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ACQUISITIONS | 12 Months Ended
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Dec. 31, 2018
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS The transactions described below were accounted for as business combinations, which requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date. SICOM On October 17, 2018, we acquired SICOM Systems, Inc. ("SICOM") for total purchase consideration of $409.2 million, which we funded with cash on hand and by drawing on our Revolving Credit Facility (described in "Note 8—Long-Term Debt and Lines of Credit"). SICOM is a provider of end-to-end enterprise, cloud-based software solutions and other technologies to quick service restaurants and food service management companies. SICOM's technologies are complementary to our existing Xenial solutions, and we believe this acquisition will expand our software-driven payments strategy by enabling us to increase our capabilities and expand on our existing presence in the restaurant vertical market. Prior to the acquisition, SICOM was indirectly owned by a private equity investment firm where one of our board members is a partner and investor. His direct interest in the transaction was approximately $1.1 million, the amount distributed to him based on his investment interest in the fund of the private equity firm that sold SICOM to us. Based on consideration of all relevant information, the audit committee of our board of directors recommended that the board approve the acquisition of SICOM, which it did. The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of December 31, 2018, including a reconciliation to the total purchase consideration, were as follows (in thousands):
Cash and cash equivalents |  | $ | 7,540 |
Property and equipment |  | 5,943 |
Identified intangible assets |  | 188,294 |
Other assets |  | 22,278 |
Deferred income taxes |  | (48,448 | )
Other liabilities |  | (31,250 | )
Total identifiable net assets |  | 144,357 |
Goodwill |  | 264,844 |
Total purchase consideration |  | $ | 409,201 |
As of December 31, 2018, we considered these balances to be provisional because we were still in the process of determining the final purchase consideration, which is subject to adjustment pursuant to the purchase agreement, and gathering and reviewing information to support the valuations of the assets acquired and liabilities assumed. Goodwill arising from the acquisition of $264.8 million, included in the North America segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining our existing businesses. We expect that approximately $50 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 |  |  | 5
Covenants-not-to-compete | 6,880 |  |  | 5
Total estimated acquired intangible assets | $ | 188,294 |  |  | 10
Transaction costs associated with the acquisition of SICOM were not material, and the revenues and operating income of SICOM were not material to our consolidated results of operations during the year ended December 31, 2018. The historical revenues and operating income of SICOM were not material to our historical consolidated results of operations for the purpose of presenting unaudited pro forma information for the years ended December 31, 2018 and 2017. AdvancedMD On September 4, 2018, we acquired AdvancedMD, Inc. ("AdvancedMD") for total purchase consideration of $706.9 million, which we funded with cash on hand and by drawing on our Revolving Credit Facility. AdvancedMD is a provider of cloud-based enterprise software solutions to small-to-medium sized ambulatory care physician practices in the United States. We believe this acquisition will expand our software-driven payments strategy by enabling us to enter the healthcare vertical market, a large and fragmented market with strong payment fundamentals and attractive growth opportunities. The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of December 31, 2018, including a reconciliation to the total purchase consideration, were as follows (in thousands):
Cash and cash equivalents |  | $ | 7,657 |
Property and equipment |  | 5,672 |
Identified intangible assets |  | 419,500 |
Other assets |  | 11,958 |
Deferred income taxes |  | (98,979 | )
Other liabilities |  | (15,624 | )
Total identifiable net assets |  | 330,184 |
Goodwill |  | 376,701 |
Total purchase consideration |  | $ | 706,885 |
During the fourth quarter of 2018, we recorded adjustments to increase the estimated acquisition-date fair value of identified intangible assets by approximately $115 million to increase the estimated acquisition-date fair value of deferred income tax liabilities by approximately $24 million and to decrease the estimated acquisition-date fair value of goodwill by approximately $92 million. The adjustments were the result of our refinement of certain estimates made as of September 30, 2018. As of December 31, 2018, we considered these balances to be provisional because we were still in the process of gathering and reviewing information to support the valuation of the assets acquired and liabilities assumed. Goodwill arising from the acquisition of $376.7 million, included in the North America segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining our existing businesses. 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 acquired intangible assets | $ | 419,500 |  |  | 10
Transaction costs associated with the acquisition of AdvancedMD were not material, and the revenues and operating income of AdvancedMD were not material to our consolidated results of operations during the year ended December 31, 2018. The historical revenues and operating income of AdvancedMD were not material to our historical consolidated results of operations for the purpose of presenting unaudited pro forma information for the years ended December 31, 2018 and 2017. ACTIVE Network We acquired the communities and sports divisions of Athlaction Topco, LLC ("ACTIVE Network") on September 1, 2017, for total purchase consideration of $1.2 billion. ACTIVE Network delivers cloud-based enterprise software, including payment technology solutions, to event organizers in the communities and health and fitness markets. This acquisition aligns with our technology-enabled, software-driven strategy and adds an enterprise software business operating in two additional vertical markets that we believe offer attractive growth fundamentals. The following table summarizes the cash and non-cash components of the consideration transferred on September 1, 2017 (in thousands):
Cash consideration paid to ACTIVE Network stockholders |  | $ | 599,497 |
Fair value of Global Payments common stock issued to ACTIVE Network stockholders |  | 572,079 |
Total purchase consideration |  | $ | 1,171,576 |
We funded the cash consideration primarily by drawing on our Revolving Credit Facility. The acquisition-date fair value of 6,357,509 shares of our common stock issued to the sellers was determined based on the share price of our common stock as of the acquisition date and the effect of certain transfer restrictions. The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, provisionally determined as of December 31, 2017 and as subsequently revised for measurement-period adjustments, including a reconciliation to the total purchase consideration, were as follows:
| Provisional at December 31, 2017 |  | Measurement- Period Adjustments |  | Final
| (in thousands)
Cash and cash equivalents | $ | 42,913 |  |  | $ | — |  |  | $ | 42,913 |
Property and equipment | 21,985 |  |  | (133 | ) |  | 21,852 |
Identified intangible assets | 410,545 |  |  | — |  |  | 410,545 |
Other assets | 87,240 |  |  | (97 | ) |  | 87,143 |
Deferred income taxes | (31,643 | ) |  | 4,003 |  |  | (27,640 | )
Other liabilities | (144,132 | ) |  | (3,349 | ) |  | (147,481 | )
Total identifiable net assets | 386,908 |  |  | 424 |  |  | 387,332 |
Goodwill | 784,668 |  |  | (424 | ) |  | 784,244 |
Total purchase consideration | $ | 1,171,576 |  |  | $ | — |  |  | $ | 1,171,576 |
The measurement-period adjustments were the result of continued refinement of certain estimates, primarily those regarding the measurement of certain contingencies and deferred income taxes. Goodwill of $784.2 million arising from the acquisition, included in the North America operating segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining our existing businesses. We expect that approximately 80% of the goodwill will be deductible for income tax purposes. The following table reflects the estimated fair values of the identified intangible assets and the respective weighted-average estimated amortization periods:
| Estimated Fair Values |  | Weighted-Average Estimated Amortization Periods
| (in thousands) |  | (years)
Customer-related intangible assets | $ | 189,000 |  |  | 17
Acquired technologies | 153,300 |  |  | 9
Trademarks and trade names | 59,400 |  |  | 15
Covenants-not-to-compete | 8,845 |  |  | 3
Total estimated acquired intangible assets | $ | 410,545 |  |  | 13
Heartland We merged with Heartland on April 22, 2016 for total purchase consideration of $3.9 billion. The merger significantly expanded our small and medium-sized enterprise distribution, customer base and vertical reach in the United States. The following table summarizes the cash and non-cash components of the consideration transferred on April 22, 2016 (in thousands):
Cash consideration paid to Heartland stockholders |  | $ | 2,043,362 |
Fair value of Global Payments common stock issued to Heartland stockholders |  | 1,879,458 |
Total purchase consideration |  | $ | 3,922,820 |
The merger date fair value of common stock issued to Heartland stockholders and equity award holders was determined based on 38.4 million shares of Heartland common stock, including common stock outstanding and equity awards for which vesting accelerated in accordance with the Merger Agreement, multiplied by the exchange ratio of 0.6687 and the closing share price of Global Payments common stock as of April 22, 2016 of $73.29 per share. The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed provisionally determined as of December 31, 2016 and as subsequently revised for measurement-period adjustments, including a reconciliation to the total purchase consideration, were as follows:
| Provisional at December 31, 2016 |  | Measurement- Period Adjustments |  | Final
| (in thousands)
Cash and cash equivalents | $ | 304,747 |  |  | $ | — |  |  | $ | 304,747 |
Accounts receivable | 70,385 |  |  | — |  |  | 70,385 |
Prepaid expenses and other assets | 103,090 |  |  | (5,131 | ) |  | 97,959 |
Identified intangible assets | 1,639,040 |  |  | — |  |  | 1,639,040 |
Property and equipment | 106,583 |  |  | — |  |  | 106,583 |
Debt | (437,933 | ) |  | — |  |  | (437,933 | )
Accounts payable and accrued liabilities | (457,763 | ) |  | (65 | ) |  | (457,828 | )
Settlement processing obligations | (36,578 | ) |  | (3,727 | ) |  | (40,305 | )
Deferred income taxes | (518,794 | ) |  | 18,907 |  |  | (499,887 | )
Other liabilities | (64,938 | ) |  | (33,495 | ) |  | (98,433 | )
Total identifiable net assets | 707,839 |  |  | (23,511 | ) |  | 684,328 |
Goodwill | 3,214,981 |  |  | 23,511 |  |  | 3,238,492 |
Total purchase consideration | $ | 3,922,820 |  |  | $ | — |  |  | $ | 3,922,820 |
The measurement-period adjustments were the result of continued refinement of certain estimates, particularly regarding certain tax positions and deferred income taxes. Goodwill of $3.2 billion arising from the merger, included in the North America segment, was attributable to expected growth opportunities, an assembled workforce and potential synergies from combining our existing businesses, and is not deductible for income tax purposes. During the year ended December 31, 2016, we incurred transaction costs in connection with the merger of $24.7 million, which were recorded in selling, general and administrative expenses in the consolidated statements of income. The following table reflects the estimated fair values of the identified intangible assets and the respective weighted-average estimated amortization periods:
| Estimated Fair Values |  | Weighted-Average Estimated Amortization Periods
| (in thousands) |  | (years)
Customer-related intangible assets | $ | 977,400 |  |  | 15
Acquired technologies | 457,000 |  |  | 5
Trademarks and trade names | 176,000 |  |  | 7
Covenants-not-to-compete | 28,640 |  |  | 1
Total estimated acquired intangible assets | $ | 1,639,040 |  |  | 11
FIS Gaming Business On June 1, 2015, we acquired certain assets of Certegy Check Services, Inc., a wholly-owned subsidiary of Fidelity National Information Services, Inc. ("FIS"). Under the purchase arrangement, we acquired substantially all of the assets of its gaming business related to licensed gaming operators (the "FIS Gaming Business"), including relationships with gaming clients in approximately 260 locations as of the acquisition date, for $237.5 million, funded from borrowings on our Revolving Credit Facility and cash on hand. We acquired the FIS Gaming Business to expand our direct distribution and service offerings in the gaming market. The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, including a reconciliation to the total purchase consideration, were as follows (in thousands):
Customer-related intangible assets |  | $ | 143,400 |
Liabilities |  | (150 | )
Total identifiable net assets |  | 143,250 |
Goodwill |  | 94,250 |
Total purchase consideration |  | $ | 237,500 |
Goodwill arising from the acquisition, included in the North America segment, was attributable to an expected growth opportunities, including cross-selling opportunities at existing and acquired gaming client locations and operating synergies in the gaming business, and an assembled workforce. Goodwill associated with this acquisition is deductible for income tax purposes. The customer-related intangible assets have an estimated amortization period of 15 years. Valuation of Identified Intangible Assets For the acquisitions discussed above, the estimated fair values of customer-related intangible assets were determined using the income approach, which was based on projected cash flows discounted 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. The discount rates used represented the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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