GLOBAL PAYMENTS INC. 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 endedDecember 31, 2020 . 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.
Executive Overview
We are a leading payments technology company delivering innovative software and services to our customers globally. Our technologies, services and team member expertise allow us to provide a broad range of solutions that enable our customers to operate their businesses more efficiently across a variety of channels around the world. OnSeptember 18, 2019 , we merged with Total System Services, Inc. ("TSYS") (the "Merger"). We continue to execute on merger and integration activities, such as combining business operations, streamlining technology infrastructure, eliminating duplicative corporate and operational support structures and realizing scale efficiencies. We also continue to invest in software and hardware to support the development of new technologies, infrastructure to support our growing business and the continued consolidation and enhancement of our operating platforms.
Highlights related to our financial condition at
•Consolidated revenues for the three and six months endedJune 30, 2021 increased to$2,137.4 million and$4,127.4 million , respectively, compared to$1,672.0 million and$3,575.6 million , respectively, for the prior year. The increase in consolidated revenues is primarily due to an increase in transaction volumes as compared to the reduced transaction levels in the prior year driven by the effects of COVID-19. We also saw sequential improvement from the first quarter of 2021 driven largely by the increase in transaction volumes from the continued easing of COVID-19 restrictions. •Consolidated operating income for the three and six months endedJune 30, 2021 increased to$362.6 million and$637.8 million , respectively, compared to$107.6 million and$351.6 million , respectively, for the prior year. Operating margin for the three and six months endedJune 30, 2021 increased to 17.0% and 15.5%, respectively, compared to 6.4% and 9.8%, respectively, for the prior year. The increase in consolidated operating income and operating margin for the three and six months endedJune 30, 2021 is primarily due to the increase in revenues and favorable effects of Merger-related cost synergies. •OnJune 10, 2021 , we acquired Zego, a real estate technology company that provides a comprehensive resident experience management software and digital commerce solutions to property managers, primarily inthe United States . This acquisition aligns with our technology-enabled, software driven strategy and expands our business into a new vertical market. We paid cash consideration of approximately$933 million , which we funded with cash on hand and by drawing on our revolving credit facility. •OnFebruary 26, 2021 , we issued$1.1 billion aggregate principal amount of 1.200% senior unsecured notes dueFebruary 2026 . We used the net proceeds from this offering to fund the redemption in full of the 3.800% senior unsecured notes dueApril 2021 , to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes. 25 -------------------------------------------------------------------------------- Table of Contents COVID-19 Update InMarch 2020 , theWorld Health Organization declared the outbreak of the COVID-19 virus a global pandemic. Since that time, the global economy has been, and continues to be, affected by COVID-19. The pandemic has caused and may continue to cause significant disruptions to businesses and markets worldwide as the virus spreads or has a resurgence in certain jurisdictions. Beginning inmid-March 2020 , our financial results were affected by decreased spending and transaction volumes, as governments implemented measures in an effort to contain the virus, including lockdowns, physical distancing, travel restrictions, limitations on public gatherings, work from home and restrictions on nonessential businesses. We saw improvement in our financial results and positive trends during the latter half of 2020 and into the first half of 2021 as certain governments began to gradually ease restrictions and provide economic stimulus and vaccine distribution accelerated, leading to an increase in spending and transaction volumes. While we continue to see signs of economic recovery, which has positively affected our financial results in 2021 as compared to the prior year, the rate of recovery on a global basis has been and may continue to be affected by additional developments related to COVID-19. Early actions we took to preserve our available capital and provide financial flexibility in response to the effects of COVID-19 on our business, including the temporary reduction of certain operating expenses, employee compensation costs, other discretionary spending and planned capital expenditures, added to the strength of our financial profile. We continue to closely monitor the COVID-19 pandemic; however, the implications on future global economic conditions and related effects on our business and financial condition are difficult to predict due to continuing uncertainties around the ultimate severity, scope and duration of the pandemic, the availability and effectiveness of treatments or vaccines, resurgence risk as new virus variants are identified and the direction or extent of current or future restrictive actions that may be imposed by governments or public health authorities. While the COVID-19 pandemic may continue to have an adverse effect on our revenues and earnings in 2021, we currently expect a continued recovery throughout the year. We expect to continue to make significant capital investments in the business, and we anticipate capital expenditures and other investments in the business during 2021 will return to pre-COVID-19 levels.
For a further discussion of trends, uncertainties and other factors that could
affect our future operating results related to the effects of the COVID-19
pandemic, see the section entitled "Risk Factors" in Item 1A in our Annual
Report on Form 10-K for the year ended
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Table of Contents
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. 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,
2020 , incorporated herein by reference, and "Note 12-Segment Information" in the
notes to the accompanying unaudited consolidated financial statements.
The following table sets forth key selected financial data for the three months
ended June 30, 2021 and 2020, 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 June 30, 2021 and
2020 is derived from the accompanying unaudited consolidated financial
statements included in Part I, Item 1 - Financial Statements.
Three Months Ended Three Months Ended
June 30, 2021 % of Revenues(1) June 30, 2020 % of Revenues(1) $ Change % Change
(dollar amounts in thousands)
Revenues:
Merchant Solutions $ 1,426,755 66.8 % $ 1,001,555 59.9 % $ 425,200 42.5 %
Issuer Solutions 505,932 23.7 % 470,025 28.1 % 35,907 7.6 %
Business and Consumer Solutions 227,355 10.6 % 216,722 13.0 % 10,633 4.9 %
Intersegment eliminations (22,605) (1.1) % (16,350) (1.0) % (6,255) 38.3 %
Consolidated revenues $ 2,137,437 100.0 % $ 1,671,952 100.0 % $ 465,485 27.8 %
Consolidated operating
expenses:
Cost of service $ 936,310 43.8 % $ 893,740 53.5 % $ 42,570 4.8 %
Selling, general and
administrative 838,569 39.2 % 670,638 40.1 % 167,931 25.0 %
Operating expenses $ 1,774,879 83.0 % $ 1,564,378 93.6 % $ 210,501 13.5 %
Operating income (loss)(2)(3):
Merchant Solutions $ 437,293 20.5 % $ 175,078 10.5 % $ 262,215 149.8 %
Issuer Solutions 74,806 3.5 % 58,027 3.5 % 16,779 28.9 %
Business and Consumer Solutions 42,283 2.0 % 48,195 2.9 % (5,912) (12.3) %
Corporate (191,824) (9.0) % (173,726) (10.4) % (18,098) 10.4 %
Operating income $ 362,558 17.0 % $ 107,574 6.4 % $ 254,984 237.0 %
Operating margin:
Merchant Solutions 30.6 % 17.5 % 13.1 %
Issuer Solutions 14.8 % 12.3 % 2.5 %
Business and Consumer Solutions 18.6 % 22.2 % (3.6) %
(1) Percentage amounts may not sum to the total due to rounding.
(2) 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."
(3) Operating loss for Corporate included acquisition and integration expenses of$76.8 million and$80.7 million during the three months endedJune 30, 2021 and 2020, respectively. 27 -------------------------------------------------------------------------------- Table of Contents The following table sets forth key selected financial data for the six months endedJune 30, 2021 and 2020, 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 six months endedJune 30, 2021 and 2020 is derived from the accompanying unaudited consolidated financial statements included in Part I, Item 1 - Financial Statements. Six Months Ended Six Months Ended June 30, 2021 % of Revenues(1) June 30, 2020 % of Revenues(1) $ Change % Change (dollar amounts in thousands) Revenues: Merchant Solutions$ 2,694,627 65.3 %$ 2,216,824 62.0 %$ 477,803 21.6 % Issuer Solutions 1,006,183 24.4 % 973,787 27.2 % 32,396 3.3 % Business and Consumer Solutions 470,941 11.4 % 420,668 11.8 % 50,273 12.0 % Intersegment eliminations (44,307) (1.1) % (35,729) (1.0) % (8,578) 24.0 % Consolidated revenues$ 4,127,444 100.0 %$ 3,575,550 100.0 %$ 551,894 15.4 % Consolidated operating expenses: Cost of service$ 1,861,556 45.1 %$ 1,827,611 51.1 %$ 33,945 1.9 % Selling, general and administrative 1,628,071 39.4 % 1,396,386 39.1 % 231,685 16.6 % Operating expenses$ 3,489,627 84.5 %$ 3,223,997 90.2 %$ 265,630 8.2 % Operating income (loss)(2)(3): Merchant Solutions$ 777,283 18.8 %$ 479,231 13.4 %$ 298,052 62.2 % Issuer Solutions 143,262 3.5 % 117,331 3.3 % 25,931 22.1 % Business and Consumer Solutions 104,205 2.5 % 79,307 2.2 % 24,898 31.4 % Corporate (386,933) (9.4) % (324,316) (9.1) % (62,617) 19.3 % Operating income$ 637,817 15.5 %$ 351,553 9.8 %$ 286,264 81.4 % Operating margin: Merchant Solutions 28.8 % 21.6 % 7.2 % Issuer Solutions 14.2 % 12.0 % 2.2 % Business and Consumer Solutions 22.1 % 18.9 % 3.2 %
(1) Percentage amounts may not sum to the total due to rounding.
(2) 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."
(3)Operating loss for Corporate included acquisition and integration expenses of$167.0 million and$150.4 million during the six months endedJune 30, 2021 and 2020, respectively. 28
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Revenues
Consolidated revenues for the three and six months endedJune 30, 2021 increased by 27.8% and 15.4%, respectively, to$2,137.4 million and$4,127.4 million , respectively, compared to$1,672.0 million and$3,575.6 million , respectively, for the prior year. Starting inmid-March 2020 , COVID-19 began to have an unfavorable effect on transaction volumes, which had an unfavorable effect on our revenues for the three and six months endedJune 30, 2020 . We saw improvements throughout the latter half of 2020 and into the first half of 2021, and revenues for the three and six months endedJune 30, 2021 increased as compared to the prior year primarily due to an increase in transaction volumes resulting from the continued easing of COVID-19 restrictions. While we continue to see signs of economic recovery, which has positively affected our financial results in 2021 as compared to the prior year, the rate of recovery on a global basis has been and may continue to be affected by additional developments related to COVID-19. Merchant Solutions Segment. Revenues from our Merchant Solutions segment for the three and six months endedJune 30, 2021 increased by 42.5% and 21.6%, respectively, to$1,426.8 million and$2,694.6 million , respectively, compared to$1,001.6 million and$2,216.8 million , respectively, for the prior year. Starting inmid-March 2020 , COVID-19 began to have an unfavorable effect on our revenues as a result of a reduction in transaction volumes and restrictions on certain of our customer businesses throughoutNorth America ,Europe andAsia Pacific . We saw improvement in our financial results during the latter half of 2020 and into the first half of 2021 as certain governments began to gradually ease pandemic-related restrictions and consumer and business spending increased as a result of government stimulus payments. Revenues for the three and six months endedJune 30, 2021 increased as compared to the prior year due to an increase in transaction volumes as compared to the reduced transaction levels in the prior year driven by the effects of COVID-19. We also saw sequential improvement from the first quarter of 2021, driven by the increase in transaction volumes from the continued easing of COVID-19 restrictions. Issuer Solutions Segment. Revenues from our Issuer Solutions segment for the three and six months endedJune 30, 2021 increased by 7.6% and 3.3%, respectively, to$505.9 million and$1,006.2 million , respectively, compared to$470.0 million and$973.8 million , respectively, for the prior year. Starting inmid-March 2020 , COVID-19 began to have an unfavorable effect on our revenues as a result of lower transaction volumes, particularly related to the processing of commercial cards. We saw improvement in our financial results during the latter half of 2020 and into the first half of 2021 as certain governments began to gradually ease pandemic-related restrictions. The increase in revenues for the three and six months endedJune 30, 2021 was primarily due to an increase in transaction volumes as compared to the reduced transaction levels in the prior year driven by the effects of COVID-19. Business and Consumer Solutions Segment. Revenues from our Business and Consumer Solutions segment for the three and six months endedJune 30, 2021 increased by 4.9% and 12.0%, respectively, to$227.4 million and$470.9 million , respectively, compared to$216.7 million and$420.7 million , respectively, for the prior year. Our Business and Consumer Solutions segment experienced an unfavorable effect on revenues starting inmid-March 2020 due to reduced consumer spending as a result of COVID-19. This unfavorable effect on our revenues for the three and six months endedJune 30, 2020 was partially mitigated by revenues in the second quarter of 2020 from individual stimulus payments and supplementary unemployment insurance distributions to our customers resulting from the Coronavirus Aid, Relief and Economic Security Act. We saw improvement in our financial results throughout the latter half of 2020 and into the first half of 2021 from increases in consumer spending as state and local governments inthe United States began to gradually ease restrictions. Increases in consumer spending also had a favorable effect on revenues during the six months endedJune 30, 2021 , including additional spending volumes driven by individual stimulus payments distributed to our customers bythe United States government primarily during the first quarter and continuing into the early portion of the second quarter of 2021. 29 -------------------------------------------------------------------------------- Table of Contents Operating Expenses Cost of Service. Cost of service for the three and six months endedJune 30, 2021 increased by 4.8% and 1.9%, respectively, to$936.3 million and$1,861.6 million , respectively, compared to$893.7 million and$1,827.6 million , respectively, for the prior year. Cost of service as a percentage of revenues decreased to 43.8% and 45.1% for the three and six months endedJune 30, 2021 , respectively, compared to 53.5% and 51.1%, respectively, for the prior year period. The increase in cost of service is primarily due to higher variable costs associated with the increase in revenues. The increase in costs of service also reflects an increase in amortization of acquired intangibles, which were$324.8 million and$314.0 million for the three months endedJune 30, 2021 and 2020, respectively, and$654.0 million and$628.3 million for the six months endedJune 30, 2021 and 2020, respectively. The decrease in cost of service as a percentage of revenues is primarily due to the favorable effects of the increase in revenues and Merger-related cost synergies. Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three and six months endedJune 30, 2021 increased by 25.0% and 16.6%, respectively, to$838.6 million and$1,628.1 million , respectively, compared to$670.6 million and$1,396.4 million , respectively, for the prior year. Selling, general and administrative expenses as a percentage of revenues were 39.2% and 39.4% for the three and six months endedJune 30, 2021 , respectively, compared to 40.1% and 39.1%, respectively, for the prior year. The increase in selling, general and administrative expenses is primarily due to an increase in variable selling and other costs related to the increase in revenues. Selling, general and administrative expenses included acquisition and integration expenses of$78.3 million and$82.2 million for the three months endedJune 30, 2021 and 2020, respectively and$170.1 million and$153.8 million for the six months endedJune 30, 2021 and 2020, respectively. Corporate. Corporate expenses for the three and six months endedJune 30, 2021 increased by$18.1 million and$62.6 million , respectively, to$191.8 million and$386.9 million , respectively, compared to$173.7 million and$324.3 million , respectively, for the prior year. The increase for the three and six months endedJune 30, 2021 is primarily due to higher employee compensation expense, including higher share-based compensation expense of$8.3 million and$17.7 million , respectively. Employee compensation costs were lower in the prior year as a result of certain temporary cost-saving actions taken to help mitigate the financial effects of the COVID-19 pandemic. The increase for the six months endedJune 30, 2021 also included higher acquisition and integration expenses of$16.6 million . During the three and six months endedJune 30, 2021 , Corporate expenses included acquisition and integration expenses of$76.8 million and$167.0 million , respectively, compared to$80.7 million and$150.4 million , respectively, for the prior year. Certain of these Merger-related integration activities resulted in the recognition of employee termination benefits. During the three months endedJune 30, 2021 and 2020, Corporate expenses included charges for employee termination benefits of$13.1 million and$24.1 million , respectively, which included$0.7 million and$1.7 million , respectively, of share-based compensation expense. During the six months endedJune 30, 2021 and 2020, Corporate expenses included charges for employee termination benefits of$38.3 million and$41.7 million , respectively, which included$1.2 million and$4.2 million , respectively, of share-based compensation expense. As ofJune 30, 2021 , the cumulative amount of recognized charges for employee termination benefits resulting from Merger-related integration activities was$178.7 million , which included$25.2 million of share-based compensation expense. We expect to incur additional charges as Merger-related integration activities continue in 2021.
Operating Income and Operating Margin
Consolidated operating income for the three and six months endedJune 30, 2021 increased to$362.6 million and$637.8 million , respectively, compared to$107.6 million and$351.6 million , respectively, for the prior year. Operating margin for the three and six months endedJune 30, 2021 increased to 17.0% and 15.5%, respectively, compared to 6.4% and 9.8%, respectively, for the prior year. The increase in consolidated operating income and operating margin for the three and six months endedJune 30, 2021 was primarily due to the increases in revenues. The unfavorable effects of COVID-19 on our revenues and incremental expenses directly related to COVID-19 contributed to the lower consolidated operating income and operating margin in the prior year. We saw improvement in our financial results and positive trends throughout the latter half of 2020 and into the first half of 2021 as a result of the recovery seen across our markets as COVID-19 restrictions eased. Further, Merger-related cost synergies had a favorable effect on operating income and operating margin for the three and six months endedJune 30, 2021 . The increase in consolidated operating income and operating margin for the three and six months endedJune 30, 2021 was partially offset by an increase in amortization of acquired intangibles of$10.8 million and$25.8 million , respectively, and an increase in employee compensation expense compared to the prior year, as a result of certain temporary 30 -------------------------------------------------------------------------------- Table of Contents cost-saving actions taken in the prior year to help mitigate the financial effects of the COVID-19 pandemic. Operating income and operating margin for the six months endedJune 30, 2021 also reflects an increase in acquisition and integration expenses of$16.6 million compared to the prior year. Segment Operating Income and Operating Margin. Operating income and operating margin in our Merchant Solutions and Issuer Solutions segments for the three and six months endedJune 30, 2021 , and in our Business and Consumer Solutions segment for the six months endedJune 30, 2021 , increased compared to the prior year due to the increase in revenues. We saw improvement in our financial results and positive trends throughout the latter half of 2020 and into the first half of 2021 as a result of the recovery seen across our geographic markets as COVID-19 restrictions eased and consumer and business spending increased as a result of government stimulus payments. Further, across all of our segments, Merger-related cost synergies had a favorable effect on segment operating income and operating margin for the three and six months endedJune 30, 2021 . In our Business and Consumer Solutions segment, operating income and operating margin for the three and six months endedJune 30, 2020 included the favorable effect from our customers loading individual stimulus payments and supplementary unemployment insurance distributions during the second quarter of 2020, as well as lower costs associated with certain temporary cost-saving actions that were taken to help mitigate the financial effects of the COVID-19 pandemic. Spending volumes driven by additional stimulus payments distributed bythe United States government in early 2021 also had a favorable effect on operating income and operating margin, primarily in the first quarter of 2021.
Other Income/Expense, Net
Interest and other expense for the three and six months endedJune 30, 2021 decreased by$2.3 million and$11.8 million , respectively, compared to the prior year, to$80.6 million and$163.7 million , respectively, primarily due to the recognition of a loss during the six months endedJune 30, 2020 related to a decline in fair value for an investment held in a strategic partner that was subsequently divested. Income Tax Expense Our effective income tax rates for the three months endedJune 30, 2021 and 2020 were 21.2% and 3.0%, respectively, and our effective income tax rates for the six months endedJune 30, 2021 and 2020 were 16.8% and 9.0%, respectively. The increase in our effective tax rate for the three and six months endedJune 30, 2021 from the prior year is primarily due to the effect of higher income before income taxes as compared to the prior year and the effect of enacted tax law changes in theU.K. which required a remeasurement of deferred tax balances during the three months endedJune 30, 2021 . The prior year effective tax rates were unusually low due to the effects of permanent differences on the lower income before income taxes, which drove a reduction in the estimated annual effective tax rate in the second quarter since the amounts of certain of our permanent differences do not vary with income before income taxes.
Net Income Attributable to
Net income attributable toGlobal Payments increased to$263.6 million and$460.3 million for the three and six months endedJune 30, 2021 , respectively, compared to$37.3 million and$180.9 million , respectively, for the prior year, reflecting the increase in operating income and additional equity in income of equity method investments. Equity in income of equity method investments increased primarily due to increases in transaction volumes and appreciation in fair market value of investments held at certain investees.
Diluted Earnings per Share
Diluted earnings per share was$0.89 and$1.55 for the three and six months endedJune 30, 2021 , respectively, compared to$0.12 and$0.60 , respectively, for the prior year. Diluted earnings per share for the three and six months endedJune 30, 2021 reflects the increase in net income and a decrease in the weighted-average number of shares outstanding. 31 -------------------------------------------------------------------------------- Table of Contents 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 credit facilities. Cash flow from operating activities is used to make planned capital investments in our business, to pursue acquisitions that meet our corporate objectives, to pay dividends, to pay principal and interest on our outstanding debt and to repurchase shares of our common stock. Accumulated cash balances are invested in high-quality, marketable short-term instruments. 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 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 networks. 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. Early actions taken to preserve our available capital and provide financial flexibility in response to the effects of COVID-19 on our business, including the temporary reduction of certain operating expenses, employee compensation costs, other discretionary spending and planned capital expenditures, added to the strength of our financial profile. 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. AtJune 30, 2021 , we had cash and cash equivalents totaling$1,799.5 million . Of this amount, we considered$970.3 million to be available for general purposes, of which$33.3 million is undistributed foreign earnings considered to be indefinitely reinvested outsidethe United States . The available cash of$970.3 million does 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 as a Merchant Reserve 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 include amounts collected prior to remittance to or at the direction of our customers. We also had restricted cash of$140.2 million as ofJune 30, 2021 , representing amounts deposited by customers for prepaid card transactions. These balances are considered cardholder funds held and are subject to local regulatory restrictions requiring appropriate segregation and restriction in their use. Operating activities provided net cash of$1,109.6 million and$960.3 million for the six months endedJune 30, 2021 and 2020, 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, including changes in settlement processing assets and obligations. The increase in cash flows from operating activities from the prior year was primarily due to the increase in earnings after the adjustment for certain noncash items, including amortization of acquired intangibles and depreciation and amortization of property and equipment. We used net cash in investing activities of$1,161.9 million and$270.3 million during the six months endedJune 30, 2021 and 2020, respectively, primarily to fund acquisitions and capital expenditures. During the six months endedJune 30, 2021 and 2020, we used cash of$943.1 million and$74.1 million , respectively, for acquisitions. We made capital expenditures of$219.6 million and$208.4 million during the six months endedJune 30, 2021 and 2020, respectively. These investments include software and hardware to support the development of new technologies, infrastructure to support our growing business and the continued consolidation and enhancement of our operating platforms. We expect to continue to make significant capital investments in the business, and we anticipate capital expenditures and other investments in the business during 2021 will return to pre-COVID-19 levels. 32 -------------------------------------------------------------------------------- Table of Contents Financing activities include borrowings and repayments 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 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. We used net cash in financing activities of$91.8 million and$510.1 million during the six months endedJune 30, 2021 and 2020, respectively. Proceeds from long-term debt were$2,821.0 million and$1,867.0 million for the six months endedJune 30, 2021 and 2020, respectively. Repayments of long-term debt were$1,830.3 million and$1,809.2 million for the six months endedJune 30, 2021 and 2020, respectively. Proceeds from and repayments of long-term debt consist of borrowings and repayments that we make with available cash, from time-to-time, under our revolving credit facility, as well as scheduled principal repayments we make on our term loans. OnFebruary 26, 2021 , we issued$1.1 billion aggregate principal amount of 1.200% senior unsecured notes dueFebruary 2026 . We used the net proceeds from this offering to fund the redemption in full of the 3.800% senior unsecured notes dueApril 2021 , to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes. OnMay 15, 2020 , we issued$1.0 billion aggregate principle senior unsecured notes. We used the net proceeds from this offering to repay a portion of the outstanding indebtedness on our revolving credit facility and for general corporate purposes. Activity under our settlement lines of credit is affected primarily by timing of month-end and transaction volume. During the six months endedJune 30, 2021 , we had net borrowings from settlement lines of credit of$134.2 million . During the six months endedJune 30, 2020 , we had net repayments of settlement lines of credit of$25.5 million . We repurchase our common stock mainly through open market repurchase plans and, at times, through accelerated share repurchase ("ASR") programs. During the six months endedJune 30, 2021 and 2020, we used$1,072.9 million and$421.2 million , respectively, to repurchase shares of our common stock. The activity for the six months endedJune 30, 2021 included repurchase of a total of 2,491,161 shares at an average price of$200.71 per share under an ASR program. OnFebruary 10, 2021 , we entered into an ASR agreement with a financial institution to repurchase an aggregate of$500 million of our common stock during the ASR program purchase period, which ended onMarch 31, 2021 .
As of
We paid dividends to our common shareholders in the amounts of
Long-Term Debt and Lines of Credit
Senior Unsecured Notes
We have$7.5 billion in aggregate principal amount of senior unsecured notes, which mature at various dates ranging fromJune 2023 toAugust 2049 . Interest on the senior notes is payable semi-annually at various dates. Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time-to-time at the redemption prices set forth in the related indenture. OnFebruary 26, 2021 , we issued$1.1 billion in aggregate principal amount of 1.200% senior unsecured notes dueMarch 2026 . We incurred debt issuance costs of approximately$8.6 million , including underwriting fees, fees for professional services and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet atJune 30, 2021 . Interest on the notes is payable semi-annually in arrears onMarch 1 andSeptember 1 of each year, commencingSeptember 1, 2021 . The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. We used the net proceeds from this offering to fund the redemption in full of the 3.800% senior unsecured notes dueApril 2021 , to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes. 33
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Senior Unsecured Credit Facilities
As of
We may issue standby letters of credit of up to$250 million in the aggregate under the revolving credit facility. Outstanding letters of credit under the revolving credit facility reduce the amount of borrowings available to us. The amounts available to borrow under the revolving credit facility are also determined by a financial leverage covenant. As ofJune 30, 2021 , the total available commitments under the revolving credit facility were$2.3 billion .
Compliance with Covenants
The senior unsecured term loan and revolving credit facility contain customary conditions to funding, affirmative covenants, negative covenants, financial covenants and events of default. As ofJune 30, 2021 , financial covenants under the 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 ofJune 30, 2021 .
Settlement Lines of Credit
In various markets where we do business, we have specialized lines of credit, that 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 lines of credit may exceed the stated credit limit. As ofJune 30, 2021 , a total of$57.3 million of cash on deposit was used to determine the available credit. As ofJune 30, 2021 , we had$487.5 million outstanding under these lines of credit with additional capacity to fund settlement of$1,393.9 million . During the six months endedJune 30, 2021 , the maximum and average outstanding balances under these lines of credit were$813.8 million and$482.7 million , respectively. The weighted-average interest rate on these borrowings was 2.05% atJune 30, 2021 . See "Note 5-Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements for further information about our borrowing agreements.
Commitments and Contractual Obligations
During the six months endedJune 30, 2021 , our commitments and contractual obligations increased from the amounts disclosed in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations-Commitments and Contractual Obligations" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . The increase primarily relates to the acquisition of software, technology infrastructure and related services. Our estimated purchase obligations as ofJune 30, 2021 were$285.3 million during the remainder of 2021,$237.2 million during 2022,$305.3 million during 2023 and 2024,$335.7 million during 2025 and 2026 and$754.0 million thereafter for a total of$1,917.5 million .
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 theFinancial 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. 34
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Forward-Looking Statements
Some of the statements we use in this report, and in some of the documents we incorporate by reference in this report, contain forward-looking statements concerning our business operations, economic performance and financial condition, including in particular: our business strategy and means to implement the strategy; measures of future results of operations, such as revenues, expenses, operating margins, income tax rates, and earnings per share; other operating metrics such as shares outstanding and capital expenditures; the effects of the COVID-19 pandemic on our business; our success and timing in developing and introducing new services and expanding our business; and statements about the benefits of our acquisitions, including future financial and operating results, the company's plans, objectives, expectations and intentions, and the successful integration of our future acquisitions or completion of anticipated benefits and strategic initiatives. You can sometimes identify forward-looking statements by our use of the words "believes," "anticipates," "expects," "intends," "plan," "forecast," "guidance" and similar expressions. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Although we believe that the plans and expectations reflected in or suggested by our forward-looking statements are reasonable, those statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond our control, cannot be foreseen and reflect future business decisions that are subject to change. Accordingly, we cannot guarantee you that our plans and expectations will be achieved. Our actual revenues, revenue growth rates and margins, other results of operations and shareholder values could differ materially from those anticipated in our forward-looking statements as a result of many known and unknown factors, many of which are beyond our ability to predict or control. Important factors, among others, that may otherwise cause actual events or results to differ materially from those anticipated by such forward-looking statements or historical performance include the effects of global economic, political, market, health and social events or other conditions, including the effects and duration of the COVID-19 pandemic and containment taken in response; 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, results of operations and liquidity; our ability to meet our liquidity needs in light of the effects of the COVID-19 pandemic or otherwise; the outcome of any legal proceedings that may be instituted against the Company or our directors; difficulties, delays and higher than anticipated costs related to integrating the businesses ofGlobal Payments and TSYS, including with respect to implementing controls to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; failing to fully realize anticipated cost savings and other anticipated benefits of the Merger when expected or at all; business disruptions from the Merger integration that may harm our business, including current plans and operations; failing to comply with the applicable requirements ofVisa , Mastercard or other payment networks or card schemes or changes in those requirements; the ability to maintainVisa and Mastercard registration and financial institution sponsorship; the ability to retain and hire key personnel; the diversion of management's attention from ongoing business operations; the continued availability of capital and financing; increased competition in the markets in which we operate and our ability to increase our market share in existing markets and expand into new markets; our ability to safeguard our data; risks associated with our indebtedness, foreign currency exchange and interest rate risks; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards, including privacy and cybersecurity laws and regulations; and events beyond our control and other factors presented in "Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year endedDecember 31, 2020 , which we advise you to review. These cautionary statements qualify all of our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date they are made and should not be relied upon as representing our plans and expectations as of any subsequent date. While we may elect 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.
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