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, 2019~~March 31, 2020



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

For the transition period from to

Commission file number: 001-16111

GLOBAL PAYMENTS INC.

(Exact name of registrant as specified in charter)



Georgia		58-2567903
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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



Securities registered pursuant to Section 12(b) of the Act
Title of each class	~~Ticker~~Trading symbol	Name of exchange on which registered
Common stock, no par value	GPN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐		~~Emerging growth company~~	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes	☐	No	☑

The number of shares of the issuer’s common stock, no par value, outstanding as of ~~October 27, 2019~~May 1, 2020 was ~~300,548,018~~299,105,721.

GLOBAL PAYMENTS INC.

FORM 10-Q

For the quarterly period ended ~~September 30, 2019~~March 31, 2020

TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Unaudited Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	3
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	54
	Consolidated Balance Sheets at ~~September 30, 2019~~March 31, 2020 (unaudited) and December 31, ~~2018~~2019	65
	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	76
	Unaudited Consolidated Statements of Changes in Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	97
	Notes to Unaudited Consolidated Financial Statements	108
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3122
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	4030
ITEM 4.	Controls and Procedures	4031
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	4232
ITEM 1A.	Risk Factors	4232
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4333
ITEM 6.	Exhibits	4434
	Signatures	4635

PART 1 - FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

Three Months Ended
September 30, 2019 September 30, 2018

Revenues $ 1,105,941
$ 857,670
Operating expenses:
Cost of service 427,720
265,013
Selling, general and administrative 504,184
369,495
931,904
634,508
Operating income 174,037
223,162

Interest and other income 11,232
3,134
Interest and other expense (96,161 ) (46,356 )
(84,929 ) (43,222 )
Income before income taxes 89,108
179,940
Income tax benefit 16,623
6,089
Net income 105,731
186,029
Net income attributable to noncontrolling interests, net of income tax (10,687 ) (9,659 )
Net income attributable to Global Payments $ 95,044
$ 176,370

Earnings per share attributable to Global Payments:
Basic earnings per share $ 0.54
$ 1.12
Diluted earnings per share $ 0.54
$ 1.11

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

~~GLOBAL PAYMENTS INC.~~

~~UNAUDITED CONSOLIDATED STATEMENTS OF INCOME~~

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


	Nine Months Ended						Three Months Ended
	September 30, 2019			September 30, 2018			March 31, 2020			March 31, 2019

Revenues	$	2,924,131		$	2,485,811		$	1,903,598		$	883,039
Operating expenses:
Cost of service	1,035,225			781,943			933,871			305,230
Selling, general and administrative	1,293,651			1,133,799			725,748			378,317
	2,328,876			1,915,742			1,659,619			683,547
Operating income	595,255			570,069			243,979			199,492

Interest and other income	20,342			17,397			2,506			2,934
Interest and other expense	(220,858		)	(139,681		)	(92,644		)	(59,081		)
	(200,516		)	(122,284		)	(90,138		)	(56,147		)
Income before income taxes	394,739			447,785
Income before income taxes and equity in income of equity method investments							153,841			143,345
Income tax expense	(39,765		)	(46,441		)	(15,502		)	(24,140		)
Income before equity in income of equity method investments							138,339			119,205
Equity in income of equity method investments, net of tax							12,269			—
Net income	354,974			401,344			150,608			119,205
Net income attributable to noncontrolling interests, net of income tax	(27,132		)	(24,506		)
Net income attributable to noncontrolling interests, net of tax							(7,033		)	(6,864		)
Net income attributable to Global Payments	$	327,842		$	376,838		$	143,575		$	112,341

Earnings per share attributable to Global Payments:
Basic earnings per share	$	2.00		$	2.37		$	0.48		$	0.71
Diluted earnings per share	$	2.00		$	2.36		$	0.48		$	0.71

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)


	Three Months Ended						Three Months Ended
	September 30, 2019			September 30, 2018			March 31, 2020			March 31, 2019

Net income	$	105,731		$	186,029		$	150,608		$	119,205
Other comprehensive income (loss):
Foreign currency translation adjustments	(67,279		)	(15,395		)	(204,111		)	5,196
Income tax benefit related to foreign currency translation adjustments	144			140			1,007			34
Net unrealized (losses) gains on hedging activities	(40,265		)	1,845
Net unrealized losses on hedging activities							(47,896		)	(14,509		)
Reclassification of net unrealized losses (gains) on hedging activities to interest expense	1,193			(1,663		)	4,671			(1,830		)
Income tax benefit (expense) related to hedging activities	9,289			(110		)
Income tax benefit related to hedging activities							10,346			3,985
Other, net of tax	37			(58		)	121			111
Other comprehensive loss	(96,881		)	(15,241		)	(235,862		)	(7,013		)

Comprehensive income	8,850			170,788
Comprehensive (loss) income							(85,254		)	112,192
Comprehensive income attributable to noncontrolling interests	(1,967		)	(21,333		)	(380		)	(2,284		)
Comprehensive income attributable to Global Payments	$	6,883		$	149,455
Comprehensive (loss) income attributable to Global Payments							$	(85,634	)	$	109,908

Nine Months Ended
September 30, 2019 September 30, 2018

Net income $ 354,974
$ 401,344
Other comprehensive income (loss):
Foreign currency translation adjustments (54,377 ) (80,620 )
Income tax benefit (expense) related to foreign currency translation adjustments 1,695
(224 )
Net unrealized (losses) gains on hedging activities (96,997 ) 12,353
Reclassification of net unrealized gains on hedging activities to interest expense (1,530 ) (2,830 )
Income tax benefit (expense) related to hedging activities 23,800
(2,420 )
Other, net of tax 165
(59 )
Other comprehensive loss (127,244 ) (73,800 )

Comprehensive income 227,730
327,544
Comprehensive income attributable to noncontrolling interests (17,780 ) (36,264 )
Comprehensive income attributable to Global Payments $ 209,950
$ 291,280

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,127,616		$	1,210,878		$	1,800,061		$	1,678,273
Accounts receivable, net	868,133			348,400			799,798			895,232
Settlement processing assets	1,556,307			1,600,222			1,046,288			1,353,778
Prepaid expenses and other current assets	440,512			216,708			423,523			439,165
Total current assets	4,992,568			3,376,208			4,069,670			4,366,448
Goodwill	23,754,450			6,341,355			23,662,373			23,759,740
Other intangible assets, net	13,184,391			2,488,618			12,814,791			13,154,655
Property and equipment, net	1,423,271			653,542			1,441,910			1,382,802
Deferred income taxes	12,477			8,128			6,778			6,292
Other noncurrent assets	1,844,890			362,923			1,854,076			1,810,225
Total assets	$	45,212,047		$	13,230,774		$	43,849,598		$	44,480,162
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit	$	547,624		$	700,486		$	375,182		$	463,237
Current portion of long-term debt	33,373			115,075			70,551			35,137
Accounts payable and accrued liabilities	1,849,424			1,176,703			1,636,823			1,822,166
Settlement processing obligations	1,852,731			1,276,356			953,723			1,258,806
Total current liabilities	4,283,152			3,268,620			3,036,279			3,579,346
Long-term debt	8,987,704			5,015,168			9,636,076			9,090,364
Deferred income taxes	3,352,727			585,025			3,024,409			3,145,641
Other noncurrent liabilities	632,746			175,618			632,401			609,822
Total liabilities	17,256,329			9,044,431			16,329,165			16,425,173
Commitments and contingencies
Equity:
Preferred stock, no par value; 5,000,000 shares authorized and none issued	—			—			—			—
Common stock, no par value; 400,000,000 shares authorized at September 30, 2019 and 200,000,000 shares authorized at December 31, 2018; 300,544,949 issued and outstanding at September 30, 2019 and 157,961,982 issued and outstanding at December 31, 2018	—			—
Common stock, no par value; 400,000,000 shares authorized at March 31, 2020 and December 31, 2019; 299,010,257 issued and outstanding at March 31, 2020 and 300,225,590 issued and outstanding at December 31, 2019							—			—
Paid-in capital	25,904,804			2,235,167			25,525,184			25,833,307
Retained earnings	2,297,897			2,066,415			2,335,407			2,333,011
Accumulated other comprehensive loss	(428,067		)	(310,175		)	(539,780		)	(310,571		)
Total Global Payments shareholders’ equity	27,774,634			3,991,407			27,320,811			27,855,747
Noncontrolling interests	181,084			194,936			199,622			199,242
Total equity	27,955,718			4,186,343			27,520,433			28,054,989
Total liabilities and equity	$	45,212,047		$	13,230,774		$	43,849,598		$	44,480,162

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Nine Months Ended						Three Months Ended
	September 30, 2019			September 30, 2018			March 31, 2020			March 31, 2019
Cash flows from operating activities:
Net income	$	354,974		$	401,344		$	150,608		$	119,205
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	132,043			105,734			83,573			41,155
Amortization of acquired intangibles	345,455			263,714			314,245			107,475
Amortization of capitalized contract costs	47,778			37,281			18,738			15,847
Share-based compensation expense	55,791			44,937			27,822			11,418
Provision for operating losses and bad debts	34,877			32,309			37,629			12,709
Noncash lease expense							25,924			8,976
Deferred income taxes	(42,990		)	(4,973		)	(47,957		)	(5,774		)
Other, net	6,666			(17,185		)	(11,757		)	67
Changes in operating assets and liabilities, net of the effects of business combinations:
Accounts receivable	(80,709		)	(27,696		)	47,624			(36,493		)
Settlement processing assets and obligations, net	623,985			(58,693		)	12,966			118,347
Prepaid expenses and other assets	(148,421		)	(117,824		)	(53,540		)	(76,740		)
Accounts payable and other liabilities	19,940			2,058			(169,301		)	(86,463		)
Net cash provided by operating activities	1,349,389			661,006			436,574			229,729
Cash flows from investing activities:
Acquisitions, net of cash acquired	(334,383		)	(769,082		)	(67,196		)	(74,830		)
Capital expenditures	(201,017		)	(156,060		)	(104,802		)	(55,123		)
Other, net	29,112			(2,383		)	2,348			13,672
Net cash used in investing activities	(506,288		)	(927,525		)	(169,650		)	(116,281		)
Cash flows from financing activities:
Net (repayments of) borrowings from settlement lines of credit	(144,473		)	49,381
Net repayments of settlement lines of credit							(78,092		)	(55,350		)
Proceeds from long-term debt	6,704,838			1,606,214			607,000			344,000
Repayments of long-term debt	(6,097,229		)	(1,468,505		)	(110,978		)	(173,060		)
Payments of debt issuance costs	(32,637		)	(12,544		)
Repurchases of common stock	(233,995		)	(180,897		)	(421,162		)	(155,997		)
Proceeds from stock issued under share-based compensation plans	22,008			12,571			28,283			7,848
Common stock repurchased - share-based compensation plans	(49,037		)	(44,824		)	(44,253		)	(9,507		)
Distributions to noncontrolling interests	(31,632		)	(5,686		)	—			(5,572		)
Preacquisition dividends paid to former TSYS shareholders	(23,240		)	—
Dividends paid	(4,727		)	(4,750		)	(58,279		)	(1,571		)
Net cash provided by (used in) financing activities	109,876			(49,040		)
Net cash used in financing activities							(77,481		)	(49,209		)
Effect of exchange rate changes on cash	(36,239		)	(29,692		)	(67,655		)	2,516
Increase (decrease) in cash and cash equivalents	916,738			(345,251		)
Increase in cash and cash equivalents							121,788			66,755
Cash and cash equivalents, beginning of the period	1,210,878			1,335,855			1,678,273			1,210,878
Cash and cash equivalents, end of the period	$	2,127,616		$	990,604		$	1,800,061		$	1,277,633

See Notes to Unaudited Consolidated Financial Statements.

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands)


	Number of Shares		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Global Payments Shareholders’ Equity			Noncontrolling Interests			Total Equity			Number of Shares		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Global Payments Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at June 30, 2019	156,675		$	2,126,065		$	2,204,445		$	(339,906	)	$	3,990,604		$	184,512		$	4,175,116
Balance at December 31, 2019																					300,226		$	25,833,307		$	2,333,011		$	(310,571	)	$	27,855,747		$	199,242		$	28,054,989
Cumulative effect of adoption of new accounting standard																										(5,379		)				(5,379		)				(5,379		)
Net income						95,044						95,044			10,687			105,731								143,575						143,575			7,033			150,608
Other comprehensive loss									(88,161		)	(88,161		)	(8,720		)	(96,881		)									(229,209		)	(229,209		)	(6,653		)	(235,862		)
Stock issued under share-based compensation plans	141		9,057									9,057						9,057			1,082		28,283									28,283						28,283
Common stock repurchased - share-based compensation plans	(180	)	(29,584		)							(29,584		)				(29,584		)	(203	)	(37,787		)							(37,787		)				(37,787		)
Share-based compensation expense			27,877									27,877						27,877					27,822									27,822						27,822
Issuance of common stock in connection with a business combination	143,909		23,771,389									23,771,389						23,771,389
Distributions to noncontrolling interest												—			(5,395		)	(5,395		)
Dividends paid ($0.01 per share)						(1,592		)				(1,592		)				(1,592		)
Balance at September 30, 2019	300,545		$	25,904,804		$	2,297,897		$	(428,067	)	$	27,774,634		$	181,084		$	27,955,718
Repurchases of common stock																					(2,095	)	(326,441		)	(77,521		)				(403,962		)				(403,962		)
Cash dividends declared ($0.195 per share)																										(58,279		)				(58,279		)				(58,279		)
Balance at March 31, 2020																					299,010		$	25,525,184		$	2,335,407		$	(539,780	)	$	27,320,811		$	199,622		$	27,520,433


	Number of Shares		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Global Payments Shareholders’ Equity			Noncontrolling Interests			Total Equity			Number of Shares		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Global Payments Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at June 30, 2018	158,071		$	2,254,783		$	1,819,213		$	(243,629	)	$	3,830,367		$	185,634		$	4,016,001
Balance at December 31, 2018																					157,962		$	2,235,167		$	2,066,415		$	(310,175	)	$	3,991,407		$	194,936		$	4,186,343
Net income						176,369						176,369			9,659			186,028								112,341						112,341			6,864			119,205
Other comprehensive income (loss)									(26,916		)	(26,916		)	11,675			(15,241		)
Other comprehensive loss																													(2,433		)	(2,433		)	(4,580		)	(7,013		)
Stock issued under share-based compensation plans	325		6,231									6,231						6,231			542		7,848									7,848						7,848
Common stock repurchased - share-based compensation plans	(210	)	(25,019		)							(25,019		)				(25,019		)	(79	)	(10,200		)							(10,200		)				(10,200		)
Share-based compensation expense			14,833									14,833						14,833					11,418									11,418						11,418
Distributions to noncontrolling interest												—			(5,686		)	(5,686		)												—			(5,572		)	(5,572		)
Dividends paid ($0.01 per share)						(1,579		)				(1,579		)				(1,579		)
Balance at September 30, 2018	158,186		$	2,250,828		$	1,994,003		$	(270,545	)	$	3,974,286		$	201,282		$	4,175,568
Repurchases of common stock																					(1,295	)	(92,610		)	(65,387		)				(157,997		)				(157,997		)
Cash dividends declared ($0.01 per share)																										(1,571		)				(1,571		)				(1,571		)
Balance at March 31, 2019																					157,130		$	2,151,623		$	2,111,798		$	(312,608	)	$	3,950,813		$	191,648		$	4,142,461

See Notes to Unaudited Consolidated Financial Statements.

~~GLOBAL PAYMENTS INC.~~

~~UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

~~(in thousands)~~

Number of Shares

Paid-in Capital

Retained Earnings
Accumulated Other Comprehensive Loss Total Global Payments Shareholders’ Equity Noncontrolling Interests Total Equity
Balance at December 31, 2018 157,962
$ 2,235,167
$ 2,066,415
$ (310,175 ) $ 3,991,407
$ 194,936
$ 4,186,343
Net income 327,842
327,842
27,132
354,974
Other comprehensive loss (117,892 ) (117,892 ) (9,352 ) (127,244 )
Stock issued under share-based compensation plans 750
22,008
22,008
22,008
Common stock repurchased - share-based compensation plans (268 ) (41,190 )

(41,190 ) (41,190 )
Share-based compensation expense 55,791
55,791
55,791
Issuance of common stock in connection with a business combination 143,909
23,771,389
23,771,389
23,771,389
Distributions to noncontrolling interest —
(31,632 ) (31,632 )
Repurchase of common stock (1,808 ) (138,361 ) (91,633 ) (229,994 ) (229,994 )
Dividends paid ($0.03 per share) (4,727 ) (4,727 ) (4,727 )
Balance at September 30, 2019 300,545
$ 25,904,804
$ 2,297,897
$ (428,067 ) $ 27,774,634
$ 181,084
$ 27,955,718

Number of Shares

Paid-in Capital

Retained Earnings
Accumulated Other Comprehensive Loss
Total Global Payments Shareholders’ Equity
Noncontrolling Interests Total Equity
Balance at December 31, 2017 159,180
$ 2,379,774
$ 1,597,897
$ (183,144 ) $ 3,794,527
$ 170,704
$ 3,965,231
Cumulative effect of adoption of new accounting standard 50,969
(1,843 ) 49,126
49,126
Net income 376,838
376,838
24,506
401,344
Other comprehensive income (loss) (85,558 ) (85,558 ) 11,758
(73,800 )
Stock issued under share-based compensation plans 895
12,571

12,571
12,571
Common stock repurchased - share-based compensation plans (277 ) (32,508 ) (32,508 ) (32,508 )
Share-based compensation expense 44,937
44,937
44,937
Distributions to noncontrolling interest —
(5,686 ) (5,686 )
Repurchase of common stock (1,612 ) (153,946 ) (26,951 ) (180,897 ) (180,897 )
Dividends paid ($0.03 per share) (4,750 ) (4,750 ) (4,750 )
Balance at September 30, 2018 158,186
$ 2,250,828
$ 1,994,003
$ (270,545 ) $ 3,974,286
$ 201,282
$ 4,175,568

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

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business, consolidation and presentation—

We are a leading pure play payments technology company delivering innovative software and services to our customers globally. Our technologies, services and employee expertise enable us to provide a broad range of solutions that allow our customers to operate their businesses more efficiently across a variety of channels around the world. We operate in 3 reportable segments: Merchant Solutions, Issuer Solutions and Business and Consumer Solutions, which are described in "Note 11—Segment Information." Global Payments Inc. and its consolidated subsidiaries are referred to herein collectively as "Global Payments," the "Company," "we," "our" or "us," unless the context requires otherwise.

These unaudited consolidated financial statements include our accounts and those of our majority-owned subsidiaries, and all intercompany balances and transactions have been eliminated in consolidation. These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The consolidated balance sheet as of December 31, ~~2018~~2019 was derived from the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 but does not include all disclosures required by GAAP for annual financial statements.

In the opinion of our management, all known adjustments necessary for a fair presentation of the results of the interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amount of assets and liabilities. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Recent developments relating to the outbreak of the coronavirus pandemic ("COVID-19")

In March 2020, the World Health Organization declared the outbreak of the COVID-19 virus a global pandemic. The pandemic is causing major disruptions to businesses and markets worldwide as the virus continues to spread. A number of countries as well as many states and cities within the United States have enacted temporary closures of businesses, issued quarantine or shelter-in-place orders and taken other restrictive measures in response to COVID-19.

Use of estimates—

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. In particular, the magnitude, duration and effects of the COVID-19 pandemic are difficult to predict at this time, and the ultimate effect could result in additional charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill and other losses. These unaudited consolidated financial statements reflect the financial statement effects of COVID-19 based upon management’s estimates and assumptions utilizing the most currently available information.

Recently adopted accounting pronouncements

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

The adoption of ASU 2016-02 resulted in the measurement and recognition of lease liabilities in the amount of $274.0 million and right-of-use assets in the amount of $236.0 million as of January 1, 2019. Lease liabilities were measured as the present value of remaining lease payments, and the corresponding right-of-use assets were measured at an amount equal to the lease liabilities adjusted by the amounts of certain assets and liabilities, such as prepaid rent and deferred lease obligations, that we previously recognized on the balance sheet prior to the initial application of ASU 2016-02. To calculate the present value of remaining lease payments, we elected to use an incremental borrowing rate based on the remaining lease term at transition.

~~Recently Issued Pronouncements Not Yet Adopted~~— ~~In August 2018, the FASB~~ issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (A Consensus of the FASB Emerging Issues Task Force)." ASU 2018-15 provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract. The new guidance amends the definition of a hosting arrangement and requires a

customer in a hosting arrangement that is a service contract to capitalize certain implementation costs as if the arrangement was an internal-use software project. The amendments in this update also provide additional presentation and disclosure requirements, including requirements to disclose the nature of an entity’s hosting arrangements that are service contracts, as well as quantitative information about capitalized implementation costs and related amortization expense. The guidance will become effective for us

We adopted ASU 2018-15 on January 1, ~~2020. We expect to apply~~2020, applying the guidance prospectively to all implementation costs incurred after the date of adoption.

We are finalizing our comparison of the guidance in ASU 2018-15 to our current accounting and financial reporting practices for costs of implementation activities performed in cloud computing arrangements. We are also evaluating the need for changes to our internal controls. We have not yet completed our assessment or quantified the effect, if any, of ASU 2018-15 on our consolidated balance sheet or our statements of income and cash flows; however, our preliminary expectation is that the The adoption of this standard ~~will~~did not have a material effect on our consolidated financial statements. We have historically capitalized implementation costs associated with cloud computing arrangements that are service contracts following the guidance in Subtopic 350-40 and ~~expect to~~will continue to do so pursuant to the clarifications provided in the new guidance. We ~~expect to~~ amortize deferred implementation costs to expense on a straight-line basis over the term of the applicable hosting arrangement.

~~In June 2016, the FASB issued~~ASU 2016-13— We adopted ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." on January 1, 2020 using the modified retrospective transition method. The adoption of this standard resulted in a cumulative-effect adjustment to decrease retained earnings by $5.4 million, net of tax. The amendments in this update ~~change~~changed how ~~companies~~we measure and recognize credit impairment for ~~many~~certain financial instruments measured at amortized cost. ~~The new model for~~Under the current expected credit losses ("CECL") ~~will require us to~~model, we recognize an estimate of credit losses expected to occur over the remaining life of ~~the~~each pool of financial ~~instruments that are within the scope of the update, including~~assets with similar risk characteristics.

We have exposure to credit losses for financial assets such as accounts receivable, ~~and~~certain settlement processing assets, ~~each~~check guarantee claims receivable assets and advances to sales representatives. We utilize a combination of aging or loss-rate methods to develop an estimate of current expected credit losses, depending on the nature and risk profile of the underlying asset pool. A broad range of information is considered in the estimation process, including historical loss information adjusted for current conditions and expectations of future trends. The estimation process also includes consideration of qualitative and quantitative risk factors associated with the age of asset balances, expected timing of payment, contract terms and conditions, changes in specific customer risk profiles or mix of customers, geographic risk, industry or economic trends and relevant environmental factors.

As of March 31, 2020, the total allowance for credit losses was approximately $29.3 million. Financial assets are presented net of the allowance for credit losses in the consolidated balance sheets. The measurement of the allowance for credit losses is recognized through credit loss expense. Depending on the nature of the underlying asset, credit loss expense is included as a component of cost of service or selling, general and administrative expense in the consolidated statements of income. Write-offs are recorded in the period in which the asset is deemed uncollectible. Recoveries are ~~short-term~~recorded when received as a direct credit to the credit loss expense in ~~nature. Under current GAAP,~~the consolidated statements of income. Prior to the adoption of ASU 2016-13, credit losses on these financial instruments ~~are not~~were recognized ~~until their~~when an occurrence iswas deemed to be probable.

Recently issued pronouncements not yet adopted

ASU 2019-12—In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which is intended to enhance and simplify various aspects of the accounting for income taxes. The amendments in this update remove certain exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and amends existing guidance ~~will become~~to improve consistent application of the accounting for franchise taxes, enacted changes in tax laws or rates and transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for ~~us on January 1, 2020. In general, the new guidance will require modified retrospective application to all outstanding financial assets that are within the scope of the update,~~annual and interim periods beginning after December 15, 2020, with ~~a cumulative-effect adjustment, if~~early adoption permitted in any ~~recorded to retained earnings as of the date of adoption.~~

interim period. We are ~~continuing to evaluate~~evaluating the effect of ASU ~~2016-13~~2019-12 on our consolidated financial ~~statements, including comparing how we currently measure~~statements.

ASU 2020-04—In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)," which provides optional expedients and ~~recognize our allowance~~exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for ~~doubtful accounts on accounts receivable~~hedging relationships existing as of December 31, 2022 for which an entity has elected certain optional expedients and ~~our reserve~~are retained through the end of the hedging relationship. The amendments in this update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. If elected, the optional expedients for ~~operating losses and sales allowances~~contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant Topic or Industry Subtopic within the Codification that contains the guidance that otherwise would be required to ~~how we would make such measurements applying the new CECL model.~~be applied. The amendments in this update can be adopted anytime beginning March 12, 2020 through December 31, 2022. We ~~have not yet completed our assessment or quantified~~are evaluating the effect ~~if any,~~ of ASU ~~2016-13~~2020-04 on our consolidated ~~balance sheet or our statements of income and cash flows; however, we believe the adoption of this new standard may require expanded qualitative disclosures about our~~ financial ~~assets and related allowance for credit losses, as well as implementation of new or modified internal controls.~~statements.

~~As a result of the Merger, we have expanded our efforts to evaluate the effects of these new standards on the combined company, and we are incorporating TSYS into our evaluation.~~

NOTE 2—ACQUISITIONS

~~The transactions described below were~~Total System Services, Inc.

On September 18, 2019, we merged with Total System Services, Inc. ("TSYS") (the "Merger"). We accounted for this transaction as a business ~~combinations,~~combination, which generally requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date.

~~Total System Services, Inc.~~

Pursuant to the Merger Agreement, we acquired all of the outstanding common stock of TSYS at the closing on September 18, 2019. Upon consummation of the Merger, holders of TSYS common stock received 0.8101 shares of Global Payments common stock for each share of TSYS common stock they owned at the effective time of the Merger (the "Exchange Ratio"). In addition, certain TSYS equity awards held by employees who were not executive officers, pursuant to their terms, vested automatically at closing ("Single-Trigger Awards") and were converted into the right to receive a number of shares of Global Payments common stock determined based on the Exchange Ratio. Also, pursuant to the Merger Agreement, we granted equity awards for approximately 2.2 million shares of Global Payments common stock to certain TSYS equity awards holders ("Replacement Awards"). Each such Replacement Award is subject to the same terms and conditions (including vesting and exercisability or payment terms) as applied to the corresponding TSYS equity award. We apportioned the fair value of the Replacement Awards between purchase consideration and amounts to be recognized in periods following the Merger as share-based compensation expense over the requisite service period of the Replacement Awards.

The purchase consideration transferred to TSYS shareholders was valued at $23.8 billion. Total purchase consideration also included the amount of borrowings outstanding under TSYS's unsecured revolving credit facility together with accrued interest and fees that we were required to repay upon consummation of the Merger.

~~The fair value of total purchase consideration was determined as follows (in thousands, except per share data):~~

Shares of TSYS common stock issued and outstanding (including Single-Trigger Awards) 177,643
Exchange Ratio 0.8101
Shares of Global Payments common stock issued to TSYS shareholders 143,909
Price per share of Global Payments common stock $ 163.74
Fair value of common stock issued to TSYS shareholders⁽¹⁾
23,563,568
Value of Replacement Awards attributable to purchase consideration 207,821
Cash paid to TSYS shareholders in lieu of fractional shares 1,352
Total purchase consideration transferred to TSYS shareholders 23,772,741
Repayment of TSYS's unsecured revolving credit facility (including accrued interest and fees) 702,212
Total purchase consideration $ 24,474,953

⁽¹⁾ Fair value of common stock issued to TSYS shareholders does not equal the product of shares of Global Payments common stock issued to TSYS shareholders and price per share of Global Payments common stock as presented in the table above due to the rounding of the number of shares in thousands.

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


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

				(in thousands)

Cash and cash equivalents	$	446,027		$	446,009		$	—		$	446,009
Accounts receivable	443,783			442,848			(2,910		)	439,938
Identified intangible assets	11,020,000			10,980,000			—			10,980,000
Property and equipment	695,560			644,084			—			644,084
Other assets	1,476,290			1,474,825			(4,940		)	1,469,885
Accounts payable and accrued liabilities	(594,558		)	(614,060		)	236			(613,824		)
Debt	(3,295,284		)	(3,295,342		)	4,787			(3,290,555		)
Deferred income tax liabilities	(2,843,643		)	(2,687,849		)	57,569			(2,630,280		)
Other liabilities	(313,782		)	(314,415		)	—			(314,415		)
Total identifiable net assets	7,034,393			7,076,100			54,742			7,130,842
Goodwill	17,440,560			17,398,853			(54,742		)	17,344,111
Total purchase consideration	$	24,474,953		$	24,474,953		$	—		$	24,474,953

As of ~~September 30, 2019,~~March 31, 2020, we considered these amounts to be provisional because we were still in the process of ~~gathering and~~ reviewing information to support the valuations of the assets acquired and liabilities assumed. ~~Goodwill~~We made measurement-period adjustments, as shown in the table above, that decreased the amount of provisional goodwill by $54.7 million. The decrease in deferred income tax liabilities for the three months ended March 31, 2020 primarily relates to a refined analysis of the outside bases of partnerships. The effects of the measurement-period adjustments on our consolidated statement of income for the three months ended March 31, 2020 were not material.

As of March 31, 2020, provisional goodwill arising from the acquisition of ~~$17.4~~$17.3 billion was included in our reportable segments as follows: $7.1 billion in the ~~TSYS~~Merchant Solutions segment, ~~as of September 30, 2019,~~$7.9 billion in the Issuer Solutions segment and $2.3 billion in the Business and Consumer Solutions segment. Goodwill was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining the acquired business into our existing business. We expect that substantially all of the goodwill from this acquisition will not be deductible for income tax purposes. ~~Due to the timing of the Merger, we are still in the process of assigning goodwill to our reporting units.~~

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

Estimated Fair Values Weighted-Average Estimated Amortization Periods

(in thousands) (years)
Customer-related intangible assets $ 6,330,000
18
Contract-based intangible assets 1,810,000
20
Acquired technologies 1,810,000
7
Trademarks and trade names 1,070,000
12
Total estimated identified intangible assets $ 11,020,000
14

From the acquisition date through September 30, 2019, TSYS contributed $147.5 million to our consolidated revenues and had an operating loss of approximately $11.1 million. Transaction costs directly related to the Merger were $53.5 million and $65.7 million for the three and nine months ended September 30, 2019, respectively.

The following unaudited pro forma information shows the results of our operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 ~~and 2018~~ as if the Merger had occurred on January 1, 2018. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of what would have occurred if the Merger had occurred as of that date. The unaudited pro forma information is also not intended to be a projection of future results due to the integration of TSYS. The unaudited pro forma information reflects the effects of applying our accounting policies and certain pro forma adjustments to the combined historical financial information of Global Payments and TSYS. ~~The pro forma adjustments include:~~

~~incremental amortization expense associated with identified intangible assets;~~

~~a reduction of revenues and operating expenses associated with fair value adjustments made to acquired assets and assumed liabilities, such as contract cost assets and contract liabilities;~~

~~a reduction of interest expense resulting from financing of the Merger, the repayment of TSYS's secured revolving credit facility and fair value adjustments applied to TSYS debt that we assumed; and~~

~~the income tax effects of the pro forma adjustments.~~

In addition, the pro forma net income attributable to Global Payments includes recognition of transaction costs related to the Merger in earnings as of the beginning of the earliest period presented. Accordingly, pro forma net income attributable to Global Payments for the nine months ended September 30, 2018 includes approximately $150 million of transaction costs.

Three Months Ended
September 30, 2019

Three Months Ended
September 30, 2018
Actual Pro Forma Actual Pro Forma

(in thousands)

Total revenues $ 1,105,941
$ 1,993,089
$ 857,670
$ 1,864,534
Net income attributable to Global Payments $ 95,044
$ 219,010
$ 176,370
$ 240,478


	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
	Actual		Pro Forma		Actual		Pro Forma		Actual		Pro Forma

	(in thousands)								(in thousands)

Total revenues	$	2,924,131	$	5,866,522	$	2,485,811	$	5,469,240	$	883,039	$	1,909,770
Net income attributable to Global Payments	$	327,842	$	614,317	$	376,838	$	407,899	$	112,341	$	187,865

~~SICOM Systems, Inc.~~

On October 17, 2018, we acquired SICOM Systems, Inc. ("SICOM") for total purchase consideration of $410.2 million, which we funded with cash on hand and incremental debt. SICOM is a provider of end-to-end enterprise, cloud-based software solutions and other technologies to quick service restaurants and food service management companies.

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

Cash and cash equivalents $ 7,540
Property and equipment 5,838
Identified intangible assets 188,294
Other assets 22,275
Deferred income liabilities (47,610 )
Other liabilities (31,350 )
Total identifiable net assets 144,987
Goodwill 265,214
Total purchase consideration $ 410,201

During the nine months ended September 30, 2019, we made an adjustment of $0.4 million to reflect an increase in the total purchase consideration, which resulted in a corresponding increase in goodwill. Goodwill arising from the acquisition of $265.2 million, included in the North America segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining the acquired business into our existing business. We expect that approximately $40 million of the goodwill from this acquisition will be deductible for income tax purposes.

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

Estimated Fair Values Weighted-Average Estimated Amortization Periods

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

~~AdvancedMD, Inc.~~

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

Cash and cash equivalents $ 7,657
Property and equipment 5,672
Identified intangible assets 419,500
Other assets 11,785
Deferred income tax liabilities (94,044 )
Other liabilities (15,647 )
Total identifiable net assets 334,923
Goodwill 371,962
Total purchase consideration $ 706,885

During the nine months ended September 30, 2019, we made measurement-period adjustments of $4.7 million primarily related to a reduction in deferred income tax liabilities, which resulted in a corresponding reduction in goodwill. Goodwill arising from the acquisition of $372.0 million, included in the North America segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining the acquired business into our existing business. We expect that substantially all of the goodwill from this acquisition will not be deductible for income tax purposes.

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

Estimated Fair Values Weighted-Average Estimated Amortization Periods

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

~~Valuation of Identified Intangible Assets~~

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

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

NOTE 3—REVENUES

The following tables present a disaggregation of our revenue from contracts with customers by geography for each of our reportable segments for the three months ended March 31, 2020 and 2019:



	Three Months Ended March 31, 2020
	Merchant Solutions		Issuer Solutions		Business and Consumer Solutions		Intersegment Revenue			Total

	(in thousands)

Americas	$	1,024,504	$	393,754	$	203,946	$	(17,733	)	$	1,604,471
Europe	135,999		108,362		—		—			244,361
Asia Pacific	54,766		1,646		—		(1,646		)	54,766
	$	1,215,269	$	503,762	$	203,946	$	(19,379	)	$	1,903,598



	Three Months Ended March 31, 2019
	Merchant Solutions		Issuer Solutions		Business and Consumer Solutions		Intersegment Revenue		Total

	(in thousands)

Americas	$	678,423	$	—	$	—	$	—	$	678,423
Europe	137,613		5,256		—		—		142,869
Asia Pacific	61,747		—		—		—		61,747
	$	877,783	$	5,256	$	—	$	—	$	883,039

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:

Three Months Ended September 30, 2019
North America Europe Asia-Pacific TSYS Total

(in thousands)

Direct:
Relationship-led $ 310,389
$ 114,562
$ 29,829
$ —
$ 454,780
Technology-enabled 369,147
50,388
28,851
—
448,386
679,536
164,950
58,680
—
903,166
Wholesale 55,305
—
—
—
55,305
734,841
164,950
58,680
—
958,471
TSYS —
—
—
147,470
147,470
$ 734,841
$ 164,950
$ 58,680
$ 147,470
$ 1,105,941



	March 31, 2020		March 31, 2019

	(in thousands)

Relationship-led	$	676,522	$	462,387
Technology-enabled	538,747		415,396
	$	1,215,269	$	877,783

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

(in thousands)

Direct:
Relationship-led $ 254,593
$ 105,468
$ 33,612
$ —
$ 393,673
Technology-enabled 317,206
52,116
22,759
—
392,081
571,799
157,584
56,371
—
785,754
Wholesale 71,916
—
—
—
71,916
643,715
157,584
56,371
—
857,670
TSYS —
—
—
—
—
$ 643,715
$ 157,584
$ 56,371
$ —
$ 857,670

Nine Months Ended September 30, 2019
North America Europe Asia-Pacific TSYS Total

(in thousands)

Direct:
Relationship-led $ 882,026
$ 319,781
$ 93,990
$ —
$ 1,295,797
Technology-enabled 1,061,094
148,387
85,321
—
1,294,802
1,943,120
468,168
179,311
—
2,590,599
Wholesale 186,062
—
—
—
186,062
2,129,182
468,168
179,311
—
2,776,661
TSYS —
—
—
147,470
147,470
$ 2,129,182
$ 468,168
$ 179,311
$ 147,470
$ 2,924,131

Nine Months Ended September 30, 2018
North America Europe Asia-Pacific TSYS Total

(in thousands)

Direct:
Relationship-led $ 725,874
$ 300,642
$ 101,225
$ —
$ 1,127,741
Technology-enabled 896,982
155,850
68,549
—
1,121,381
1,622,856
456,492
169,774
—
2,249,122
Wholesale 236,689
—
—
—
236,689
1,859,545
456,492
169,774
—
2,485,811
TSYS —
—
—
—
—
$ 1,859,545
$ 456,492
$ 169,774
$ —
$ 2,485,811

Accounting Standards Codification Topic 606,

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

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


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

		(in thousands)					(in thousands)

Assets:
Capitalized costs to obtain customer contracts, net	Other noncurrent assets	$	216,540	$	194,616	Other noncurrent assets	$	232,030	$	226,945
Capitalized costs to fulfill customer contracts, net	Other noncurrent assets	$	24,114	$	12,954	Other noncurrent assets	$	52,573	$	38,150

Liabilities:
Contract liabilities, net (current)	Accounts payable and accrued liabilities	$	195,472	$	146,947	Accounts payable and accrued liabilities	$	187,084	$	193,405
Contract liabilities, net (noncurrent)	Other noncurrent liabilities	$	28,039	$	8,595	Other noncurrent liabilities	$	42,556	$	35,272

~~The increase in contract liabilities during the nine months ended September 30, 2019 was primarily attributable to contract liabilities assumed in the Merger.~~ Net contract assets were not material at ~~September 30, 2019~~March 31, 2020 or at December 31, ~~2018.~~

2019. Revenue recognized for the three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ from contract liability balances at the beginning of each period was ~~$52.0~~$90.8 million and ~~$39.2 million, respectively. Revenue recognized for the nine months ended September 30, 2019 and 2018 from contract liability balances at the beginning of each period was $122.7 million and $90.2~~$58.5 million, respectively.

ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations. The purpose of this disclosure is to provide additional information about the amounts and expected timing of revenue to be recognized from the remaining performance obligations in our existing contracts. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at ~~the end of the reporting period.~~March 31, 2020. However, as permitted, ~~by ASC 606,~~ we have elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. Accordingly, the total unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amounts disclosed in the table ~~below.~~

~~Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at September 30, 2019 as follows~~below (in thousands):


Year ending December 31,
Remainder of 2019	$	228,002
2020	746,107

Remainder of 2020			$	687,211
2021	608,080		795,626
2022	435,065		603,497
2023-2029	526,047
2023			396,016
2024			245,923
2025-2029			564,501
Total	$	2,543,301	$	3,292,774

NOTE 4—GOODWILL AND OTHER INTANGIBLE ASSETS

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


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

	(in thousands)				(in thousands)

Goodwill	$	23,754,450	$	6,341,355	$	23,662,373	$	23,759,740
Other intangible assets:
Customer-related intangible assets	$	8,812,560	$	2,486,217	$	9,176,861	$	9,238,728
Acquired technologies	2,726,862		896,701		2,745,024		2,732,218
Contract-based intangible assets	1,981,156		178,391		1,970,443		1,974,429
Trademarks and trade names	1,357,763		289,588		1,237,020		1,239,471
	14,878,341		3,850,897		15,129,348		15,184,846
Less accumulated amortization:
Customer-related intangible assets	1,032,218		860,715		1,376,969		1,225,785
Acquired technologies	474,904		351,170		670,304		576,928
Contract-based intangible assets	75,804		67,160		88,788		82,225
Trademarks and trade names	111,024		83,234		178,496		145,253
	1,693,950		1,362,279		2,314,557		2,030,191
	$	13,184,391	$	2,488,618	$	12,814,791	$	13,154,655

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


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

	(in thousands)														(in thousands)

Balance at December 31, 2018	$	5,530,087		$	484,761		$	326,507		$	—	$	6,341,355
Balance at December 31, 2019															$	13,415,352		$	7,985,731		$	2,358,657	$	23,759,740
Goodwill acquired															34,911			—			—		34,911
Effect of foreign currency translation	3,217			(19,533		)	(11,542		)	—		(27,858		)	(64,218		)	(13,318		)	—		(77,536		)
Goodwill acquired	—			—			—			17,440,560		17,440,560
Measurement-period adjustments	(4,370		)	—			4,763			—		393			3,514			(60,984		)	2,728		(54,742		)
Balance at September 30, 2019	$	5,528,934		$	465,228		$	319,728		$	17,440,560	$	23,754,450
Balance at March 31, 2020															$	13,389,559		$	7,911,429		$	2,361,385	$	23,662,373

There were 0 accumulated impairment losses for goodwill as of ~~September 30, 2019~~March 31, 2020 or December 31, ~~2018.~~

~~NOTE 5—LEASES~~

Our leases consist primarily of operating real estate leases for office space and data centers in the markets in which we conduct business. We also have operating and finance leases for computer and other equipment. Many of our leases include escalating rental payments and incentives, as well as termination and renewal options. Certain of our lease agreements provide that we pay the cost of property taxes, insurance and maintenance. As described in "Note 1—Basis of Presentation and Summary

~~of Significant Accounting Policies," we adopted ASU 2016-02 on January 1,~~ 2019. ~~Unless otherwise indicated, the following information in this footnote applies only to periods after December 31, 2018.~~

We evaluate each of our lease and service arrangements at inception to determine if the arrangement is, or contains, a lease and the appropriate classification of each identified lease. A lease exists if we obtain substantially all of the economic benefits of, and have the right to control the use of, an asset for a period of time. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease agreement. We recognize right-of-use assets and lease liabilities at the lease commencement date based on the present values of fixed lease payments over the term of the lease. Right-of-use assets may also be adjusted to reflect any prepayments made or any incentive payments received. Operating lease costs and depreciation expense for finance leases are recognized as expense on a straight-line basis over the lease term. We consider a termination or renewal option in the determination of the lease term when it is reasonably certain that we will exercise that option. The weighted-average remaining lease term for operating and finance leases at September 30, 2019 was 7.5 years and 5.4 years, respectively. Because our leases generally do not provide a readily determinable implicit interest rate, we use an incremental borrowing rate to measure the lease liability and associated right-of-use asset at the lease commencement date. The incremental borrowing rate used is a fully collateralized rate that considers our credit rating, market conditions and the term of the lease at the lease commencement date. As of September 30, 2019, the weighted-average discount rate used in the measurement of operating and finance lease liabilities was 4.1% and 2.8%, respectively.

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

Balance Sheet Location September 30, 2019 January 1, 2019

(in thousands)

Assets:
Operating lease right-of-use assets:
Real estate Other noncurrent assets $ 368,816
$ 231,720
Computer equipment Other noncurrent assets 85,961
—
Other Other noncurrent assets 1,215
4,259
Total operating lease right-of-use-assets 455,992
235,979

Finance lease right-of-use assets:
Computer equipment Property and equipment, net $ 22,020
$ —
Other Property and equipment, net 4,702
—
26,722
—
Less accumulated depreciation:
Computer equipment Property and equipment, net (470 ) —
Other Property and equipment, net (17 ) —
Total accumulated depreciation (487 ) —
Total finance lease right-of-use assets 26,235
—
Total right-of-use assets⁽¹⁾
$ 482,227
$ 235,979

Liabilities:
Operating lease liabilities (current) Accounts payable and accrued liabilities $ 88,280
$ 37,339
Operating lease liabilities (noncurrent) Other noncurrent liabilities 413,111
236,697
Finance lease liabilities (current) Current portion of long-term debt 6,414
—
Finance lease liabilities (noncurrent) Long-term debt 27,852
—
Total lease liabilities $ 535,657
$ 274,036

⁽¹⁾~~Approximately 85% of our right-of-use assets are located in the United States.~~

~~As of September 30, 2019, maturities of lease liabilities were as follows:~~

Operating Leases
Finance
Leases

(in thousands)

Year ending December 31,
Remainder of 2019 $ 22,197
$ 1,781
2020 106,212
7,328
2021 97,330
7,100
2022 86,099
7,066
2023 57,251
6,674
2024 47,250
6,597
2025 and thereafter 180,794
273
Total lease payments⁽¹⁾
597,133
36,819
Imputed interest (95,742 ) (2,553 )
Total lease liabilities $ 501,391
$ 34,266

⁽¹⁾Total operating lease payments did not include approximately $40 million for operating leases that had not yet commenced at September 30, 2019. We expect the lease commencement dates for these leases to occur later in 2019 and in 2020.

Operating lease costs in our consolidated statement of income for the three months ended September 30, 2019 were $23.4 million, including $20.4 million in selling, general and administrative expenses and $3.0 million in cost of services.Operating lease costs in our consolidated statement of income for the nine months ended September 30, 2019 were $53.3 million, including $47.9 million in selling, general and administrative expenses and $5.4 million in cost of services.Total lease costs for the three and nine months ended September 30, 2019 include variable lease costs of approximately $9.0 million and $14.0 million, respectively, which are primarily comprised of the cost of property taxes, insurance and maintenance. Finance lease costs and lease costs for leases with a term of less than twelve months were not material for the three and nine months ended September 30, 2019.

Cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2019 was $43.0 million, which is included as a component of cash provided by operating activities in the consolidated statement of cash flows. Operating lease liabilities arising from obtaining new or modified right-of-use assets, net of reductions resulting from certain lease modifications, were approximately $23.5 million for the nine months ended September 30, 2019. In connection with the Merger, we acquired right-of-use assets and assumed lease liabilities of $256.6 million and $271.9 million, respectively.

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

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

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

NOTE 6—5—LONG-TERM DEBT AND LINES OF CREDIT

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


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

	(in thousands)				(in thousands)

Long-term Debt
3.800% senior notes due April 1, 2021	$	763,194	$	—	$	758,797	$	760,996
3.750% senior notes due June 1, 2023	568,598		—		566,062		567,330
4.000% senior notes due June 1, 2023	574,170		—		570,874		572,522
2.650% senior notes due February 15, 2025	991,090		—		991,844		991,423
4.800% senior notes due April 1, 2026	823,448		—		817,799		820,623
4.450% senior notes due June 1, 2028	488,081		—		485,883		486,982
3.200% senior notes due August 15, 2029	1,234,560		—		1,235,238		1,234,843
4.150% senior notes due August 15, 2049	739,410		—		739,521		739,431
Unsecured term loan facility	1,980,886		—		1,982,763		1,981,758
Unsecured revolving credit facility	783,000		—		1,416,000		903,000
Secured term loans (outstanding under our Prior Credit Facility)	—		4,426,243
Secured revolving credit facility (outstanding under our Prior Credit Facility)	—		704,000
Finance lease liabilities	34,266		—		30,798		32,996
Other borrowings	40,374		—		111,048		33,597
Total long-term debt	9,021,077		5,130,243		9,706,627		9,125,501
Less current portion	33,373		115,075		70,551		35,137
Long-term debt, excluding current portion	$	8,987,704	$	5,015,168	$	9,636,076	$	9,090,364

The carrying amounts of our senior notes and term loans are presented net of unamortized discount and unamortized debt issuance costs, as applicable. At ~~September 30, 2019,~~March 31, 2020, unamortized discount on senior notes was ~~$6.0~~$5.8 million, and unamortized debt issuance costs on senior notes and the unsecured term loan facility were ~~$48.0~~$44.9 million. Unamortized debt issuance costs on our ~~secured~~senior notes and unsecured term loans at December 31, ~~2018~~2019 were ~~$37.4~~$46.6 million. The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets. At ~~September 30, 2019~~March 31, 2020, unamortized debt issuance costs on the unsecured revolving credit ~~facility~~facility were ~~$18.6~~$16.7 million, ~~and,~~and, at December 31, ~~2018,~~2019, unamortized debt issuance costs on the ~~secured~~unsecured revolving credit facility were ~~$12.9~~$17.6 million. The amortization of debt discounts and debt issuance costs ~~are~~is recognized as an increase to interest expense over the terms of the respective debt instruments. Amortization of discounts and debt issuance costs ~~was $3.1 million and $9.2 million, respectively,~~ for the three ~~and nine~~ months ended ~~September 30, 2019. Amortization of debt issuance costs for the three~~March 31, 2020 and ~~nine months ended September 30, 2018~~2019 was ~~$2.9~~$2.8 million and ~~$8.6~~$3.1 million, respectively.

At ~~September 30, 2019,~~March 31, 2020, maturities of long-term debt (excluding finance lease liabilities) were as follows by year (in thousands):


Year ending December 31,
Remainder of 2019	$	11,536
2020	22,953

Remainder of 2020			$	50,726
2021	754,906		801,771
2022	50,038		58,403
2023	1,300,000		1,300,000
2024	2,533,000		3,166,000
2025 and thereafter	4,200,000
2025			1,000,000
2026 and thereafter			3,200,000
Total	$	8,872,433	$	9,576,900

~~See "Note 5—Leases" for more information about our finance lease liabilities, including maturities.~~

~~Bridge Facility~~

On May 27, 2019, in connection with our entry into the Merger Agreement described in "Note 2—Acquisitions," we obtained commitments for a $2.75 billion, 364-day senior unsecured bridge facility (the "Bridge Facility"). On July 9, 2019, upon our entry into the Term Loan Facility and theSenior Unsecured ~~Revolving~~ Credit Facility (each as defined below), the aggregate commitments under the Bridge Facility were reduced to approximately $2.1 billion. Concurrently with the issuance of the Senior Notes (as defined below), the remaining aggregate commitments under the Bridge Facility were reduced to 0 and terminated. For the three and nine months ended September 30, 2019, we recognized $8.8 million and $11.7 million, respectively, of fees associated with the Bridge Facility in interest expense.

~~New~~ Facilities

~~On July 9, 2019, we entered into~~We have a term loan credit agreement ("Term Loan Credit Agreement") and a revolving credit agreement ("Unsecured Revolving Credit Agreement") in each case with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents. The Term Loan Credit Agreement provides for a senior unsecured $2.0 billion term loan facility, ~~("Term Loan Facility"). The~~and the Unsecured Revolving Credit Agreement provides for a senior unsecured $3.0 billion revolving credit facility ("Unsecured Revolving Credit Facility," together with the Term Loan Facility, the "New Facilities"). We capitalized debt issuance costs of $12.8 million in connection with the issuances under the New Facilities.facility.

Borrowings under the ~~Term Loan Facility~~term loan facility were made in U.S. dollars and borrowings under the ~~Unsecured Revolving Credit Facility~~revolving credit facility are available to be made in U.S. dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option. Borrowings in U.S. dollars and certain other ~~London Interbank Offered Rate ("LIBOR")-quoted~~LIBOR quoted currencies will bear interest, at our option, at a rate equal to either (1) the rate (adjusted for any statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits in the London interbank market, (2) a floating rate of interest set forth on the applicable LIBOR screen page designated by Bank of America or (3) the highest of (a) the federal funds effective rate plus 0.5%, (b) the rate of interest as publicly announced by Bank of America as its "prime rate" or (c) LIBOR plus 1.0%, in each case, plus an applicable margin.

As of ~~September 30, 2019,~~March 31, 2020, the interest rates on the ~~Term Loan Facility~~term loan facility and the ~~Unsecured Revolving Credit Facility~~revolving credit facility were ~~3.42%~~2.36% and ~~3.33%~~2.02%, respectively. In addition, we are required to pay a quarterly commitment fee with respect to the unused portion of the ~~Unsecured Revolving Credit Facility~~revolving credit facility at an applicable rate per annum ranging from 0.125% to 0.300% depending on our credit rating. Beginning on December 31, 2022, and at the end of each quarter thereafter, the ~~Term Loan Facility~~term loan facility must be repaid in quarterly installments in the amount of 2.50% of original principal through the maturity date with the remaining principal balance due upon maturity in September 2024. The ~~Unsecured Revolving Credit Agreement~~revolving credit facility also matures in September 2024.

We may issue standby letters of credit of up to $250 million in the aggregate under the ~~Unsecured Revolving Credit Facility.~~revolving credit facility. Outstanding letters of credit under the ~~Unsecured Revolving Credit Facility~~revolving credit facility reduce the amount of borrowings available to us. The total available commitments under the ~~Unsecured Revolving Credit Facility~~revolving credit facility at ~~September 30, 2019~~March 31, 2020 were ~~$2,198.8 million.~~$1.6 billion.

Senior Unsecured Notes

~~On August 14, 2019, we completed the public offering and issuance of~~We have $3.0 billion in aggregate principal amount of senior unsecured notes, consisting of the following: (i) $1.0 billion aggregate principal amount of 2.650% senior notes due 2025; (ii) $1.25 billion aggregate principal amount of 3.200% senior notes due 2029; and (iii) $750 million aggregate principal amount of 4.150% senior notes due ~~2049 (collectively, the "Senior Notes").~~2049. Interest on the ~~Senior Notes~~senior notes is payable semi-annually in arrears on each February 15 and August ~~15, beginning on February 15, 2020.~~15. Each series of the ~~Senior Notes~~senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture. We ~~issued the Senior Notes at a total discount of $6.1 million and capitalized related debt issuance costs of $29.3 million.~~

From August 14, 2019 to the closing date of the Merger, the proceeds from the issuance of the Senior Notes were held in escrow. Upon closing, the funds were released and used together with borrowings under the Term Loan Facility and the Unsecured Revolving Credit Facility and cash on hand to repay TSYS's unsecured revolving credit facility, to refinance certain of our existing indebtedness, to fund cash payments made in lieu of fractional shares payable in accordance with the terms of the Merger Agreement and to pay transaction fees and costs related to the Merger.

~~In addition, in connection with the Merger, we assumed~~have an additional $3.0 billion in aggregate principal amount of senior unsecured notes ~~of TSYS,~~ consisting of the following: (i) $750 million aggregate principal amount of 3.800% senior notes due 2021; (ii) $550 million aggregate principal amount of 3.750% senior notes due 2023; (iii) $550 million aggregate principal amount of 4.000% senior notes due 2023; (iv) $750 million aggregate principal amount of 4.800% senior notes due 2026; and (v) $450 million aggregate principal amount of 4.450% senior notes due 2028. For the 3.800% senior notes due 2021 and the 4.800% senior notes due 2026, interest is payable semi-annually each April 1 and October 1. For the 3.750% senior notes due 2023, the 4.000% senior notes due 2023 and the 4.450% senior notes due 2028, interest is payable semi-annually each June 1 and December 1.

~~The senior notes assumed in the Merger were measured at fair value of $3.2 billion at the acquisition date, which exceeded their aggregate face value by $169.0 million.~~ The difference between the fair value and face value of ~~the assumed~~these senior notes at the date the Merger was consummated is recognized over the terms of the respective notes as a reduction of interest expense. The amortization of this fair value adjustment was ~~$1.5~~$9.0 million for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020.

As of ~~September 30, 2019,~~March 31, 2020, our senior notes had a total carrying amount of $6.2 billion and an estimated fair value of ~~$6,313.2 million.~~$6.2 billion. The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy. The fair value of other long-term debt approximated its carrying amount at ~~September 30, 2019.~~March 31, 2020.

~~Prior Credit Facility~~

Prior to completion of the Merger, we were party to a 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 "Prior Credit Facility"). The Prior Credit Facility provided for secured financing comprised of (i) a $1.5 billion revolving credit facility; (ii) a $1.5 billion term loan; (iii) a $1.37 billion term loan; (iv) a $1.14 billion term loan; and (v) a $500 million term loan. Upon the consummation of the Merger, all borrowings outstanding and other amounts due under the Prior Credit Facility were repaid with proceeds from the New Facilities and the Prior Credit Facility was terminated. In connection with the extinguishment of the Prior Credit Facility in the three months ended September 30, 2019, we wrote-off related unamortized debt issuance costs of $16.7 million to interest expense.

Compliance with Covenants

The ~~Term Loan Credit Agreement contains~~senior unsecured term loan and revolving credit facility contain customary conditions to funding, affirmative covenants, negative covenants, financial covenants and events of default. ~~The Unsecured Revolving Credit Facility Agreement contains customary conditions to funding, affirmative covenants, negative covenants and events of default.~~ As of ~~September 30, 2019,~~March 31, 2020, financial covenants under the ~~Term Loan Credit Agreement~~term loan facility required a leverage ratio of 3.50 to 1.00 and an interest coverage ratio of 3.00 to 1.00. We were in compliance with all applicable covenants as of ~~September 30, 2019.~~March 31, 2020.

Settlement Lines of Credit

In various markets where we do business, we have specialized lines of credit, which are restricted for use in funding settlement. The settlement lines of credit generally have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. For certain of our lines of credit, the available credit is increased by the amount of cash we have on deposit in specific accounts with the lender. Accordingly, the amount of the outstanding ~~line~~lines of credit may exceed the stated credit limit. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, a total of ~~$72.1~~$58.0 million and ~~$70.6~~$74.5 million, respectively, of cash on deposit was used to determine the available credit.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018, respectively,~~2019 we had ~~$547.6~~$375.2 million and ~~$700.5~~$463.2 million, respectively, outstanding under these lines of credit with additional capacity to fund settlement of ~~$871.9~~$1,092.1 million as of ~~September 30, 2019. The weighted-average interest rate on these borrowings was 3.34% and 2.97% at September 30, 2019 and December~~March 31, ~~2018, respectively.~~2020. During the three months ended ~~September 30, 2019,~~March 31, 2020, the maximum and average outstanding balances under these lines of credit were ~~$699.0~~$679.0 million and ~~$426.6~~$376.4 million, respectively. The weighted-average interest rate on these borrowings was 1.99% and 3.16% at March 31, 2020 and December 31, 2019, respectively.

Derivative Agreements

We have interest rate swap agreements with financial institutions to hedge changes in cash flows attributable to interest rate risk on a portion of our variable-rate debt instruments. Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. Since we have designated the interest rate swap agreements as portfolio cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recorded as components of other comprehensive income (loss).

In addition, in June 2019, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $1.0 billion. The forward-starting interest rate swaps, designated as cash flow hedges, were designed to manage the exposure to interest rate volatility in anticipation of the issuance of the Senior Notes. During the period from the commencement of the swaps through the date upon which the Senior Notes were issued, the effective portion of the unrealized losses on the swaps was included in other comprehensive loss. Upon issuance of the Senior Notes, we terminated the forward-starting swap agreements and made settlement payments of $48.3 million, which are included cash flows from operating activities in our consolidated statement of cash flows for the nine months ended September 30, 2019 within the caption labeled "Other, net." We have and will continue to reclassify the effective portion of the realized loss from accumulated other comprehensive loss into interest expense over the terms of the related Senior Notes.

The fair values of ~~the~~our interest rate swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. These derivative instruments were classified within Level 2 of the valuation hierarchy.

The table below presents ~~the fair values of~~information about our derivative financial instruments, designated as cash flow hedges, included in the consolidated balance sheets:

Fair Values
Derivative Financial Instruments Balance Sheet Location Weighted-Average Fixed Rate of Interest at September 30, 2019
Range of Maturity Dates at
September 30, 2019

September 30,
2019
December 31, 2018

(in thousands)

Interest rate swaps (Notional of $500 million at September 30, 2019 and $750 million at December 31, 2018) Prepaid expenses and other current assets 1.46% December 31, 2019 - July 31, 2020 $ 950
$ 3,200
Interest rate swaps (Notional of $550 million at December 31, 2018) Other noncurrent assets NA NA $ —
$ 8,256
Interest rate swaps (Notional of $1.5 billion at September 30, 2019 and $950 million at December 31, 2018) Other noncurrent liabilities 2.57% March 31, 2021 - December 31, 2022 $ 55,238
$ 14,601



				Fair Values
Derivative Financial Instruments	Balance Sheet Location	Weighted-Average Fixed Rate of Interest at March 31, 2020	Range of Maturity Dates at March 31, 2020	March 31, 2020		December 31, 2019

				(in thousands)

Interest rate swaps (Notional of $250 million at December 31, 2019)	Prepaid expenses and other current assets	NA	NA	$	—	$	472
Interest rate swaps (Notional of $550 million at March 31, 2020)	Accounts payable and accrued liabilities	1.65%	July 31, 2020 - March 31, 2021	$	5,365	$	—
Interest rate swaps (Notional of $1.25 billion at March 31, 2020 and $1.55 billion at December 31, 2019)	Other noncurrent liabilities	2.73%	December 31, 2022	$	84,361	$	45,604

NA -= not applicable.

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


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018			March 31, 2020		March 31, 2019

	(in thousands)												(in thousands)

Net unrealized (losses) gains recognized in other comprehensive loss	$	(40,265	)	$	1,845		$	(96,997	)	$	12,353
Net unrealized losses recognized in other comprehensive loss													$	47,896	$	14,509
Net unrealized losses (gains) reclassified out of other comprehensive loss to interest expense	$	1,193		$	(1,663	)	$	(1,530	)	$	(2,830	)	$	4,671	$	(1,830	)

As of ~~September 30, 2019,~~March 31, 2020, the amount of net unrealized losses in accumulated other comprehensive loss related to our interest rate swaps that is expected to be reclassified into interest expense during the next 12 months was ~~approximately $19.1~~$41.4 million.

Interest Expense

Interest expense was ~~approximately $96~~$81.1 million and ~~$46~~$55.4 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and approximately $221 million and $140 million for the nine months ended September 30, 2019 and 2018,~~ respectively.

NOTE 7—6—INCOME TAX

Our effective income tax rates for the three months ended March 31, 2020 and 2019 were 10.1% and 16.8%, respectively. Our effective income tax rate for the three months ended ~~September 30, 2019 was a benefit of 18.7%, and our effective income tax rate for the nine months ended September 30, 2019 was 10.1%. Our effective income tax rates for those periods~~March 31, 2020 differed from the U.S. statutory rate primarily as a result ~~of:~~

~~the reduction~~ of ~~our U.S. deferred~~ tax ~~liability resulting from the effect of the Merger on the apportionment of income among the states;~~

credits, excess tax benefits of share-based awards that are recognized upon vesting or ~~settlement;~~

settlement and the ~~U.S. tax benefits associated with~~foreign-derived intangible income ~~derived from foreign sources; and~~

~~the recognition of the benefit of uncertain tax positions due to the effective settlement of the positions.~~

~~Our effective income tax rate for~~deduction. For the three months ended ~~September 30, 2018 was a benefit of 3.4%, and~~March 31, 2019, our effective income tax rate for the nine months ended September 30, 2018 was 10.4%. During the three and nine months ended September 30, 2018, we reduced our estimated transition tax liability associated with the U.S. Tax Cuts and Jobs Act of 2017 by $23.3 million, which was the primary reason our effective income tax rates for those periods differed from the U.S. statutory ~~rate.~~rate primarily due to the excess tax benefits of share-based awards that are recognized upon vesting or settlement.

We conduct business globally and file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities around the world, including, without limitation, the United States and the United Kingdom. We are no longer subject to state income tax examinations for years ended on or before May 31, 2010, U.S. federal income tax examinations for years ended on or before ~~May~~December 31, 2016 and U.K. federal income tax examinations for years ended on or before May 31, ~~2015.~~2016.

NOTE 8—7—SHAREHOLDERS’ EQUITY

We repurchase our common stock mainly through open market repurchase plans and, at times, through accelerated share repurchase programs. During the ~~nine~~three months ended ~~September 30, 2019 and 2018,~~March 31, 2020, we repurchased and retired ~~1,808,398 shares and 1,612,174~~2,094,731 shares of our common stock at a cost, including commissions, of ~~$230.0~~$404.0 million, ~~and $180.9 million, respectively,~~ or ~~$127.18 per share and $112.19~~$192.85 per share. ~~We did not repurchase any~~During the three months ended March 31, 2019, we repurchased and retired 1,295,282 shares of our common stock ~~during~~at a cost, including commissions, of $158.0 million, or $121.98 per share.

On February 26, 2020, our board of directors approved an increase to our existing share repurchase program authorization, which raised the ~~three months ended September 30, 2019 and 2018.~~total available authorization to $1.0 billion. As of ~~September 30, 2019, we were authorized to~~March 31, 2020, the amount that may yet be purchased under our share repurchase ~~up to $568.0 million of our common stock.~~

~~In connection with the completion of the Merger, our Articles of Incorporation were amended to increase the number of authorized shares of Global Payments common stock from 200 million to 400~~program was $880.0 million.

On ~~October 24, 2019,~~April 29, 2020, our board of directors declared a dividend of $0.195 per share payable on ~~December 27, 2019~~June 26, 2020 to common shareholders of record as of ~~December 13, 2019.~~June 12, 2020.

NOTE 9—8—SHARE-BASED AWARDS AND STOCK OPTIONS

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


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		March 31, 2020		March 31, 2019

	(in thousands)								(in thousands)

Share-based compensation expense	$	27,877	$	14,833	$	55,791	$	44,937	$	27,822	$	11,418
Income tax benefit	$	4,396	$	3,614	$	10,633	$	10,276	$	6,473	$	2,509

Share-Based Awards

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


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

	(in thousands)				(in thousands)

Unvested at December 31, 2018	1,084			$108.51
Replacement Awards	894		163.74
Unvested at December 31, 2019					1,844			$149.96
Granted	772		141.42		546		193.36
Vested	(490	)	71.92		(553	)	116.66
Forfeited	(88	)	112.47		(18	)	152.88
Unvested at September 30, 2019	2,172			$151.06
Unvested at March 31, 2020					1,819			$173.12

The total fair value of restricted stock and performance awards vested during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and March 31, 2019 ~~and September 30, 2018~~ was ~~$35.3~~$64.6 million and ~~$45.0~~$20.8 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of ~~$20.2~~$25.2 million and ~~$13.8~~$10.1 million during the three months ended ~~September 30,~~March 31, 2020 and March 31, 2019, ~~and September 30, 2018, respectively, and $45.0 million and $41.1 million during the nine months ended September 30, 2019 and September 30, 2018,~~ respectively. As of ~~September 30, 2019,~~March 31, 2020, there was ~~$175.1~~$216.8 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of ~~2.2~~2.4 years. ~~Our restricted stock and performance award plans provide for accelerated vesting under certain conditions.~~

Stock Options

The following table summarizes ~~changes in~~ stock option activity for the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:

Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value

(in thousands) (years) (in millions)

Outstanding at December 31, 2018 598

$59.16
6.2 $27.3
Replacement Awards 1,336
68.96

Granted 109
128.22

Exercised (221 ) 32.54

Outstanding at September 30, 2019 1,822

$73.71
6.8 $155.4

Options vested and exercisable at September 30, 2019 1,217

$57.29
5.9 $123.7



	Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value

	(in thousands)				(years)	(in millions)

Outstanding at December 31, 2019	1,755			$74.06	6.5	$190.3
Granted	125		200.42
Forfeited	(2	)	113.48
Exercised	(383	)	64.38
Outstanding at March 31, 2020	1,495			$87.05	6.8	$85.5

Options vested and exercisable at March 31, 2020	1,097			$66.97	5.9	$84.8

We recognized compensation expense for stock options of ~~$7.0~~$1.9 million and $0.7 million during the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $8.6 million and $2.3 million during the nine months ended September 30, 2019 and 2018,~~ respectively. The aggregate intrinsic value of stock options exercised during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ was ~~$22.9~~$53.6 million and $15.9 million, respectively. As of ~~September 30, 2019,~~March 31, 2020, we had ~~$15.4~~$14.7 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of ~~1.7~~2.2 years.

The weighted-average grant-date fair value of stock options granted, including Replacement Awards, during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 was $54.85 and ~~2018 was $99.56 and $35.09,~~$39.60, respectively. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:


	Nine Months Ended		Three Months Ended
	September 30, 2019	September 30, 2018	March 31, 2020	March 31, 2019

Risk-free interest rate	1.72%	2.60%	1.24%	2.49%
Expected volatility	31%	29%	30%	30%
Dividend yield	0.04%	0.04%	0.39%	0.04%
Expected term (years)	5	5	5	5

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

NOTE ~~10—~~9—EARNINGS PER SHARE

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

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

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

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


	Three Months Ended		Nine Months Ended		Three Months Ended
	September 30, 2019	September 30, 2018	September 30, 2019	September 30, 2018	March 31, 2020	March 31, 2019

	(in thousands)				(in thousands)

Basic weighted-average number of shares outstanding	177,039	158,168	163,846	158,827	299,388	157,519
Plus: Dilutive effect of stock options and other share-based awards	504	538	485	632	1,450	499
Diluted weighted-average number of shares outstanding	177,543	158,706	164,331	159,459	300,838	158,018

NOTE ~~11—~~10—ACCUMULATED OTHER COMPREHENSIVE LOSS

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

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

(in thousands)

Balance at June 30, 2019 $ (289,194 ) $ (47,313 ) $ (3,399 ) $ (339,906 )
Other comprehensive income (loss) (58,415 ) (29,783 ) 37
(88,161 )
Balance at September 30, 2019 $ (347,609 ) $ (77,096 ) $ (3,362 ) $ (428,067 )

Balance at June 30, 2018 $ (253,372 ) $ 14,030
$ (4,287 ) $ (243,629 )
Other comprehensive income (loss) (26,930 ) 72
(58 ) (26,916 )
Balance at September 30, 2018 $ (280,302 ) $ 14,102
$ (4,345 ) $ (270,545 )



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

	(in thousands)

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

Balance at December 31, 2018	$	(304,274	)	$	(2,374	)	$	(3,527	)	$	(310,175	)
Other comprehensive income (loss)	9,807			(12,351		)	111			(2,433		)
Balance at March 31, 2019	$	(294,467	)	$	(14,725	)	$	(3,416	)	$	(312,608	)

Other comprehensive ~~income (loss)~~loss attributable to noncontrolling interests, which relates only to foreign currency translation, was ~~a loss of $8.7~~$6.7 million and ~~income of $11.7~~$4.6 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

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

(in thousands)

Balance at December 31, 2018 $ (304,274 ) $ (2,374 ) $ (3,527 ) $ (310,175 )
Other comprehensive income (loss) (43,335 ) (74,722 ) 165
(117,892 )
Balance at September 30, 2019 $ (347,609 ) $ (77,096 ) $ (3,362 ) $ (428,067 )

Balance at December 31, 2017 $ (185,856 ) $ 6,999
$ (4,287 ) $ (183,144 )
Cumulative effect of adoption of new accounting standard (1,843 ) —
—
(1,843 )
Other comprehensive income (loss) (92,603 ) 7,103
(58 ) (85,558 )
Balance at September 30, 2018 $ (280,302 ) $ 14,102
$ (4,345 ) $ (270,545 )

Other comprehensive income (loss) attributable to noncontrolling interests, which relates only to foreign currency translation, was a loss of $9.4 million and income of $11.8 million for the nine months ended September 30, 2019 and 2018, respectively.

NOTE ~~12—~~11—SEGMENT INFORMATION

~~Prior to the completion of the Merger, we operated~~We operate in 3 reportable segments: ~~North America, Europe~~Merchant Solutions, Issuer Solutions and ~~Asia-Pacific. As a result of the Merger, we anticipate realigning our executive management~~Business and organizational structures. As of September 30, 2019, we were still assessing changes in our internal management reporting structure to incorporate TSYS and the effects it may have on our reportable segments. Because this process was not complete as of September 30, 2019, we have reported the results of operations of TSYS from the acquisition date to September 30, 2019 as a separate reportable segment. In future periods, once the new management and organizational structures have been established, we will report financial information for our new reportable segments and recast prior periods to reflect the change, as necessary.

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

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

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018

(in thousands)

Revenues⁽¹⁾:

North America $ 734,841
$ 643,715
$ 2,129,182
$ 1,859,545
Europe 164,950
157,584
468,168
456,492
Asia-Pacific 58,680
56,371
179,311
169,774
TSYS 147,470
—
147,470
—
Consolidated revenues $ 1,105,941
$ 857,670
$ 2,924,131
$ 2,485,811

Operating income (loss)⁽¹⁾:

North America $ 205,728
$ 174,012
$ 547,160
$ 446,600
Europe 91,332
85,781
249,638
239,011
Asia-Pacific 24,187
23,692
74,718
67,043
TSYS ⁽²⁾
(11,124 ) —
(11,124 ) —
Corporate⁽²⁾
(136,086 ) (60,323 ) (265,137 ) (182,585 )
Consolidated operating income $ 174,037
$ 223,162
$ 595,255
$ 570,069

Depreciation and amortization⁽¹⁾:

North America $ 123,075
$ 106,022
$ 375,885
$ 313,980
Europe 12,876
11,660
38,971
36,180
Asia-Pacific 5,201
4,381
15,382
13,740
TSYS 40,213
—
40,213
—
Corporate 2,381
1,994
7,047
5,548
Consolidated depreciation and amortization $ 183,746
$ 124,057
$ 477,498
$ 369,448



	Three Months Ended
	March 31, 2020			March 31, 2019



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

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

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

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

⁽²⁾During the three months ended March 31, 2020, operating income for our Merchant Solutions segment reflected the effect of acquisition and integration expenses of $2.2 million. Operating loss for Corporate included acquisition and integration expenses of ~~$80.0~~$69.7 million and ~~$8.2~~$5.3 million, ~~for~~during the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Operating loss for Corporate included acquisition and integration expenses of $99.5 million and $34.6 million, respectively for the nine months ended September 30, 2019 and 2018. Operating loss for TSYS included acquisition and integration expenses of $20.9 million for the three and nine months ended September 30, 2019.

NOTE ~~13—~~12—COMMITMENTS AND CONTINGENCIES

Purchase Obligations

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

Legal Matters

~~Six putative class action lawsuits challenging the Merger were filed. Two of these lawsuits, captioned~~ ~~Peters v. Total System Services, Inc. et al.~~ ~~(Case No. 4:19-cv-00114) and~~ ~~Wolf v. Total System Services, Inc., et al.~~ ~~(Case No. 4:19-cv-00115), were filed in the United States District Court for the Middle District of Georgia on July 18, 2019. The third lawsuit, captioned~~ ~~Drulias v. Global Payments Inc., et. al~~ ~~(Case No. 60774/2019) was filed in the Supreme Court of the State of New York, County of Westchester on July 19, 2019. The fourth lawsuit, captioned~~ ~~Hickey v. Total System Services, Inc., et al.~~ ~~(Civil Action No. 1:19-cv-03337-LMM) was filed in the United States District Court for the Northern District of Georgia, Atlanta Division, on July 23, 2019. The fifth lawsuit, captioned,~~ ~~Cason v. Total System Services, Inc., et al.~~ ~~(Case No. 1:19-cv-07471) was filed in the United States District Court for the Southern District of New York on August 9, 2019. The sixth lawsuit, captioned,~~ ~~Cheng v. Total System Services, et al.~~ (Case No: 1:19-cv-01513-UNA) was filed in the United States District Court for the District of Delaware on August 13, 2019. The complaints filed in the lawsuits assert, among other matters, claims for filing a materially incomplete registration statement with the SEC. Global Payments and TSYS released supplemental disclosures relating to the Merger in late August 2019, and the ~~Peters~~ ~~lawsuit, the~~ ~~Wolf~~ ~~lawsuit and the~~ ~~Cheng~~ ~~lawsuit have been voluntarily dismissed.~~

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

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

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

Executive Overview

On May 27, 2019, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Total System Services, Inc. ("TSYS") providing for the merger of TSYS with and into Global Payments, with Global Payments as the surviving entity (the "Merger"). We consummated the Merger on September 18, 2019 for total purchase consideration of $24.5 billion. Prior to the Merger, TSYS was a leading global payments provider, offering seamless, secure and innovative solutions to issuers, merchants and consumers. Through our combination with TSYS, we are ~~now~~ a leading pure play payments technology company delivering innovative software and services to our customers globally. ~~See~~Our technologies, services and employee expertise enable us to provide a broad range of solutions that allow our customers to operate their businesses more efficiently across a variety of channels around the world. On September 18, 2019, we merged with Total System Services, Inc. ("TSYS") (the "Merger").

Recent developments relating to the outbreak of the coronavirus pandemic ("COVID-19")

In March 2020, the World Health Organization declared the outbreak of the COVID-19 virus a global pandemic. This outbreak is causing major disruptions to businesses and markets worldwide as the virus continues to spread. A number of countries as well as certain states and cities within the United States have enacted temporary closures of businesses, issued quarantine or shelter-in-place orders and taken other restrictive measures in response to COVID-19. We are closely monitoring the effects of the COVID-19 pandemic. We are currently operating normally, and, at this time, we do not anticipate any significant operational effects as a result of the pandemic.

Our first quarter performance in January, February and through the first two weeks of March exceeded our internal expectations, excluding an immaterial revenue effect from COVID-19 in our Asia Pacific region. However, starting in mid-March, the COVID-19 pandemic began to affect our results significantly in North America and Europe as governments took actions to encourage social distancing and implement shelter-in-place directives. The deterioration in our financial results accelerated toward the end of March as the pandemic spread further and the number of countries and localities adopting restrictive measures meaningfully increased. We expect that the COVID-19 pandemic will have an adverse effect on our revenues and financial results for the remainder of 2020, although the magnitude and duration of the ultimate effects as a result of the COVID-19 pandemic are not possible to predict at this time. We have taken and will continue to implement cost-saving actions, such as reductions in employee compensation costs, business travel and marketing initiatives, to help mitigate the financial effects of the COVID-19 pandemic.

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

Consolidated Results

Highlights related to our financial condition at March 31, 2020 and results of operations for the three months then ended include the following:

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


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

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

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

Results of Operations

We operate in three reportable segments: Merchant Solutions, Issuer Solutions and Business and Consumer Solutions. We evaluate performance and allocate resources based on the operating income of each operating segment. In connection with an organizational realignment implemented after the Merger in the fourth quarter of 2019, the presentation of segment information for the three months ended March 31, 2019 has been recast to align with the segment presentation for the three months ended March 31, 2020. For further information about our reportable segments, see "Item 1. Business—Business Segments" within our Annual Report on Form 10-K for the year ended December 31, 2019, incorporated herein by reference, and "Note ~~2—Acquisitions"~~11—Segment Information" in the notes to the accompanying unaudited consolidated financial ~~statements for a description of the Merger and other acquisitions and "Note 12—Segment Information" for a description of our reportable segments.~~

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

Consolidated revenues for the three and nine months ended September 30, 2019 increased to $1,105.9 million and $2,924.1 million, respectively, compared to $857.7 million and $2,485.8 million for the prior-year periods, primarily due to additional revenues from the Merger and businesses acquired in the second half of 2018.

Consolidated operating income for the three months ended September 30, 2019 decreased to $174.0 million compared to $223.2 million for the prior-year period as a result of the acquisition and integration expenses primarily related to the Merger. Consolidated operating income for the nine months ended September 30, 2019 increased to $595.3 million compared to $570.1 million for the prior-year period. Operating margin for the three and nine months ended September 30, 2019 was 15.7% and 20.4%, respectively, compared to 26.0% and 22.9% for the prior-year periods.

Net income attributable to Global Payments for the three and nine months ended September 30, 2019 decreased to $95.0 million and $327.8 million, respectively, compared to $176.4 million and $376.8 million for the prior-year periods, reflecting the change in operating income and additional interest expense.

~~Diluted earnings per share for the three and nine months ended September 30, 2019 decreased to $0.54 and $2.00, respectively, compared to $1.11 and $2.36 for the prior-year periods.~~

~~Results of Operations~~statements.

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

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

(dollar amounts in thousands)

Revenues⁽²⁾:

North America $ 734,841
66.4 % $ 643,715
75.1 % $ 91,126
14.2 %
Europe 164,950
14.9 % 157,584
18.4 % 7,366
4.7 %
Asia-Pacific 58,680
5.3 % 56,371
6.6 % 2,309
4.1 %
TSYS 147,470
13.3 % —
— % 147,470
NA
Total revenues $ 1,105,941
100.0 % $ 857,670
100.0 % $ 248,271
28.9 %

Consolidated operating expenses⁽²⁾:

Cost of service $ 427,720
38.7 % $ 265,013
30.9 % $ 162,707
61.4 %
Selling, general and administrative 504,184
45.6 % 369,495
43.1 % 134,689
36.5 %
Operating expenses $ 931,904
84.3 % $ 634,508
74.0 % $ 297,396
46.9 %

Operating income (loss)⁽²⁾:

North America $ 205,728
$ 174,012
$ 31,716
18.2 %
Europe 91,332
85,781
5,551
6.5 %
Asia-Pacific 24,187
23,692
495
2.1 %
TSYS⁽³⁾
(11,124 ) —
(11,124 ) NA
Corporate⁽³⁾
(136,086 ) (60,323 ) (75,763 ) 125.6 %
Operating income $ 174,037
15.7 % $ 223,162
26.0 % $ (49,125 ) (22.0 )%

Operating margin⁽²⁾:

North America 28.0 % 27.0 %
1.0 %
Europe 55.4 % 54.4 % 1.0 %
Asia-Pacific 41.2 % 42.0 %
(0.8 )%
TSYS (7.5 )% NA
NA



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

	(dollar amounts in thousands)

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

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

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

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

NANM = not ~~applicable.~~meaningful.

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

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

⁽³⁾ During the three months ended March 31, 2020, operating income for our Merchant Solutions segment reflected the effect of acquisition and integration expenses of $2.2 million. Operating loss for Corporate included acquisition and integration expenses of ~~$80.0~~$69.7 million and ~~$8.2~~$5.3 million, ~~for~~during the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~Operating loss for TSYS included acquisition and integration expenses of $20.9 million for the three months ended September 30, 2019.~~

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

Nine Months Ended September 30, 2019
% of Revenues⁽¹⁾
Nine Months Ended September 30, 2018
% of Revenues⁽¹⁾
Change % Change

(dollar amounts in thousands)

Revenues⁽²⁾:

North America $ 2,129,182
72.8 % $ 1,859,545
74.8 % $ 269,637
14.5 %
Europe 468,168
16.0 % 456,492
18.4 % 11,676
2.6 %
Asia-Pacific 179,311
6.1 % 169,774
6.8 % 9,537
5.6 %
TSYS 147,470
5.0 % —
— % 147,470
NA
Total revenues $ 2,924,131
100.0 % $ 2,485,811
100.0 % $ 438,320
17.6 %

Consolidated operating expenses⁽²⁾:

Cost of service $ 1,035,225
35.4 % $ 781,943
31.5 % $ 253,282
32.4 %
Selling, general and administrative 1,293,651
44.2 % 1,133,799
45.6 % 159,852
14.1 %
Operating expenses $ 2,328,876
79.6 % $ 1,915,742
77.1 % $ 413,134
21.6 %

Operating income (loss)⁽²⁾:

North America $ 547,160
$ 446,600
$ 100,560
22.5 %
Europe 249,638
239,011
10,627
4.4 %
Asia-Pacific 74,718
67,043
7,675
11.4 %
TSYS⁽³⁾
(11,124 ) —
(11,124 ) NA
Corporate⁽³⁾
(265,137 ) (182,585 ) (82,552 ) 45.2 %
Operating income $ 595,255
20.4 % $ 570,069
22.9 % $ 25,186
4.4 %

Operating margin⁽²⁾:

North America 25.7 % 24.0 % 1.7 %
Europe 53.3 % 52.4 % 0.9 %
Asia-Pacific 41.7 % 39.5 % 2.2 %
TSYS (7.5 )% NA
NA

~~NA = not applicable.~~

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

⁽³⁾ Operating loss for Corporate included acquisition and integration expenses of $99.5 million and $34.6 million, respectively for the nine months ended September 30, 2019 and 2018. Operating loss for TSYS included acquisition and integration expenses of $20.9 million for the nine months ended September 30, 2019.

Revenues

Consolidated revenues for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 increased by ~~28.9% and 17.6%, respectively,~~115.6% to ~~$1,105.9~~$1,903.6 million, and $2,924.1 million, despite the unfavorable effect of fluctuations in foreign currency exchange rates. For the three and nine months ended September 30, 2019, currency exchange rate fluctuations reduced our consolidated revenues by $11.8 million and $50.8 million, respectively, compared to $883.0 million in the prior-year ~~periods, calculated~~period, primarily due to additional revenues of $1,055.0 million from the acquired operations of TSYS, partially offset by ~~converting~~the adverse effect on our revenues ~~for~~resulting from the ~~current period in local currencies using exchange rates for the prior-year period.~~COVID-19 pandemic.

~~North America~~Merchant Solutions Segment. Revenues from our ~~North America~~Merchant Solutions segment for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 increased by ~~14.2% and 14.5%, respectively,~~38.4% to ~~$734.8~~$1,215.3 million, ~~and $2,129.2~~compared to $877.8 million in the prior-year period, primarily due to ~~organic~~additional revenues from the acquired operations of TSYS. As revenue ~~growth.~~from the Merchant Solutions segment is predominantly generated from core merchant acquiring, we experienced significant revenue declines starting in mid-March due to a reduction in consumer spending and closures of certain of our merchant customer businesses, including those who operate restaurants, retail locations, schools and universities and casinos, as well as the cancellation of events involving large groups of people throughout North America and Europe.

~~Europe~~Issuer Solutions Segment. Revenues from our ~~Europe~~Issuer Solutions segment for the three ~~and nine~~ months ended ~~September 30, 2019 increased by 4.7% and 2.6%, respectively, to $165.0~~March 31, 2020 was $503.8 million, ~~and $468.2 million~~primarily reflecting revenues from the acquired operations of TSYS. Starting in mid-March, we experienced revenue declines as a result of lower transaction volumes, particularly in our commercial cards due to ~~organic growth, partially offset by the unfavorable effect of fluctuations in foreign currency exchange rates of $9.4 million~~reduced travel and ~~$35.4 million, respectively.~~entertainment spending.

~~Asia-Pacific~~Business and Consumer Solutions Segment. Revenues from our ~~Asia-Pacific~~Business and Consumer segment for the three ~~and nine~~ months ended ~~September 30, 2019 increased by 4.1%~~March 31, 2020 was $203.9 million, reflecting revenues from the acquired operations of TSYS. Our Business and ~~5.6%, respectively, to $58.7 million and $179.3 million, primarily~~Consumer Solutions segment experienced revenue declines starting in mid-March due to ~~organic~~decreased consumer spending, lower load activity and fewer new funded accounts. These revenue ~~growth,~~declines were partially ~~offset~~mitigated by ~~the unfavorable effect~~positive trends in consumer adoption of ~~fluctuations in foreign currency exchange rates of $1.4 million and $7.6 million, respectively.~~our demand deposit account product.

Operating Expenses

Cost of Service. Cost of service for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 increased by ~~61.4% and 32.4%, respectively,~~206.0% to ~~$427.7~~$933.9 million, ~~and $1,035.2 million.~~compared to $305.2 million for the prior-year period, primarily due to additional costs associated with the acquired operations of TSYS. Cost of service for the three months ended March 31, 2020 reflects amortization of acquired intangibles of $314.2 million, compared to $107.5 million for the prior-year period. Cost of service as a percentage of revenues ~~was 38.7% and 35.4%, respectively,~~increased to 49.1% for the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, compared to ~~30.9% and 31.5%~~34.6% for the prior-year ~~periods. The increase in cost of service for the three and nine months ended September 30, 2019 was~~period, primarily due to ~~additional costs associated with revenue growth, including those of acquired businesses, and an~~the increase in amortization of acquired intangibles of $15.0 million and $81.7 million, respectively. Cost of service for the three and nine months ended September 30, 2019 also reflects acquisition and integration expenses of $10.4 million and $12.4 million, respectively, which contributed to the increase in cost of service as a percentage of revenues.intangibles.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 increased by ~~36.5%~~91.8% to $725.7 million, compared to $378.3 million for the prior-year period. The increase in selling, general and ~~14.1%, respectively,~~administrative expenses was primarily due to ~~$504.2~~additional costs associated with the acquired operations of TSYS, and included acquisition and integration expenses of $71.6 million, ~~and $1,293.7 million.~~primarily related to the Merger, compared to $5.3 million for the prior-year period. Selling, general and administrative expenses as a percentage of revenues was ~~45.6% and 44.2%, respectively,~~38.1% for the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, compared to ~~43.1% and 45.6%~~42.8% for the prior-year periods. The increase in selling, general and administrative expenses for the three and nine months ended September 30, 2019 was primarily due to additional costs to support the growth of our business, including those of acquired businesses. Selling, general and administrative expenses for the three and nine months ended September 30, 2019 also reflect acquisition and integration expenses of $90.5 million and $108.0 million, respectively, which contributed to the increase in selling, general and administrative expenses as a percentage of revenues.

~~Operating Income and Operating Margin~~

~~North America Segment~~. Operating income in our North America segment for the three and nine months ended September 30, 2019 increased by 18.2% and 22.5%, respectively, to $205.7 million and $547.2 million, primarily due to revenue growth. Operating margin for the three and nine months ended September 30, 2019 increased to 28.0% and 25.7%, respectively, compared to 27.0% and 24.0% for the prior-year periods.

~~Europe Segment~~. Operating income in our Europe segment for the three and nine months ended September 30, 2019 increased by 6.5% and 4.4%, respectively, to $91.3 million and $249.6 million, primarily due to revenue growth, partially offset by the unfavorable effect of fluctuations in foreign currency exchange rates of $4.9 million and $16.6 million, respectively. Operating margin for the three and nine months ended September 30, 2019 increased to 55.4% and 53.3%, respectively, compared to 54.4% and 52.4% for the prior-year periods.

~~Asia-Pacific Segment~~. Operating income in our Asia-Pacific segment for the three and nine months ended September 30, 2019 increased by 2.1% and 11.4%, respectively, to $24.2 million and $74.7 million, primarily due to revenue growth. Operating margin for the three and nine months ended September 30, 2019 was 41.2% and 41.7%, respectively, compared to 42.0% and 39.5% for the prior-year periods.period.

Corporate. Corporate expenses increased by ~~$75.8~~$108.5 million ~~and $82.6 million, respectively,~~ to ~~$136.1 million and $265.1~~$150.6 million for the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, compared to $42.1 million for the prior-year ~~periods,~~period, primarily due to additional expenses associated with the acquired operations of TSYS and an increase in acquisition and integration expenses primarily due to the Merger. During the three months ended ~~September 30, 2019 and 2018, operating loss for~~March 31, 2020, Corporate expenses included acquisition and integration expenses of ~~$80.0~~$69.7 million, compared to $5.3 million for the prior-year period. Certain of these Merger-related integration activities resulted in the recognition of employee termination benefits. During the three months ended March 31, 2020, we recognized charges of $17.6 million for actions taken, which included $2.6 million of share-based compensation expense. We expect to incur additional charges as Merger-related integration activities continue in 2020.

Operating Income and Operating Margin

Consolidated operating income for the three months ended March 31, 2020 increased to $244.0 million, compared to $199.5 million for the prior year due to additional income from the acquired operations of TSYS of $115.5 million, partially offset by the increase in acquisition and integration expenses. Operating margin for the three months ended March 31, 2020 decreased to 12.8%, compared to 22.6% for the prior-year period. Consolidated operating income for the three months ended March 31, 2020 reflects an increase in amortization of acquired intangibles of $206.7 million and ~~$8.2 million, respectively. During the nine months ended September 30, 2019 and 2018, operating loss for Corporate included~~an increase in acquisition and integration expenses of ~~$99.5~~$66.6 million, ~~and $34.6 million, respectively.~~primarily due to the Merger, compared to the prior-year period.

Other Income/Expense, Net

Interest and other ~~income increased by $8.1 million and $2.9 million, respectively, to $11.2 million and $20.3 million~~expense for the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020 increased by $33.6 million to $92.6 million, compared to the prior-year ~~periods,~~period, as a result of interest earned on the net proceeds from the issuance of the Senior Notes while they were in escrow. Interest and other income for the nine months ended September 30, 2018 included a gain of $9.6 million recognized on the reorganization of a debit network association of which we were a member through one of our Canadian subsidiaries.

Interest and other expense increased by $49.8 million and $81.2 million, respectively, for the three and nine months ended September 30, 2019, compared to the prior-year periods. The increases in interest expense for the three and nine months ended September 30, 2019 reflect additional interest expense associated with the increase in our long-term debt, including debt of $3,295.3 million that we assumed in the Merger. Further, in connection with financing activities related to the Merger, we incurred fees and charges of $25.5 million and $28.4 million, which were included in interest expense for the three and nine months ended September 30, 2019, respectively. These fees and charges included fees associated with bridge financing and charges for the write-off of unamortized debt issuance costs related to borrowings under our Prior Credit Facility that was extinguished prior to the completion of the Merger.outstanding borrowings.

Income Tax Expense ~~(Benefit)~~

Our effective income tax rates for the three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018 were a benefit of 18.7%, and a benefit of 3.4%, respectively. Our effective income tax rates for the nine months ended September 30, 2019 and 2018~~ were 10.1% and ~~10.4%~~16.8%, respectively. The ~~changes~~change in our effective tax ~~rates~~rate for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 from the prior-year ~~periods~~period reflects the effect of ~~discrete items related to the Merger during the three months ended September 30, 2019~~tax credits and ~~the reduction of our estimated transition tax liability~~benefits associated with ~~the U.S. Tax Cuts and Jobs Act of 2017 during the three months ended September 30, 2018.~~share-based awards.

Liquidity and Capital Resources

In the ordinary course of our business, a significant portion of our liquidity comes from operating cash flows and borrowings, including the capacity under our ~~new~~ credit ~~facilities, which are described below.~~facilities. Cash flow from operating activities is used to make planned capital investments in our business, to pursue acquisitions that meet our corporate objectives, to pay dividends, to pay principal and interest on our outstanding debt and to repurchase shares of our common stock. Accumulated cash balances are invested in high-quality, marketable short-term instruments.

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

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

At ~~September 30, 2019,~~March 31, 2020, we had cash and cash equivalents totaling ~~$2,127.6~~$1,800.1 million. Of this amount, we ~~consider $961.9~~considered $1,297.8 million to be available for general purposes, of which ~~approximately $26~~$29.0 million iswas undistributed foreign earnings considered to be indefinitely reinvested outside the United States. The available cash of ~~$961.9~~$1,297.8 million ~~does~~ did not include the following: (i) settlement-related cash balances, (ii) funds held as collateral for merchant losses ("Merchant Reserves") and (iii) funds held for customers. Settlement-related cash balances represent funds that we hold when the incoming amount from the card networks precedes the funding obligation to the merchant. Settlement-related cash balances are not restricted; however, these funds are generally paid out in satisfaction of settlement processing obligations the following day. Merchant Reserves serve as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant's agreement. While this cash is not restricted in its use, we believe that designating this cash to collateralize Merchant Reserves strengthens our fiduciary standing with our member sponsors and is in accordance with the guidelines set by the card networks. Funds held for customers and the corresponding liability that we record in customer deposits include amounts collected prior to remittance on our customers' behalf.

Operating activities provided net cash of ~~$1,349.4~~$436.6 million and ~~$661.0~~$229.7 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, which reflect net income adjusted for noncash items, including depreciation and amortization and changes in operating assets and liabilities. Fluctuations in operating assets and liabilities are affected primarily by timing of month-end and transaction volume, especially changes in settlement processing assets and ~~obligations, and by the effects of businesses we acquire that have different working capital requirements.~~obligations. Changes in settlement processing assets and obligations increased operating cash flows by ~~$624.0~~$13.0 million and $118.3 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and decreased operating cash flows by $58.7 million during the nine months ended September 30, 2018.~~respectively. The increase in cash flows from operating activities from the prior-year period was primarily due to the ~~effect~~increase in earnings before certain noncash items, including amortization of ~~changes in settlement processing assets~~acquired intangibles and ~~obligations. Cash flows from operations during the nine months ended September 30, 2019 also reflect the effect~~depreciation and amortization of ~~settlement payments of $48.3 million related to interest rate swaps that we terminated upon the issuance of our Senior Notes.~~property and equipment.

We used net cash in investing activities of ~~$506.3~~$169.7 million and ~~$927.5~~$116.3 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Cash used for investing activities primarily represents cash used to fund acquisitions, net of cash acquired, and capital expenditures. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, we used cash of ~~$780.4~~$68.2 million and $74.8 million, respectively, for acquisitions, including $703.6 million for the repayment of TSYS's unsecured revolving credit facility (including accrued interest and fees) and for cash paid to TSYS shareholders in lieu of fractional shares, which was partially offset by cash acquired of $446.0 million. During the nine months ended September 30, 2018, we used cash of $776.7 million for acquisitions, which was partially offset by cash acquired of $7.7 million.acquisitions.

We made capital expenditures of ~~$201.0~~$104.8 million and ~~$156.1~~$55.1 million to purchase property and equipment during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. These investments include software and hardware to support the development of new technologies, continued consolidation and enhancement of our operating platforms and infrastructure to support our growing business. ~~During~~Consistent with our first quarter, we will continue to make significant capital investments in the ~~year ending December 31, 2019, we expect aggregate capital expenditures for property and equipment to approximate $300 million.~~business but in light of COVID-19, will do so at a reduced rate from our initial expectations.

Financing activities include borrowings and repayments made under our various debt arrangements, as well as borrowings and repayments made under specialized lines of credit to fund daily settlement activities. Our borrowing arrangements are further described in "Note 6—5—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements and below under "Long-Term Debt and Lines of Credit." Financing activities also include cash flows associated with common stock repurchase programs and share-based compensation programs, as well as cash distributions made to noncontrolling interests and our shareholders. ~~Cash flows from~~We used net cash in financing activities ~~provided net cash~~ of ~~$109.9~~$77.5 million and $49.2 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, respectively.

Proceeds from long-term debt were $607.0 million and ~~used net cash of $49.0~~$344.0 million ~~during~~for the ~~nine~~three months ended ~~September 30, 2018.~~

~~In connection with financing activities associated with the Merger, we received $2,993.9 million of proceeds from the issuance of Senior Notes (defined below)~~March 31, 2020 and $2,868.0 million from our New Credit Facility (defined in "Note 6—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements). We used these proceeds to repay TSYS's unsecured revolving credit facility, to refinance certain of our existing indebtedness, to fund cash payments made in lieu of fractional shares payable in accordance with the terms of the Merger Agreement and to pay transaction fees and costs related to the Merger.

2019, respectively. Repayments of long-term debt were ~~$6,097.2~~$111.0 million and ~~$1,468.5~~$173.1 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, respectively. Proceeds from and ~~2018, respectively. Repayments~~repayments of long-term debt consist of borrowings and repayments that we make with available cash, from time-to-time, under our Revolving Credit Facility, as well as scheduled principal repayments we make on our term loans. ~~During the nine months ended~~

September 30, 2019, repayments of long-term debt also included $5,127.5 million for the repayment of all outstanding principal under our Prior Credit Facility (defined in "Note 6—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements).

Activity under our settlement lines of credit is affected primarily by timing of month-end and transaction volume. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, we had net repayments of settlement lines of credit of ~~$144.5~~$78.1 million and ~~during the nine months ended September 30, 2018, we had net borrowings from settlement lines of credit of $49.4~~$55.4 million, respectively.

We repurchase our common stock mainly through open market repurchase ~~plans and, at times, through accelerated share repurchase programs.~~plans. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ we used ~~$234.0~~$421.2 million and ~~$180.9~~$156.0 million, respectively, to repurchase shares of our common stock. As of ~~September 30, 2019,~~March 31, 2020, we had ~~$568.0~~$880.0 million of share repurchase authority remaining under a share repurchase program authorized by the board of directors.

~~During the nine months ended September 30, 2019, we~~We paid ~~distributions~~dividends to ~~noncontrolling interest in the amount of $31.6 million, and we funded assumed dividends payable (declared by TSYS's board of directors prior to consummation of the Merger) to former TSYS~~our common shareholders in the ~~amount~~amounts of ~~$23.2 million. During~~$58.3 million and $1.6 million during the ~~nine~~three months ended ~~September 30, 2018, distributions to noncontrolling interests were $5.7 million.~~March 31, 2020 and 2019, respectively.

We believe that our current level of cash and borrowing capacity under our existing credit facilities, together with expected future cash flows from operations, will be sufficient to meet the needs of our existing operations and planned requirements for the foreseeable future.

Long-Term Debt and Lines of Credit

~~Bridge Facility~~

On May 27, 2019, in connection with our entry into the Merger Agreement, we obtained commitments for a $2.75 billion, 364-day senior unsecured bridge facility (the "Bridge Facility"). On July 9, 2019, upon our entry into the Term Loan Facility and theSenior Unsecured ~~Revolving~~ Credit Facility (each as defined below), the aggregate commitments under the Bridge Facility were reduced to approximately $2.1 billion. Concurrently with the issuance of the Senior Notes (as defined below), the remaining aggregate commitments under the Bridge Facility were reduced to zero and terminated. During the nine months ended September 30, 2019, we paid fees of $11.7 million for the Bridge Facility.

~~New~~ Facilities

~~On July 9, 2019, we entered into~~We have a term loan credit agreement ("Term Loan Credit Agreement") and a revolving credit agreement ("Unsecured Revolving Credit Agreement") in each case with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents. The Term Loan Credit Agreement provides for a senior unsecured $2.0 billion term loan ~~facility ("Term Loan Facility").~~facility. The Unsecured Revolving Credit Agreement provides for a senior unsecured $3.0 billion revolving credit ~~facility ("Unsecured Revolving Credit Facility," together with the Term Loan Facility, the "New Facilities").~~

facility. Borrowings under the ~~Term Loan Facility~~term loan facility were made in U.S. dollars and borrowings under the ~~Unsecured Revolving Credit Facility~~revolving credit facility are available to be made in U.S. dollars, euros, sterling, Canadian dollars and, subject to certain conditions, certain other currencies at our option. Borrowings in U.S. dollars and certain other London Interbank Offered Rate ("LIBOR")-quoted currencies will bear interest, at our option, at a rate equal to either (1) the rate (adjusted for any statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits in the London interbank market, (2) a floating rate of interest set forth on the applicable LIBOR screen page designated by Bank of America or (3) the highest of (a) the federal funds effective rate plus 0.5%, (b) the rate of interest as publicly announced by Bank of America as its "prime rate" or (c) LIBOR plus 1.0%, in each case, plus an applicable margin. As of March 31, 2020, borrowings outstanding under the term loan facility and the revolving credit facility were $2.0 billion and $1.4 billion, respectively.

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

installments in the amount of 2.50% of original principal through the maturity date with the remaining principal balance due upon maturity in September 2024. The ~~Unsecured Revolving Credit Agreement~~revolving credit facility also matures in September 2024.

Senior Unsecured Notes

~~On August 14, 2019, we completed the public offering and issuance of~~We have $3.0 billion in aggregate principal amount of senior unsecured notes, consisting of the following: (i) $1.0 billion aggregate principal amount of 2.650% senior notes due 2025; (ii) $1.25 billion aggregate principal amount of 3.200% senior notes due 2029; and (iii) ~~$750~~$750.0 million aggregate principal amount of 4.150% senior notes due ~~2049 (collectively, the "Senior Notes").~~2049. Interest on the ~~Senior Notes~~senior notes is payable semi-annually in arrears on each February 15 and August ~~15, beginning on February 15, 2020.~~15. Each series of the ~~Senior Notes~~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.

From August 14, 2019 to the closing date of the Merger, the net proceeds from the issuance of the Senior Notes were held in escrow. Upon closing, the funds were released and used together with borrowings under the Term Loan Facility and the Unsecured Revolving Credit Facility and cash on hand to repay TSYS's unsecured revolving credit facility, to refinance certain of our existing indebtedness, to fund cash payments made in lieu of fractional shares payable in accordance with the terms of the Merger Agreement and to pay transaction fees and costs related to the Merger.

~~In addition, in connection with the Merger, we assumed~~ We have an additional $3.0 billion in aggregate principal amount of senior unsecured notes ~~of TSYS,~~ consisting of the following: (i) $750 million aggregate principal amount of 3.800% senior notes due 2021; (ii) $550 million aggregate principal amount of 3.750% senior notes due 2023; (iii) $550 million aggregate principal amount of 4.000% senior notes due 2023; (iv) $750 million aggregate principal amount of 4.800% senior notes due 2026; and (v) $450 million aggregate principal amount of 4.450% senior notes due 2028. For the 3.800% senior notes due 2021 and the 4.800% senior notes due 2026, interest is payable semi-annually each April 1 and October 1. For the 3.750% senior notes due 2023, the 4.000% senior notes due 2023 and the 4.450% senior notes due 2028, interest is payable semi-annually each June 1 and December 1.

~~Prior Credit Facility~~

Compliance with Covenants

Settlement Lines of Credit

credit may exceed the stated credit limit. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, a total of ~~$72.1~~$58.0 million and ~~$70.6~~$74.5 million, respectively, of cash on deposit was used to determine the available credit.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, we had ~~$547.6~~$375.2 million and ~~$700.5~~$463.2 million outstanding under these lines of credit with additional capacity to fund settlement of ~~$871.9~~$1,092.1 million as of ~~September 30, 2019. The weighted-average interest rate on these borrowings was 3.34% and 2.97% at September 30, 2019 and December~~March 31, ~~2018, respectively.~~2020. During the three months ended ~~September 30, 2019,~~March 31, 2020, the maximum and average outstanding balances under these lines of credit were ~~$699.0~~$679.0 million and ~~$426.6~~$376.4 million, respectively. The weighted-average interest rate on these borrowings was 1.99% and 3.16% at March 31, 2020 and December 31, 2019, respectively.

See "Note 5—~~Leases" and "Note 6—~~Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements for further information about our borrowing agreements and our lease liabilities.

Commitments and Contractual Obligations

~~As a result of~~During the ~~Merger and the related financing activities,~~three months ended March 31, 2020, our commitments and contractual obligations increased from the amounts disclosed in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of ~~Operations—Commitments~~Operations-Commitments and Contractual Obligations" in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. The increase primarily relates to the acquisition of software and related services for $293.8 million. We financed $97.6 million of this amount utilizing a two-year vendor financing arrangement. As of ~~September 30, 2019,~~March 31, 2020, the estimated remaining purchase commitments for this acquisition are $47.6 million during the remainder of 2020, $64.9 million during 2021, $66.9 million during 2022 and $16.8 million during 2023.

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

Because of the effects of the COVID-19 pandemic on our business beginning in mid-March, we had long-term debt (including finance lease liabilities) of $9,021.1 million and operating lease liabilities of $501.4 million. See "Note 5—Leases" and "Note 6—Long-Term Debt and Lines of Credit" inevaluated the ~~notes to the accompanying unaudited consolidated~~potential effects on our financial statements as of and for ~~further information about our borrowing agreements~~the three months ended March 31, 2020. However, the magnitude and duration of the ultimate effect of the COVID-19 pandemic are not possible to predict at this time, and our ~~lease liabilities,~~assessments are therefore subject to material revision.

Goodwill- We considered a variety of factors that might indicate that it is more likely than not that the fair value of any reporting unit is below its carrying amount at March 31, 2020, including ~~maturity schedules. Additionally,~~general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of our reporting units, events or changes affecting the composition or carrying amount of the net assets of our reporting units, our share price and other relevant events. For certain of our reporting units that were recently acquired in ~~connection with~~ the Merger, we also ~~assumed purchase commitments~~considered the expected near term impact of ~~approximately $93 million, which include future payments for noncancelable contractual obligations related to service arrangements with suppliers for fixed or minimum amounts. Payments for~~ the ~~assumed purchase commitments due during~~COVID-19 pandemic on revenues and our cost mitigation efforts as well as longer term performance expectations. Based on the ~~remainder~~analyses completed, we believe it is not more likely than not that the carrying amount of ~~2019 are approximately $12 million and purchase commitments due in~~any our reporting units exceeded the fair value as of March 31, 2020 ~~2021, 2022, 2023, 2024 and thereafter are approximately $32 million, $14 million, $9 million, $6 million, $5 million and $15 million, respectively.~~.

Off-Balance Sheet Arrangements

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

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

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

Forward-Looking Statements

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

~~Important~~In addition to factors previously disclosed in Global Payments’ reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, ~~that may otherwise~~could cause actual ~~events or~~ results to differ materially from ~~those anticipated by such~~ forward-looking statements ~~include failure to realize~~or historical performance: the ~~expected benefits~~effects and duration of global economic, political, market, health and social events or other conditions, including the effects and duration of the ~~Merger~~COVID-19 pandemic; regulatory measures or ~~difficulties integrating~~voluntary actions, including social distancing, shelter-in-place orders, shutdowns of nonessential businesses and similar measures imposed or undertaken in an effort to combat the ~~business~~spread of the ~~combined company,~~COVID-19 pandemic; management’s assumptions and projections used in their estimates of the timing and severity of the effects of the COVID-19 pandemic on our future revenues and results of operations; our ability to meet our liquidity needs in light of the effects of the COVID-19 pandemic; the outcome of any legal proceedings that may be instituted against Global Payments or its or TSYS’ current or former directors; difficulties, delays and higher than anticipated costs related to integrating the businesses of Global Payments and TSYS, including with respect to implementing systems to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; failing to fully realize anticipated cost savings and other anticipated benefits of the Merger when expected or at all; business disruptions from the Merger or integration that will harm our business, including current plans and operations; potential adverse reactions or changes to business relationships resulting from the ~~risk of customer loss related~~Merger, including as it relates to the ~~Merger, our~~businesses’ ability to ~~safeguard our data; increased competition from larger companies~~successfully renew existing client contracts on favorable terms or at all and ~~non-traditional competitors, our ability~~obtain new clients; failing to ~~update our services~~comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in ~~a timely manner; our~~those requirements; the ability to maintain Visa and ~~MasterCard~~Mastercard registration and financial institution sponsorship; ~~our reliance on financial institutions~~the ability to ~~provide clearing services~~retain and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing following the Merger; the business, economic and political conditions in ~~connection with our~~

settlement activities; our potential failure to comply with card network requirements; risk associated with our indebtedness; potential systems interruptions or failures; software defects or undetected errors;the markets in which we operate; increased ~~attrition of merchants, referral partners or independent sales organizations;~~competition in the markets in which we operate and our ability to increase our market share ofin existing markets and expand into new markets; development of market trends and technologies; a decline in the use of cards for payment generally; unanticipated increases in chargeback liability; increases in credit card network fees; change in laws, regulations or network rules or interpretations thereof;our ability to safeguard our data; risks associated with our indebtedness, foreign currency exchange and interest rate risks; ~~political, economic and regulatory~~the effects of new or changes in ~~the foreign countries in which we operate; future performance, integration~~current laws, regulations, credit card association rules or other industry standards, including privacy and ~~conversion~~cybersecurity laws and regulations; and events beyond our control, such as acts of ~~acquired operations, including without limitation difficulties and delays in integrating or fully realizing cost savings~~terrorism, and other ~~benefits of our acquisitions at all or within~~factors included in the ~~expected time period; fully realizing anticipated annual interest expense savings from refinancing our credit Facilities; our loss of key personnel and other risk factors presented~~“Risk Factors” in ~~"Part II, Item 1A - Risk Factors" of this Form 10-Q and "Part I, Item 1A - Risk Factors" of~~ our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019, and ~~any~~in other documents that we file with the SEC, ~~filings,~~ which ~~we advise you to review.~~

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

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a result of debt we assumed in the Merger and the financing activities we completed during the quarter ended September 30, 2019, including the issuance of Senior Notes, a larger portion of our debt as of September 30, 2019 had fixed interest rates as compared to our debt at December 31, 2018. As a result, and considering the interest rate swap agreements we have to hedge changes in cash flows attributable to interest rate risk on our variable-rate debt instruments, our exposure to interest rate risk has decreased since December 31, 2018. Based on balances outstanding at September 30, 2019, a hypothetical increase of 50 basis points in applicable interest rates as of September 30, 2019 would increase our annual interest expense by approximately $6.0 million and increase our annual interest income by approximately $4.6 million.

In addition, as a result of the Merger and other recent acquisitions we have made in the United States, a smaller portion of our business was conducted in foreign currencies during the three and nine months ended September 30, 2019 as compared to the prior year periods. For the three and nine months ended September 30, 2019, currency exchange rate fluctuations reduced our consolidated revenues by $11.8 million and $50.8 million, respectively, compared to the prior year, calculated by converting revenues for the current period in local currencies using exchange rates for the prior-year period.

For a ~~further~~ discussion of our exposure to market risk, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," contained in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

ITEM 4—CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2020, as part of our ongoing integration activities following the Merger, we continued to apply our controls and procedures to the acquired operations of TSYS and to augment our company-wide controls to address the risks inherent in an acquisition of this magnitude. In response to the COVID-19 pandemic, our teams worldwide have been working remotely since the middle of March. We ~~completed our merger with TSYS on September 18, 2019. In accordance with our integration efforts, we plan~~took precautionary measures to ~~incorporate TSYS's operations into~~ensure our internal control over financial reporting ~~program within~~addressed risks working in a remote environment. We are continually monitoring and assessing the ~~time provided by~~COVID-19 potential effects on the ~~applicable rules~~design and ~~regulations~~operating effectiveness of ~~the U.S. Securities and Exchange Commission.~~our internal control over financial reporting.

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, which may ultimately result from the outcome of such matters, individually or in the aggregate, are not expected to have a material adverse effect on our financial position, liquidity, results of operations or cash flows. See "Note ~~13—~~12—Commitments and Contingencies" in the notes to the accompanying unaudited consolidated financial statements for information about certain legal matters.

ITEM 1A—RISK FACTORS

~~On September 18, 2019, we completed the Merger with TSYS, pursuant~~The following represent material changes to ~~the Merger Agreement that we entered into with TSYS on May 27, 2019. We face a number of risks and uncertainties relating to the Merger. Because of these risks, we have supplemented~~ the risk factors ~~previously disclosed~~included in our Annual Report on Form 10-K for the year ended December 31, ~~2018, to add the following risk factors:~~2019.

~~We expect~~Our business has been and is likely to ~~incur substantial costs~~continue to be negatively affected by the recent COVID-19 outbreak.

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

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

Merchant temporary closures and failures;

Continued unemployment which may negatively influence consumer spending;

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

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

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

These factors may remain prevalent for a significant ~~amount~~period of ~~nonrecurring costs associated with the Merger. These costs include financial advisory, legal, accounting, consulting~~time and ~~other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, printing costs and other related costs.~~

~~We expect~~may continue to incur substantial costs in connection with the related integration. There are a large number of processes, policies, procedures, operations, technologies and systems that may need to be integrated, includingadversely affect our business, ~~operating platforms~~results of operations and other operational matters as well as integrating our purchasing, accounting and finance, sales, payroll, pricing and benefits and other administrative processes. While we have assumed that a certain level of costs will be incurred, there are many factors beyond our control that could affectfinancial condition even after the ~~total amount or the timing~~COVID-19 pandemic has subsided. The full effects of the ~~integration costs. Moreover, many~~COVID-19 pandemic on our business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and are difficult to predict at this time, including, but not limited to, the duration and spread of the ~~costs~~pandemic, its severity, the restrictive actions taken to contain the virus or treat its effects, its effects on our customers and how quickly and to what extent normal economic and operating conditions, operations and demand for our services can resume. It is also likely that the current outbreak or continued spread of COVID-19 will be incurred are, by their nature, difficult to estimate accurately. These costs could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of duplicative costscause an economic slowdown, and ~~the realization of economies of scale and cost savings. These integration costs may result in significant charges against earnings, and the amount and timing of such charges are uncertain at present.~~

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

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

~~Until the completion of the Merger, we operated independently of TSYS. It~~it is possible that it could cause a global recession. Accordingly, the ~~integration process could result in~~ultimate effects on our operations, financial condition and cash flows cannot be determined at this time. Nevertheless, despite the loss of key employees, the disruption of our ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, commercial counterparties and employees or to achieve the anticipated benefits and cost savingsuncertainty of the ~~Merger. Integration efforts may also divert management attention and resources. These integration matters could~~COVID-19 situation, we expect that the COVID-19 pandemic will have an adverse effect on usour revenues and financial results for ~~an undetermined period after completion~~the remainder of ~~the Merger.~~2020.

~~Our future results may suffer if we do not effectively manage~~Furthermore, the COVID-19 pandemic and the resulting adverse and unpredictable economic conditions are likely to implicate or exacerbate other risks identified in our ~~expanded operations.~~

~~Following~~Annual Report on Form 10-K for the ~~completion of the Merger, the size of~~year ended December 31, 2019, which in turn could materially adversely affect our business, increased significantly. Our future success will depend, in part, upon our ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoringfinancial condition, results of ~~new~~ operations and associated increased costs and complexity. We may also face increased scrutiny from governmental authorities as a result of the significant increase in the size of its business. There can be no assurances that we will be successful or that we will realize the expected operating efficiencies, cost savings, revenue enhancements or other benefits currently anticipated from the Merger.liquidity.

~~We may be unable to retain our personnel successfully.~~

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

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

Holders of our common stock have the right to vote in the election of the board of directors and on other matters affecting us. Upon completion of the Merger, the former holders of TSYS common stock owned approximately forty-eight percent (48%) of our fully diluted shares and holders of our common stock prior to the completion of the Merger, as a group, owned approximately fifty-two percent (52%) of our fully diluted shares. Because of this, holders of our common stock who owned shares of our common stock prior to the completion of the Merger may have less influence on our management and policies than they had prior to the completion of the Merger.

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

In connection with the payment of the Merger consideration, we issued approximately 143.9 million shares of our common stock to TSYS shareholders. The issuance of these new shares of our common stock may result in fluctuations in the market price our common stock, including a stock price decrease.

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

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

Period
Total Number of
Shares Purchased ⁽¹⁾
Average Price Paid per Share Total Number of
Shares Purchased as Part of
Publicly Announced
Plans or Programs
Maximum
Number (or
Approximate
Dollar Value) of
Shares that May Yet Be Purchased Under
the Plans or
Programs ⁽²⁾
(in millions)
July 2019 46,869
$ 171.40
—
$ 568.0
August 2019 1,437
165.63
—
568.0
September 2019 131,243
162.39
—
568.0
Total 179,549
$ 164.77
—
$ 568.0



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

⁽¹⁾

Our board of directors has authorized us to repurchase shares of our common stock through any combination of Rule 10b5-1 open-market repurchase plans, accelerated share repurchase plans, discretionary open-market purchases or privately negotiated transactions. During the quarter ended ~~September 30, 2019,~~March 31, 2020, pursuant to our employee incentive plans, we withheld ~~97,458~~203,358 shares, at an average price per share of ~~$165.12~~$185.81 in order to satisfy employees' tax withholding and payment obligations in connection with the vesting of awards of restricted stock. In September 2019, in connection with the Merger and the vesting of the Single-Trigger Awards, we withheld 82,091 shares, at an average price per share of $164.35, in order to satisfy tax withholding and payment obligations.

⁽²⁾

On February ~~13, 2019, we announced that~~26, 2020, our board of directors approved an increase to our existing share repurchase program authorization, which raised the total available authorization to ~~$750 million.~~$1.0 billion. As of ~~September 30, 2019,~~March 31, 2020, the ~~approximate dollar value of shares~~amount that may yet be purchased under our share repurchase program was ~~$568.0~~$880.0 million. The board authorization does not expire, but could be revoked at any time. In addition, we are not required by the board’s authorization or otherwise to complete any repurchases by any specific time or at all.

ITEM 6—EXHIBITS

List of Exhibits



~~2.1~~		Agreement and Plan of Merger by and between Total System Services, Inc. and Global Payments Inc., dated as of May 27, 2019, incorporated by reference to Exhibit 2.1 to Global Payment Inc.'s Current Report on Form 8-K filed on May 31, 2019. ++
3.1		Third Amended and Restated Articles of Incorporation of Global Payments Inc., incorporated by reference to Exhibit 4.1 to Global Payment Inc.’s Post-Effective Amendment No. 1 on Form S-8 to the Registration Statement on Form S-4 filed on September 18, 2019.
3.2		~~Ninth~~Articles of Amendment to the Third Amended and Restated ~~Bylaws~~Articles of Incorporation of Global ~~Payment's~~Payments Inc., incorporated by reference to Exhibit ~~4.2 to Global Payment Inc.’s Post-Effective Amendment No. 1 on Form S-8 to the Registration Statement on Form S-4 filed on September 18, 2019.~~
~~4.1~~		~~Stockholders Agreement, dated August 31, 2017, by and among Global Payments Inc. and the stockholders party thereto, incorporated by reference to Exhibit 10.1~~3.1 to Global Payments Inc.'s Current Report on Form 8-K filed on ~~September 6, 2017.~~May 1, 2020.
~~4.2~~3.3		~~Indenture, dated as~~Tenth Amended and Restated Bylaws of ~~August 14, 2019, between~~ Global Payments Inc. ~~and U.S. Bank National Association, as trustee,~~, incorporated by reference to Exhibit ~~4.1~~3.2 to Global ~~Payments~~Payment Inc.’s Current Report on Form 8-K filed on ~~August 14, 2019.~~
~~4.3~~		~~Supplemental Indenture No.~~May 1, dated as of August 14, 2019, between Global Payments Inc. and U.S. Bank National Association, as trustee, incorporated by reference to Exhibit 4.2 Global Payments Inc.’s Current Report on Form 8-K filed on August 14, 2019.
~~4.4~~		~~Form of Notes (included in Exhibit 4.2).~~
~~4.5~~		~~Senior Indenture, dated March 17, 2016, between TSYS and Regions Bank, as trustee, incorporated by reference to Exhibit 4.1 of TSYS's Current Report on Form 8-K filed on March 17, 2016.~~
~~4.6~~		Supplemental Indenture No. 1, dated as of September 17, 2019, among Total System Services, Inc., Global Payments Inc. and Regions Bank, incorporated by reference to Exhibit 4.1 to Global Payments Inc.’s Current Report on Form 8-K filed on September 20, 2019.
~~4.7~~		~~Form of 3.800% Senior Note due 2021, incorporated by reference to Exhibit 4.2 of TSYS's Current Report on Form 8-K filed on March 17, 2016.~~
~~4.8~~		~~Form of 4.000% Senior Note due 2023, incorporated by reference to Exhibit 4.1 of TSYS's Current Report on Form 8-K filed on May 11, 2018.~~
~~4.9~~		~~Form of 4.800% Senior Note due 2026, incorporated by reference to Exhibit 4.3 of TSYS's Current Report on Form 8-K filed on March 17, 2016.~~
~~4.10~~		Indenture, dated as of May 22, 2013, between TSYS and Wells Fargo Bank, National Association, as trustee, incorporated by reference to Exhibit 4.1 of TSYS's Current Report on Form 8-K filed on May 22, 2013.
~~4.11~~		Supplemental Indenture No. 1, dated as of September 17, 2019, among Total System Services, Inc., Global Payments Inc. and Wells Fargo Bank, National Association, incorporated by reference to Exhibit 4.2 to Global Payments Inc.’s Current Report on Form 8-K filed on September 20, 2019.
~~4.12~~		~~Form of 3.750% Senior Note due 2023, incorporated by reference to Exhibit 4.3 of TSYS's Current Report on Form 8-K filed on May 22, 2013.~~2020.
10.1*		Form of Restricted Stock Award pursuant to the 2011 Amended and Restated ~~Employment Agreement, dated as of September 20, 2019, by and between Global Payments Inc. and Jeffrey S. Sloan.~~Incentive Plan for Executive Officers (calendar 2020).
10.2*		Form of Performance Unit Award Agreement pursuant to the 2011 Amended and Restated ~~Employment Agreement, dated as of September 20, 2019, by and between Global Payments Inc. and Cameron M. Bready.~~Incentive Plan for Executive Officers (calendar 2020).
10.3*		Form of Stock Option Award pursuant to the 2011 Amended and Restated ~~Employment Agreement, dated as of September 20, 2019, by and between Global Payments Inc. and Guido F. Sacchi.~~
10.4*		~~Amended and Restated Employment Agreement, dated as of September 20, 2019, by and between Global Payments Inc. and David L. Green.~~
10.5*		~~Employment Agreement, dated as of September 20, 2019, by and between Global Payments Inc. and Paul M. Todd.~~
10.6*		~~Form of Synergy Performance Share Award Agreement.~~
10.7*		~~Global Payments Inc. Sixth Amended and Restated Non-Employee Director Compensation Plan, dated October 24, 2019.~~
~~10.8~~		~~Technical Amendment to the Credit Agreement, dated as of May 31, 2019, between Global Payments Inc. and Bank of America, N.A., as administrative agent.~~
~~10.9~~		~~Total System Services, Inc. 2017 Omnibus Plan incorporated by reference to Exhibit 10.1 to TSYS’ Current Report on Form 8-K filed on April 28, 2017.~~



~~10.10~~		~~Total System Services, Inc. 2012 Omnibus Plan, incorporated by reference to Exhibit 10.1 to TSYS’ Current Report on Form 8-K filed on May 4, 2012.~~
~~10.11~~		~~Total System Services, Inc. 2007 Omnibus Plan, incorporated by reference to Exhibit 10.1 to TSYS’ Current Report on Form 8-K filed on April 25, 2007.~~
~~10.12~~		~~Amended and Restated NetSpend Holdings, Inc. 2004 Equity~~ Incentive Plan for ~~Options and Restricted Shares Assumed by Total System Services, Inc., incorporated by reference to Exhibit 99.1 to TSYS’ Registration Statement on Form S-8 filed on July 1, 2013.~~
~~10.13~~		Term Loan Credit Agreement, dated as of July 9, 2019, among Global Payments Inc., as Borrower, Bank of America, N.A. as Administrative Agent, and the other Lenders party thereto, incorporated by reference to Exhibit 10.1 to Global Payments Inc.'s Current Report on Form 8-K filed on July 16, 2019.
~~10.14~~		Credit Agreement, dated as of July 9, 2019, among Global Payments Inc., as Borrower, the other Borrowers party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer and the other Lenders and L/C Issuers party thereto, incorporated by reference to Exhibit 10.2 to Global Payments Inc.'s Current Report on Form 8-K filed on July 16, 2019.Executive Officers (calendar 2020).
31.1*		Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following financial information from the Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2019,~~March 31, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) the Unaudited Consolidated Statements of Income; (ii) the Unaudited Consolidated Statements of Comprehensive ~~Income;~~Income (Loss); (iii) the Consolidated Balance Sheets; (iv) the Unaudited Consolidated Statements of Cash Flows; (v) the Unaudited Consolidated Statements of Changes in Equity; and (vi) the Notes to Unaudited Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

______________________



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

SIGNATURES

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



		Global Payments Inc.
		(Registrant)

Date: ~~October 31, 2019~~May 6, 2020		/s/ Paul M. Todd
		Paul M. Todd
		Senior Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

4635



Shares of TSYS common stock issued and outstanding (including Single-Trigger Awards)	177,643
Exchange Ratio	0.8101
Shares of Global Payments common stock issued to TSYS shareholders	143,909
Price per share of Global Payments common stock	$	163.74
Fair value of common stock issued to TSYS shareholders⁽¹⁾	23,563,568
Value of Replacement Awards attributable to purchase consideration	207,821
Cash paid to TSYS shareholders in lieu of fractional shares	1,352
Total purchase consideration transferred to TSYS shareholders	23,772,741
Repayment of TSYS's unsecured revolving credit facility (including accrued interest and fees)	702,212
Total purchase consideration	$	24,474,953



	Estimated Fair Values		Weighted-Average Estimated Amortization Periods

	(in thousands)		(years)
Customer-related intangible assets	$	6,330,000	18
Contract-based intangible assets	1,810,000		20
Acquired technologies	1,810,000		7
Trademarks and trade names	1,070,000		12
Total estimated identified intangible assets	$	11,020,000	14



	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018
	Actual		Pro Forma		Actual		Pro Forma

	(in thousands)

Total revenues	$	1,105,941	$	1,993,089	$	857,670	$	1,864,534
Net income attributable to Global Payments	$	95,044	$	219,010	$	176,370	$	240,478



Cash and cash equivalents	$	7,540
Property and equipment	5,838
Identified intangible assets	188,294
Other assets	22,275
Deferred income liabilities	(47,610		)
Other liabilities	(31,350		)
Total identifiable net assets	144,987
Goodwill	265,214
Total purchase consideration	$	410,201



Cash and cash equivalents	$	7,657
Property and equipment	5,672
Identified intangible assets	419,500
Other assets	11,785
Deferred income tax liabilities	(94,044		)
Other liabilities	(15,647		)
Total identifiable net assets	334,923
Goodwill	371,962
Total purchase consideration	$	706,885



	Three Months Ended September 30, 2019
	North America		Europe		Asia-Pacific		TSYS		Total

	(in thousands)

Direct:
Relationship-led	$	310,389	$	114,562	$	29,829	$	—	$	454,780
Technology-enabled	369,147		50,388		28,851		—		448,386
	679,536		164,950		58,680		—		903,166
Wholesale	55,305		—		—		—		55,305
	734,841		164,950		58,680		—		958,471
TSYS	—		—		—		147,470		147,470
	$	734,841	$	164,950	$	58,680	$	147,470	$	1,105,941



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

	(in thousands)

Direct:
Relationship-led	$	254,593	$	105,468	$	33,612	$	—	$	393,673
Technology-enabled	317,206		52,116		22,759		—		392,081
	571,799		157,584		56,371		—		785,754
Wholesale	71,916		—		—		—		71,916
	643,715		157,584		56,371		—		857,670
TSYS	—		—		—		—		—
	$	643,715	$	157,584	$	56,371	$	—	$	857,670



	Nine Months Ended September 30, 2019
	North America		Europe		Asia-Pacific		TSYS		Total

	(in thousands)

Direct:
Relationship-led	$	882,026	$	319,781	$	93,990	$	—	$	1,295,797
Technology-enabled	1,061,094		148,387		85,321		—		1,294,802
	1,943,120		468,168		179,311		—		2,590,599
Wholesale	186,062		—		—		—		186,062
	2,129,182		468,168		179,311		—		2,776,661
TSYS	—		—		—		147,470		147,470
	$	2,129,182	$	468,168	$	179,311	$	147,470	$	2,924,131



	Nine Months Ended September 30, 2018
	North America		Europe		Asia-Pacific		TSYS		Total

	(in thousands)

Direct:
Relationship-led	$	725,874	$	300,642	$	101,225	$	—	$	1,127,741
Technology-enabled	896,982		155,850		68,549		—		1,121,381
	1,622,856		456,492		169,774		—		2,249,122
Wholesale	236,689		—		—		—		236,689
	1,859,545		456,492		169,774		—		2,485,811
TSYS	—		—		—		—		—
	$	1,859,545	$	456,492	$	169,774	$	—	$	2,485,811



	Balance Sheet Location	September 30, 2019			January 1, 2019

		(in thousands)

Assets:
Operating lease right-of-use assets:
Real estate	Other noncurrent assets	$	368,816		$	231,720
Computer equipment	Other noncurrent assets	85,961			—
Other	Other noncurrent assets	1,215			4,259
Total operating lease right-of-use-assets		455,992			235,979

Finance lease right-of-use assets:
Computer equipment	Property and equipment, net	$	22,020		$	—
Other	Property and equipment, net	4,702			—
		26,722			—
Less accumulated depreciation:
Computer equipment	Property and equipment, net	(470		)	—
Other	Property and equipment, net	(17		)	—
Total accumulated depreciation		(487		)	—
Total finance lease right-of-use assets		26,235			—
Total right-of-use assets⁽¹⁾		$	482,227		$	235,979

Liabilities:
Operating lease liabilities (current)	Accounts payable and accrued liabilities	$	88,280		$	37,339
Operating lease liabilities (noncurrent)	Other noncurrent liabilities	413,111			236,697
Finance lease liabilities (current)	Current portion of long-term debt	6,414			—
Finance lease liabilities (noncurrent)	Long-term debt	27,852			—
Total lease liabilities		$	535,657		$	274,036



	Operating Leases			Finance Leases

	(in thousands)

Year ending December 31,
Remainder of 2019	$	22,197		$	1,781
2020	106,212			7,328
2021	97,330			7,100
2022	86,099			7,066
2023	57,251			6,674
2024	47,250			6,597
2025 and thereafter	180,794			273
Total lease payments⁽¹⁾	597,133			36,819
Imputed interest	(95,742		)	(2,553		)
Total lease liabilities	$	501,391		$	34,266



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



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

	(in thousands)

Balance at June 30, 2019	$	(289,194	)	$	(47,313	)	$	(3,399	)	$	(339,906	)
Other comprehensive income (loss)	(58,415		)	(29,783		)	37			(88,161		)
Balance at September 30, 2019	$	(347,609	)	$	(77,096	)	$	(3,362	)	$	(428,067	)

Balance at June 30, 2018	$	(253,372	)	$	14,030		$	(4,287	)	$	(243,629	)
Other comprehensive income (loss)	(26,930		)	72			(58		)	(26,916		)
Balance at September 30, 2018	$	(280,302	)	$	14,102		$	(4,345	)	$	(270,545	)

3550 Lenox Road

(Address of principal executive offices)

(Zip Code)