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ACQUISITIONS | 9 Months Ended
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Sep. 30, 2019
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS The transactions described below were accounted for as business combinations, 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, 2019, including a reconciliation to the total purchase consideration, were as follows (in thousands):
Cash and cash equivalents |  | $ | 446,027 |
Accounts receivable |  | 443,783 |
Identified intangible assets |  | 11,020,000 |
Property and equipment |  | 695,560 |
Other assets |  | 1,476,290 |
Accounts payable and accrued liabilities |  | (594,558 | )
Debt |  | (3,295,284 | )
Deferred income tax liabilities |  | (2,843,643 | )
Other liabilities |  | (313,782 | )
Total identifiable net assets |  | 7,034,393 |
Goodwill |  | 17,440,560 |
Total purchase consideration |  | $ | 24,474,953 |
As of September 30, 2019, 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 arising from the acquisition of $17.4 billion, included in the TSYS segment as of September 30, 2019, 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, 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
| (in thousands)
Total revenues | $ | 2,924,131 |  |  | $ | 5,866,522 |  |  | $ | 2,485,811 |  |  | $ | 5,469,240 |
Net income attributable to Global Payments | $ | 327,842 |  |  | $ | 614,317 |  |  | $ | 376,838 |  |  | $ | 407,899 |
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. 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 |  | $ | 7,657 |
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, the estimated fair values of customer-related and contract-based intangible assets were generally 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.

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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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