any. The ASU will become effective for uspurchase consideration was funded through cash on January 1, 2019. Early application is permitted for all hedging relationships that exist at the date of adoption. We are evaluating the effect of ASU 2017-12 on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business." The ASU clarifies the definition of a business, which affects many areas of accounting including acquisitions, disposals, goodwillhand and consolidation. The new standard is intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses, with the expectation that fewer will qualify as acquisitions (or disposals) of businesses. The ASU will become effective for us on January 1, 2018. These amendments will be applied prospectively from the date of adoption. The effect of ASU 2017-01 will be dependent upon the nature of future acquisitions or dispositions that we make, if any.

In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory." The amendments in this update state that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory, such as intellectual property and property and equipment, when the transfer occurs. The amendments in this update will become effective for us on January 1, 2018. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We do not expect that the adoption of ASU 2016-16 will have a material effect on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial instruments." The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The guidance will become effective for us on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. We are evaluating the effect of ASU 2016-13 on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases." The amendments in this update require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. In addition, several new disclosures will be required. Although early adoption is permitted, we expect to adopt ASU 2016-02 when it becomes effective for us on January 1, 2019. Adoption will require a modified retrospective transition where the lessees are required to recognize and measure leases at the beginning of the earliest period presented. In September 2017, the FASB issued ASU 2017-13, "Revenue Recognition" (Topic 605), "Revenue from Contracts with Customers" (Topic 606), "Leases" (Topic 840), and "Leases" (Topic 842), which provides additional implementation guidance on the previously issued ASU 2016-02. We have not completed our evaluation of the effect of ASU 2016-02 or ASU 2017-13 on our consolidated financial statements; however, we expect to recognize right of use assets and liabilities for our operating leases in the balance sheet upon adoption.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." The amendments in this update address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendments in this update supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures and limited liability

companies) to be measured at fair value with changes in the fair value recognized through earnings. Equity investments that are accounted forborrowings under the equity method of accounting or result in consolidation of an investee are not included within the scope of this update. The amendments allow equity investments that do not have readily determinable fair values to be remeasured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. The guidance will become effective for us on January 1, 2018. We do not expect that the adoption of ASU 2016-01 will have a material effect on our consolidated financial statements and related disclosures.

NOTE 2—ACQUISITIONS

ACTIVE Network

On September 1, 2017, we acquired the communities and sports divisions of Athlaction Topco, LLC ("ACTIVE Network") in a cash-and-stock transaction with Vista Equity Partners. We paid the sellers consideration of $600 million in cash, which we funded primarily by drawing on our revolving credit facility, and 6,357,509 sharesfacility.

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Table of our common stock having an estimated fair value of approximately $572 million. The acquisition-date fair value of common stock issued toContents
We accounted for the sellers was determined based on the share price of our common stock as of theEVO acquisition date and the effect of certain transfer restrictions.

This transaction was accounted for as a business combination, which generally requires that we recordrecognize the assets acquired and liabilities assumed at fair value as of the acquisition date. The accounting for this acquisition was not complete as of September 30, 2017. The fair values of the assets acquired and the liabilities assumed have been determined provisionally and are subject to adjustment as we obtain additional information. In particular, additional time is needed to refine and review the results of the valuation of assets and liabilities and to evaluate the basis differences for assets and liabilities for financial reporting and tax purposes.

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

Cash and cash equivalents$42,866
Property and equipment22,889
Identified intangible assets471,120
Other assets80,485
Deferred income taxes(26,757)
Other liabilities(123,047)
Total identifiable net assets467,556
Goodwill704,020
Total purchase consideration$1,171,576
Final Amounts at
March 31, 2024
Cash and cash equivalents$324,859 
Accounts receivable51,470 
Settlement processing assets134,712 
Deferred income tax assets1,734 
Property and equipment72,100 
Identifiable intangible assets1,478,995 
Other assets148,567 
Accounts payable and accrued liabilities(289,360)
Settlement lines of credit(7,587)
Settlement processing obligations(163,535)
Deferred income tax liabilities(253,221)
Other liabilities(61,207)
Total identifiable net assets1,437,527 
Redeemable noncontrolling interests(471,119)
Goodwill3,303,212 
Total purchase consideration$4,269,620 


ACTIVE Network delivers cloud-based, mission critical enterprise software, including payment technology solutions,During the three months ended March 31, 2024, we made measurement-period adjustments that increased the amount of goodwill by $19.9 million, primarily related to event organizersdeferred income taxes as a result of finalizing the evaluation of the differences in the communitiesbases of assets and healthliabilities for financial reporting and fitness verticals. This acquisition aligns withtax purposes. The effects of the measurement-period adjustments on our technology-enabled, software driven strategy and adds an enterprise software business operating in two new vertical markets that we believe offer attractive growth fundamentals. Goodwillconsolidated statement of $704.0 millionincome for the three months ended March 31, 2024 were not material.

Goodwill arising from the acquisition was included in the North America operatingMerchant Solutions segment and was attributable to expected growth opportunities, potential synergies from combining the acquired business into our existing businesses and an assembled workforce. We expect that approximately 80%$1.2 billion of the goodwill from this acquisition will be deductible for income tax purposes.


We are still evaluating information to separately identify and value the intangible assets acquired. We expect such assets to include primarily customer-related intangible assets and acquired technology as well as other identifiable intangible assets that are similar to those we have identified in previous acquisitions. We estimate the amortization periods for the more significant intangible assets to be in a range of 5 to 15 years.

Heartland

We merged with Heartland Payment Systems, Inc. ("Heartland") in a cash-and-stock transaction on April 22, 2016 for total purchase consideration of $3.9 billion. The following table summarizesreflects the components of the consideration transferred on April 22, 2016 (in thousands):
Cash consideration paid to Heartland stockholders $2,043,362
Fair value of Global Payments common stock issued to Heartland stockholders 1,879,458
Total purchase consideration $3,922,820

This transaction was accounted for as a business combination, which requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date. The estimated acquisition-date fair values of major classesthe identified intangible assets of assets acquiredEVO and liabilities assumed previously determined astheir respective weighted-average estimated amortization periods:

Estimated Fair ValueWeighted-Average Estimated Amortization Periods
(in thousands)(years)
Customer-related intangible assets$916,000 11
Contract-based intangible assets470,000 12
Acquired technologies86,995 7
Trademarks and trade names6,000 2
Total estimated identifiable intangible assets$1,478,995 11

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For the three months ended March 31, 20162024, and as subsequently revised, including a reconciliation toduring the total purchase consideration, are as follows:
 December 31, 2016 Measurement-Period Adjustments Final
      
 (in thousands)
      
Cash and cash equivalents$304,747
 $—
 $304,747
Accounts receivable70,385
 —
 70,385
Prepaid expenses and other assets103,090
 (5,131) 97,959
Identified intangible assets1,639,040
 —
 1,639,040
Property and equipment106,583
 —
 106,583
Debt(437,933) —
 (437,933)
Accounts payable and accrued liabilities(457,763) (65) (457,828)
Settlement processing obligations(36,578) (3,727) (40,305)
Deferred income taxes(518,794) 18,907
 (499,887)
Other liabilities(64,938) (33,495) (98,433)
Total identifiable net assets707,839
 (23,511) 684,328
Goodwill3,214,981
 23,511
 3,238,492
Total purchase consideration$3,922,820
 $—
 $3,922,820

The measurement-period adjustments were the result of continued refinement of certain estimates, particularly regarding certain tax positions and deferred income taxes.

Goodwill of $3.2 billion arisingperiod from the merger, included inacquisition date through March 31, 2023, the North America segment, was attributableacquired operations of EVO contributed less than 10% to expected growth opportunities, potential synergies from combining our existing businessesconsolidated revenues and an assembled workforce,operating income, respectively. The historical revenue and isearnings of EVO were not deductiblematerial for income tax purposes. During the nine months ended September 30, 2016, we incurredpurpose of presenting pro forma information. In addition, transaction costs associated with this business combination were not material.

NOTE 3—BUSINESS DISPOSITION

Consumer Business- On April 26, 2023, we completed the sale of the consumer portion of our Netspend business for approximately $1 billion, subject to certain closing adjustments. The consumer business comprised our former Consumer Solutions segment prior to disposition and had been presented as held for sale with certain adjustments to report the disposal group at fair value less costs to sell in our consolidated balance sheet since June 30, 2022. In connection with the mergersale, we provided $675 million of $24.7seller financing as described below. We recognized charges within net loss on business disposition in our consolidated statements of income of $244.8 million during the three months ended March 31, 2023 to reduce the disposal group to estimated fair value less costs to sell. The loss during the three months ended March 31, 2023 included the effects of incremental negotiated closing adjustments, changes in the estimated fair value of the seller financing and the effects of the final tax structure of the transaction.

Notes Receivable and Allowance for Credit Losses

In connection with the sale of our consumer business, we provided seller financing consisting of the following: (1) a first lien seven-year secured term loan facility with an aggregate principal amount of $350 million bearing interest at a fixed annual rate of 9.0%, including 3.5% payable quarterly in cash and 5.5% settled quarterly via the issuance of additional paid-in-kind ("PIK") notes with the same terms as the original notes until December 2024, after which are recordedinterest will be payable quarterly in selling, generalcash along with quarterly principal payments of $4.375 million with the remaining balance due at maturity; and administrative expenses(2) a second lien twenty-five year secured term loan facility with an aggregate principal amount of $325 million bearing interest at a fixed annual rate of 13.0% PIK due at maturity.

In connection with the sale of our gaming business in April 2023, we also provided seller financing consisting of an unsecured promissory note due April 1, 2030 with an aggregate principal amount of $32 million bearing interest at a fixed annual rate of 11.0%.

We recognized interest income of $21.5 million on the notes during the three months ended March 31, 2024, as a component of interest and other income in the consolidated statements of income.



As of March 31, 2024 and December 31, 2023, there was an aggregate principal amount of $771.2 million and $753.5 million, respectively, outstanding on the notes, including PIK, and the notes are presented net of the allowance for credit losses of $15.2 million within notes receivable in our consolidated balance sheet. The estimated fair value of the notes receivable was $750.4 million and $735.6 million as of March 31, 2024 and December 31, 2023, respectively. The estimated fair value of notes receivable was based on a discounted cash flow approach and is considered to be a Level 3 measurement of the valuation hierarchy.

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NOTE 4—REVENUES

The following reflectstables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the estimated fair valuesthree months ended March 31, 2024 and 2023:
Three Months Ended March 31, 2024
Merchant
Solutions		Issuer
Solutions		Intersegment
Eliminations		Total
(in thousands)
Americas$1,522,732 $458,605 $(6,214)$1,975,123 
Europe251,051 133,702 — 384,753 
Asia Pacific60,311 10,428 (10,428)60,311 
$1,834,094 $602,735 $(16,642)$2,420,187 

Three Months Ended March 31, 2023
Merchant
Solutions		Issuer
Solutions		Consumer
Solutions		Intersegment
Eliminations		Total
(in thousands)
Americas$1,365,894 $443,345 $143,709 $(17,321)$1,935,627 
Europe176,098 117,104 — — 293,202 
Asia Pacific63,618 10,458 — (10,458)63,618 
$1,605,610 $570,907 $143,709 $(27,779)$2,292,447 

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the identified intangible assetsthree months ended March 31, 2024 and 2023:
Three Months Ended
March 31, 2024March 31, 2023
(in thousands)
Relationship-led$903,345 $795,680 
Technology-enabled930,749 809,930 
$1,834,094 $1,605,610 

ASC Topic 606, Revenues from Contracts with Customers ("ASC 606") requires that we determine for each customer arrangement whether revenue should be recognized at a point in time or over time. For the respective weighted-average estimated amortization periods:three months ended March 31, 2024 and 2023, substantially all of our revenues were recognized over time.

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 Estimated Fair Values Weighted-Average Estimated Amortization Periods
    
 (in thousands) (years)
    
Customer-related intangible assets$977,400
 15
Acquired technology457,000
 5
Trademarks and trade names176,000
 7
Covenants-not-to-compete28,640
 1
Total estimated acquired intangible assets$1,639,040
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NOTE 3—SETTLEMENT PROCESSING ASSETS AND OBLIGATIONS

AsSupplemental balance sheet information related to contracts from customers as of September 30, 2017March 31, 2024 and December 31, 2016, settlement processing2023 was as follows:
Balance Sheet LocationMarch 31, 2024December 31, 2023
(in thousands)
Assets:
Capitalized costs to obtain customer contracts, netOther noncurrent assets$362,863 $360,684 
Capitalized costs to fulfill customer contracts, netOther noncurrent assets$206,109 $197,355 
Liabilities:
Contract liabilities, net (current)Accounts payable and accrued liabilities$210,670 $229,686 
Contract liabilities, net (noncurrent)Other noncurrent liabilities$55,058 $54,246 

Net contract assets were not material at March 31, 2024 or December 31, 2023. Revenue recognized for the three months ended March 31, 2024 and obligations consisted2023 from contract liability balances at the beginning of each period was $92.3 million and $83.7 million, respectively.

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, 2024. 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 amount of unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amounts disclosed in the table below (in thousands):
Year Ending December 31,
2024$832,635 
2025961,551 
2026791,597 
2027608,447 
2028333,515 
2029157,722 
2030 and thereafter333,165 
Total$4,018,632 

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 September 30, 2017 December 31, 2016
    
 (in thousands)
    
Settlement processing assets:   
Interchange reimbursement$288,923
 $150,612
Receivable from members14,483
 71,590
Receivable from networks1,546,821
 1,325,029
Exception items9,570
 6,450
Merchant reserves(12,565) (6,827)
 $1,847,232
 $1,546,854
    
Settlement processing obligations:   
Interchange reimbursement$74,970
 $199,202
Liability to members(20,340) (177,979)
Liability to merchants(1,472,221) (1,358,271)
Exception items11,018
 21,194
Merchant reserves(140,327) (158,419)
Reserve for operating losses and sales allowances(3,727) (2,939)
 $(1,550,627) $(1,477,212)

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NOTE 4—5—GOODWILL AND OTHER INTANGIBLE ASSETS


As of September 30, 2017March 31, 2024 and December 31, 2016,2023, goodwill and other intangible assets consisted of the following:
 March 31, 2024December 31, 2023
 (in thousands)
Goodwill$26,728,023 $26,743,523 
Other intangible assets:
Customer-related intangible assets$10,626,438 $10,653,036 
Acquired technologies3,001,611 3,005,576 
Contract-based intangible assets2,241,063 2,254,273 
Trademarks and trade names1,074,256 1,074,631 
16,943,368 16,987,516 
Less accumulated amortization:
Customer-related intangible assets4,055,254 3,866,686 
Acquired technologies2,129,982 2,047,330 
Contract-based intangible assets342,006 309,886 
Trademarks and trade names619,103 595,568 
7,146,345 6,819,470 
$9,797,023 $10,168,046 
 September 30, 2017 December 31, 2016
    
 (in thousands)
    
Goodwill$5,616,414
 $4,807,594
Other intangible assets:   
Customer-related intangible assets$2,119,873
 $1,864,731
Acquired technologies804,485
 547,151
Trademarks and trade names190,021
 188,311
Contract-based intangible assets162,107
 157,882
 3,276,486
 2,758,075
Less accumulated amortization:   
Customer-related intangible assets635,574
 487,729
Acquired technologies179,006
 89,633
Trademarks and trade names44,586
 24,142
Contract-based intangible assets88,611
 71,279
 947,777
 672,783
 $2,328,709
 $2,085,292


The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the ninethree months ended September 30, 2017:March 31, 2024:
Merchant
Solutions		Issuer
Solutions		Total
(in thousands)
Balance at December 31, 2023$17,226,828 $9,516,695 $26,743,523 
Effect of foreign currency translation(31,534)(3,893)(35,427)
Measurement period adjustments19,927 — 19,927 
Balance at March 31, 2024$17,215,221 $9,512,802 $26,728,023 
 North America Europe Asia-Pacific Total
        
 (in thousands)
        
Balance at December 31, 2016$4,083,252
 $455,300
 $269,042
 $4,807,594
Goodwill acquired704,020
 —
 —
 704,020
Effect of foreign currency translation5,559
 50,515
 18,185
 74,259
Measurement-period adjustments23,511
 —
 7,030
 30,541
Balance at September 30, 2017$4,816,342
 $505,815
 $294,257
 $5,616,414


There was no accumulatedAccumulated impairment loss as of September 30, 2017 or December 31, 2016.

NOTE 5—OTHER ASSETS

Through certain of our subsidiaries in Europe, welosses for goodwill were a member and shareholder of Visa Europe Limited ("Visa Europe"). On June 21, 2016, Visa Inc. ("Visa") acquired all of the membership interests in Visa Europe, including ours, upon which we recorded a gain of $41.2 million included in interest and other income in our consolidated statements of income for the nine months ended September 30, 2016. We received up-front consideration comprised of €33.5 million ($37.7 million equivalent at June 21, 2016) in cash and Series B and C convertible preferred shares whose initial conversion rate equates to Visa common shares valued at $22.9$357.9 million as of June 21, 2016. However, the preferred shares were assigned a valueMarch 31, 2024 and December 31, 2023.

15
Table of zero based on transfer restrictions, Visa's ability to adjust the conversion rate, and the estimation uncertainty associated with those factors. Based on the outcome of potential litigation involving Visa Europe in the United Kingdom and elsewhere in Europe, the conversion rate of the preferred shares could be adjusted down such that the number of Visa common shares we ultimately receive could be as low as zero, and approximately €25.6 million ($28.8 million equivalent at June 21, 2016) of the up-front cash consideration could be refundable. On the third anniversary of the closing of the acquisition by Visa, we will also receive €3.1 million ($3.5 million equivalent at June 21, 2016) of deferred consideration (plus compounded interest at a rate of 4.0% per annum).Contents


NOTE 6—LONG-TERM DEBT AND LINES OF CREDIT


As of September 30, 2017March 31, 2024 and December 31, 2016,2023, long-term debt consisted of the following:
March 31, 2024December 31, 2023
(in thousands)
1.500% senior notes due November 15, 2024$499,377 $499,143 
2.650% senior notes due February 15, 2025998,535 998,172 
1.200% senior notes due March 1, 20261,096,327 1,095,848 
4.800% senior notes due April 1, 2026772,600 775,425 
2.150% senior notes due January 15, 2027746,509 746,196 
4.950% senior notes due August 15, 2027496,689 496,444 
4.450% senior notes due June 1, 2028468,308 469,406 
3.200% senior notes due August 15, 20291,241,534 1,241,169 
5.300% senior notes due August 15, 2029496,237 496,063 
2.900% senior notes due May 15, 2030992,830 992,537 
2.900% senior notes due November 15, 2031743,604 743,394 
5.400% senior notes due August 15, 2032743,113 742,908 
4.150% senior notes due August 15, 2049740,947 740,860 
5.950% senior notes due August 15, 2052738,676 738,576 
4.875% senior notes due March 17, 2031854,652 873,747 
1.000% convertible notes due August 15, 20291,455,560 1,453,493 
1.500% convertible notes due March 1, 20311,967,242 — 
Revolving credit facility1,598,000 1,570,000 
Commercial paper notes274,954 1,371,639 
Finance lease liabilities20,965 24,525 
Other borrowings198,403 243,337 
Total long-term debt17,145,062 16,312,882 
Less current portion1,579,357 620,585 
Long-term debt, excluding current portion$15,565,705 $15,692,297 

The carrying amounts of our senior notes and convertible notes in the table above are presented net of unamortized discount and unamortized debt issuance costs, as applicable. At March 31, 2024, the unamortized discount on senior notes and convertible notes was $44.2 million, and unamortized debt issuance costs on senior notes and convertible notes were $107.4 million. At December 31, 2023, the unamortized discount on senior notes and convertible notes was $46.1 million and unamortized debt issuance costs on senior notes and convertible notes were $78.4 million. The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets. At March 31, 2024 and December 31, 2023, unamortized debt issuance costs on the unsecured revolving credit facility were $17.2 million and $18.5 million, respectively.

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 September 30, 2017 December 31, 2016
    
 (in thousands)
    
Corporate credit facility:   
Term loans (face amounts of $3,956,497 and $3,728,857 at September 30, 2017 and December 31, 2016, respectively, less unamortized debt issuance costs of $40,180 and $46,282 at September 30, 2017 and December 31, 2016, respectively)$3,916,317
 $3,682,575
Revolving Credit Facility855,000
 756,000
Capital lease obligations1
 37
Total long-term debt4,771,318
 4,438,612
Less current portion of corporate credit facility (face amounts of $102,129 and $187,274 at September 30, 2017 and December 31, 2016, respectively, less unamortized debt issuance costs of $8,722 and $9,526 at September 30, 2017 and December 31, 2016, respectively) and current portion of capital lease obligations of $1 and $37 at September 30, 2017 and December 31, 2016, respectively93,408
 177,785
Long-term debt, excluding current portion$4,677,910
 $4,260,827

Maturity requirements onAt March 31, 2024, future maturities of long-term debt as of September 30, 2017 by year(excluding finance lease liabilities) are as follows by year (in thousands):
Year Ending December 31,
2024$565,228 
20251,049,065 
20261,885,419 
20273,157,893 
2028462,962 
20293,250,128 
2030 and thereafter6,863,884 
Total$17,234,579 
Years ending December 31, 
2017$23,821
2018108,979
2019141,912
2020161,144
2021180,376
20223,111,391
2023 and thereafter1,083,875
Total$4,811,498


Convertible Notes

1.500% convertible notes due March 1, 2031

On February 23, 2024, we issued $2.0 billion in aggregate principal amount of 1.500% convertible unsecured senior notes due March 2031 through a private placement. The net proceeds from this offering were approximately $1.97 billion reflecting debt issuance costs of $33.5 million, which were capitalized and reflected as a reduction of the related carrying amount of the convertible notes in our consolidated balance sheet. Interest on the convertible notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024, to the holders of record on the preceding February 15 and August 15, respectively.

Prior to December 1, 2030, the notes are convertible at the option of the holders only under certain conditions, including: (i) if the last reported sale price of our common stock has been at least 130% of the conversion price for at least 20 trading days within the last 30 consecutive trading days of the immediately preceding calendar quarter; (ii) for a five business day period following a ten-day consecutive trading period where the trading price of the notes is less than 98% of the product of the last reported sale price of our common stock and the conversion rate; (iii) if we call any or all of the notes for redemption; or (iv) upon the occurrence of certain corporate events. On or after December 1, 2030, the notes are convertible at the option of the holders at any time until the second scheduled trading day prior to the maturity date. The conversion rate for the notes is initially 6.371 shares of common stock per $1,000 in principal amount of the notes (which is equal to an initial conversion price of approximately $156.96 per share), subject to customary adjustments upon the occurrence of certain events. Upon conversion, the principal amount of, and interest due on, the convertible notes are required to be settled in cash and any other amounts may be settled in shares, cash or a combination of shares and cash at our election.

We are partymay not redeem the notes prior to March 6, 2028. On or after March 6, 2028, we have the option to redeem all or any portion of the notes for cash if the last reported sale price of our common stock has been at least 130% of the conversion price for at least 20 trading days within the last 30 consecutive trading day period at a credit facility agreementredemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. If certain corporate events that constitute a fundamental change (as defined in the indenture governing the notes) occur, any holder of the notes may require that we repurchase all or a portion of their notes for cash at a purchase price equal to 100% of the principal amount of the notes to be repurchased plus accrued and unpaid interest. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture governing the notes) occur, then the conversion rate will in certain circumstances be increased. The notes include customary covenants for notes of this type, as well as customary events of default, which may result in the acceleration of the maturity of the convertible notes.

In connection with Bankthe issuance 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 Agreement"). On May 2, 2017,notes, we entered into privately negotiated capped call transactions with certain of the Fourth Amendmentinitial purchasers of the notes and other financial institutions to cover, subject to customary adjustments, the Credit Facility Agreement (the "Fourth Amendment"), which increasednumber of shares of common stock initially underlying the total financing capacity available undernotes. The economic effect of the Credit Facility Agreementcapped call transactions is to $5.2 billion; however,hedge the aggregate outstanding debt underpotential dilutive effect upon the Credit Facility Agreement didconversion of the notes, or offset our cash obligation if the cash settlement option is elected, for amounts in excess of the principal amount of converted notes subject to a cap. The initial cap price of the capped call
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transactions is $228.90 per share. The capped call transactions meet the accounting criteria to be reflected in stockholders’ equity and not changeaccounted for as we repaid certain outstanding amounts under the Term A Loan, the Term A-2 Loan and the Revolving Credit Facility (each as defined below)derivatives. The cost of $256.3 million incurred in connection with the Fourth Amendment. Ascapped call transactions was reflected as a reduction to paid-in-capital in our consolidated balance sheet at March 31, 2024, net of September 30, 2017, the Credit Facility Agreement provided for secured financing comprised of (i) aapplicable income taxes.

1.000% convertible notes due August 15, 2029

We have $1.5 billion term loan (the "Term A Loan"), (ii)in aggregate principal amount of 1.000% convertible notes due August 2029, which were issued during 2022 in a $1.3 billion term loan (the "Term A-2 Loan"), (iii)private placement pursuant to an investment agreement with Silver Lake Partners. Interest on the convertible notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2023, to the holders of record on the preceding February 1 and August 1, respectively. The convertible notes mature on August 15, 2029, subject to earlier conversion or repurchase. The notes, which are currently convertible, are presented within long-term debt in our consolidated balance sheet based on our intent and ability to refinance on a $1.2 billion term loan facility, (the "Term B-2 Loan") and (iv)long-term basis should a $1.25conversion event occur.

Revolving Credit Facility

Our revolving credit agreement provides for an unsubordinated unsecured $5.75 billion revolving credit facility (the "Revolving Credit Facility"). Substantially allthat matures in August 2027. As of the assetsMarch 31, 2024, there were borrowings of our domestic subsidiaries are pledged as collateral$1,598.0 million outstanding under the Credit Facility Agreement.

The Credit Facility Agreement provides forrevolving credit facility with an interest rate at our election, of either London Interbank Offered Rate ("LIBOR") or a base rate, in each case plus a leverage-based margin. As of September 30, 2017, the interest rates on the Term A Loan, the Term A-2 Loan6.80%, and the Term B-2 Loan were 2.99%, 2.95% and 3.23%, respectively.

The Term A Loan and the Term A-2 Loan mature, and the Revolving Credit Facility Agreement expires, on May 2, 2022. The Term B-2 Loan matures on April 22, 2023. The Term A Loan principal must be repaid in quarterly installments in the amount of 1.25% of principal through June 2019, increasing to 1.875% of principal through June 2021, and increasing to 2.50% of principal through March 2022, with the remaining principal balance due upon maturity in May 2022. The Term A-2 Loan principal must be

repaid in quarterly installments of $1.7 million through June 2018, increasing to quarterly installments of $8.6 million through March 2022, with the remaining balance due upon maturity in May 2022. The Term B-2 Loan principal must be repaid in quarterly installments in the amount of 0.25% of principal through March 2023, with the remaining principal balance due upon maturity in April 2023.

The Credit Facility Agreement allows us to issue standby letters of credit of up to $100 million in the aggregate under the Revolving Credit Facility. Outstanding letters of credit under the Revolving Credit Facility reduce the amount of borrowings available to us. 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 Facilityrevolving credit facility were $3.4 billion.

Commercial Paper

We have a $2.0 billion commercial paper program under which we may issue senior unsecured commercial paper notes with maturities of up to 397 days from the date of issue. Commercial paper notes are expected to be issued at September 30, 2017 and December 31, 2016 were $383.1 million and $446.3 million, respectively. a discount from par, or they may bear interest, each at commercial paper market rates dictated by market conditions at the time of their issuance. The proceeds from issuances of commercial paper notes will be used primarily for general corporate purposes but may also be used for acquisitions, to pay dividends, for debt refinancing or for other purposes.

As of September 30, 2017, theMarch 31, 2024, we had net borrowings under our commercial paper program of $275.0 million outstanding, presented within long-term debt in our consolidated balance sheet based on our intent and ability to continually refinance on a long-term basis, with a weighted average annual interest rate of 6.01%. The commercial program is backstopped by our revolving credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility. As such, we could draw on the Revolving Credit Facility was 2.95%. In addition, we are requiredrevolving credit facility to payrepay commercial paper notes that cannot be rolled over or refinanced with similar debt.

Fair Value of Long-Term Debt

As of March 31, 2024, our senior notes had a quarterly commitment fee on the unused portion of the Revolving Credit Facility at an applicable rate per annum ranging from 0.20% to 0.30% depending on our leverage ratio.

The portion of deferred debt issuance costs related to the Revolving Credit Facility is included in other noncurrent assets, and the portion of deferred debt issuance costs related to the term loans is reported as a reduction to thetotal carrying amount of the term loans. Debt issuance costs$11.6 billion and an estimated fair value of $11.0 billion. As of March 31, 2024, our 1.500% convertible notes due March 1, 2031 had a total carrying amount of $2.0 billion and an estimated fair value of $2.1 billion. The estimated fair values were based on quoted market prices in active markets and are amortized as an adjustmentconsidered to interest expense over the termsbe Level 1 measurements of the respective facilities.valuation hierarchy.

Settlement Lines of Credit

In various markets where we do business, we have 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 settlement 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 of credit may exceed the stated credit limit. As of September 30, 2017 and December 31, 2016, a total of $55.5 million and $51.0 million, respectively, of cash on deposit was used to determine the available credit.


As of September 30, 2017March 31, 2024, our 1.000% convertible notes due August 15, 2029 had a total carrying amount of $1.5 billion and Decemberan estimated fair value of $1.7 billion. The estimated fair value of our convertible notes was based on a lattice pricing model and is considered to be a Level 3 measurement of the valuation hierarchy.

The fair value of other long-term debt approximated its carrying amount at March 31, 2016, respectively, we had $487.5 million and $392.1 million outstanding under these lines of credit with additional capacity of $669.9 million as of September 30, 2017 to fund settlement. The weighted-average interest rate on these borrowings was 2.11% and 1.90% at September 30, 2017 and December 31, 2016, respectively. During the three months ended September 30, 2017, the maximum and average outstanding balances under these lines of credit were $627.3 million and $334.2 million, respectively.2024.


Compliance with Covenants


The Credit Facility Agreementconvertible notes include customary covenants and events of default for convertible notes of this type. The revolving credit agreement contains customary affirmative covenants and restrictive covenants, including, among others, financial covenants based on ournet leverage and fixed chargeinterest coverage ratios, as defined in the agreement. Asand customary events of September 30, 2017, financial covenants under the Credit Facility Agreementdefault. The required a leverage ratio no greater than: (i)was increased to 4.50 to 1.00 as a result of the endacquisition of any fiscal quarter ending duringEVO and will gradually step-down over eight quarters to the period from July 1, 2017 through June 30, 2018; (ii)original
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required ratio of 3.75 to 1.00. As of March 31, 2024, the required leverage ratio was 4.25 to 1.00, as ofand the end of any fiscal quarter ending during the period from July 1, 2018 through June 30, 2019; and (iii) 4.00 to 1.00 as of the end of any fiscal quarter ending thereafter. The fixed chargerequired interest coverage ratio is requiredwas 3.00 to be no less than 2.25 to 1.00.

The Credit Facility Agreement and settlement lines of credit also include various other covenants that are customary in such borrowings. The Credit Facility Agreement includes covenants, subject in each case to exceptions and qualifications, that may restrict certain payments, including in certain circumstances, the payment of cash dividends in excess of our current rate of $0.01 per share per quarter.

The Credit Facility Agreement also includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. We were in compliance with all applicable covenants as of March 31, 2024.

Interest Expense

Interest expense was $160.8 million and $119.0 million for the ninethree months ended September 30, 2017.March 31, 2024 and 2023, respectively.


NOTE 7—DERIVATIVES AND HEDGING INSTRUMENTS

Net Investment Hedge

We have designated our aggregate €800 million Euro-denominated 4.875% senior notes due March 2031 as a hedge of our net investment in our Euro-denominated operations. The purpose of the net investment hedge is to reduce the volatility of our net investment in our Euro-denominated operations due to changes in foreign currency exchange rates.

Investments in foreign operations with functional currencies other than the reporting currency are subject to foreign currency risk as the assets and liabilities of these subsidiaries are translated into the reporting currency at the period-end rate of exchange with the resulting foreign currency translation adjustment presented as a component of other comprehensive income and included in accumulated comprehensive income within equity in our consolidated balance sheets. Under net investment hedge accounting, the foreign currency remeasurement gains and losses associated with our Euro-denominated senior notes are presented within the same components of other comprehensive income and accumulated comprehensive income, partially offsetting the foreign currency translation adjustment for our foreign subsidiaries.

We recognized a loss of $7.1 million and $18.2 million within foreign currency translation adjustments in other comprehensive income in our consolidated statements of comprehensive income during the three months ended March 31, 2024 and 2023, respectively.

Interest Rate Swap AgreementsSwaps


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. In the first quarter of 2023, we entered into new interest rate swap agreements with an aggregate notional amount of $1.5 billion to convert eligible borrowings under our revolving credit facility from a floating term Secured Overnight Financing Rate to a fixed rate. 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 recordedrecognized as components of other comprehensive income, except for any ineffective portion of the change in fair value, which would be immediately recorded in interest expense. During the three and nine months ended September 30, 2017 and 2016, there was no ineffectiveness.income. The fair values of theour interest rate swaps wereare 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 wereare classified within Level 2 of the valuation hierarchy.


The table below presents the fair values ofinformation about our derivative financial instrumentsinterest rate swaps, designated as cash flow hedges, included in the consolidated balance sheets:
Fair Values
Derivative Financial InstrumentsBalance Sheet LocationWeighted-Average Fixed Rate of Interest at March 31, 2024Range of Maturity Dates at March 31, 2024March 31, 2024December 31, 2023
(in thousands)
Interest rate swaps (Notional of $1.5 billion at March 31, 2024)Other noncurrent liabilities4.26 %April 17, 2027 - August 17, 2027$3,258 $28,187 
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Derivative Financial Instruments Balance Sheet Location Weighted-Average Fixed Rate of Interest at September 30, 2017 Range of Maturity Dates September 30, 2017 December 31, 2016
        (in thousands)
           
Interest rate swaps (Notional of $1,000 million at September 30, 2017, $250 million at December 31, 2016) Other assets 1.49% February 28, 2019 - July 31, 2020 $2,923
 $2,147
Interest rate swaps (Notional of $300 million at September 30, 2017, $750 million at December 31, 2016) Accounts payable and accrued liabilities 1.91% March 31, 2021 $1,495
 $3,175


The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the three and nine months ended September 30, 2017March 31, 2024 and 2016:2023:
Three Months Ended
March 31, 2024March 31, 2023
(in thousands)
Net unrealized gains (losses) recognized in other comprehensive income (loss)$29,116 $(48,051)
Net unrealized gains (losses) reclassified out of other comprehensive income (loss) to interest expense$2,662 $(1,386)
 Three Months Ended Nine Months Ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
        
 (in thousands)
        
Amount of gain (loss) recognized in other comprehensive income$341
 $3,429
 $(2,214) $(12,665)
Amount reclassified out of other comprehensive income to interest expense$1,172
 $1,853
 $4,667
 $5,733


As of September 30, 2017,March 31, 2024, the amount of net unrealized gains 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 $1.7$5.9 million.


Interest Expense

NOTE 8—INCOME TAX
Interest expense was $41.8 million and $44.6 million for
For the three months ended September 30, 2017 and 2016, respectively, and $130.3 million and $95.6 million for the nine months ended September 30, 2017 and 2016, respectively.


NOTE 7—INCOME TAX

OurMarch 31, 2024, our effective income tax rates were 11.7% and 18.4% for the three months ended September 30, 2017 and September 30, 2016, respectively. Our effective income tax rates were 14.4% and 14.7% for the nine months ended September 30, 2017 and September 30, 2016, respectively. Our effective income tax rates differrate of 5.9% differed favorably from the U.S. statutory rate primarily due to income generated in international jurisdictions with lower tax rates. In addition, as a result of adopting ASU 2016-09a change in the assessment of the need for a valuation allowance related to certain foreign tax credit carryforwards, foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

For the three months ended March 31, 2023, we reported a tax benefit in excess of the U.S. statutory tax rate. The tax benefit included the favorable effect of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction. In addition, the tax benefit on the loss on business disposition was tax effected at the applicable tax rate, whereas the earnings other than this discrete item were tax effected at the lower estimated annual effective tax rate.

NOTE 9—REDEEMABLE NONCONTROLLING INTERESTS

The portions of equity in our consolidated subsidiaries in Greece and Chile that are not attributable, directly or indirectly, to us, are redeemable upon the occurrence of an event that is not solely within our control.

We own 51% of our subsidiary in Greece and 50.1% of our subsidiary in Chile. Under the shareholder agreements, the minority shareholders have the option to compel us to purchase their shares at a price per share based on the fair value of the shares, or under certain circumstances for our subsidiary in Greece, at a price determined by calculations stipulated in the shareholder agreement. The options have no expiration date.

Because the exercise of each of these redemption options is not solely within our control, the redeemable noncontrolling interests are presented in the mezzanine section between total liabilities and shareholders’ equity, as temporary equity, in our consolidated balance sheet as of March 31, 2024. The redeemable noncontrolling interest for each subsidiary is reflected at the higher of: (i) the initial carrying amount, increased or decreased for the noncontrolling interest's share of comprehensive income (loss), capital contributions and distributions or (ii) the redemption price.

The option held by the minority shareholder in Greece, which is redeemable at a price other than fair value, is considered probable of becoming redeemable on December 8, 2025. In determining the measurement method of redemption price, we have elected to accrete changes in the redemption price over the period from the date of issuance to the earliest redemption date of the instrument using the effective interest method, applied prospectively. We have also elected to recognize the entire amount of any redemption price adjustments in net income attributable to noncontrolling interests in our consolidated statements of income.

In addition, we own 66% of our subsidiary in Poland. The redemption option held by the minority shareholder in Poland expired on January 1, 2017, as described in "Note 1— Basis of Presentation2024, and Summary of Significant Accounting Policies," we recognize the income tax effects of the excess benefits or deficiencies of share-based awardsredeemable noncontrolling interest was reclassified to nonredeemable noncontrolling interest in the statementconsolidated balance sheet as of income when share-based awards vest or are settled, which contributed to lower effective income tax rates in the current year periods. During the nine months ended September 30, 2016, we recorded an income tax benefitJanuary 1, 2024.

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Table of $12.7 million associated with the elimination of certain net deferred tax liabilities associated with undistributed earnings from Canada as a result of management's plans to reinvest these earnings outside the United States indefinitely.Contents

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, 2008, U.S. federal income tax examinations for fiscal years prior to 2013 and U.K. federal income tax examinations for years ended on or before May 31, 2013.

NOTE 8—10—SHAREHOLDERS’ EQUITY


We make repurchases ofrepurchase our common stock mainly through the use of open market purchasesrepurchase plans and, at times, through accelerated share repurchase ("ASR") programs. As of September 30, 2017, we were authorized to repurchase up to $264.9 million of our common stock. During the three and nine months ended September 30, 2017, respectively, through open market repurchase plans,March 31, 2024 and 2023, we repurchased and retired 311,5936,061,999 and 376,3092,058,902 shares of our common stock, respectively, at a cost, including commissions and applicable excise taxes, of $29.0$808.4 million and $34.8$206.6 million, or an average cost of $93.09$133.35 and $92.51$100.33 per share, including commissions.

Duringrespectively. The share repurchase activity for the three and nine months ended September 30, 2016, respectively,March 31, 2024 included the repurchase of 1,414,759 shares using a portion of the net proceeds from our offering of 1.500% convertible unsecured senior notes due March 2031 through open market repurchase plans, we repurchased and retired 484,256 and 1,142,415 sharesprivately negotiated transactions with purchasers of ournotes in the offering, or one of their respective affiliates. The purchase price per share of the common stock at a costrepurchased in such transactions equaled the closing price of $35.5 million and $80.3 million, or an average cost of $73.25 and $70.29 per share, including commissions. In addition to shares repurchased through open market repurchase plans, we repurchased 673,212 shares of ourthe common stock at a coston February 20, 2024, which was $130.80 per share. As of $50.0 million, or an average cost of $74.27 per share, including commissions, through an acceleratedMarch 31, 2024, the remaining amount available under our share repurchase program during the nine months ended September 30, 2016.was $1,471.9 million.


On April 25, 2024, our board of directors declared a dividend of $0.25 per share payable on June 28, 2024 to common shareholders of record as of June 14, 2024.

NOTE 9—11—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 EndedThree Months Ended
March 31, 2024March 31, 2024March 31, 2023
Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
       
(in thousands)
(in thousands)
(in thousands)
(in thousands)
       
Share-based compensation expense$9,617
 $8,688
 $30,771
 $26,060
Share-based compensation expense
Share-based compensation expense
Income tax benefit$3,523
 $2,968
 $10,788
 $8,679
 

Share-Based Awards


The following table summarizes the changes in unvested share-basedrestricted stock and performance awards for the ninethree months ended September 30, 2017:March 31, 2024:
SharesWeighted-Average
Grant-Date
Fair Value
(in thousands)
Unvested at December 31, 20232,481 $131.41 
Granted1,168 130.71 
Vested(917)142.99 
Forfeited(49)117.42 
Unvested at March 31, 20242,683 $127.64 
 Shares 
Weighted-Average
Grant-Date
Fair Value
 (in thousands)  
    
Unvested at December 31, 20161,263
 
$49.55
Granted611
 71.77
Vested(685) 40.35
Forfeited(71) 60.36
Unvested at September 30, 20171,118
 
$66.74


The total fair value of share-basedrestricted stock and performance awards vested during the nine months ended September 30, 2017 and September 30, 2016 was $27.6 million and $22.2 million, respectively.

For these share-based awards, we recognized compensation expense of $8.6 million and $8.0 million during the three months ended September 30, 2017March 31, 2024 and September 30, 2016, respectively, and $27.7March 31, 2023 was $131.1 million and $24.3$126.5 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of $35.6 million and $75.2 million during the ninethree months ended September 30, 2017March 31, 2024 and September 30, 2016,2023, respectively. As of September 30, 2017,March 31, 2024, there was $53.2$262.6 million of unrecognized compensation expense related to unvested share-basedrestricted stock and performance awards that we expect to recognize over a weighted-average period of 2.12.2 years. Our share-based award plans provide for accelerated vesting under certain conditions.


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Stock Options


Stock options are granted with an exercise price equal to 100% of fair market value of our common stock on the date of grant and have a term of ten years. Stock options granted before the year ended May 31, 2015 vest in equal installments on each of the first four anniversaries of the grant date. Stock options granted during the year ended May 31, 2015 and thereafter vest in equal installments on each of the first three anniversaries of the grant date. During the nine months ended September 30, 2017 and September 30, 2016, we granted stock options to purchase 123,958 and 72,733 shares of our common stock. Our stock option plans provide for accelerated vesting under certain conditions.

The following table summarizes changes in stock option activity for the ninethree months ended September 30, 2017:March 31, 2024:
OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual TermAggregate Intrinsic Value
(in thousands)(years)(in millions)
Outstanding at December 31, 2023921 $99.54 5.0$32.1
Granted154 130.09 
Forfeited(1)76.91 
Exercised(169)51.89 
Outstanding at March 31, 2024905 $113.67 5.7$23.8
Options vested and exercisable at March 31, 2024616 $111.85 4.0$19.1
 Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value
 (in thousands)   (years) (in millions)
        
Outstanding at December 31, 2016759
 $37.51 6.0 $24.5
Granted124
 79.45    
Exercised(156) 23.56    
Outstanding at September 30, 2017727
 $47.67 6.6 $34.4
        
Options vested and exercisable at September 30, 2017505
 $36.49 5.6 $29.6


We recognized compensation expense for stock options of $0.7$2.8 million and $0.5$12.7 million during the three months ended September 30, 2017March 31, 2024 and September 30, 2016, respectively, and $2.0 million and $1.2 million during the nine months ended September 30, 2017 and September 30, 2016,2023, respectively. The aggregate intrinsic value of stock options exercised during the ninethree months ended September 30, 2017 and September 30, 2016March 31, 2024 was $9.9 million and $10.6 million, respectively. $13.6 million. As of September 30,

2017,March 31, 2024, we had $4.0 $11.2 million ofof unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.0 years.2.3 years.


The weighted-average grant-date fair value of each stock optionoptions granted, including replacement awards granted in connection with the EVO acquisition, during the ninethree months ended September 30, 2017March 31, 2024 and 2023 was $23.68.$54.42 and $47.08, respectively. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:
Three Months Ended
March 31, 2024March 31, 2023
Risk-free interest rate4.16%3.86%
Expected volatility45%45%
Dividend yield0.90%0.81%
Expected term (years)55
Nine Months Ended
September 30, 2017
Risk-free interest rate1.99%
Expected volatility30%
Dividend yield0.06%
Expected term (years)5


The risk-free interest rate iswas 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 iswas based on our historical volatility. The dividend yield assumption is calculatedwas 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 10—12—EARNINGS PER SHARE


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


Diluted earnings per shareEPS 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, convertible notes or other potential securities that would have a dilutive effect on earnings per share.EPS. All stock options with an exercise price lower than the average market share price of
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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, 2024 excluded approximately 0.1 million shares related to stock options that would have an antidilutive effect on the computation of diluted earnings per share. Due to a net loss for the three months ended March 31, 2023, no incremental shares were included in the computation of diluted earnings per share because the effect would be antidilutive. Approximately 1.2 million shares related to stock options and share-based awards were therefore excluded from the dilutive share base for the three months ended March 31, 2023.


The effect of the potential shares needed to settle the conversion spread on our convertible notes is included in diluted EPS if the effect is dilutive. The effect depends on the market share price of our common stock at the time of conversion and would be dilutive if the average market share price of our common stock for the period exceeds the conversion price. For the three months ended March 31, 2024, the convertible notes were not included in the computation of diluted EPS as the effect would have been anti-dilutive. Further, the effect of the related capped call transactions is not included in the computation of diluted EPS as it is always anti-dilutive.

The following table sets forth the computation of diluted weighted-average number of shares outstanding for the three and nine months ended September 30, 2017March 31, 2024 and September 30, 2016:2023:
Three Months Ended
March 31, 2024March 31, 2023
(in thousands)
Basic weighted-average number of shares outstanding256,926 263,115 
Plus: Dilutive effect of stock options and other share-based awards662 — 
Diluted weighted-average number of shares outstanding257,588 263,115 
 Three Months Ended Nine Months Ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
        
 (in thousands)
        
Basic weighted-average number of shares outstanding154,560
 153,668
 153,138
 143,794
Plus: Dilutive effect of stock options and other share-based awards842
 862
 941
 937
Diluted weighted-average number of shares outstanding155,402
 154,530
 154,079
 144,731



NOTE 11—13—SUPPLEMENTAL BALANCE SHEET INFORMATION

Cash, cash equivalents and restricted cash

Cash and cash equivalents include cash on hand and all liquid investments with a maturity of three months or less when purchased. We regularly maintain cash balances with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit or the equivalent outside the U.S. As of March 31, 2024, approximately 75% of our total balance of cash and cash equivalents was held within a small group of financial institutions, primarily large money center banks. Although we currently believe that the financial institutions with whom we do business will be able to fulfill their commitments to us, there is no assurance that those institutions will be able to continue to do so. We have not experienced any losses associated with our balances in such accounts for the three months ended March 31, 2024 and 2023.

Restricted cash includes amounts that cannot be withdrawn or used for general operating activities under legal or regulatory restrictions. Restricted cash consists of amounts deposited by customers for prepaid card transactions and funds held as a liquidity reserve that are subject to local regulatory restrictions requiring appropriate segregation and restriction in their use. Restricted cash is included in prepaid expenses and other current assets in the consolidated balance sheets with a corresponding liability in accounts payable and accrued liabilities.

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A reconciliation of the amounts of cash and cash equivalents and restricted cash in the consolidated balance sheets to the amount in the consolidated statements of cash flows is as follows:

March 31, 2024December 31, 2023
(in thousands)
Cash and cash equivalents$2,167,616 $2,088,887 
Restricted cash159,414 167,190 
Cash included in assets held for sale693 798 
Cash, cash equivalents and restricted cash shown in the statements of cash flows$2,327,723 $2,256,875 

Long-lived assets

During the three months ended March 31, 2023, we entered into a new agreement to acquire software, of which $48.0 million was financed utilizing a five-year vendor financing arrangement.

NOTE 14—ACCUMULATED OTHER COMPREHENSIVE LOSS


The changes in the accumulated balances for each component of other comprehensive loss, net of tax,income (loss) were as follows for the three and nine months ended September 30, 2017March 31, 2024 and September 30, 2016:2023:
Foreign Currency Translation Gains (Losses)Unrealized Gains (Losses) on Hedging ActivitiesOtherAccumulated Other Comprehensive Loss
(in thousands)
Balance at December 31, 2023$(215,540)$(40,859)$(2,526)$(258,925)
Other comprehensive income (loss)(58,579)20,066 — (38,513)
Balance at March 31, 2024$(274,119)$(20,793)$(2,526)$(297,438)
Balance at December 31, 2022$(380,584)$(22,420)$(2,965)$(405,969)
Other comprehensive income (loss)30,889 (35,715)— (4,848)
Balance at March 31, 2023$(349,695)$(58,135)$(2,965)$(410,817)
 Foreign Currency Translation Unrealized Gains (Losses) on Hedging Activities Other Accumulated Other Comprehensive Loss
        
 (in thousands)
        
Balance at June 30, 2016$(249,374) $(11,377) $(4,634) $(265,385)
Other comprehensive income, net of tax2,505
 3,331
 23
 5,859
Balance at September 30, 2016$(246,869) $(8,046) $(4,611) $(259,526)
        
Balance at June 30, 2017$(239,669) $51
 $(3,841) $(243,459)
Other comprehensive income, net of tax40,090
 843
 18
 40,951
Balance at September 30, 2017$(199,579) $894
 $(3,823) $(202,508)


Other comprehensive income (loss) attributable to noncontrolling interest,interests, which relates only to foreign currency translation, was approximately $2.3$(23.1) million and $(0.8)$6.4 million for the three months ended September 30, 2017March 31, 2024 and September 30, 2016,2023, respectively.

 Foreign Currency Translation Unrealized Gains (Losses) on Hedging Activities Other Accumulated Other Comprehensive Loss
        
 (in thousands)
        
Balance at December 31, 2015$(239,650) $(3,732) $(3,808) $(247,190)
Other comprehensive loss, net of tax(7,219) (4,314) (803) (12,336)
Balance at September 30, 2016$(246,869) $(8,046) $(4,611) $(259,526)
        
Balance at December 31, 2016$(318,450) $(640) $(3,627) $(322,717)
Other comprehensive income (loss), net of tax118,871
 1,534
 (196) 120,209
Balance at September 30, 2017$(199,579) $894
 $(3,823) $(202,508)

Other comprehensive income attributable to noncontrolling interest, which relates only to foreign currency translation, was approximately $15.1 million and $3.8 million for the nine months ended September 30, 2017 and September 30, 2016, respectively.

NOTE 12—15—SEGMENT INFORMATION


We operate in two reportable segments: Merchant Solutions and Issuer Solutions. As described in "Note 3 - Business Disposition," during the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment. Our former Consumer Solutions segment is presented below for periods prior to disposition.

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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 certainshare-based compensation costs are included in CorporateCorporate. Impairment of goodwill and gains or losses on business dispositions are not included in the following table.determining segment operating income. Interest and other income, interest and other expense, income tax expense and provision forequity in income taxesof equity method investments 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 TransitionAnnual Report on Form 10-K for the seven monthsyear ended December 31, 20162023 and our summary of significant accounting policies in "Note 1—1—Basis of Presentation and Summary of Significant Accounting Policies."



Information on segments and reconciliations to consolidated revenues, and consolidated operating income areand consolidated depreciation and amortization were as follows for the three and nine months ended September 30, 2017March 31, 2024 and September 30, 2016:2023:
Three Months Ended
March 31, 2024March 31, 2023
(in thousands)
Revenues(1):
Merchant Solutions$1,834,094 $1,605,610 
Issuer Solutions602,735 570,907 
Consumer Solutions— 143,709 
Intersegment eliminations(16,642)(27,779)
 Consolidated revenues$2,420,187 $2,292,447 
Operating income (loss)(1):
Merchant Solutions$580,438 $507,210 
Issuer Solutions106,097 82,810 
Consumer Solutions— (5,798)
Corporate(234,283)(282,654)
Loss on business disposition— (244,833)
Consolidated operating income$452,252 $56,735 
Depreciation and amortization(1):
Merchant Solutions$292,333 $241,573 
Issuer Solutions163,974 160,853 
Corporate4,829 4,912 
 Consolidated depreciation and amortization$461,136 $407,338 
 Three Months Ended Nine Months Ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
        
 (in thousands)
        
Revenues(1):
       
North America$764,902
 $718,977
 $2,162,911
 $1,770,957
Europe205,203
 173,246
 557,258
 479,620
Asia-Pacific68,802
 59,662
 200,741
 170,212
 Consolidated revenues$1,038,907
 $951,885
 $2,920,910
 $2,420,789
        
Operating income (loss)(1):
       
North America$138,345
 $110,983
 $344,604
 $258,648
Europe76,214
 63,727
 196,394
 172,293
Asia-Pacific20,032
 14,657
 57,321
 40,266
Corporate(2)
(62,120) (68,978) (189,026) (195,085)
 Consolidated operating income$172,471
 $120,389
 $409,293
 $276,122
        
Depreciation and amortization(1):
       
North America$95,056
 $91,790
 $277,219
 $189,585
Europe11,863
 11,019
 34,926
 30,780
Asia-Pacific4,484
 4,450
 12,068
 12,204
Corporate2,246
 1,296
 5,750
 3,740
 Consolidated depreciation and amortization$113,649
 $108,555
 $329,963
 $236,309


(1)Revenues, operating income and depreciation and amortization reflect the effecteffects of acquired businesses from the respective acquisition dates and the effects of acquisition. Fordivested businesses through the respective disposal dates. See “Note 2—Acquisition” and “Note 3—Business Disposition” for further discussion, see "Note 2—Acquisitions."discussion.


(2)During the three and nine months ended September 30, 2017, respectively,March 31, 2024 and 2023, operating loss for Corporateincome included acquisition and integration expenses of $21.5$78.9 million and $69.5 million. During the three and nine months ended September 30, 2016,$101.8 million, respectively, operating loss forwhich were primarily included within Corporate included acquisition and integration expenses of $34.0 million and $93.0 million.expenses.


NOTE 13—16—COMMITMENTS AND CONTINGENCIES


LeasesLegal Matters


We are party to a number of claims and lawsuits incidental to our business. In May 2017, we received $37.5 millionour opinion, the liabilities, if any, which may ultimately result from the saleoutcome of such matters, individually or in the aggregate, are not expected to have a material adverse effect on our operating facility in Jeffersonville, Indiana, which we acquired as partfinancial position, liquidity, results of the Heartland merger, and simultaneously leased the property back for an initial termoperations or cash flows.
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Table of 20 years, followed by four optional renewal terms of 5 years. The arrangement met the criteria to be treated as a sale for accounting purposes, and as a result, we derecognized the associated property. There was no resulting gain or loss on the sale because the proceeds received were equal to the carrying amount of the property. We are accounting for the lease as an operating lease.Contents


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 1I 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 TransitionAnnual Report on Form 10-K for the seven monthsyear ended December 31, 2016.2023. 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 paymentpayments technology servicescompany delivering innovative solutionssoftware and services to our customers globally. Our technologies, services and employeeteam member expertise enableallow us to provide a broad range of servicessolutions that allowenable our customers to accept various payment types. We distribute our servicesoperate their businesses more efficiently across a variety of channels around the world.

We have grown organically, as well as through acquisitions, and continue to invest in new technology solutions, infrastructure to support our growing business and the ongoing consolidation and enhancement of our operating platforms. These investments include new product development and innovation to further enhance and differentiate our suite of technology and cloud-based solutions available to customers, along with migration of certain underlying technology platforms to cloud environments to enhance performance, improve speed to market and drive cost efficiencies. We also continue to execute on integration and other activities, such as combining business operations, streamlining technology infrastructure, eliminating duplicative corporate and operational support structures and realizing scale efficiencies.

Highlights related to our financial condition at March 31, 2024, and results of operations for the three months then ended, include the following:

•Consolidated revenues for the three months ended March 31, 2024 increased to $2,420.2 million compared to $2,292.4 million for the prior year. The increase in 30 countries throughout North America, Europe,consolidated revenues was primarily due to an increase in transaction volumes, including from the Asia-PacificEVO business acquired in March 2023, partially offset by the effects on revenue of the businesses divested in April 2023.

•Merchant Solutions and Issuer Solutions segment operating income and operating margin for the three months ended March 31, 2024 increased compared to the prior year primarily due to the favorable effect of increases in revenues, since certain fixed costs do not vary with revenues, and continued expense management.

•Consolidated operating income for the three months ended March 31, 2024 included the favorable effects of the increase in revenues as compared to the prior year, lower corporate expenses and the effects of the business divestitures completed in April 2023, partially offset by an increase in amortization of acquired intangibles, primarily related to the acquisition of EVO. Consolidated operating income for the three months ended March 31, 2023 included the unfavorable effect of the loss on business disposition related to the sale of our consumer business.

•On February 23, 2024, we issued $2.0 billion in aggregate principal amount of 1.500% convertible unsecured senior notes due March 2031 through a private placement. In connection with the issuance of the notes, we entered into privately negotiated capped call transactions to hedge the potential dilutive effect upon conversion of the notes, or offset our cash obligation if the cash settlement option were to be elected, for amounts in excess of the principal amount of converted notes up to a cap price.
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Risks Related to Macroeconomic Effects and Other Global Conditions

We are exposed to general economic conditions, including currency fluctuations, inflation, rising interest rates and other conditions that affect the overall level of consumer, business and government spending, which could negatively affect our financial performance.

Certain of our operations are conducted in foreign currencies. Consequently, a portion of our revenues and expenses has been and may continue to be affected by fluctuations in foreign currency exchange rates. A strengthening of the U.S. dollar or other significant fluctuations in foreign currency exchange rates could result in an adverse effect on our future financial results; however, we are unable to predict the extent of the potential effect on our financial results.

We have sought to reduce our interest rate risk through the issuance of fixed rate debt in place of variable rate debt, including the effect of interest rate swap hedging arrangements to convert a significant portion of the eligible variable rate borrowings under our revolving credit facility to a fixed rate. However, inflationary pressure or interest rate fluctuations could adversely affect our business and financial performance as a result of higher costs and/or lower consumer spending. In addition, continued inflation or a rise in interest rates could have an adverse effect on our future financial results and the recoverability of assets. However, as the future magnitude, duration and effects of these conditions are difficult to predict at this time, we are unable to predict the extent of the potential effect on our financial results.

We regularly maintain cash balances with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit or the equivalent outside the U.S. A disruption in financial markets could impair our banking partners, which could affect our ability to access our cash or cash equivalents, our ability to provide settlement services or our customers' ability to access their existing cash to fulfill their payment obligations to us. The occurrence of these events could negatively affect our business, financial condition and results of operations.

We also continue to evaluate the potential effects on our business from heightened geopolitical and economic instability or increased difficulty of conducting business in a country or region due to actual or potential political or military conflict or action, such as those arising from recent global events, which have increased the level of economic and Brazilpolitical uncertainty in various regions of the world. Although we have not experienced significant exposure or adverse effects on our business and financial results to date, the extent to which these events could affect the global economy and our operations is difficult to predict at this time. However, a significant escalation, expansion of the scope or continuation of the related economic disruptions could have an adverse effect on our business and financial results.

Our financial condition and results of operations may be adversely affected by a downturn in macroeconomic conditions. When adverse macroeconomic conditions arise, we evaluate where we may be able to implement cost-saving measures, including those related to headcount and discretionary expenses.

For a further discussion of trends, uncertainties and other factors that could affect our future operating results, see the section entitled “Risk Factors” in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent filings we make with the SEC.


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Results of Operations

We operate in threetwo reportable segments: North America, EuropeMerchant Solutions and Asia-Pacific.

We merged with Heartland Payments Systems, Inc. ("Heartland")Issuer Solutions. As described in a cash-and-stock transaction on April 22, 2016 for total purchase consideration of $3.9 billion. See "Note 2—Acquisitions"“Note 3 – Business Disposition” in the notes to the accompanying unaudited consolidated financial statements, for further discussionduring the second quarter of our merger with Heartland.

On September 1, 2017,2023, we acquired the communities and sports divisions of Athlaction Topco, LLC ("ACTIVE Network") in a cash-and-stock transaction with Vista Equity Partners. We paid the sellers consideration of $600 million in cash, which we funded primarily by drawing on our Revolving Credit Facility (as defined in "Liquidity and Capital Resources - Long-Term Debt and Lines of Credit" below), and 6,357,509 shares of our common stock having an estimated fair value of approximately $572 million.

Highlights related to our financial condition and results of operations for the three and nine months ended September 30, 2017 are provided below:

Consolidated revenues increased by 9.1% and 20.7% to $1,038.9 million and $2,920.9 million, respectively, for the three and nine months ended September 30, 2017, compared to $951.9 million and $2,420.8 million, respectively, for the prior-year periods. The increase for the three month-period was primarily due to organic growth across our operating segments and the increase for the nine month-period was primarily due to our merger with Heartland.

Consolidated operating income was $172.5 million and $409.3 million, respectively, for the three and nine months ended September 30, 2017 compared to $120.4 million and $276.1 million, respectively, for the prior-year periods. Our operating margin for the three and nine months ended September 30, 2017 was 16.6% and 14.0%, respectively, compared to 12.6% and 11.4%, respectively, for the prior-year periods. The contribution of the revenue growth was partially offset by an increase in depreciation and amortization expense of $5.1 million and $93.7 million, respectively.

Net income attributable to Global Payments was $110.7 million and $226.5 million, respectively, for the three and nine months ended September 30, 2017 compared to $55.5 million and $177.7 million, respectively, for the prior-year periods. The nine months ended September 30, 2016 included a gain of $41.2 million fromcompleted the sale of all of our membership interests in Visa Europe Limited ("Visa Europe") to Visa Inc. ("Visa").

Diluted earnings per share was $0.71 and $1.47, respectively, for the three and nine months ended September 30, 2017 compared to $0.36 and $1.23, respectively, for the prior-year periods.

Emerging Trends

We believe that electronic payment transactions will continue to grow and that an increasing percentage of these will be facilitated through emerging technologies.  As a result, we expect an increasingconsumer portion of our future capital investment will be

allocatedNetspend business, which comprised our former Consumer Solutions segment. Our former Consumer Solutions segment is presented below for periods prior to supportdisposition. For further information about our reportable segments, see “Item 1. Business—Business Segments” within our Annual Report on Form 10-K for the development of newyear ended December 31, 2023, incorporated herein by reference, and emerging technologies; however, we do not expect our aggregate capital spending to increase materially from our current level of spending as a result of this.

We also believe new markets will continue to develop in areas that have been previously dominated by paper-based transactions. We expect industries such as education, government and healthcare, as well as payment types such as recurring payments and business-to-business payments, to continue to see transactions migrate to electronic-based solutions.  We anticipate that the continued development of new services and the emergence of new vertical markets will be a factor“Note 15—Segment Information” in the growth of our business and our revenue innotes to the future.accompanying unaudited consolidated financial statements.

The payments industry continues to grow worldwide and as a result, certain large payment technology companies, including us, have expanded operations globally by pursuing acquisitions and creating alliances and joint ventures. We expect to continue to expand into new markets internationally or increase our scale and improve our competitiveness in existing markets by pursuing further acquisitions and joint ventures.

Results of Operations


The following table sets forth key selected financial data for the three months ended September 30, 2017March 31, 2024 and September 30, 2016,2023, this data as a percentage of total revenues and the changes between the periods in dollars and as a percentage of the prior-yearprior-period amount. The income statement data for the three months ended September 30, 2016 areMarch 31, 2024 and 2023 is derived from ourthe accompanying unaudited consolidated financial statements for that period.included in Part I, Item 1 — Financial Statements.
Three Months Ended
March 31, 2024
% of Revenues(1)
Three Months Ended
March 31, 2023
% of Revenues(1)
$ Change% Change
(dollar amounts in thousands)
Revenues(2):
Merchant Solutions$1,834,094 75.8 %$1,605,610 70.0 %$228,484 14.2 %
Issuer Solutions602,735 24.9 %570,907 24.9 %31,828 5.6 %
Consumer Solutions— — %143,709 6.3 %(143,709)NM
Intersegment eliminations(16,642)(0.7)%(27,779)(1.2)%11,137 (40.1)%
 Consolidated revenues$2,420,187 100.0 %$2,292,447 100.0 %$127,740 5.6 %
Consolidated operating expenses(2):
Cost of service$922,390 38.1 %$947,753 41.3 %$(25,363)(2.7)%
Selling, general and administrative1,045,545 43.2 %1,043,126 45.5 %2,419 0.2 %
Loss on business disposition— — %244,833 10.7 %(244,833)NM
Operating expenses$1,967,935 81.3 %$2,235,712 97.5 %$(267,777)(12.0)%
Operating income (loss)(2):
Merchant Solutions$580,438 24.0 %$507,210 22.1 %$73,228 14.4 %
Issuer Solutions106,097 4.4 %82,810 3.6 %23,287 28.1 %
Consumer Solutions— — %(5,798)(0.3)%5,798 NM
Corporate(234,283)(9.7)%(282,654)(12.3)%48,371 (17.1)%
Loss on business disposition— — %(244,833)(10.7)%244,833 NM
Operating income$452,252 18.7 %$56,735 2.5 %$395,517 697.1 %
Operating margin(2):
Merchant Solutions31.6 %31.6 %— %
Issuer Solutions17.6 %14.5 %3.1 %
Consumer SolutionsNM(4.0)%NM
 Three Months Ended September 30, 2017 
% of Revenue(1)
 Three Months Ended September 30, 2016 
% of Revenue(1)
 Change % Change
            
 (dollar amounts in thousands)
            
Revenues(2):
           
North America$764,902
 73.6% $718,977
 75.5% $45,925
 6.4 %
Europe205,203
 19.8% 173,246
 18.2% 31,957
 18.4 %
Asia-Pacific68,802
 6.6% 59,662
 6.3% 9,140
 15.3 %
Total revenues$1,038,907
 100.0% $951,885
 100.0% $87,022
 9.1 %
            
Consolidated operating expenses:
           
Cost of service$493,883
 47.5% $469,980
 49.4% $23,903
 5.1 %
Selling, general and administrative372,553
 35.9% 361,516
 38.0% 11,037
 3.1 %
Operating expenses$866,436
 83.4% $831,496
 87.4% $34,940
 4.2 %
            
Operating income (loss):
           
North America$138,345
 

 $110,983
   $27,362
 24.7 %
Europe76,214
   63,727
   12,487
 19.6 %
Asia-Pacific20,032
   14,657
   5,375
 36.7 %
Corporate(2)
(62,120)   (68,978)   6,858
 (9.9)%
Operating income$172,471
 16.6% $120,389
 12.6% $52,082
 43.3 %
            
Operating margin:
           
North America18.1%   15.4%
  2.7%  
Europe37.1%   36.8%   0.3%  
Asia-Pacific29.1%   24.6%
  4.5%  

NM = Not meaningful

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


(2) Operating loss for Corporate included acquisition and integration expenses of $21.5 million and $34.0 million during the three months ended September 30, 2017 and 2016, respectively. 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 nine months ended September 30, 2017 and September 30, 2016, 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 nine months ended September 30, 2016 are derived from our unaudited consolidated financial statements for that period.
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 Nine Months Ended September 30, 2017 
% of Revenue(1)
 Nine Months Ended September 30, 2016 
% of Revenue(1)
 Change % Change
            
 (dollar amounts in thousands)
            
Revenues(2):
           
North America$2,162,911
 74.0% $1,770,957
 73.2% $391,954
 22.1 %
Europe557,258
 19.1% 479,620
 19.8% 77,638
 16.2 %
Asia-Pacific200,741
 6.9% 170,212
 7.0% 30,529
 17.9 %
Total revenues$2,920,910
 100.0% $2,420,789
 100.0% $500,121
 20.7 %
            
Consolidated operating expenses(2):
           
Cost of service$1,418,969
 48.6% $1,125,041
 46.5% $293,928
 26.1 %
Selling, general and administrative1,092,648
 37.4% 1,019,626
 42.1% 73,022
 7.2 %
Operating expenses$2,511,617
 86.0% $2,144,667
 88.6% $366,950
 17.1 %
            
Operating income (loss)(2):
           
North America$344,604
   $258,648
   $85,956
 33.2 %
Europe196,394
   172,293
   24,101
 14.0 %
Asia-Pacific57,321
   40,266
   17,055
 42.4 %
Corporate(3)
(189,026)   (195,085)   6,059
 (3.1)%
Operating income$409,293
 14.0% $276,122
 11.4% $133,171
 48.2 %
            
Operating margin(2):
           
North America15.9%   14.6%   1.3 %  
Europe35.2%   35.9%   (0.7)%  
Asia-Pacific28.6%   23.7%   4.9 %  

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

(2)Revenues, consolidated operating expenses, operating income and operating margin reflect the effecteffects of acquired businesses from the respective acquisition dates and the effects of acquisition. Fordivested businesses through the respective disposal dates. See “Note 2—Acquisition” and “Note 3—Business Disposition” for further discussion, see "Note 2—Acquisitions" in the notes to the accompanying unaudited consolidated financial statements.discussion.


(3) Operating loss for CorporateOperating income included acquisition and integration expenses of $69.5$78.9 million and $93.0$101.8 million during the nine months ended September 30, 2017 and 2016, respectively. These expenses are included primarily in selling, general and administrative expenses in the unaudited consolidated statements of income.




Revenues

For the three months ended September 30, 2017, revenues increased by $87.0 million, or 9.1%, compared to the prior year, to $1,038.9 million, reflecting organic growth in each of our operating segments and the favorable effect of currency fluctuations of $9.1 million. For the nine months ended September 30, 2017, revenues increased by $500.1 million, or 20.7%, compared to the prior year, to $2,920.9 million, due primarily to our merger with Heartland, despite the unfavorable effect of currency fluctuations of $13.1 million.

North America Segment. For the three and nine months ended September 30, 2017, revenues from our North America segment increased by $45.9 million and $392.0 million, or 6.4% and 22.1%, respectively, compared to the prior year, to $764.9 million and $2,162.9 million, respectively. The increase for the three months ended September 30, 2017March 31, 2024 and 2023, respectively, which were primarily included within Corporate expenses.

Revenues

Consolidated revenues for the three months ended March 31, 2024 increased by 5.6% to $2,420.2 million, compared to $2,292.4 million for the prior year. The increase in revenues was primarily due to organic growth andan increase in transaction volumes, including from the increaseEVO business acquired in March 2023, partially offset by the effects on revenue of the businesses divested in April 2023.

Merchant Solutions Segment. Revenues from our Merchant Solutions segment for the ninethree months ended September 30, 2017March 31, 2024 increased by 14.2% to $1,834.1 million, compared to $1,605.6 million for the prior year. The increase in revenues was primarily due to an increase in transaction volumes, including from the EVO business, and growth in subscription and software revenue.

Issuer Solutions Segment. Revenues from our merger with Heartland.

Europe Segment. ForIssuer Solutions segment for the three and nine months ended September 30, 2017, revenues from our Europe segmentMarch 31, 2024 increased by $32.05.6% to $602.7 million, and $77.6 million, or 18.4% and 16.2%, respectively, compared to $570.9 million for the prior year, to $205.2 million and $557.3 million, respectively,year. The increase in revenues was primarily due to organic growth. During the three and nine months ended September 30, 2017, revenues from our Europe segment included a favorable effect from currency fluctuations of $5.6 million and an unfavorable effect from currency fluctuations of $15.1 million, respectively.increase in transaction volumes.


Asia-Pacific Segment. For the three and nine months ended September 30, 2017, revenues from our Asia-Pacific segment increased by $9.1 million and $30.5 million, or 15.3% and 17.9%, respectively, compared to the prior year, to $68.8 million and $200.7 million, respectively, primarily due to organic growth.

Operating Expenses


Cost of Service. For the three and nine months ended September 30, 2017, costCost of service increased by $23.9 million and $293.9 million, or 5.1% and 26.1%, respectively, compared to the prior year, to $493.9 million and $1,419.0 million, respectively. The increase in cost of service was driven primarily by an increase in the variable costs associated with our revenue growth, including during the nine months ended September 30, 2017, the incremental expenses associated with the merger with and integration of Heartland as well as additional intangible asset amortization of $75.8 million from recently acquired businesses. As a percentage of revenues, cost of service decreased to 47.5% for the three months ended September 30, 2017 from 49.4%March 31, 2024 was $922.4 million, compared to $947.8 million for the prior year. AsCost of service as a percentage of revenues cost of service increaseddecreased to 48.6%38.1% for the ninethree months ended September 30, 2017 from 46.5%March 31, 2024, compared to 41.3% for the prior year. The decrease in cost of service as a percentagewas primarily due to continued prudent expense management and the elimination of revenuecosts related to the businesses divested in 2023. These favorable effects were partially offset by the inclusion of costs for the EVO business, including the related amortization of acquired intangibles. Cost of service included amortization of acquired intangibles of $343.2 million and $301.3 million for the three months ended September 30, 2017 was due to aMarch 31, 2024 and 2023, respectively. The decrease in Heartland customer-related intangible asset amortization, which is calculated using an accelerated method.cost of service as a percentage of revenues also reflects the favorable effect of the increase in revenues, since certain fixed costs do not vary with revenues.


Selling, General and Administrative Expenses. For the three and nine months ended September 30, 2017, selling,Expenses. Selling, general and administrative expenses increased by $11.0for the three months ended March 31, 2024 were $1,045.5 million, and $73.0 million, or 3.1% and 7.2%, respectively, compared to $1,043.1 million for the prior year, to $372.6 millionyear. Selling, general and $1,092.6 million, respectively. Asadministrative expenses as a percentage of revenues selling, general and administrative expenses decreased to 35.9% and 37.4%was 43.2% for the three and nine months ended September 30, 2017 from 38.0% and 42.1%, respectively,March 31, 2024, compared to 45.5% for the prior year.

During the three Higher variable selling and nine months ended September 30, 2017,other costs related to the increase in selling, generalrevenues and administrative expenses was primarily duethe inclusion of costs for the EVO business were offset by the elimination of costs related to additional costs to support the growth of our business, including during the nine months ended September 30, 2017 incrementalbusinesses divested in 2023, lower acquisition and integration expenses.expenses and a decrease in share-based compensation expense. The decreasechange in selling, general and administrative expenses as a percentage of revenues was due to synergies achievedalso reflects the favorable effect of the increase in revenues, since certain fixed costs do not vary with revenues.

Selling, general and administrative expenses from the merger with Heartland, as well as the decrease inincluded acquisition and integration expenses during the three and nine months ended September 30, 2017.

Operating Income and Operating Margin

North America Segment. Operating income in our North America segment increased by 24.7% and 33.2% to $138.3of $78.9 million and $344.6$101.4 million respectively, for the three and nine months ended September 30, 2017 compared to the prior year. Operating margin increased by 2.7 and 1.3 percentage points for the three and nine months ended September 30, 2017, respectively. The increase in operating income was primarily due to revenue growth in our U.S. business, which during the nine months ended September 30,

2017 was partially offset by additional intangible asset amortization associated with acquired businesses. The increase in operating margin during the three months ended September 30, 2017March 31, 2024 and 2023, respectively. Share-based compensation expense was $40.1 million and $89.6 million for the three months ended March 31, 2024 and 2023, respectively.

Corporate. Corporate expenses for the three months ended March 31, 2024 were $234.3 million, compared to $282.7 million for the prior year. The decrease for the three months ended March 31, 2024 was primarily due to the decrease in intangible asset amortization expense from the merger with Heartlandacquisition and integration and share-based compensation expenses as a percentagedescribed above.

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Operating Income and Operating Margin
Europe Segment. Operating
Consolidated operating income in our Europe segment increased by 19.6% and 14.0% to $76.2 million and $196.4 million, respectively, for the three and nine months ended September 30, 2017March 31, 2024 was $452.3 million, compared to $56.7 million for the prior year. Operating margin for the three months ended March 31, 2024 was 18.7%, compared to 2.5% for the prior year. Consolidated operating income and operating margin for the three months ended March 31, 2024 compared to the prior year despiteincluded the effectfavorable effects of unfavorable currency fluctuations of $11.3 million for the nine months ended September 30, 2017. The increase in operating income for the threerevenues, since certain fixed costs do not vary with revenues, prudent expense management and nine months ended September 30, 2017 was primarily due to revenue growth.lower acquisition and integration and share-based compensation expenses as described above. These effects were partially offset by higher amortization of acquired intangibles as described above.


Asia-Pacific Segment. Operating income in our Asia-Pacific segment increased by 36.7% and 42.4% to $20.0 million and $57.3 million, respectively, for the three and nine months ended September 30, 2017 compared to the prior year. Operating margin increased by 4.5 and 4.9 percentage points, respectively, for the three and nine months ended September 30, 2017. The increase inConsolidated operating income and operating margin was due to organic revenue growth.

Corporate. Corporate expenses decreased by 9.9% and 3.1% to $62.1 million and $189.0 million, respectively, for the three and nine months ended September 30, 2017March 31, 2023 included the effects of the $244.8 million loss on business disposition related to the sale of our consumer business.

Segment Operating Income and Operating Margin

In our Merchant Solutions segment, operating income for the three months ended March 31, 2024 increased compared to the prior year primarily due to a decreasethe favorable effects of the increase in acquisitionrevenues, since certain fixed costs do not vary with revenues, and integration expenses.continued expense management. These favorable effects were partially offset by incremental expenses related to continued investment in products, innovation and our technology environments. In addition, the inclusion of the EVO business had an unfavorable effect on the Merchant Solutions operating margin for the three months ended March 31, 2024 as compared to the prior year.


In our Issuer Solutions segment, operating income and operating margin for the three months ended March 31, 2024 increased compared to the prior year primarily due to the favorable effect of the increase in revenues, since certain fixed costs do not vary with revenues, and continued expense management.

Other Income/Expense, Net


Interest and other income decreased $39.5for the three months ended March 31, 2024 increased to $35.9 million, compared to $11.2 million for the nine months ended September 30, 2017 compared to the prior year, which included a gain of $41.2 millionprimarily due to interest income associated with the seller financing notes that were issued in connection with ourthe sale of all of the membership interests in Visa Europe. See "Note 5—Other Assets"our consumer business in the notes to the accompanying unaudited consolidated financial statements for further discussionsecond quarter of this transaction.2023.


Interest and other expense decreased $4.8for the three months ended March 31, 2024 increased to $162.1 million, compared to $122.9 million for the prior year, primarily due to an increase in our average outstanding borrowings along with higher average interest rates on outstanding borrowings.

Income Tax Expense (Benefit)

For the three months ended March 31, 2024, our effective income tax rate of 5.9% included the favorable effects of a change in the assessment of the need for a valuation allowance related to certain foreign tax credit carryforwards, foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

For the three months ended March 31, 2023, we reported a tax benefit of 57.0%. The tax rate for the three months ended March 31, 2023 included the favorable effects of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction. In addition, during the three months ended March 31, 2023, we recognized a tax benefit on the loss on business disposition at the applicable tax rate, whereas the earnings other than this discrete item were tax effected at the lower estimated annual effective tax rate.

In December 2022, the EU Member States formally adopted the Pillar Two Directive, which generally provides for a global minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development Pillar Two Framework. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future. We do not expect the Pillar Two Directive to have any significant effect on our financial statements.

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Net Income (loss) Attributable to Global Payments

Net income attributable to Global Payments was $313.3 million for the three months ended September 30, 2017March 31, 2024 compared to net loss of $11.0 million for the prior year, and increased $35.1 million forreflecting the nine months ended September 30, 2017 compared to the prior year. The outstanding borrowings on our long-term debt facilities increased significantly in April 2016 as a result of incremental borrowings we made to fund a portion of the total consideration for our merger with Heartland. Since then, we have made principal repayments that have lowered our average outstanding borrowings, and we have lowered the leverage-based margins we pay on interest rates through refinancing activities that we completed in October 2016 and May 2017. The savings we realized during the three months ended September 30, 2017 compared to the prior year were partially offset by increases in LIBOR during the intervening time frame.changes noted above.


Provision for Income TaxesDiluted Earnings (Loss) per Share


Our effective income tax rates were 11.7% and 18.4%Diluted earnings per share was $1.22 for the three months ended September 30, 2017 and September 30, 2016, respectively, and 14.4% and 14.7%March 31, 2024 compared to diluted loss per share of $0.04 for the nine months ended September 30, 2017 and September 30, 2016, respectively. The effective income tax ratesprior year. Diluted earnings per share for the three and nine months ended September 30, 2017 includedMarch 31, 2024 reflects the effect of excess tax benefits associated with share-based awards that vested during the periods. The effective income tax rate for the nine months ended September 30, 2016 included the effect of eliminating certainchanges in net deferred tax liabilities associated with undistributed earnings from Canada, as a result of management's plans to reinvest these earnings outside the United States indefinitely.income.


Liquidity and Capital Resources


We have numerous sources of capital, including cash on hand and cash flows generated from operations as well as various sources of financing. In the ordinary course of our business, a significant portion of our liquidity comes from operating cash flows. Cash flow from operations is usedflows and borrowings, including the capacity under our revolving credit facility.

Our capital allocation priorities are 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. AccumulatedOur significant contractual cash balancesrequirements also include ongoing payments for lease liabilities and contractual obligations related to service arrangements with suppliers for fixed or minimum amounts, which primarily relate to software, technology infrastructure and related services. Commitments under our borrowing arrangements are investedfurther described in high-quality, marketable short-term instruments."Note 6—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." For additional information regarding our other cash commitments and contractual obligations, see "Note 7—Leases" and “Note 19—Commitments and Contingencies” in our Annual Report on Form 10-K for the year ended December 31, 2023.


Our capital plan objectives are to support our operational needs and strategic plan for long-term growth while maintaining a lowoptimizing our cost of capital. Wecapital and financial position. To supplement cash from operating activities, we use oura combination of bank financing, such as borrowings under our Revolving Credit Facilitycredit facilities, commercial paper program and our term loans,senior note issuances, for general corporate purposes and to fund acquisitions. In addition,Our commercial paper program provides a cost effective means of addressing our short-term liquidity needs and is backstopped by our revolving credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility. Finally, 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. networks.

We regularly evaluate our liquidity and capital position relative to cash requirements, and we may elect to raise additional funds in the future either through the issuance of debt or equity or otherwise.by other means. Accumulated cash balances are invested in high-quality, marketable short-term instruments. We believe that our current and projected sources of liquidity will be sufficient to meet our projected liquidity requirements associated with our operations for the near and long term.


At September 30, 2017,March 31, 2024, we had cash and cash equivalents totaling $1,186.1$2,167.6 million. Of this amount, we consider $560.7considered $763.6 million to be available for general purposes, of which $63.6 million is undistributed foreign earnings considered to be indefinitely reinvested outside the United States. The available cash of $763.6 million does not include the following: (1)(i) settlement-related cash balances, (2)(ii) funds held as collateral for merchant losses ("Merchant Reserves") and (3)(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;restricted in their use; 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 merchantmerchant's agreement. While this cash is not restricted in its use, we believe that designating this cash to collateralizeas a Merchant ReservesReserve strengthens our fiduciary standing with our member sponsors and is in accordance with the guidelines set by the card networks.sponsors. Funds held for customers, and the corresponding liability that we recordwhich are not restricted in customer depositstheir use, include amounts collected priorbefore the corresponding obligation is due to remittance onbe settled to or at the direction of our customers' behalf.customers.


Our available
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We also had restricted cash balance at September 30, 2017 included $500.1of $159.4 million as of cashMarch 31, 2024, representing amounts deposited by customers for prepaid card transactions and funds held by foreign subsidiaries whose earningsas a liquidity reserve. These balances are considered indefinitely reinvested outside the United States. These cash balances reflect our capital investmentssubject to local regulatory restrictions requiring appropriate segregation and restriction in these subsidiaries and the accumulation of cash flows generated by their operations, net of cash flows used to service debt locally and fund acquisitions outside of the United States. We believe that we are able to maintain a sufficient level of liquidity for our domestic operations and commitments without repatriation of the earnings of these foreign subsidiaries. If we were to repatriate some or all of the cash held by such foreign subsidiaries, we do not believe that the associated income tax liabilities would have a significant effect on our liquidity.use.


Operating activities provided net cash of $360.1$416.3 million and $367.4$599.5 million for the ninethree months ended September 30, 2017March 31, 2024 and September 30, 2016, respectively.2023, respectively, which reflect net income adjusted for noncash items, including depreciation, amortization and the provision for credit losses, charges associated with the net loss on business disposition and facility exit charges, and changes in operating assets and liabilities. The decrease in cash flows from operating activities of $7.3 millionfrom the prior year was primarily due to the improvementfluctuations in our earnings before non-cash expenses, such as amortizationoperating results and related assets and liabilities that are affected primarily by timing of acquired intangibles, offset by a decrease in the change in net settlement processing assets of $232.6 millionmonth-end and other working capital accounts. Fluctuationstransaction volume, including changes in settlement processing assets and obligations are largely due to timing of month-end and settlement transaction volume.accounts payable and other liability balances.


NetWe used net cash used in investing activities was $710.2of $148.0 million and $1,892.0$4,206.8 million during the ninethree months ended September 30, 2017March 31, 2024 and September 30, 2016,2023, respectively. Cash used for investing activities primarily represents cash used to fund acquisitions, net of cash and restricted cash acquired, and capital expenditures. During the ninethree months ended September 30, 2017,March 31, 2024 and 2023, we paid $600used cash of $2.6 million of cash as a portion of the considerationand $4,046.8 million, respectively, for the acquisition of ACTIVE Network. During the nine months ended September 30, 2016, we paid Heartland shareholders $2,043.4 million of cash as a portion of the consideration for the merger.

acquisitions. We made capital expenditures of $136.6$145.4 million and $102.4$162.2 million during the ninethree months ended September 30, 2017March 31, 2024 and September 30, 2016,2023, respectively. DuringThese investments include software and hardware to support the development of new technologies, infrastructure to support our growing business and the consolidation and enhancement of our operating platforms. These investments also include new product development and innovation to further enhance and differentiate our suite of technology and cloud-based solutions available to customers. We expect to continue to make significant capital investments in the business, and we anticipate capital expenditures to grow at a similar rate as our revenue growth during the year ending December 31, 2017, we expect capital expenditures for property2024.

Financing activities include borrowings and equipment, including internal-use capitalized software development costs,repayments made under our various debt arrangements, as well as borrowings and repayments made under specialized lines of credit to approximate $180 million.

Duringfund daily settlement activities. Our borrowing arrangements are further described in "Note 6—Long-Term Debt and Lines of Credit" in the nine months ended September 30, 2017, we completed a sale-leasebacknotes to the accompanying unaudited consolidated financial statements and below under "Long-Term Debt and Lines of Credit." Financing activities also include cash flows associated with common stock repurchase programs and share-based compensation programs, cash distributions made to our operating facilityshareholders and cash contributions from and distributions to noncontrolling interests. We used net cash in Jeffersonville, Indiana and received cash of $37.5 million. During the nine months ended September 30, 2016, we received cash of $37.8 million from the sale of our membership interests in Visa Europe.

Net cash provided by financing activities was $333.1 million and $1,954.8of $163.4 million during the ninethree months ended September 30, 2017March 31, 2024, and September 30, 2016, respectively. The changes in each period were primarily due to financing activities associatedprovided net cash of $3,610.8 million during the three months ended March 31, 2023.

Proceeds from long-term debt were $4,609.0 million and $4,708.1 million for the three months ended March 31, 2024 and 2023, respectively. Repayments of long-term debt were $2,628.5 million and $1,556.0 million for the three months ended March 31, 2024 and 2023, respectively. Proceeds from and repayments of long-term debt consist of borrowings and repayments that we make with available cash, from time-to-time, under our corporaterevolving credit facility.facility, as well as scheduled principal repayments we make on our senior notes, finance leases and other vendor financing arrangements. During the ninethree months ended September 30, 2017, we amended our corporate credit facilityMarch 31, 2024 and subsequently borrowed an additional $600 million under our Revolving Credit Facility primarily to fund the cash portion of the consideration for the acquisition of ACTIVE Network. After repayments made during the nine months ended September 30, 2017,2023, we had net proceeds from long-termrepayments of $1,093.0 million and net borrowings of $1,048.6 million, respectively, under our commercial paper program. Furthermore, in connection with the issuance of convertible notes in February 2024, we paid $256.3 million to purchase privately negotiated capped call transactions to hedge the potential dilutive effect upon conversion of the notes, or offset our cash obligation if the cash settlement option were to be elected. See section "Long-Term Debt and Lines of Credit" below for further discussion of our recent debt transactions.

Activity under our settlement lines of $326.6 million.credit is affected primarily by timing of month-end and transaction volume. During the ninethree months ended September 30, 2016,March 31, 2024 and 2023, we increasedhad net borrowings of $133.2 million and net repayments of $281.4 million, respectively, under our long-term debt by $2,152.8 million, primarily to fund our merger with Heartland.settlement lines of credit.


As of September 30, 2017, we have approximately $264.9 million of shareWe repurchase authority remaining under a program authorized by the board of directors, announced on January 5, 2017, to repurchase shares of our common stock. We make repurchases of our common stock mainly through the use of open market purchasesrepurchase plans and, at times, through accelerated share repurchase programs. The manner, timing and amount of any purchases are determined by our management based on an evaluation of market conditions, stock price and other factors. During the ninethree months ended September 30, 2017March 31, 2024 and September 30, 2016,2023, we used cash of $32.8$800.0 million and $130.3$202.8 million, respectively, to repurchase shares of our common stock. The share repurchase activity for the three months ended March 31, 2024 included the repurchase of 1,414,759 shares using a portion of the net proceeds from our offering of 1.500% convertible unsecured senior notes due March 2031 through privately negotiated transactions with purchasers of notes in the offering, or one of their respective affiliates. The purchase price per share of the common stock repurchased in such transactions equaled the closing price of the common stock on February 20, 2024, which was $130.80 per share. As of March 31, 2024, the remaining amount available under our share repurchase program was $1,471.9 million.

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We believe thatpaid dividends to our current levelcommon shareholders in the amounts of cash$63.6 million and borrowing capacity under our long-term debt$65.8 million during the three months ended March 31, 2024 and lines2023, respectively. We made distributions to noncontrolling interests in the amount of credit described below, together with future cash flows from operations will be sufficient to meet$4.7 million and $6.2 million during the needs of our existing operationsthree months ended March 31, 2024 and planned requirements for the foreseeable future.2023, respectively.


Long-Term Debt and Lines of Credit


Senior Notes

We have $10.8 billion in aggregate principal amount of senior unsecured notes, which mature at various dates ranging from November 2024 to August 2052. Interest on the senior notes is payable annually or semi-annually at various dates. 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.

Convertible Notes

On February 23, 2024, we issued $2.0 billion in aggregate principal amount of 1.500% convertible unsecured senior notes due March 2031 through a private placement. The net proceeds from this offering were approximately $1.97 billion reflecting debt issuance costs of $33.5 million, which were capitalized and reflected as a reduction of the related carrying amount of the convertible notes in our consolidated balance sheet. Interest on the convertible notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024, to the holders of record on the preceding February 15 and August 15, respectively.

Prior to December 1, 2030, the notes are partyconvertible at the option of the holders only under certain conditions, including: (i) if the last reported sale price of our common stock has been at least 130% of the conversion price for at least 20 trading days within the last 30 consecutive trading days of the immediately preceding calendar quarter; (ii) for a five business day period following a ten-day consecutive trading period where the trading price of the notes is less than 98% of the product of the last reported sale price of our common stock and the conversion rate; (iii) if we call any or all of the notes for redemption; or (iv) upon the occurrence of certain corporate events. On or after December 1, 2030, the notes are convertible at the option of the holders at any time until the second scheduled trading day prior to the maturity date. The conversion rate for the notes is initially 6.371 shares of common stock per $1,000 in principal amount of the notes (which is equal to an initial conversion price of approximately $156.96 per share), subject to customary adjustments upon the occurrence of certain events. Upon conversion, the principal amount of, and interest due on, the convertible notes are required to be settled in cash and any other amounts may be settled in shares, cash or a combination of shares and cash at our election.

We may not redeem the notes prior to March 6, 2028. On or after March 6, 2028, we have the option to redeem all or any portion of the notes for cash if the last reported sale price of our common stock has been at least 130% of the conversion price for at least 20 trading days within the last 30 consecutive trading day period at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. If certain corporate events that constitute a fundamental change (as defined in the indenture governing the notes) occur, any holder of the notes may require that we repurchase all or a portion of their notes for cash at a purchase price equal to 100% of the principal amount of the notes to be repurchased plus accrued and unpaid interest. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the indenture governing the notes) occur, then the conversion rate will in certain circumstances be increased. The notes include customary covenants for notes of this type, as well as customary events of default, which may result in the acceleration of the maturity of the convertible notes.

In connection with the issuance of the notes, we entered into privately negotiated capped call transactions with certain of the initial purchasers of the notes and other financial institutions to cover, subject to customary adjustments, the number of shares of common stock initially underlying the notes. The economic effect of the capped call transactions is to hedge the potential dilutive effect upon the conversion of the notes, or offset our cash obligation if the cash settlement option is elected, for amounts in excess of the principal amount of converted notes subject to a cap. The initial cap price of the capped call transactions is $228.90 per share. The capped call transactions meet the accounting criteria to be reflected in stockholders’ equity and not accounted for as derivatives. The cost of $256.3 million incurred in connection with the capped call transactions was reflected as a reduction to paid-in-capital in our consolidated balance sheet at March 31, 2024 net of applicable income taxes.
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We also have $1.5 billion in aggregate principal amount of 1.000% convertible notes due August 2029, which were issued during 2022 in a private placement pursuant to an investment agreement with Silver Lake Partners. Interest on the convertible notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2023, to the holders of record on the preceding February 1 and August 1, respectively. The convertible notes mature on August 15, 2029, subject to earlier conversion or repurchase. The notes, which are currently convertible, are presented within long-term debt in our consolidated balance sheet based on our intent and ability to refinance on a long-term basis should a conversion event occur.

Revolving Credit Facility

Our revolving credit facility agreement 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 Agreement"). The Credit Facility Agreement was most recently amended on May 2, 2017 (the "Fourth Amendment") and, as amended, provides for (i) a $1.25an unsubordinated unsecured $5.75 billion revolving credit facility (the "Revolving Credit Facility"); (ii) a $1.5 billion term loan (the "Term A Loan"); (iii) a $1.3 billion term loan (the "Term A-2 Loan"); and (iv) a $1.2 billion term loan facility, which replaced the Term B Loan (the "Term B-2 Loan"). The Fourth Amendment increased the total financing capacity under the Credit Facility Agreement on May 2, 2017 from $4.9 billion to $5.2 billion, although the outstanding debt under the Credit Facility Agreement did not change as we repaid certain outstanding amounts under the Term A Loan, the Term A-2 Loan and the Revolving Credit Facilitythat matures in connection with the Fourth Amendment. Substantially all of the assets of our domestic subsidiaries are pledged as collateral under the Credit Facility Agreement.August 2027.


The Credit Facility Agreement provides for an interest rate, at our election, of either London Interbank Offered Rate ("LIBOR") or a base rate, in each case plus a leverage-based margin as were fully disclosed in our Current Report on Form 8-K filed on May 4, 2017. As of September 30, 2017, the interest rates on the Term A Loan, the Term A-2 Loan and the Term B-2 Loan were 2.99%, 2.95% and 3.23%, respectively, and the interest rate on the Revolving Credit Facility was 2.95%. The Credit Facility Agreement also provides for a commitment fee with respect to borrowings under the Revolving Credit Facility at an applicable rate per annum ranging from 0.20% to 0.30% depending on our leverage ratio. As of September 30, 2017, the aggregate outstanding balance on the term loans was $4.0 billion, and the outstanding balance on the Revolving Credit Facility was $855.0 million.

The Term A Loan and the Term A-2 Loan mature, and the Revolving Credit Facility Agreement expires, on May 2, 2022. The Term B-2 Loan matures on April 22, 2023. The Term A Loan principal must be repaid in quarterly installments in the amount of 1.25% of principal through June 2019, increasing to 1.875% of principal through June 2021, and increasing to 2.50% of principal through March 2022, with the remaining principal balance due upon maturity in May 2022. The Term A-2 Loan principal must be repaid in quarterly installments of $1.7 million through June 2018, increasing to quarterly installments of $8.6 million through March 2022, with the remaining balance due upon maturity in May 2022. The Term B-2 Loan principal must be repaid in quarterly installments in the amount of 0.25% of principal through March 2023, with the remaining principal balance due upon maturity in April 2023.

The Credit Facility Agreement allows us toWe may issue standby letters of credit of up to $100$250.0 million in the aggregate under the Revolving Credit Facility.revolving credit facility. Outstanding letters of credit under the Revolving Credit Facilityrevolving credit facility reduce the amount of borrowings available to us. BorrowingsThe amounts available to usborrow under the Revolving Credit Facilityrevolving credit facility are further limitedalso determined by a financial leverage covenant. As of March 31, 2024, there were borrowings of $1,598.0 million outstanding under the covenants described below under "Compliance with Covenants." Therevolving credit facility, and the total available commitments under the Revolving Credit Facilityrevolving credit facility were $3.4 billion.

Commercial Paper

We have a $2.0 billion commercial paper program under which we may issue senior unsecured commercial paper notes with maturities of up to 397 days from the date of issue. The program is backstopped by our revolving credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility. As such, we could draw on the revolving credit facility to repay commercial paper notes that cannot be rolled over or refinanced with similar debt.

Commercial paper notes are expected to be issued at September 30, 2017a discount from par, or they may bear interest, each at commercial paper market rates dictated by market conditions at the time of their issuance. The proceeds from issuances of commercial paper notes will be used primarily for general corporate purposes but may also be used for acquisitions, to pay dividends, for debt refinancing or for other purposes.

As of March 31, 2024, we had net borrowings under our commercial paper program of $275.0 million outstanding with a weighted average annual interest rate of 6.01%.

Compliance with Covenants

The convertible notes include customary covenants and events of default for convertible notes of this type. The revolving credit agreement contains customary affirmative covenants and restrictive covenants, including, among others, financial covenants based on net leverage and interest coverage ratios, and customary events of default. The required leverage ratio was increased to 4.50 to 1.00 as a result of the acquisition of EVO, and will gradually step-down over eight quarters to the original required ratio of 3.75 to 1.00. As of March 31, 2024, the required leverage ratio was 4.25 to 1.00, and the required interest coverage ratio was 3.00 to 1.00. We were $383.1 million.in compliance with all applicable covenants as of March 31, 2024.


Settlement Lines of Credit


In various markets where we do business, we have specialized lines of credit whichthat 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 linelines of credit may exceed the stated credit limit. As of September 30, 2017 and DecemberMarch 31, 2016,2024, a total of $55.5$82.5 million and $51.0 million, respectively, of cash on deposit was used to determine the available credit.


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As of September 30, 2017 and DecemberMarch 31, 2016, respectively,2024, we had $487.5 million and $392.1$1,095.9 million outstanding under these lines of credit with additional capacity of $669.9 million as of September 30, 2017 to fund settlement.settlement of $1,294.1 million. During the three months ended March 31, 2024, the maximum and average outstanding balances under these lines of credit were $1,197.1 million and $504.4 million, respectively. The weighted-average interest rate on these borrowings was 2.11% and 1.90%5.91% at September 30, 2017 and DecemberMarch 31, 2016, respectively.2024.


Compliance with Covenants

The Credit Facility Agreement contains customary affirmative and restrictive covenants, including, among others, financial covenants based on our leverage and fixed charge coverage ratios as defined in the agreement. As of September 30, 2017, financial covenants under the Credit Facility Agreement required a leverage ratio no greater than: (i) 4.50 to 1.00 as of the end of any fiscal quarter ending during the period from July 1, 2017 through June 30, 2018; (ii) 4.25 to 1.00 as of the end of any fiscal quarter ending during the period from July 1, 2018 through June 30, 2019; and (iii) 4.00 to 1.00 as of the end of any fiscal quarter ending thereafter. The fixed charge coverage ratio is required to be no less than 2.25 to 1.00.

The Credit Facility Agreement and settlement lines of credit also include various other covenants that are customary in such borrowings. The Credit Facility Agreement includes covenants, subject in each case to exceptions and qualifications that may restrict certain payments, including, in certain circumstances, repurchasing our common stock and paying cash dividends in excess of our current rate of $0.01 per share per quarter.

The Credit Facility Agreement also includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. We were in compliance with all applicable covenants as of and for the nine months ended September 30, 2017.


See "Note 6—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements for further discussion ofinformation about our borrowing arrangements.agreements.


Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interest, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market, or credit risk support other than the guarantee services described in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" in our Transition Report on Form 10-K for the seven months ended December 31, 2016.

Commitments and Contractual Obligations

As a result of the Fourth Amendment, the repayment schedules for our term loans and Revolving Credit Facility were extended. See "Note 6—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements for updated repayment requirements by year as of September 30, 2017. In addition, during the three months ended September 30, 2017, we borrowed an additional $600 million under our Revolving Credit Facility to fund a portion of the consideration for the acquisition of ACTIVE Network.

As a result of the sale-leaseback of our operating facility in Jeffersonville, Indiana, we entered into an operating lease with escalating future minimum payments totaling $55.5 million at September 30, 2017. See "Note 13—Commitments and Contingencies" in the notes to the accompanying unaudited consolidated financial statements for further discussion about the sale-leaseback transaction.

Critical Accounting Policies
Our unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which often require the judgment of management in the selection and application of certain accounting principles and methods. We discuss our critical accounting policies in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Transition Report on Form 10-K for the seven months ended December 31, 2016.

During the first quarter of 2017, we revised our reporting unit structure within our North America segment to reflect changes made in connection with the integration of Heartland. Under the revised reporting unit structure, we operate two reporting units in our North America segment: (i) Payments and (ii) Integrated Solutions and Vertical Markets. We reassigned the goodwill previously

allocated to North America merchant services and Heartland to the two new reporting units using a relative fair value approach. As a result of the change in reporting units, we performed goodwill impairment tests immediately before and after this change in reporting units and determined that there was no impairment.

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


From time to time,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 someSome of the statements we use in this report, and in some of the documents we incorporate by reference in this report, contain forward-looking statements concerning our business operations, economic performance and are made pursuantfinancial condition, including in particular: our business strategy and means to implement the "safe-harbor" provisionsstrategy; measures of future results of operations, such as revenues, expenses, operating margins, income tax rates, and earnings per share; other operating metrics such as shares outstanding and capital expenditures; statements we make regarding guidance and projected financial results for the year 2024; the effects of general economic conditions on our business; statements about the benefits of our acquisitions or divestitures, including future financial and operating results and the completion and expected timing of our acquisitions or completion of anticipated benefits or strategic initiatives; our success and timing in developing and introducing new services and expanding our business; and other statements regarding our future financial performance and the company's plans, objectives, expectations and intentions. You can sometimes identify forward-looking statements by our use of the words "believes," "anticipates," "expects," "intends," "plan," "forecast," "guidance" and similar expressions. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These

Although we believe that the plans and expectations reflected in or suggested by our forward-looking statements involveare reasonable, those statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, and uncertainties and depend uponcontingencies, many of which are beyond our control, cannot be foreseen and reflect future events or conditions. Actual events or results might differ materially from those expressed or forecasted in these forward-looking statements.business decisions. 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 benefits of our merger with HeartlandOur actual revenues, revenue growth rates and the acquisition of ACTIVE Network, including future financial and operating results, the combined company’s plans, objectives, expectations and intentionsmargins, and other results of operations could differ materially from those anticipated in our forward-looking statements thatas a result of many known and unknown factors, many of which are not historical facts.

beyond our ability to predict or control. Important factors that may otherwise cause actual events or results to differ materially from those anticipated by such forward-looking statements or historical performance include, among others, the effects of global economic, political, market, health and social events or other conditions; foreign currency exchange, inflation and rising interest rate risks; difficulties, delays and higher than anticipated costs related to integrating the businesses of acquired companies, including with respect to implementing controls to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; the effect of a security breach or operational failure on our abilitybusiness; failing to safeguard our data; increased competition from larger companies and non-traditional competitors, our ability to update our servicescomply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in a timely manner; ourthose requirements; the ability to maintain Visa and MasterCardMastercard registration and financial institution sponsorship; our reliance on financial institutionsthe ability to provide clearing servicesretain, develop and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing; increased competition 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; increased attrition of merchants, referral partners or independent sales organizations;the markets in which we operate and our ability to increase our market share ofin existing markets and expand into new markets; a declineour ability to safeguard our data; risks associated with our indebtedness; our ability to meet environmental, social and governance targets, goals and commitments; the potential effects of climate change, including natural disasters; the effects of new or changes in the use of cards for payment generally; unanticipated increases in chargeback liability; increases incurrent laws, regulations, credit card network fees; change in laws, regulations or networkassociation rules or interpretations thereof; foreign currency exchangeother industry standards on us or our partners and interest rate risks; political, economiccustomers, including privacy and regulatory changes in the foreign countries in which we operate; future performance, integrationcybersecurity laws and conversion of acquired operations; including without limitation difficulties and delays in integrating the Heartland and ACTIVE Network businesses or fully realizing cost savingsregulations; and other benefits of the acquisitions at all or within the expected time period; fully realizing anticipated annual interest expense savings from refinancingevents beyond our corporate debt facilities; our loss of key personnelcontrol, and other risk factors presented in Item 1-"Item 1A - Risk FactorsFactors" of our TransitionAnnual Report on Form 10-K for the seven monthsyear ended December 31, 20162023 and any subsequent filings we make with the SEC, filings, which we advise you to review.

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These cautionary statements qualify all of our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date they are made and should not be relied upon as representing our plans and expectations as of any subsequent date. We undertake noWhile we may elect to update or revise forward-looking statements at some time in the future, we specifically disclaim any obligation to revisepublicly release the results of any of theserevisions to our forward-looking statements, to reflect future circumstances or the occurrence of unanticipated events.except as required by law.


ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Interest Rate Risk

We are exposed to market risk related to changes in interest rates on our long-term debt and cash investments. We invest our excess cash in securities that we believe are highly liquid and marketable in the short term. These investments earnFor a floating rate of interest and are not held for trading or other speculative purposes.

We have term loans and a Revolving Credit Facility that we use for general corporate purposes, as well as various lines of credit that we use to fund settlement in certain of our markets. Interest rates on these debt instruments and settlement lines of credit are based on market rates and fluctuate accordingly. As of September 30, 2017, $5.3 billion was outstanding under these variable-rate debt arrangements and settlement lines of credit.

The interest earned on our cash investments and the interest paid on our debt are based on variable interest rates; therefore, the exposure of our net income to a change in interest rates is partially mitigated as an increase in rates would increase both interest

income and interest expense, and a reduction in rates would decrease both interest income and interest expense. Under our current policies, we may selectively use derivative instruments, such as interest rate swaps or forward rate agreements, to manage all or a portion of our exposure to interest rate changes. We have interest rate swaps that reduce a portiondiscussion of our exposure to market interest rate risk, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," contained in our Annual Report on our LIBOR-based debt as discussed in "Note 6—Long-Term Debt and Lines of Credit" inForm 10-K for the notes to our accompanying unaudited consolidated financial statements.year ended December 31, 2023.


Based on balances outstanding under variable-rate debt agreements and cash investment balances at September 30, 2017, a hypothetical increase of 50 basis points in applicable interest rates as of September 30, 2017 would increase our annual interest expense by approximately $20.0 million and increase our annual interest income by approximately $3.5 million.

Foreign Currency Exchange Rate Risk

A substantial amount of our operations are conducted in foreign currencies. Consequently, a portion of our revenues and expenses may be affected by fluctuations in foreign currency exchange rates. We are also affected by fluctuations in exchange rates on assets and liabilities related to our foreign operations. We have not historically hedged our translation risk on foreign currency exposure, but we may do so in the future.

ITEM 4—CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


As of September 30, 2017,March 31, 2024, 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)1934). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2017,March 31, 2024, 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

In April 2016, we completed our merger with Heartland, which is being integrated into our North America segment. As part of our ongoing integration activities, we are continuing to apply our controls and procedures to the Heartland business and to augment our company-wide controls to reflect the risks inherent in an acquisition of this magnitude.

In September 2017, we completed the acquisition of ACTIVE Network. In accordance with our integration efforts, we plan to incorporate ACTIVE Network's operations into our internal control over financial reporting program within the time period provided by the applicable SEC rules and regulations. The assets, excluding goodwill, of ACTIVE Network constituted approximately 4% of our total consolidated assets as of September 30, 2017. Revenues and operating income of ACTIVE Network for the three and nine months ended September 30, 2017 were not material to our consolidated financial statements.

Otherwise, thereThere were no changes in our internal control over financial reporting during the quarter ended September 30, 2017March 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION


ITEM 1—LEGAL PROCEEDINGS


We are party to a number of claims and lawsuits incidental to our business. In our opinion, the liabilities, if any, whichthat 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 16—Commitments and Contingencies" in the notes to the accompanying unaudited consolidated financial statements for information about certain legal matters.


ITEM 1A - 1A—RISK FACTORS


There have been no material changes from theFor a discussion of our risk factors, set forth insee Part I, Item 1A,1A. “Risk Factors” of our TransitionAnnual Report on Form 10-K for the seven monthsyear ended December 31, 2016, other than the risk factors set forth in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017.2023.


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

(a) Unregistered Sales of Equity Securities and Use of Proceeds
As disclosed previously, in connection with the Company’s acquisition of ACTIVE Network, we issued 6,357,509 shares of the Company’s common stock having an estimated fair value of approximately $572 million. The Company relied on the exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(a)(2) thereof and rules and regulations of the SEC promulgated thereunder. Each of the sellers who received the Company’s common stock in the acquisition is an “accredited investor” as defined in Regulation D promulgated by the SEC under the Securities Act.


(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers


Information about the shares of our common stock that we repurchased during the quarter ended September 30, 2017March 31, 2024 is set forth below:
Period
Total Number of
Shares Purchased (1)
 Approximate 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)
July 201775,894
 89.16
 75,894
  
August 2017156,581
 94.24
 156,581
  
September 201779,118
 94.57
 79,118
  
Total311,593
   311,593
 $264.9
Period
Total Number of
Shares Purchased (1)
Approximate Average Price Paid per Share, excluding commissionTotal 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, 20242,736,922 $130.58 2,733,535 $— 
February 1-29, 20243,630,207 133.05 3,328,464 — 
March 1-31, 202417,248 130.93 — — 
Total6,384,377 $133.29 6,061,999 $1,471.9 
 
(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.
(2)
As of September 30, 2017, the approximate dollar value of shares that may yet be purchased under our share repurchase program was $264.9 million remaining available under the board’s authorization announced on January 5, 2017. The authorizations by the board of directors do not expire, but could be revoked at any time. In addition, we are not required by any of the board’s authorizations or otherwise to complete any repurchases by any specific time or at all.

(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 September 30, 2017,March 31, 2024, pursuant to our employee incentive plans, we withheld 247,345322,378 shares at an average price per share of $94.50$132.34 in order to satisfy employees' tax withholding and payment obligations in connection with the vesting of awards of restricted stock, whichstock.

(2)As of March 31, 2024, the remaining amount available under our share repurchase program was $1,471.9 million. The authorization by our board of directors does not expire but could be revoked at any time. In addition, we withheldare not required by the board’s authorization or otherwise to complete any repurchases by any specific time or at fair market value onall.

ITEM 5—OTHER INFORMATION

(c) Director and Officer Trading Plans and Arrangements

During the vesting date.quarter ended March 31, 2024, none of our directors or officers notified us that they adopted, modified or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement as defined in Item 408(a) of Regulation S-K.

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Table of Contents
ITEM 6—EXHIBITS


List of Exhibits
2.1
2.1
2.23.1
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 September 6, 2017. ++May 1, 2020.
3.13.3
3.2
Eighth Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.1 to the Company’sGlobal Payment Inc.’s Current Report on Form 8-K filed May 4, 2017.on February 21, 2023.
10.14.1
4.2Form of Global Note representing the Notes (included in Exhibit 4.1).
4.3
10.1*
Form of Restricted Stock Award pursuant to the 2011 Amended and certain other signatories thereto,Restated Incentive Plan for Executive Officers (calendar 2024).
10.2*
Form of Restricted Stock Award Certificate pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (1 year vest; calendar 2024).
10.3*
Form of Performance Unit Award Certificate pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2024).
10.4*
Form of Stock Option Award pursuant to the 2011 Amended and Restated Incentive Plan for Executive Officers (calendar 2024).
10.5
Form of Capped Call Confirmation, incorporated by reference to Exhibit 10.1 to the Company’sGlobal Payments Inc.'s Current Report on Form 8-K filed on September 6, 2017.February 23, 2024.
31.1*10.6*+
Employment Agreement dated January 1, 2024 between Global Payments, Inc. and Shannon Johnston
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 September 30, 2017,March 31, 2024, 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; (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.Statements; and (vii) the information included in Part II, Item 5(c). 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.
†
*Filed herewith.
++Certain schedules and exhibits to this agreement have been omitted pursuantPursuant to Item 601(b)(2) of Regulation S-K, and Global Payments Inc.certain schedules have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission a copy of any omitted schedule and/or exhibit upon request.
+Management contract or compensatory plan or arrangement.



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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: May 1, 2024/s/ Joshua J. Whipple
Date: November 8, 2017/s/ Cameron M. BreadyJoshua J. Whipple
Cameron M. Bready
Senior Executive Vice President and Chief Financial Officer
(Principal Financial Officer)











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