# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

x	ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE

SECURITIES	EXCHANGE	ACT	OF	1934

For	the	fiscal	year	ended	December	31,	2018 OR

o	TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE SECURITIES	EXCHANGE	ACT	OF	1934 For	the	transition	period	from														to Commission	File	No.	001-16111

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# GLOBAL	PAYMENTS	INC.

(Exact	name	of	registrant	as	specified	in	charter)

Georgia

(State	or	other	jurisdiction	of incorporation	or	organization)

3550	Lenox	Road,	Atlanta,	Georgia

(Address	of	principal	executive	offices)

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Title	of	each	class

Common	Stock,	No	Par	Value

(I.R.S.	Employer Identification	No.)

(Zip	Code)

Name	of	each	exchange

on	which	registered

# New	York	Stock	Exchange

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:

(Title	of	Class)

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.	Yes		x		No	o

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	15(d)	of	the	Act.	Yes	o	No	x

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		x		No	o

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	x			No	o

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§	229.405	of	this	chapter)	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.	o

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	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	x								Accelerated	filer	o

Non-accelerated	filer	o								Smaller	reporting	company	o

Emerging	growth	company	o

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act).	Yes	o			No	x

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.	o

The	aggregate	market	value	of	the	voting	and	non-voting	common	equity	held	by	non-affiliates	computed	by	reference	to	the	price	at	which	the	common	equity	was	last	sold,	or	the	average	bid and	asked	price	of	such	common	equity,	as	of	the	last	business	day	of	the	registrant's	most	recently	completed	second	fiscal	quarter	was	$17,478,395,120.	The	number	of	shares	of	the	registrant's common	stock	outstanding	at	February	19,	2019	was	157,603,304	shares.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Specifically	identified	portions	of	the	registrant's	proxy	statement	for	the	2019	annual	meeting	of	shareholders	are	incorporated	by	reference	in	Part	III.

# PART	I

|  | GLOBAL	PAYMENTS	INC.<br>2018	ANNUAL	REPORT	ON	FORM	10-K<br>PART	I | Page |
| :--- | :--- | :--- |
| ITEM\t1. | BUSINESS | 4 |
| ITEM\t1A. | RISK\tFACTORS | 14 |
| ITEM\t2. | PROPERTIES | 26 |
| ITEM\t3. | LEGAL\tPROCEEDINGS | 26 |
|  | PART\tII |  |
|  | MARKET\tFOR\tREGISTRANT'S\tCOMMON\tEQUITY,\tRELATED\tSTOCKHOLDER\tMATTERS\tAND |  |
| ITEM\t5. | ISSUER\tPURCHASES\tOF\tEQUITY\tSECURITIES | 27 |
| ITEM\t6. | SELECTED\tFINANCIAL\tDATA | 30 |
|  | MANAGEMENT'S\tDISCUSSION\tAND\tANALYSIS\tOF\tFINANCIAL\tCONDITION\tAND\tRESULTS\tOF |  |
| ITEM\t7. | OPERATIONS | 31 |
| ITEM\t7A. | QUANTITATIVE\tAND\tQUALITATIVE\tDISCLOSURES\tABOUT\tMARKET\tRISK | 50 |
| ITEM\t8. | FINANCIAL\tSTATEMENTS\tAND\tSUPPLEMENTARY\tDATA | 51 |
|  | CHANGES\tIN\tAND\tDISAGREEMENTS\tWITH\tACCOUNTANTS\tON\tACCOUNTING\tAND\tFINANCIAL |  |
| ITEM\t9. | DISCLOSURE | 99 |
| ITEM\t9A. | CONTROLS\tAND\tPROCEDURES | 99 |
|  | PART\tIII |  |
| ITEM\t10. | DIRECTORS,\tEXECUTIVE\tOFFICERS\tAND\tCORPORATE\tGOVERNANCE | 101 |
| ITEM\t11. | \t\t EXECUTIVE\tCOMPENSATION | 101 |
|  | SECURITY\tOWNERSHIP\tOF\tCERTAIN\tBENEFICIAL\tOWNERS\tAND\tMANAGEMENT\tAND\tRELATED |  |
| ITEM\t12. | STOCKHOLDER\tMATTERS | 101 |
| ITEM\t13. | \t\t CERTAIN\tRELATIONSHIPS\tAND\tRELATED\tTRANSACTIONS,\tAND\tDIRECTOR\tINDEPENDENCE | 101 |
| ITEM\t14. | PRINCIPAL\tACCOUNTING\tFEES\tAND\tSERVICES | 102 |
|  | PART\tIV |  |
| ITEM\t15. | EXHIBITS,\tFINANCIAL\tSTATEMENT\tSCHEDULES | 103 |
|  | SIGNATURES | 107 |

Table	of	Contents

# EXPLANATORY	NOTE	REGARDING	TRANSITION	PERIOD

In	2016,	we	changed	our	fiscal	year-end	from	May	31	to	December	31.	We	refer	to	the	period	consisting	of	the	seven-months	ended	December	31,	2016	as	the "2016	fiscal	transition	period."

When	our	financial	results	for	the	year	ended	December	31,	2017	and	the	2016	fiscal	transition	period	are	compared	to	our	financial	results	for	the	prior-year periods,	the	results	compare	the	twelve-month	period	from	January	1,	2017	through	December	31,	2017	to	the	twelve-month	period	from	January	1,	2016	through December	31,	2016	and	compare	the	seven-month	period	from	June	1,	2016	through	December	31,	2016	to	the	seven-month	period	from	June	1,	2015	through December	31,	2015.	The	results	for	the	twelve	months	ended	December	31,	2016	and	the	seven	months	ended	December	31,	2015	are	unaudited.

# CAUTIONARY	NOTICE	REGARDING	FORWARD-LOOKING	STATEMENTS

Unless	the	context	requires	otherwise,	references	in	this	report	to	"Global	Payments,"	the	"Company,"	"we,"	"our"	or	"us,"	refer	to	Global	Payments	Inc.	and	its subsidiaries.

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;	our	success	and	timing	in	developing	and	introducing	new	services	and	expanding	our	business;	statements	about	the	benefits	of our	acquisitions,	including	future	financial	and	operating	results,	the	combined	company's	plans,	objectives,	expectations	and	intentions,	and	the	successful	integration of	our	future	acquisitions.	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	that	may cause	 actual	 events	 or	 results	 to	 differ	 materially	 from	 those	 anticipated	 by	 our	 forward-looking	 statements	 include	 our	 ability	 to	 safeguard	 our	 data;	 increased competition	from	larger	companies	and	non-traditional	competitors;	our	ability	to	update	our	services	in	a	timely	manner;	our	ability	to	maintain	Visa	and	Mastercard registration	and	financial	institution	sponsorship;	our	reliance	on	financial	institutions	to	provide	clearing	services	in	connection	with	our	settlement	activities;	our potential	failure	to	comply	with	card	network	requirements;	potential	systems	interruptions	or	failures;	software	defects	or	undetected	errors;	increased	attrition	of merchants,	referral	partners	or	independent	sales	organizations;	our	ability	to	increase	our	share	of	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; changes	in	laws,	regulations	or	network	rules	or	interpretations	thereof;	foreign	currency	exchange	and	interest	rate	risks;	political,	economic	and	regulatory	changes	in the	foreign	countries	in	which	we	operate;	future	performance,	integration	and	conversion	of	acquired	operations,	including	without	limitation	difficulties	and	delays	in integrating	or	fully	realizing	cost	savings	and	other	benefits	of	our	acquisitions	at	all	or	within	the	expected	time	period;	fully	realizing	anticipated	annual	interest expense	savings	from	refinancing	our	Credit	Facility	(described	in	"Note	8—Long-Term	Debt	and	Lines	of	Credit"	in	the	notes	to	the	accompanying	consolidated financial	statements);	loss	of	key	personnel;	and	other	risk	factors	presented	in	Item	"1A	-	Risk	Factors	of	this	Annual	Report	on	Form	10-K,"	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.

# ITEM	1-	BUSINESS

Global	Payments,	Inc.	and	its	consolidated	subsidiaries	are	referred	to	collectively	as	"Global	Payments,"	the	"Company,"	"we,"	"our"	or	"us,"	unless	the	context requires	otherwise.

# Introduction

We	are	a	leading	worldwide	provider	of	payment	technology	and	software	solutions	delivering	innovative	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	accept	various	payment	types	and	operate	their	businesses more	efficiently.	We	distribute	our	services	across	a	variety	of	channels	in	32	countries	throughout	North	America,	Europe,	the	Asia-Pacific	region	and	Brazil	and operate	in	three	reportable	segments:	North	America,	Europe	and	Asia-Pacific.

We	were	incorporated	in	Georgia	as	Global	Payments	Inc.	in	2000	and	spun-off	from	our	former	parent	company	in	2001.	Including	our	time	as	part	of	our	former parent	company,	we	have	been	in	the	payment	technology	services	business	since	1967.	Since	our	spin-off,	we	have	expanded	in	existing	markets	and	into	new	markets internationally	by	pursuing	further	acquisitions	and	 joint	ventures.	In	2016,	we	merged	with	Heartland	Payment	Systems,	Inc.	("Heartland"),	which	significantly expanded	our	small	and	medium-sized	enterprise	distribution,	customer	base	and	vertical	reach	in	the	United	States.	For	the	year	ended	December	31,	2018,	our revenues	were	$3.4	billion.

Headquartered	in	Atlanta,	Georgia,	we	are	a	member	of	the	Standard	&	Poor's	500	Index,	and	our	common	stock	is	traded	on	the	New	York	Stock	Exchange	under the	symbol	"GPN."

# Recent	Acquisitions

On	October	17,	2018,	we	acquired	SICOM	Systems,	Inc.	("SICOM")	for	total	purchase	consideration	of	approximately	$409	million.	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.

On	September	4,	2018,	we	acquired	AdvancedMD,	Inc.	("AdvancedMD")	for	total	purchase	consideration	of	approximately	$707	million.	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.

On	September	1,	2017,	we	acquired	the	communities	and	sports	divisions	of	Athlaction	Topco,	LLC	("ACTIVE	Network")	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	vertical	markets.	This	acquisition	aligns	with	our	technology-enabled,	software	driven	strategy	and	adds	an	enterprise	software	business	operating	in	two	vertical markets	that	we	believe	offer	attractive	growth	fundamentals.

See	"Note	2—Acquisitions"	in	the	notes	to	the	accompanying	consolidated	financial	statements	for	further	discussion	of	these	and	other	acquisitions.

# Payment	Technology	and	Software	Solutions	Overview

We	provide	payment	technology	and	software	solutions	to	customers	globally.	Our	payment	technology	solutions	are	similar	around	the	world	in	that	we	enable our	 customers	 to	 accept	 card,	 electronic,	 check	 and	 digital-based	 payments.	 Our	 comprehensive	 offerings	 include,	 but	 are	 not	 limited	 to,	 authorization	 services, settlement	and	funding	services,	customer	support	and	help-desk	functions,	chargeback	resolution,	terminal	rental,	sales	and	deployment,	payment	security	services, consolidated	billing	and	statements	and	on-line	reporting.

In	addition,	we	offer	a	wide	array	of	enterprise	software	solutions	that	streamline	business	operations	to	customers	in	numerous	vertical	markets.	We	also	provide a	variety	of	value-added	services,	including	analytic	and	engagement	tools,	payroll	services	and	reporting	that	assist	our	customers	with	driving	demand	and	operating their	businesses	more	efficiently.

Our	value	proposition	is	to	provide	distinctive	high-quality,	responsive	and	secure	services	to	all	of	our	customers.	We	distribute	our	services	through	multiple channels	and	target	customers	in	many	vertical	markets	in	32	countries	located	throughout	North	America,	Europe,	the	Asia-Pacific	region	and	in	Brazil.	The	majority	of revenues	is	generated	by	services	priced	as	a	percentage	of	transaction	value	or	a	specified	fee	per	transaction,	depending	on	the	card	type	or	the	market.	We	also	earn software	subscription	and	licensing	fees,	as	well	as	other	fees	based	on	specific	value-added	services	that	may	be	unrelated	to	the	number	or	value	of	transactions.

# Direct	Distribution

Our	primary	business	model	is	to	actively	market	and	provide	our	payment	services,	enterprise	software	solutions	and	other	value-added	services	directly	to	our customers	through	a	variety	of	distribution	channels.	We	offer	high-touch	services	that	provide	our	customers	with	reliable	and	secure	solutions	coupled	with	high quality	and	responsive	support	services.	Through	our	direct	sales	force	worldwide,	as	well	as	bank	partnerships,	we	offer	our	payment	technology	services,	software	and other	value-added	solutions	directly	to	customers	in	the	markets	we	serve.	See	"Business	Segments"	below	for	a	description	of	our	direct	sales	forces	located	around	the world.

Many	 of	 our	 payment	 solutions	 are	 technology-enabled	 in	 that	 they	 incorporate	 or	 are	 incorporated	 into	 innovative,	 technology-driven	 solutions,	 including enterprise	software	solutions,	designed	to	enable	merchants	to	better	manage	their	businesses.	Our	primary	technology-enabled	solutions	include	integrated	and	vertical markets,	ecommerce	and	omnichannel	and	gaming	solutions,	each	as	described	below.

Integrated	and	Vertical	Markets.	Our	integrated	and	vertical	market	solutions	provide	advanced	payments	technology	that	is	deeply	integrated	into	business enterprise	software	solutions	either	owned	by	us	or	by	our	partners.	We	grow	our	business	when	new	merchants	implement	our	enterprise	software	solutions	and	when new	or	existing	merchants	enable	payments	services	through	enterprise	software	solutions	sold	by	us	or	by	our	partners.	We	distribute	our	integrated	payment	solutions primarily	through	the	following	businesses:

•OpenEdge.	Through	OpenEdge,	we	offer	integrated	payment	solutions	through	technology	partners	across	numerous	vertical	markets,	primarily	in	North America.	OpenEdge	enables	third-party	application	developers	to	incorporate	payment	innovations	into	their	enterprise	business	solutions.

•Ezidebit.	Through	Ezi	Holdings	Pty	Ltd	("Ezidebit"),	we	offer	integrated	payment	technology	solutions	in	the	Asia-Pacific	region.	Ezidebit	focuses	on recurring	payments	verticals	and,	similar	to	OpenEdge,	markets	its	services	through	a	network	of	integrated	software	vendors	and	direct	channels	to	numerous vertical	markets.

•ACTIVE	Network.	Through	ACTIVE	Network,	we	deliver	cloud-based	enterprise	software,	including	payment	technology	solutions,	to	event	organizers	in	the communities	and	health	and	fitness	markets.

•Education	Solutions.	We	offer	integrated	payment	solutions	specifically	designed	for	all	levels	of	educational	institutions.	At	the	university	level,	we	offer integrated	commerce	solutions,	payment	services,	higher	education	loan	services,	credentialing	services	and	open-	and	closed-loop	payment	solutions.	For kindergarten	through	12th	grade,	we	provide	ecommerce	and	in-person	payments,	cafeteria	POS	solutions	and	back-office	management	software,	hardware, technical	support	and	training.

•AdvancedMD.	Through	AdvancedMD,	we	provide	cloud-based	enterprise	solutions	to	small-to-medium	sized	ambulatory	physician	practices	in	the	United States.

•Xenial	and	SICOM.	Through	Xenial	and	SICOM,	we	offer	 leading-edge	enterprise	software	solutions, integrated	with	our	payment	services	and	other adjacent	business	service	applications,	to	the	restaurant	and	hospitality	and	retail	vertical	markets.

Ecommerce	and	Omnichannel.	We	offer	ecommerce	and	omnichannel	solutions	to	our	customers	that	seamlessly	blend	payment	gateway	services,	retail	payment acceptance	infrastructure	and	payment	technology	service	capabilities	though	a	unified	commerce	platform	to	allow	merchants	to	accept	various	payment	methods through	any	channel	across	our	geographical	footprint.	We	sell	ecommerce	and	omnichannel	solutions	to	customers	of	all	sizes,	from	small	businesses	accepting payments	in	a	single

country,	to	enterprise	and	multinational	businesses	that	have	complex	payment	needs	and	operate	retail	and	online	businesses	in	multiple	countries.

Gaming.	We	offer	a	comprehensive	suite	of	cash	access	solutions	to	the	gaming	market	in	North	America.	These	solutions	include	credit	and	debit	card	cash advance,	traditional	and	electronic	check	processing	and	other	services	specific	to	this	market.	Our	services	allow	casino	patrons	in	North	America	fast	access	to	cash with	high	limits	to	enable	gaming	establishments	to	increase	the	flow	of	money	to	their	gaming	floors	and	reduce	risk.

# Wholesale	Distribution

Although	our	primary	business	model	is	to	build	high	quality	direct	relationships	with	merchants,	we	also	provide	our	services	through	a	wholesale	distribution channel	where	we	do	not	maintain	the	face-to-face	relationship	with	the	merchant.	Through	our	wholesale	channel,	we	provide	payment	services	to	merchants	through independent	sales	organizations	("ISOs").	The	ISOs	act	as	third-party	sales	groups	selling	our	payment	technology	services	directly	to	end-user	merchant	customers.	As we	continue	to	grow	and	control	our	direct	distribution	by	adding	new	channels	and	partners,	including	expanding	our	ownership	of	additional	enterprise	software solutions	in	select	vertical	markets,	our	wholesale	distribution	channel	has	become	a	smaller	portion	of	our	business.

# Credit	and	Debit	Card	Transaction	Processing

Credit	and	debit	card	transaction	processing	includes	the	processing	of	the	world's	major	international	card	brands,	including	American	Express,	Discover	Card ("Discover"),	JCB,	Mastercard,	UnionPay	International	("UPI"),	Visa	and	non-traditional	payment	methods,	as	well	as	certain	domestic	debit	networks,	such	as	Interac in	Canada.	Credit	and	debit	networks	establish	uniform	regulations	that	govern	much	of	the	payment	card	industry.	During	a	typical	payment	transaction,	the	merchant and	the	card	issuer	do	not	interface	directly	with	each	other,	but	instead	rely	on	payments	technology	companies,	such	as	Global	Payments,	to	facilitate	transaction processing	services,	including	authorization,	electronic	draft	capture,	file	transfers	to	facilitate	funds	settlement	and	certain	exception-based,	back	office	support	services such	as	chargeback	and	retrieval	resolution.

We	process	funds	settlement	under	two	models,	a	sponsorship	model	and	a	direct	membership	model.	Under	the	sponsorship	model,	we	are	designated	as	an	ISO by	Mastercard	and	Visa.	To	be	designated	as	a	certified	processor,	member	clearing	financial	institutions	("Members")	sponsor	us	and	require	our	adherence	to	the standards	of	the	networks.	In	certain	markets,	we	have	sponsorship	or	depository	and	clearing	agreements	with	financial	institution	sponsors.	These	agreements	allow	us to	route	transactions	under	the	Members'	control	and	identification	numbers	to	clear	card	transactions	through	Mastercard	and	Visa.	In	this	model,	the	standards	of	the card	networks	restrict	us	from	performing	funds	settlement	or	accessing	merchant	settlement	funds,	and,	instead,	require	that	these	funds	be	in	the	possession	of	the Member	until	the	merchant	has	been	funded.

Under	the	direct	membership	model,	we	are	direct	members	in	various	payment	networks,	allowing	us	to	process	and	fund	transactions	without	third-party sponsorship.	In	this	model,	we	route	and	clear	transactions	directly	through	the	card	brand's	network	and	are	not	restricted	from	performing	funds	settlement.	Otherwise, we	process	these	transactions	similarly	to	how	we	process	transactions	in	the	sponsorship	model.	We	are	required	to	adhere	to	the	standards	of	the	various	networks	in which	we	are	direct	members.	We	maintain	relationships	with	financial	institutions,	which	may	also	serve	as	our	Member	sponsors	for	other	card	brands	or	in	other markets,	to	assist	with	funds	settlement.

# How	a	Card	Transaction	Works

A	typical	payment	transaction	begins	when	a	cardholder	presents	a	card	for	payment	at	a	merchant	location	where	the	card	information	is	captured	by	a	POS terminal	card	reader	or	mobile	device	card	reader,	which	may	be	sold	or	leased	to	the	merchant	and	serviced	by	us.	Alternatively,	card	and	transaction	information	may be	captured	and	transmitted	to	our	network	through	a	POS	device	or	ecommerce	portal	by	one	of	a	number	of	services	that	we	offer	directly	or	through	a	value-added reseller.	The	card	reader	electronically	records	sales	draft	information,	such	as	the	card	identification	number,	transaction	date	and	transaction	amount.

After	the	card	and	transaction	information	is	captured,	the	POS	device	automatically	connects	to	our	network	through	the	internet	or	other	communication	channel in	order	to	receive	authorization	of	the	transaction.	For	a	credit	card	transaction,	authorization	services	generally	refer	to	the	process	in	which	the	card	issuer	indicates whether	a	particular	credit	card	is	authentic	and	whether	the	impending	transaction	amount	will	cause	the	cardholder	to	exceed	defined	credit	limits.	In	a	debit	card transaction,	we	obtain	authorization	for	the	transaction	from	the	card	issuer	through	the	payment	network	verifying	that	the	cardholder	has	access	to	sufficient	funds	for the	transaction	amount.

As	an	illustration,	shown	below,	on	a	$100.00	card	transaction,	the	card	issuer	may	fund	the	Member,	our	sponsor,	(indirectly	through	the	card	network)	$98.50 after	retaining	approximately	$1.50	referred	to	as	an	interchange	fee.	The	card	issuer	seeks	reimbursement	of	$100.00	from	the	cardholder	in	the	cardholder's	monthly credit	card	statement.	The	Member	would,	in	turn,	pay	the	merchant	$100.00.	The	net	settlement	after	this	transaction	would	require	us	to	advance	the	Member	$1.50. After	the	end	of	the	month,	we	would	bill	the	merchant	a	percentage	of	the	transaction	amount,	or	merchant	discount,	to	cover	the	full	amount	of	the	interchange	fee	and our	fee	from	the	transaction.	If	our	discount	rate	for	the	merchant	in	the	above	example	was	2.00%,	we	would	bill	the	merchant	$2.00	after	the	end	of	the	month	for	the transaction,	reimburse	ourselves	for	$1.50	in	interchange	fees	and	retain	$0.50	as	our	fees	for	the	transaction.	Under	some	arrangements,	we	remit	the	net	amount	of $98.00	to	the	merchant,	rather	than	funding	the	full	$100.00	and	subsequently	billing	the	merchant	at	the	end	of	the	month.	Discount	rates	vary	based	on	negotiations with	 merchants	 and	 the	 economic	 characteristics	 of	 transactions.	 Interchange	 rates	 also	 vary	 based	 on	 the	 economic	 characteristics	 of	 individual	 transactions. Accordingly,	our	fee	per	transaction	varies	across	our	merchant	base	and	is	subject	to	change	based	on	changes	in	discount	rates	and	interchange	rates.	Our	profit	on	the transaction	reflects	the	fee	received	less	payment	network	fees	and	operating	expenses,	including	systems	cost	to	process	the	transaction	and	commissions	paid	to	our sales	force	or	ISO.	Payment	network	fees	are	charged	by	the	card	brands,	in	part,	based	on	the	value	of	transactions	processed	through	their	networks.

# howapaymenttransworks.jpg

# Business	Segments

We	operate	in	three	reportable	segments:	North	America,	Europe	and	Asia-Pacific.	See	"Note	16—Segment	Information"	in	the	notes	to	the	accompanying consolidated	financial	statements	for	additional	information	about	our	segments,	including	revenues,	operating	income	and	depreciation	and	amortization	by	segment	as well	as	financial	 information	about	geographic	areas	 in	which	we	operate.	In	general,	our	business	has	not	experienced	pronounced	seasonality.	However,	each geographic	channel	has	somewhat	higher	and	lower	quarters	given	the	nature	of	the	merchant	portfolio.	Our	foreign	operations	subject	us	to	various	risks,	including, without	limitation,	currency	exchange	risks	and	political,	economic	and	regulatory	risks.	See	"Item	1A	-	Risk	Factors"	for	additional	information	about	these	risks.

# North	America

Approximately	74.9%	of	our	revenues	for	the	year	ended	December	31,	2018	were	derived	from	our	operations	in	North	America,	which	include	the	United	States and	Canada.

Our	primary	mode	of	distribution	in	North	America	is	our	direct	distribution	channels,	including	an	extensive	direct	sales	force	selling	our	services	and	solutions across	 numerous	 vertical	 markets,	 including,	 but	 not	 limited	 to,	 education,	 restaurant,	 event	 management,	 hospitality,	 retail,	 healthcare,	 convenience	 stores	 and petroleum,	professional	services,	automotive	and	lodging.

Our	technology-enabled	solutions	represented	a	substantial	component	of	our	revenues	in	North	America	for	the	year	ended	December	31,	2018.	Our	technology- enabled	distribution	in	North	America	includes	integrated	and	vertical	market	solutions,	ecommerce	and	omnichannel	solutions	and	gaming	solutions.

We	also	generate	a	portion	of	our	revenues	in	North	America	from	our	wholesale	distribution	channel,	primarily	ISOs	acting	as	third-party	selling	groups.

# Europe

Approximately	18.1%	of	our	revenues	for	the	year	ended	December	31,	2018	were	derived	from	our	operations	in	Europe,	which	includes	the	United	Kingdom,	the Republic	of	Ireland,	Spain,	the	Republic	of	Malta,	the	Czech	Republic,	Hungary,	Slovakia,	Romania	and	the	Russian	Federation.	We	have	direct	sales	forces	in	these markets	through	which	we	sell	our	services	while	also	leveraging	our	bank	referral	relationships.	Our	ecommerce	and	omnichannel	solutions	represent	a	growing percentage	of	the	services	we	sell	in	Europe.

# Asia-Pacific

Approximately	6.9%	of	our	revenues	for	the	year	ended	December	31,	2018	were	derived	from	our	operations	in	the	Asia-Pacific	region,	which	includes	the following	countries	and	territories:	Australia,	China,	Hong	Kong,	India,	Macau,	Malaysia,	Maldives,	New	Zealand,	the	Philippines,	Singapore,	Sri	Lanka	and	Taiwan. Our	direct	sales	force	in	the	Asia-Pacific	region	accounts	for	substantially	all	of	the	services	we	sell	in	the	region.

Technology-enabled	solutions	represent	a	substantial	and	growing	portion	of	our	operations	in	the	Asia-Pacific	region,	driven	by	Ezidebit	and	eWay	Limited	in Australia.

# Industry	Overview

The	payment	technology	services	industry	provides	merchants	with	credit,	debit,	gift	and	loyalty	card	and	other	payment	processing	services,	along	with	related information	services.	The	industry	continues	to	grow	as	a	result	of	wider	merchant	acceptance,	increased	consumer	use	of	credit	and	debit	cards	and	advances	in payment	processing	and	telecommunications	technology.	The	proliferation	of	credit	and	debit	cards	has	made	the	acceptance	of	card-based	payments	a	virtual	necessity for	many	businesses,	regardless	of	size,	in	order	to	remain	competitive.	This	increased	use	of	cards	and	the	availability	of	more	sophisticated	technology	services	to	all market	segments	has	resulted	in	a	highly	competitive	and	specialized	industry.

# Competition

We	are	a	leading	provider	of	payments	technology	and	software	solutions	in	North	America,	where	we	compete	primarily	with	Bank	of	America	Merchant Services,	LLC	(a	joint	venture	between	First	Data	Corporation	and	Bank	of	America	Corporation),	Chase	Paymentech	Solutions,	LLC,	Elavon,	Inc.,	a	subsidiary	of	U.S. Bancorp,	First	Data	Corporation,	Total	System	Services,	Inc.,	Wells	Fargo	Bank,	N.A	and	Worldpay,	Inc.	While	these	are	our	primary	competitors,	some	of	our vertically	focused	business	in	the	United	States	compete	with	other	organizations.

In	Europe	and	the	Asia-Pacific	region,	financial	institutions	remain	the	primary	providers	of	payment	technology	services	to	merchants,	although	the	outsourcing of	 these	services	 to	 third-party	service	providers	 is	becoming	more	prevalent.	Payment	services	have	become	 increasingly	complex,	requiring	significant	capital commitments	to	develop,	maintain	and	update	the	systems	necessary	to	provide	these	advanced	services	at	competitive	prices.

Competitors	in	Europe	include	Ayden	N.V.,	Barclays	Bank	PLC,	Spanish	banking	institutions	and	Worldpay,	Inc.	Financial	institutions	that	offer	merchant acquiring	services	are	our	primary	competitors	in	Asia-Pacific.

# Emerging	Trends

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

We	believe	that	the	number	of	electronic	payment	transactions	will	continue	to	grow	and	that	an	increasing	percentage	of	these	will	be	facilitated	through emerging	technologies.		As	a	result,	we	expect	an	increasing	portion	of	our	future	capital	investment	will	be	allocated	to	support	the	development	of	new	and	emerging technologies;	however,	we	do	not	expect	our	aggregate	capital	spending	to	increase	materially	from	our	current	level	of	spending	as	a	result	of	this.

We	also	believe	new	markets	will	continue	to	develop	in	areas	that	have	been	previously	dominated	by	paper-based	transactions.	We	expect	industries	such	as education,	government	and	healthcare,	as	well	as	recurring	payments	and	business-to-business	payments,	to	continue	to	see	transactions	migrate	to	electronic-based solutions.		We	anticipate	that	the	continued	development	of	new	services	and	the	emergence	of	new	vertical	markets	will	be	a	factor	in	the	growth	of	our	business	and our	revenue	in	the	future.

# Strategy

We	seek	to	leverage	the	adoption	of,	and	transition	to,	card,	electronic	and	digital-based	payments	by	expanding	share	in	our	existing	markets	through	our distribution	channels	and	service	innovation,	as	well	as	through	acquisitions	to	improve	our	offerings	and	scale.	We	also	seek	to	enter	new	markets	through	acquisitions, alliances	and	joint	ventures	around	the	world.	We	intend	to	continue	to	invest	in	and	leverage	our	technology	infrastructure	and	our	people	to	increase	our	penetration	in existing	markets.

The	key	tenets	of	our	strategy	include	the	following:

•Grow	and	control	our	direct	distribution	by	adding	new	channels	and	partners,	including	expanding	our	ownership	of	additional	enterprise	software	solutions in	select	vertical	markets;

•Deliver	 innovative	 services	 by	 developing	 value-added	 applications,	 enhancing	 existing services	 and	 developing	 new systems	 and services to	 blend technology	with	customer	needs;

•Leverage	technology	and	operational	advantages	throughout	our	global footprint;

•Continue	to	develop	seamless	multinational	solutions	for	leading	global customers;

•Provide	customer	service	at	levels	that	exceed	our	competition,	while	investing	in	technology,	training	and	enhancements	to	our	service	offerings; and

•Pursue	potential	domestic	and	international	acquisitions	of,	investments	in	and	alliances	with	companies	that	have	high	growth	potential,	significant	market presence,	sustainable	distribution	platforms	and/or	key	technological	capabilities.

# Competitive	Strengths

We	believe	that	our	competitive	strengths	include	the	following:

•Global	 Footprint	 and	 Distribution -	 Our	 worldwide	 presence	 allows	 us	 to	 focus	 our	 investments	 on	 markets	 with	 promising	 gross	 domestic	 product fundamentals	and	favorable	secular	trends,	makes	us	more	attractive	to	merchants	with	international	operations	and	exposes	us	to	emerging	innovations	that we	can	adopt	globally,	while	diversifying	our	economic	risk.

•Technology	Solutions	-	We	provide	innovative	technology-based	solutions,	including	enterprise	software	solutions,	that	enable	our	customers	to	operate	their business	 more	 efficiently	 and	 simplify	 the	 payments	 process,	 regardless	 of	 the	 channel	 through	 which	 the	 transaction	 occurs.	 We	 believe	 our	 robust technology	solutions	will	continue	to	differentiate	us	in	the	marketplace	and	will	position	us	for	continued	growth.

•Scalable	Operating	Environment	and	Technology	Infrastructure	-	We	operate	as	a	single,	unified	international	organization,	with	a	multi-channel,	global technology	 infrastructure,	 which	 provides	 scalable	 and	 innovative	 service	 offerings	 and	 a	 consistent	 service	 experience	 to	 our	 merchants	 and	 partners worldwide,	while	also	driving	sustainable	operating	efficiencies.

•Strong,	Long-lasting	Partner	Relationships	-	We	have	established	strong,	long-lasting	relationships	with	many	financial	institutions,	enterprise	software providers,	value-added	resellers	and	other	technology-based	payment	service	providers,	which	facilitate	lead	generation	and	enable	us	to	deliver	a	diverse solutions	set	to	our	merchant	customers.

•Disciplined	Acquisition	Approach	-	Our	proven	track	record	for	selectively	and	successfully	sourcing,	completing	and	integrating	acquired	businesses	in existing	and	new	markets	positions	us	well	for	future	growth	and	as	an	attractive	partner	for	potential	acquisition	targets.

# Safeguarding	Our	Business

In	 order	 to	 provide	 our	 services,	 we	 obtain	 and	 store	 sensitive	 business	 information	 and	 personal	 information	 about	 our	 merchants,	 merchants'	 customers, merchants'	employees,	vendors,	partners	and	other	parties,	which	may	include	credit	and	debit	card	numbers,	bank	account	numbers,	social	security	numbers,	drivers' license	numbers,	names	and	addresses,	and	other	types	of	personal	information	or	sensitive	business	information.	Some	of	this	information	is	also	processed	and	stored by	our	 third-party	service	providers	and	other	agents	(which	we	refer	 to	collectively	as	our	"associated	 third	parties")	as	well	as	merchants	and	ISOs.	We	have responsibility	to	the	card	networks,	their	member	financial	institutions,	and	in	some	instances,	our	merchants,	ISOs	and/or	individuals,	for	our	failure	or	the	failure	of	our associated	third	parties	or	merchants	(as	applicable)	to	protect	this	information.

We	are	subject	to	cyber	security	and	information	theft	risks	in	our	operations,	which	we	seek	to	manage	through	a	cyber	and	information	security	programs, training	and	insurance	coverage.	To	strengthen	our	security	and	cyber	defenses,	we	continue	to	deploy	multiple	methods	at	different	layers	to	defend	our	systems	against misuse,	intrusions	and	cyberattacks	and	to	protect	the	data	we	collect.	Further,	we	work	with	information	security	and	forensics	firms	and	employ	advanced	technologies to	help	prevent,	investigate	and	address	issues	relating	to	processing	system	security	and	availability.	We	also	collaborate	with	industry	third	parties,	regulators	and	law enforcement,	when	appropriate,	to	resolve	security	incidents	and	assist	in	efforts	to	prevent	unauthorized	access	to	our	processing	systems.

# Intellectual	Property

Our	intellectual	property	is	an	important	part	of	our	strategy	to	be	a	leading	provider	of	payment	technology	and	software	solutions.	We	use	a	combination	of internal	policies,	intellectual	property	laws,	and	contractual	provisions	to	protect	our	proprietary	technologies	and	brands.	In	addition,	to	protect	our	various	brands,	we seek	and	maintain	registration	of	U.S.	and	international	trademarks,	service	marks	and	domain	names	that	align	with	our	brand	strategy.	We	also	enforce	our	trademarks against	potential	sources	of	confusion	that	could	harm	our	brand	and	ability	to	compete.

# Employees	and	Labor

As	 of	December	31,	2018,	we	had	approximately	11,000	employees,	many	of	whom	are	highly	skilled	in	technical	areas	specific	to	payment	technology	and software	solutions.

# Regulation

Various	aspects	of	our	business	are	subject	to	regulation	and	supervision	under	federal,	state	and	local	laws	in	the	United	States,	such	as	the	California	Consumer Privacy	Act	(the	"CCPA),	and	foreign	laws,	regulations	and	rules,	including	Directive	2007/64/EC	in	the	European	Union	(the	"Payment	Services	Directive"),	as	well	as local	escheat	laws	and	privacy	and	information	security	regulations.	In	addition,	we	are	subject	to	rules	promulgated	by	the	various	payment	networks,	including American	Express,	Discover,	Interac,	Mastercard,	UPI	and	Visa.	In	addition,	because	we	provide	data	processing	services	to	banks	and	other	financial	institutions,	we are	subject	to	examination	by	the	Federal	Financial	Institutions	Examination	Council	(the	"FFIEC").	Set	forth	below	is	a	brief	summary	of	some	of	the	significant	laws and	regulations	that	apply	to	us.	These	descriptions	are	not	exhaustive,	and	these	laws,	regulations	and	rules	frequently	change	and	are	increasing	in	number.

# Dodd-Frank	Act

The	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	of	2010	(the	"Dodd-Frank	Act"),	which	was	signed	into	law	in	the	United	States	in	2010, resulted	in	significant	structural	and	other	changes	to	the	regulation	of	the	financial	services	industry.	The	Dodd-Frank	Act	directed	the	Board	of	Governors	of	the Federal	Reserve	(the	"Federal	Reserve	Board")	to	regulate	the	debit	interchange	transaction	fees	that	a	card	issuer	or	payment	card	network	receives	or	charges	for	an electronic	debit	transaction.		Pursuant	to	the	so-called	"Durbin	Amendment"	to	the	Dodd-Frank	Act,	these	fees	must	be	"reasonable	and	proportional"	to	the	cost	incurred by	the	card	issuer	in	authorizing,	clearing	and	settling	the	transaction.	Pursuant	to	regulations	promulgated	by	the	Federal	Reserve	Board,	debit	interchange	rates	for	card issuers	with	assets	of	$10	billion	or	more	are	capped	at	$0.21	per	transaction	and	an	ad	valorem	component	of	5	basis	points	to	reflect	a	portion	of	the	issuer's	fraud losses	plus,	for	qualifying	issuers,	an	additional	$0.01	per	transaction	in	debit	interchange	for	fraud	prevention	costs.	The	cap	on	interchange	fees	has	not	had	a	material direct	effect	on	our	results	of	operations.

In	addition,	the	Dodd-Frank	Act	limits	the	ability	of	payment	card	networks	to	impose	certain	restrictions	because	it	allows	merchants	to:	(i)	set	minimum	dollar amounts	(not	to	exceed	$10)	for	the	acceptance	of	a	credit	card	(and	allows	federal	governmental	entities	and	institutions	of	higher	education	to	set	maximum	amounts for	the	acceptance	of	credit	cards)	and	(ii)	provide	discounts	or	incentives	to	encourage	consumers	to	pay	with	cash,	checks,	debit	cards	or	credit	cards.

The	rules	also	contain	prohibitions	on	network	exclusivity	and	merchant	routing	restrictions	that	require	a	card	issuer	to	enable	at	least	two	unaffiliated	networks on	each	debit	card,	prohibit	card	networks	from	entering	into	exclusivity	arrangements	and	restrict	the	ability	of	issuers	or	networks	to	mandate	transaction	routing requirements.	The	prohibition	on	network	exclusivity	has	not	significantly	affected	our	ability	to	pass	on	network	fees	and	other	costs	to	our	customers,	nor	do	we	expect it	to	in	the	future.

The	Dodd-Frank	Act	also	created	the	Financial	Stability	Oversight	Council	(the	"FSOC"),	which	was	established	to,	among	other	things,	identify	risks	to	the stability	of	the	U.S.	financial	system.		The	FSOC	has	the	authority	to	require	supervision	and	regulation	of	nonbank	financial	companies	that	the	FSOC	determines	pose a	systemic	risk	to	the	U.S.	financial	system.	Accordingly,	we	may	be	subject	to	additional	systemic	risk-related	oversight.

# Payment	Network	Rules

We	are	subject	to	the	rules	of	American	Express,	Discover,	Interac,	Mastercard,	UPI	and	Visa	and	other	payment	networks.	 In	order	to	provide	our	services, several	of	our	subsidiaries	are	either	registered	as	service	providers	for	member	 institutions	with	Mastercard,	Visa	and	other	networks	or	are	direct	members	of Mastercard,	Visa	and	other	networks.	Accordingly,	we	are	subject	to	card	association	and	network	rules	that	could	subject	us	to	a	variety	of	fines	or	penalties	that	may be	levied	by	the	card	networks	for	certain	acts	or	omissions.

# Banking	Laws	and	Regulations

The	FFIEC	is	an	interagency	body	comprised	of	federal	bank	and	credit	union	regulators	such	as	the	Federal	Reserve	Board,	the	Federal	Deposit	Insurance Corporation,	the	National	Credit	Union	Administration,	the	Office	of	the	Comptroller	of	the	Currency	and	the	Consumer	Financial	Protection	Bureau	(the	"CFPB").	The FFIEC	examines	large	data	processors	in	order	to	identify	and	mitigate	risks	associated	with	systemically	significant	service	providers,	including	specifically	the	risks they	may	pose	to	the	banking	industry.	In	addition,	we	are	subject	to	the	Payment	Services	Directive,	which	was	implemented	in	most	European	Union	member	states through	national	 legislation.	As	a	result	of	 this	 legislation,	we	are	subject	 to	regulation	and	oversight	 in	certain	European	Union	member	nations,	 including	 the requirement	that	we	maintain	specified	regulatory	capital;	however,	these	regulatory	capital	requirements	are	generally	insignificant	to	our	total	assets	and	total	equity and	have	no	material	effect	on	our	liquidity.

# Privacy,	Information	Security	and	Healthcare	Technology	Laws

We	 provide	 services	 that	 may	 be	 subject	 to	 various	 state,	 federal	 and	 foreign	 privacy	 laws	 and	 regulations,	 and,	 as	 a	 result	 of	 our	 recent	 acquisition	 of AdvancedMD,	certain	healthcare	technology	laws,	including	the	Health	Insurance	Portability	and	Accountability	Act	of	1996,	as	amended	("HIPAA")	and	the	Health Information	Technology	for	Economic	and	Clinical	Health	Act.	These	laws	and	regulations	also	include	the	federal	Gramm-Leach-Bliley	Act	of	1999,	which	applies	to	a broad	range	of	financial	institutions	and	to	companies	that	provide	services	to	financial	institutions	in	the	United	States,	including	our	gaming	business.	and	the	CCPA, which	requires	companies	that	process	personal	information	of	California	residents	to	make	new	disclosures	to	consumers	about	their	data	collection	and	use,	and	will grant	consumers	specific	access	rights	to	their	data.	Outside	the	United	States,	these	laws	include,	without	limitation,	the	EU	General	Data	Protection	Regulation, Canada's	Personal

Information	Protection	and	Electronic	Documents	Act,	Hong	Kong's	Personal	Data	Privacy	Ordinance	(Cap.	486),	the	Taiwan	Personal	Data	Protection	Law,	the Philippines'	Data	Privacy	Act	of	2012,	and	Australia's	Federal	Privacy	Act	of	1988.	 See	Item	1A.	Risk	Factors	-	"Any	new	implementation	of	or	changes	made	to	laws, regulations,	card	network	rules	or	other	industry	standards	affecting	our	business	in	any	of	the	geographic	regions	in	which	we	operate	may	require	significant development	efforts	or	have	an	unfavorable	effect	on	our	financial	results	and	our	cash	flows."

# Anti-Money	Laundering	and	Counter	Terrorist	Requirements

In	many	countries,	we	are	legally	or	contractually	required	to	comply	with	anti-money	laundering	laws	and	regulations,	such	as,	in	the	United	States,	the	Bank Secrecy	Act,	as	amended	by	the	USA	PATRIOT	Act	of	2001	(collectively,	the	"BSA"),	and	the	BSA	implementing	regulations	of	the	Financial	Crimes	Enforcement Network	("FinCEN"),	a	bureau	of	the	U.S.	Department	of	the	Treasury.	A	variety	of	similar	anti-money	laundering	requirements	apply	in	other	countries.	In	some countries,	we	are	directly	subject	to	these	requirements;	in	other	countries,	we	have	contractually	agreed	to	assist	our	sponsor	banks	with	their	obligation	to	comply	with anti-money	laundering	requirements	that	apply	to	them.	These	laws	typically	require	organizations	to:

# •establish	and	audit	anti-money	laundering	programs;

•establish	procedures	for	obtaining	and	verifying	customer	information;

•file	reports	on	large	cash	transactions;	and

•file	 suspicious activity reports if the financial institution	 believes a customer	 may	 be	 violating	 U.S. laws and regulations.

Regulations	issued	by	the	Office	of	Foreign	Assets	Control	("OFAC")	of	the	U.S.	Department	of	Treasury		place	prohibitions	and	restrictions	on	all	U.S.	citizens and	entities,	including	the	Company,	with	respect	to	transactions	by	U.S.	persons	with	specified	countries	and	individuals	and	entities	identified	on	OFAC's	Specially Designated	Nationals	list	(for	example,	individuals	and	companies	owned	or	controlled	by,	or	acting	for	or	on	behalf	of,	countries	subject	to	certain	economic	and	trade sanctions,	as	well	as	terrorists,	terrorist	organizations	and	narcotics	traffickers	identified	by	OFAC	under	programs	that	are	not	country	specific).		Similar	requirements apply	to	transactions	and	dealings	with	persons	and	entities	specified	in	lists	maintained	in	other	countries.	We	have	developed	procedures	and	controls	that	are	designed to	monitor	and	address	legal	and	regulatory	requirements	and	developments	and	that	allow	our	customers	to	protect	against	having	direct	business	dealings	with	such prohibited	countries,	individuals	or	entities.

# Escheat	Laws

We	are	subject	to	unclaimed	or	abandoned	property	state	laws	in	the	United	States	and	in	certain	foreign	countries	that	require	us	to	transfer	to	certain	government authorities	the	unclaimed	property	of	others	that	we	hold	when	that	property	has	been	unclaimed	for	a	certain	period	of	time.		Moreover,	we	are	subject	to	audit	by	state and	foreign	regulatory	authorities	with	regard	to	our	escheatment	practices.

# Foreign	Laws	and	Regulations

We	are	subject	to	foreign	laws	and	regulations	that	affect	the	payment	technology	services	industry	in	each	of	the	foreign	countries	in	which	we	operate.	Some	of these	countries,	such	as	the	Russian	Federation,	India	and	the	United	Kingdom,	have	undergone	significant	political,	economic	and	social	change	in	recent	years.	In these	countries,	there	is	a	greater	risk	of	new,	unforeseen	changes	that	could	result	from,	among	other	things,	instability	or	changes	in	a	country's	or	region's	economic conditions;	changes	in	laws	or	regulations	or	in	the	interpretation	of	existing	laws	or	regulations,	whether	caused	by	a	change	in	government	or	otherwise;	increased difficulty	of	conducting	business	in	a	country	or	region	due	to	actual	or	potential	political	or	military	conflict;	or	action	by	the	European	Union	or	the	United	States, Canada	or	other	governments	that	may	restrict	our	ability	to	transact	business	in	a	foreign	country	or	with	certain	foreign	individuals	or	entities,	such	as	sanctions	by	or against	the	Russian	Federation.

# Debt	Collection	and	Credit	Reporting	Laws

Portions	of	our	business	may	be	subject	to	the	Fair	Debt	Collection	Practices	Act,	the	Fair	Credit	Reporting	Act	and	similar	state	laws.	These	debt	collection	laws are	designed	to	eliminate	abusive,	deceptive	and	unfair	debt	collection	practices	and	may	require	licensing	at	the	state	level.	The	Fair	Credit	Reporting	Act	regulates	the use	and	reporting	of	consumer	credit	information	and	also	imposes	disclosure	requirements	on	entities	that	take	adverse	action	based	on	information	obtained	from credit	reporting	agencies.

# Where	to	Find	More	Information

We	file	annual	and	quarterly	reports,	proxy	statements	and	other	information	with	the	U.S.	Securities	and	Exchange	Commission	("SEC").	You	may	read	and	print materials	that	we	have	filed	with	the	SEC	from	its	website	at	www.sec.gov.	In	addition,	certain	of	our	SEC	filings,	including	our	annual	reports	on	Form	10-K,	our transition	report	on	Form	10-K	for	the	2016	fiscal	transition	period,	our	quarterly	reports	on	Form	10-Q,	our	current	reports	on	Form	8-K	and	amendments	to	them	can	be viewed	and	printed,	free	of	charge,	from	 the	 investor	relations	section	of	our	website	at	www.globalpaymentsinc.com.	Certain	materials	relating	 to	our	corporate governance,	including	our	codes	of	ethics	applicable	to	our	directors,	senior	financial	officers	and	other	employees,	are	also	available	in	the	investor	relations	section	of our	website.	Copies	of	our	filings,	specified	exhibits	and	corporate	governance	materials	are	also	available,	free	of	charge,	by	writing	us	using	the	address	on	the	cover	of this	Annual	Report	on	Form	10-K.	You	may	also	telephone	our	investor	relations	office	directly	at	(770)	829-8478.	We	are	not	including	the	information	on	our	website as	a	part	of,	or	incorporating	it	by	reference	into,	this	Annual	Report	on	Form	10-K.

# ITEM	1A	-	RISK	FACTORS

An	investment	in	our	common	stock	involves	a	high	degree	of	risk.	You	should	consider	carefully	the	following	risks	and	other	information	contained	in	this	Annual Report	on	Form	10-K	and	other	SEC	filings	before	you	decide	whether	to	buy	our	common	stock.	The	risks	identified	below	are	not	all	encompassing	but	should	be considered	in	establishing	an	opinion	of	our	future	operations.	If	any	of	the	events	contemplated	by	the	following	discussion	of	risks	should	occur,	our	business,	results of	operations,	financial	condition	and	cash	flows	could	suffer	significantly.	As	a	result,	the	market	price	of	our	common	stock	could	decline	and	you	may	lose	all	or	part of	your	investment	in	our	common	stock.

# Risks	Related	to	Our	Business	and	Operations

Our	ability	to	protect	our	systems	and	data	from	continually	evolving	cybersecurity	risks	or	other	technological	risks	could	affect	our	reputation	among	our customers	and	cardholders,	adversely	affect	our	continued	card	network	registration	or	membership	and	financial	institution	sponsorship,	and	may	expose	us	to penalties,	fines,	liabilities	and	legal	claims.

In	order	to	provide	our	services,	we	process	and	store	sensitive	business	information	and	personal	information	about	our	merchants,	merchants'	customers, merchants'	employees,	ISOs,	vendors,	partners	and	other	parties.	This	information	may	include	credit	and	debit	card	numbers,	bank	account	numbers,	social	security numbers,	driver's	license	numbers,	names	and	addresses,	and	other	types	of	personal	information	or	sensitive	business	information.	Some	of	this	information	is	also processed	and	stored	by	our	third-party	service	providers	and	other	agents	(which	we	refer	to	collectively	as	our	"associated	third	parties")	as	well	as	merchants	and ISOs.	We	have	responsibility	to	the	card	networks,	their	member	financial	institutions,	and	in	some	instances,	our	merchants,	ISOs	and/or	individuals,	for	our	failure	or the	failure	of	our	associated	third	parties	or	merchants	(as	applicable)	to	protect	this	information.

We	are	a	regular	target	of	malicious	third-party	attempts	to	identify	and	exploit	system	vulnerabilities,	and/or	penetrate	or	bypass	our	security	measures,	in	order	to gain	unauthorized	access	to	our	networks	and	systems	or	those	of	our	associated	third	parties.	Such	access	could	lead	to	the	compromise	of	sensitive,	business,	personal or	confidential	information.	As	a	result,	we	follow	a	defense-in-depth	model	for	cybersecurity,	meaning	we	proactively	seek	to	employ	multiple	methods	at	different layers	to	defend	our	systems	against	intrusion	and	attack	and	to	protect	the	data	we	collect.	However,	we	cannot	be	certain	that	these	measures	will	be	successful	and will	be	sufficient	to	counter	all	current	and	emerging	technology	threats.

Our	computer	systems	and/or	our	associated	third	parties'	computer	systems	could	be	subject	to	penetration,	and	our	data	protection	measures	may	not	prevent unauthorized	access.	The	techniques	used	to	obtain	unauthorized	access,	disable	or	degrade	service	or	sabotage	systems	change	frequently	and	are	often	difficult	to detect	and	continually	evolve	and	become	more	sophisticated.	Threats	to	our	systems	and	our	associated	third	parties'	systems	can	derive	from	human	error,	fraud	or malice	on	the	part	of	employees	or	third	parties,	including	state-sponsored	organizations	with	significant	financial	and	technological	resources.	Computer	viruses	and other	malware	can	be	distributed	and	could	infiltrate	our	systems	or	those	of	our	associated	third	parties.	In	addition,	denial	of	service	or	other	attacks	could	be	launched against	us	for	a	variety	of	purposes,	including	to	interfere	with	our	services	or	create	a	diversion	for	other	malicious	activities.	Our	defensive	measures	may	not	prevent downtime,	unauthorized	access	or	use	of	sensitive	data.	While	we	maintain	first-	and	third-party	insurance	coverage	that	may	cover	certain	aspects	of	cyber	risks,	such insurance	coverage	may	be	insufficient	to	cover	all	losses.	Companies	we	acquire	may	require	post-closing	implementation	of	additional	cyber	defense	methods	to	align with	our	standards	and,	as	a	result,	there	may	be	a	period	of	increased	risk	between	the	closing	of	an	acquisition	and	the	completion	of	such	implementation.	Further,	our third-party	relationships	are	subject	to	our	vendor	management	program	and	governed	by	written	contracts;	however,	we	do	not	control	the	actions	of	our	associated third	parties,	and	any	problems	experienced	by	these	third	parties,	including	those	resulting	from	breakdowns	or	other	disruptions	in	the	services	provided	by	such parties	or	cyberattacks	and	security	breaches,	could	adversely	affect	our	ability	to	service	our	merchant	customers	or	otherwise	conduct	our	business.

We	also	could	be	subject	to	liability	for	claims	relating	to	misuse	of	personal	information	in	violation	of	contractual	obligations	or	data	privacy	laws.	Regulatory authorities	around	the	world	are	considering	or	have	enacted	a	number	of	legislative	and	regulatory	proposals	concerning	data	protection	and	use,	and	the	interpretation and	application	of	consumer	and	data	protection	laws	in	the	United	States,	Europe,	the	Asia-Pacific	region	and	elsewhere	is	increasingly	uncertain.	It	is	possible	that these	laws	may	be	interpreted	and	applied	in	a	manner	that	is	inconsistent	with	our	data	practices	or	operations	model,	which	could	result	in	potential	liability	for	fines, damages	or	a	need	to	incur	substantial	costs	to	modify	our	operations.	In	addition,	we	cannot	provide	assurance	that	the	contractual	requirements	related	to	use,	security and	privacy	that	we	impose	on	our	associated	third	parties	who	have	access	to	this	data	will	be	followed	or	will	be	adequate	to	prevent	the	misuse	of	this	data.	Any misuse	or	compromise	of	personal	information	or	failure	to	adequately	enforce	these	contractual	requirements	could	result	in	liability,	protracted	and	costly	litigation and,	with	respect	to	misuse	of	personal	information	of	our	merchants	and	consumers,	lost	revenue	and	reputational	harm.	In	addition,	as	the	regulatory	environment related	to	information	security,	data	collection	and	use	and	privacy	becomes	increasingly

rigorous,	with	new	and	constantly	changing	requirements	applicable	to	our	business,	compliance	with	those	requirements	could	also	result	in	additional	costs.

Any	type	of	security	breach,	attack	or	misuse	of	data	described	above	or	otherwise,	whether	experienced	by	us	or	an	associated	third	party,	could	harm	our reputation	and	deter	existing	and	prospective	customers	from	using	our	services	or	from	making	electronic	payments	generally,	increase	our	operating	expenses	in	order to	contain	and	remediate	the	incident,	expose	us	to	unanticipated	or	uninsured	liability,	disrupt	our	operations	(including	potential	service	interruptions),	distract	our management,	increase	our	risk	of	litigation	or	regulatory	scrutiny,	result	in	the	imposition	of	penalties	and	fines	under	state,	federal	and	foreign	laws	or	by	the	card networks,	and	adversely	affect	our	continued	card	network	registration	or	membership	and	financial	institution	sponsorship.	Our	removal	from	networks'	 lists	of Payment	Card	Industry	Data	Security	Standard	compliant	service	providers	could	mean	that	existing	merchant	customers,	sales	partners	or	other	third	parties	may	cease using	or	referring	our	services.	Also,	prospective	merchant	customers,	sales	partners	or	other	third	parties	may	choose	to	terminate	negotiations	with	us,	or	delay	or choose	not	to	consider	us	for	their	processing	needs.	In	addition,	the	card	networks	could	refuse	to	allow	us	to	process	through	their	networks.

The	payment	technology	services	industry	is	highly	competitive,	and	some	of	our	competitors	are	larger	and	have	greater	financial	and	operational	resources	than we	do,	which	may	give	them	an	advantage	with	respect	to	the	pricing	of	services	offered	to	customers	and	the	ability	to	develop	new	technologies.

We	operate	in	the	payment	technology	services	industry,	which	is	highly	competitive.	In	this	industry,	our	primary	competitors	include	other	independent	payment processors,	as	well	as	financial	institutions,	ISOs	and,	potentially,	card	networks.	Many	of	our	competitors	are	companies	that	are	larger	than	we	are,	with	greater financial	and	operational	resources	than	we	have.	Our	competitors	that	are	financial	institutions	or	subsidiaries	of	financial	institutions	do	not	incur	the	costs	associated with	being	sponsored	by	a	direct	member	for	participation	in	the	card	networks,	as	we	do	in	certain	jurisdictions,	and	may	be	able	to	settle	transactions	more	quickly	for merchants	than	we	can.	These	financial	institutions	may	also	provide	payment	processing	services	to	merchants	at	a	loss	in	order	to	generate	banking	fees	from	the merchants.	It	is	also	possible	that	larger	financial	institutions	could	decide	to	perform	in-house	some	or	all	of	the	services	that	we	currently	provide	or	could	provide. These	attributes	may	provide	them	with	a	competitive	advantage	in	the	market.

Furthermore,	we	are	facing	increasing	competition	from	nontraditional	competitors,	including	new	entrant	technology	companies	who	offer	certain	innovations	in payment	methods.	Some	of	these	competitors	utilize	proprietary	software	and	service	solutions.	Some	of	these	nontraditional	competitors	have	significant	financial resources	and	robust	networks	and	are	highly	regarded	by	consumers.	In	addition,	some	nontraditional	competitors,	such	as	private	companies	or	startup	companies,	may be	less	risk	averse	than	we	are	and,	therefore,	may	be	able	to	respond	more	quickly	to	market	demands.	If	these	nontraditional	competitors	gain	a	greater	share	of	total electronic	payments	transactions,	it	could	have	a	material	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.	These	competitors may	compete	in	ways	that	minimize	or	remove	the	role	of	traditional	card	networks,	processors	and/or	point-of-sale	software	in	the	electronic	payments	process.

In	order	to	remain	competitive	and	to	continue	to	increase	our	revenues	and	earnings,	we	must	continually	and	quickly	update	our	services,	a	process	that	could result	in	higher	costs	and	the	loss	of	revenues,	earnings	and	customers	if	the	new	services	do	not	perform	as	intended	or	are	not	accepted	in	the	marketplace.

The	payment	technology	services	industry	in	which	we	compete	are	characterized	by	rapid	technological	change,	new	product	introductions,	evolving	industry standards	and	changing	customer	needs.	In	order	to	remain	competitive,	we	are	continually	involved	in	a	number	of	projects,	including	the	development	of	a	new authorization	platform,	mobile	payment	applications,	ecommerce	services	and	other	new	offerings	emerging	in	the	payment	technology	services	industry.	These	projects carry	the	risks	associated	with	any	development	effort,	including	cost	overruns,	delays	in	delivery	and	performance	problems.	In	the	payment	technology	services markets,	these	risks	are	even	more	acute.	Any	delay	in	the	delivery	of	new	services	or	the	failure	to	differentiate	our	services	could	render	our	services	less	desirable	to customers,	or	possibly	even	obsolete.	Furthermore,	as	the	market	for	alternative	payment	processing	services	evolves,	it	may	develop	too	rapidly	or	not	rapidly	enough for	us	to	recover	the	costs	we	have	incurred	in	developing	new	services	targeted	at	this	market.

In	addition,	the	services	we	deliver	to	the	payment	technology	services	markets	are	designed	to	process	very	complex	transactions	and	deliver	reports	and	other information	on	those	transactions,	all	at	very	high	volumes	and	processing	speeds.	Any	failure	to	deliver	an	effective	and	secure	product	or	any	performance	issue	that arises	with	a	new	product	or	service	could	result	in	significant	processing	or	reporting	errors	or	other	losses.	As	a	result	of	these	factors,	our	development	efforts	could result	in	higher	costs	that	could	reduce	our	earnings	in	addition	to	a	loss	of	revenues	and	earnings	if	promised	new	services	are	not	delivered

timely	to	our	customers	or	do	not	perform	as	anticipated.	We	rely	in	part	on	third	parties,	including	some	of	our	competitors	and	potential	competitors,	for	the development	of	and	access	to	new	technologies.

# Our	revenues	from	 the	sale	of	services	 to	merchants	 that	accept	Visa	cards	and	Mastercard	cards	are	dependent	upon	our	continued	Visa	and	Mastercard registrations,	financial	institution	sponsorship	and,	in	some	cases,	continued	membership	in	certain	card	networks.

In	order	to	provide	our	Visa	and	Mastercard	transaction	processing	services,	we	must	be	either	a	direct	member	or	be	registered	as	a	merchant	processor	or	service provider	of	Visa	and	Mastercard,	respectively.	Registration	as	a	merchant	processor	or	service	provider	is	dependent	upon	our	being	sponsored	by	Members	of	each organization	in	certain	jurisdictions.	If	our	sponsor	financial	institution	in	any	market	should	stop	providing	sponsorship	for	us,	we	would	need	to	find	another	financial institution	to	provide	those	services	or	we	would	need	to	attain	direct	membership	with	the	card	networks,	either	of	which	could	prove	to	be	difficult	and	expensive.	If we	are	unable	to	find	a	replacement	financial	institution	to	provide	sponsorship	or	attain	direct	membership,	we	may	no	longer	be	able	to	provide	processing	services	to affected	customers	and	potential	customers	in	that	market,	which	would	negatively	affect	our	revenues,	earnings	and	cash	flows.	Furthermore,	some	agreements	with	our financial	 institution	 sponsors	 give	 them	 substantial	 discretion	 in	 approving	 certain	 aspects	 of	 our	 business	 practices,	 including	 our	 solicitation,	 application	 and qualification	procedures	for	merchants	and	the	terms	of	our	agreements	with	merchants.	Our	sponsors'	discretionary	actions	under	these	agreements	could	have	a material	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.	In	connection	with	direct	membership,	the	rules	and	regulations	of various	card	associations	and	networks	prescribe	certain	capital	requirements.	Any	 increase	 in	 the	capital	 level	required	would	 limit	our	use	of	capital	for	other purposes.

# We	rely	on	various	financial	institutions	to	provide	clearing	services	in	connection	with	our	settlement	activities.	If	we	are	unable	to	maintain	clearing	services	with these	financial	institutions	and	are	unable	to	find	a	replacement,	our	business	may	be	adversely	affected.

We	rely	on	various	financial	 institutions	 to	provide	clearing	services	 in	connection	with	our	settlement	activities.	If	such	financial	 institutions	should	stop providing	clearing	services,	we	must	find	other	financial	institutions	to	provide	those	services.	If	we	are	unable	to	find	a	replacement	financial	institution	we	may	no longer	be	able	to	provide	processing	services	to	certain	customers,	which	could	negatively	affect	our	revenues,	earnings	and	cash	flows.

If	we	fail	to	comply	with	the	applicable	requirements	of	the	card	networks,	they	could	seek	to	fine	us,	suspend	us	or	terminate	our	registrations	or	membership.	If	we incur	fines	or	penalties	for	which	our	merchants	or	ISOs	are	responsible	that	we	cannot	collect	or	pursue	collection	from	them,	we	may	have	to	bear	the	cost	of such	fines	or	penalties.

We	are	subject	to	card	association	and	network	rules	that	could	subject	us	to	a	variety	of	fines	or	penalties	that	may	be	levied	by	the	card	networks	for	certain	acts or	omissions.	The	rules	of	the	card	networks	are	set	by	their	boards,	which	may	be	influenced	by	card	issuers,	and	some	of	those	issuers	are	our	competitors	with	respect to	these	processing	services.	Many	banks	directly	or	indirectly	sell	processing	services	to	merchants	in	direct	competition	with	us.	These	banks	could	attempt,	by	virtue of	their	influence	on	the	networks,	to	alter	the	networks'	rules	or	policies	to	the	detriment	of	non-members,	including	us	in	certain	jurisdictions.	The	termination	of	our registrations	or	our	membership	or	our	status	as	a	service	provider	or	a	merchant	processor,	or	any	changes	in	card	association	or	other	network	rules	or	standards, including	interpretation	and	implementation	of	the	rules	or	standards,	that	increase	the	cost	of	doing	business	or	limit	our	ability	to	provide	transaction	processing services	to	our	customers,	could	have	a	material	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.	If	a	merchant	or	an	ISO	fails	to comply	with	the	applicable	requirements	of	the	card	associations	and	networks,	we	or	the	merchant	or	ISO	could	be	subject	to	a	variety	of	fines	or	penalties	that	may	be levied	by	the	card	associations	or	networks.	If	we	cannot	collect	or	pursue	collection	of	such	amounts	from	the	applicable	merchant	or	ISO,	we	may	have	to	bear	the	cost of	such	fines	or	penalties,	resulting	in	lower	earnings	for	us.	The	termination	of	our	registration,	or	any	changes	in	the	Visa	or	Mastercard	rules	that	would	impair	our registration,	could	require	us	to	stop	providing	Visa	and	Mastercard	payment	processing	services,	which	would	make	it	impossible	for	us	to	conduct	our	business	on	its current	scale.

# Our	systems	or	our	third-party	providers'	systems	may	fail,	which	could	interrupt	our	service,	cause	us	to	lose	business,	increase	our	costs	and	expose	us	to	liability.

We	depend	on	the	efficient	and	uninterrupted	operation	of	our	computer	systems,	software,	data	centers	and	telecommunications	networks,	as	well	as	the	systems and	services	of	third	parties.	A	system	outage	or	data	loss	could	have	a	material	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows. Not	only	would	we	suffer	damage	to	our	reputation	in	the	event	of	a	system	outage	or	data	loss,	but	we	may	also	be	liable	to	third	parties.	Our	systems	and	operations	or those	of	our	third-party	providers	could	be	exposed	to	damage	or	interruption	from,	among	other	things,	fire,	natural	disaster,	power	loss,	telecommunications	failure, terrorist	acts,	war,	unauthorized	entry,	human	error,	and	computer	viruses	or	other	defects.

Defects	in	our	systems	or	those	of	third	parties,	errors	or	delays	in	the	processing	of	payment	transactions,	telecommunications	failures,	or	other	difficulties	(including those	related	to	system	relocation)	could	result	in	loss	of	revenue,	loss	of	customers,	loss	of	merchant	and	cardholder	data,	harm	to	our	business	or	reputation,	exposure to	fraud	losses	or	other	liabilities,	negative	publicity,	additional	operating	and	development	costs,	fines	and	other	sanctions	imposed	by	card	networks,	and/or	diversion of	technical	and	other	resources.

# We	may	experience	software	defects,	undetected	errors,	and	development	delays,	which	could	damage	customer	relations,	decrease	our	potential	profitability	and expose	us	to	liability.

Our	services	are	based	on	software	and	computing	systems	that	often	encounter	development	delays,	and	the	underlying	software	may	contain	undetected	errors, viruses	 or	 defects.	Defects	in	our	software	services	and	errors	or	delays	in	our	processing	of	electronic	transactions	could	result	in	additional	development	costs, diversion	of	technical	and	other	resources	from	our	other	development	efforts,	loss	of	credibility	with	current	or	potential	customers,	harm	to	our	reputation	and	exposure to	liability	claims.

In	addition,	we	rely	on	technologies	and	software	supplied	by	third	parties	that	may	also	contain	undetected	errors,	viruses	or	defects	that	could	have	a	material adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.

# Increased	merchant,	referral	partner	or	ISO	attrition	could	cause	our	financial	results	to	decline.

We	experience	attrition	in	merchant	credit	and	debit	card	processing	volume	resulting	from	several	factors,	including	business	closures,	transfers	of	merchants' accounts	to	our	competitors,	unsuccessful	contract	renewal	negotiations	and	account	closures	that	we	initiate	for	various	reasons,	such	as	heightened	credit	risks	or contract	breaches	by	merchants.	If	an	ISO	partner	switches	to	another	transaction	processor,	terminates	our	services,	internalizes	payment	processing	functions	that	we perform,	merges	with	or	is	acquired	by	one	of	our	competitors,	or	shuts	down	or	becomes	insolvent,	we	may	no	longer	receive	new	merchant	referrals	from	the	ISO,	and we	risk	losing	existing	merchants	that	were	originally	enrolled	by	the	ISO.	We	cannot	predict	the	level	of	attrition	in	the	future	and	it	could	increase.	Our	referral	partners are	a	significant	source	of	new	business.	Higher	than	expected	attrition	could	negatively	affect	our	results,	which	could	have	a	material	adverse	effect	on	our	business, financial	condition,	results	of	operations	and	cash	flows.

# Our	future	growth	depends	in	part	on	the	continued	expansion	within	markets	in	which	we	already	operate,	the	emergence	of	new	markets,	and	the	continued availability	of	alliance	relationships	and	strategic	acquisition	opportunities.

Our	future	growth	and	profitability	depend	upon	our	continued	expansion	within	the	markets	in	which	we	currently	operate,	the	further	expansion	of	these markets,	the	emergence	of	other	markets	for	payment	technology	and	software	solutions	and	our	ability	to	penetrate	these	markets.	As	part	of	our	strategy	to	achieve	this expansion,	we	look	for	acquisition	opportunities,	investments	and	alliance	relationships	with	other	businesses	that	will	allow	us	to	increase	our	market	penetration, technological	capabilities,	product	offerings	and	distribution	capabilities.	We	may	not	be	able	to	successfully	identify	suitable	acquisition,	investment	and	alliance candidates	in	the	future,	and	if	we	do,	they	may	not	provide	us	with	the	value	and	benefits	we	anticipate.

Our	expansion	into	new	markets	is	also	dependent	upon	our	ability	to	apply	our	existing	technology	or	to	develop	new	applications	to	meet	the	particular	service needs	of	each	new	market.	We	may	not	have	adequate	financial	or	technological	resources	to	develop	effective	and	secure	services	and	distribution	channels	that	will satisfy	the	demands	of	these	new	markets.	If	we	fail	to	expand	into	new	and	existing	markets	for	payment	technology	and	software	solutions,	we	may	not	be	able	to continue	to	grow	our	revenues	and	earnings.

# There	may	be	a	decline	in	the	use	of	cards	and	other	electronic	payments	as	a	payment	mechanism	for	consumers	or	adverse	developments	with	respect	to	the	card industry	in	general.

If	consumers	do	not	continue	to	use	credit	or	debit	cards	or	other	electronic	payment	methods	as	a	payment	mechanism	for	their	transactions	or	if	there	is	a	change in	the	mix	of	payments	between	cash,	checks,	credit	cards,	and	debit	cards,	which	is	adverse	to	us,	it	could	have	a	material	adverse	effect	on	our	business,	financial condition,	results	of	operations	and	cash	flows.	Consumer	credit	risk	may	make	it	more	difficult	or	expensive	for	consumers	to	gain	access	to	credit	facilities	such	as credit	cards.	Regulatory	changes	may	result	in	financial	institutions	seeking	to	charge	their	customers	additional	fees	for	use	of	credit	or	debit	cards.	Such	fees	may result	in	decreased	use	of	credit	or	debit	cards	by	cardholders.	In	each	case,	our	business,	financial	condition,	results	of	operations	and	cash	flows	may	be	adversely affected.	We	believe	future	growth	in	the	use	of	credit	and	debit	cards	and	other	electronic	payments	will	be	driven	by	the	cost,	ease-of-use,	and	quality	of	services offered	to	consumers	and	businesses.	In	order	to	consistently	increase	and	maintain	our	profitability,	consumers	and	businesses	must	continue	to	use	electronic	payment methods	that	we	process,	including	credit	and	debit	cards.

# We	incur	chargeback	losses	when	our	merchants	refuse	or	cannot	reimburse	us	for	chargebacks	resolved	in	favor	of	their	customers.	Any	increase	in	chargebacks not	paid	by	our	merchants	may	adversely	affect	our	business,	financial	condition,	results	of	operations	and	cash	flows.

In	the	event	a	dispute	between	a	cardholder	and	a	merchant	is	not	resolved	in	favor	of	the	merchant,	the	transaction	is	normally	charged	back	to	the	merchant	and the	purchase	price	is	credited	or	otherwise	refunded	to	the	cardholder.	If	we	are	unable	to	collect	such	amounts	from	the	merchant's	account	or	reserve	account	(if applicable),	or	if	the	merchant	refuses	or	is	unable,	due	to	closure,	bankruptcy	or	other	reasons,	to	reimburse	us	for	a	chargeback,	we	bear	the	loss	for	the	amount	of	the refund	paid	to	the	cardholder.	The	risk	of	chargebacks	is	typically	greater	with	those	merchants	that	promise	future	delivery	of	goods	and	services	rather	than	delivering goods	or	rendering	services	at	the	time	of	payment.	We	may	experience	significant	losses	from	chargebacks	in	the	future.	Any	increase	in	chargebacks	not	paid	by	our merchants	could	have	a	material	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.	We	have	policies	to	manage	merchant-related credit	risk	and	often	mitigate	such	risk	by	requiring	collateral	and	monitoring	transaction	activity.	Notwithstanding	our	programs	and	policies	for	managing	credit	risk,	it is	possible	that	a	default	on	such	obligations	by	one	or	more	of	our	merchants	could	have	a	material	adverse	effect	on	our	business.

# Fraud	by	merchants	or	others	could	have	an	adverse	effect	on	our	financial	condition,	results	of	operations	and	cash	flows.

We	have	potential	liability	for	fraudulent	electronic	payment	transactions	or	credits	initiated	by	merchants	or	others.	Examples	of	merchant	fraud	include	when	a merchant	or	other	party	knowingly	uses	a	stolen	or	counterfeit	credit	or	debit	card,	card	number,	or	other	credentials	to	record	a	false	sales	or	credit	transaction, processes	 an	 invalid	 card,	 or	 intentionally	 fails	 to	 deliver	 the	 merchandise	 or	 services	 sold	 in	 an	 otherwise	 valid	 transaction.	 Criminals	 are	 using	 increasingly sophisticated	methods	to	engage	in	illegal	activities	such	as	counterfeiting	and	fraud.	Failure	to	effectively	manage	risk	and	prevent	fraud	could	increase	our	chargeback losses	or	cause	us	to	incur	other	liabilities.	It	is	possible	that	incidents	of	fraud	could	increase	in	the	future.	Increases	in	chargebacks	or	other	liabilities	could	have	a material	adverse	effect	on	our	financial	condition,	results	of	operations	and	cash	flows.

# We	are	subject	to	economic	and	political	risk,	the	business	cycles	and	credit	risk	of	our	customers	and	the	overall	level	of	consumer,	business	and	government spending,	which	could	negatively	affect	our	business,	financial	condition,	results	of	operations	and	cash	flows.

The	global	payment	technology	services	industry	depends	heavily	on	the	overall	level	of	consumer,	business	and	government	spending.	We	are	exposed	to	general economic	conditions	that	affect	consumer	confidence,	consumer	spending,	consumer	discretionary	income	and	changes	in	consumer	purchasing	habits.	A	sustained deterioration	in	general	economic	conditions	in	the	markets	in	which	we	operate	or	increases	in	interest	rates	may	adversely	affect	our	financial	performance	by	reducing the	number	or	average	purchase	amount	of	transactions	made	using	electronic	payments.	A	reduction	in	the	amount	of	consumer	spending	could	result	in	a	decrease	in our	revenues	and	profits.	If	our	merchants	make	fewer	sales	to	consumers	using	electronic	payments	or	consumers	using	electronic	payments	spend	less	per	transaction, we	will	have	fewer	transactions	to	process	or	lower	transaction	amounts,	each	of	which	would	contribute	to	lower	revenues.

A	downturn	in	the	economy	could	force	retailers	to	close,	resulting	in	exposure	to	potential	credit	losses	and	future	transaction	declines.	Furthermore,	credit	card issuers	may	reduce	credit	limits	and	be	more	selective	with	respect	to	whom	they	issue	credit	cards.	We	also	have	a	certain	amount	of	fixed	and	other	costs,	including rent,	debt	service,	and	salaries,	which	could	limit	our	ability	to	quickly	adjust	costs	and	respond	to	changes	in	our	business	and	the	economy.	Changes	in	economic conditions	could	also	adversely	affect	our	future	revenues	and	profits	and	cause	a	materially	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and cash	flows.

In	addition,	a	recessionary	economic	environment	could	affect	our	merchants	through	a	higher	rate	of	bankruptcy	filings,	resulting	in	lower	revenues	and	earnings for	us.	Our	associated	third	parties	are	also	liable	for	any	fines	or	penalties	that	may	be	assessed	by	any	card	networks.	In	the	event	that	we	are	not	able	to	collect	such amounts	from	our	merchants	or	the	associated	third	parties,	due	to	fraud,	breach	of	contract,	insolvency,	bankruptcy	or	any	other	reason,	we	may	be	liable	for	any	such charges.

Reject	losses	arise	from	the	fact	that,	in	most	markets,	we	collect	our	fees	from	our	merchants	on	the	first	day	after	the	monthly	billing	period.	This	results	in	the build-up	of	a	substantial	receivable	from	our	customers.	If	a	merchant	has	gone	out	of	business	during	the	billing	period,	we	may	be	unable	to	collect	such	fees,	which could	negatively	affect	our	business,	financial	condition,	results	of	operations	and	cash	flows.

# Increases	in	card	network	fees	may	result	in	the	loss	of	customers	and/or	a	reduction	in	our	earnings.

From	time-to-time,	the	card	networks,	including	Visa	and	Mastercard,	increase	the	fees	that	they	charge	processors.	We	could	attempt	to	pass	these	increases	along to	our	merchant	customers,	but	this	strategy	might	result	in	the	loss	of	customers	to	our	competitors	who	may	not	pass	along	the	increases,	thereby	reducing	our revenues	and	earnings.	If	competitive	practices	prevent	us	from	passing	along	the	higher	fees	to	our	merchant	customers	in	the	future,	we	may	have	to	absorb	all	or	a portion	of	such	increases,	thereby	increase	our	operating	costs	and	reducing	our	earnings.

# Any	new	implementation	of	or	changes	made	to	laws,	regulations,	card	network	rules	or	other	industry	standards	affecting	our	business	in	any	of	the	geographic regions	in	which	we	operate	may	require	significant	development	efforts	or	have	an	unfavorable	effect	on	our	financial	results	and	our	cash	flows.

Our	business	is	affected	by	laws	and	regulations	and	examinations	that	affect	us	and	our	industry	in	the	countries	in	which	we	operate.	Regulation	and	proposed regulation	of	 the	payments	 industry	has	 increased	significantly	 in	recent	years.	Failure	 to	comply	with	regulations	or	guidelines	may	result	 in	 the	suspension	or revocation	of	a	license	or	registration,	the	limitation,	suspension	or	termination	of	service,	and	the	imposition	of	civil	and	criminal	penalties,	including	fines,	or	may cause	customers	or	potential	customers	to	be	reluctant	to	do	business	with	us,	any	of	which	could	have	an	adverse	effect	on	our	financial	condition.	For	example,	we	are subject	 to	 the	card	network	rules	of	Visa,	Mastercard	and	other	card	networks,	Interac,	and	various	debit	networks;	applicable	privacy	and	 information	security regulations	in	the	regions	where	we	operate	and	of	the	card	networks;	the	Payment	Services	Directive	in	Europe;	The	Code	of	Conduct	for	the	Credit	and	Debit	Card Industry	in	Canada	(issued	by	Canada's	Department	of	Finance);	the	Housing	Assistance	Tax	Act	of	2008	in	the	United	States,	which	requires	information	returns	to	be made	for	each	calendar	year	by	merchant	acquiring	entities;	and	a	myriad	of	U.S.	federal	and	state	consumer	protection	laws	and	state	escheat	regulations.	We	are	also subject	to	examination	by	the	FFIEC	as	a	result	of	our	provision	of	data	processing	services	to	financial	institutions.	Additionally,	we	manage	a	membership	discount program	that	is	billed	to	customers	annually	on	a	recurring	basis.	Change	in	regulation	of	this	type	of	billing	could	negatively	affect	our	revenue.

Interchange	fees	(which	are	retained	by	the	card	issuer	in	connection	with	transactions)	are	subject	to	intense	legal,	regulatory	and	legislative	scrutiny	worldwide. For	instance,	the	Dodd-Frank	Act,	which	was	signed	into	law	in	July	2010,	significantly	changed	the	U.S.	financial	regulatory	system.	Changes	affecting	the	payment processing	industry	include	restricting	amounts	of	debit	card	fees	that	certain	issuing	institutions	can	charge	merchants	and	allowing	merchants	to	set	minimum	amounts for	 the	acceptance	of	credit	cards	and	 to	offer	discounts	for	different	payment	methods.	These	 types	of	restrictions	could	negatively	affect	 the	number	of	debit transactions,	which	would	adversely	affect	our	business.	The	Dodd-Frank	Act	also	created	the	CFPB,	which	has	assumed	responsibility	for	enforcing	federal	consumer protection	laws,	and	the	Financial	Stability	Oversight	Council,	which	has	the	authority	to	determine	whether	any	nonbank	financial	company,	such	as	us,	should	be supervised	by	the	Board	of	Governors	of	the	Federal	Reserve	System	(the	"Federal	Reserve")	on	the	ground	that	it	is	"systemically	important	"to	the	U.S.	financial system.	Any	such	designation	would	result	in	increased	regulatory	burdens	on	our	business,	which	increases	our	risk	profile	and	may	have	an	adverse	effect	on	our business,	financial	condition,	results	of	operations	and	cash	flows.

All	persons	offering	or	providing	financial	services	or	products	to	consumers,	directly	or	indirectly,	can	be	subject	to	prohibitions	against	unfair,	deceptive,	or abusive	acts	or	practices	("UDAAP")	under	the	Dodd-Frank	Act.	The	CFPB	has	enforcement	authority	to	prevent	an	entity	that	offers	or	provides	consumer	financial services	or	products	or	a	service	provider	from	committing	or	engaging	in	UDAAP,	including	the	ability	to	engage	in	joint	investigations	with	other	agencies,	issue subpoenas	and	civil	investigative	demands,	conduct	hearings	and	adjudication	proceedings,	commence	a	civil	action,	grant	relief	(e.g.,	limit	activities	or	functions; rescission	of	contracts),	and	refer	matters	for	criminal	proceedings.	More	generally,	all	persons	engaged	in	commerce,	including,	but	not	limited	to,	us	and	our	merchant and	financial	institution	customers,	are	also	subject	to	Section	5	of	the	Federal	Trade	Commission	("FTC")	Act	prohibiting	unfair	or	deceptive	acts	or	practices ("UDAP").	In	addition,	there	are	other	laws,	rules	and	or	regulations,	including	the	Telemarketing	Sales	Act,	that	may	directly	impact	the	activities	of	our	merchant customers	and	in	some	cases	may	subject	us,	as	the	merchant's	payment	processor,	to	investigations,	fees,	fines	and	disgorgement	of	funds	in	the	event	we	are	deemed	to have	aided	and	abetted	or	otherwise	provided	the	means	and	instrumentalities	to	facilitate	the	illegal	activities	of	the	merchant	through	our	payment	processing	services. Various	federal	and	state	regulatory	enforcement	agencies,	including	the	FTC,	the	CFPB	and	the	states'	attorneys	general	have	the	authority	to	take	action	against nonbanks	that	engage	in	UDAP	or	violate	other	laws,	rules	or	regulations	and,	to	the	extent	we	are	processing	payments	for	a	merchant	that	may	be	in	violation	of	these laws,	rules	or	regulations,	we	may	be	subject	to	enforcement	actions	and	as	a	result	may	incur	losses	and	liabilities.

In	many	countries,	we	are	legally	or	contractually	required	to	comply	with	the	anti-money	laundering	laws	and	regulations,	such	as,	in	the	United	States,	the	BSA, as	amended	by	the	USA	PATRIOT	Act,	and	similar	laws	of	other	countries,	which	require	that	customer	identifying	information	be	obtained	and	verified.	In	some countries,	we	are	directly	subject	to	these	requirements;	in	other	countries,	we	have	contractually	agreed	to	assist	our	sponsor	financial	institutions	with	their	obligation to	comply	with

anti-money	laundering	requirements	that	apply	to	them.	In	addition,	we	and	our	sponsor	financial	institutions	are	subject	to	the	laws	and	regulations	enforced	by	OFAC, which	prohibit	U.S.	persons	from	engaging	in	transactions	with	certain	prohibited	persons	or	entities.	Similar	requirements	apply	in	other	countries.	Our	failure	to comply	with	any	of	these	contractual	requirements	or	laws	could	adversely	affect	our	business,	financial	credit	results	of	operations	and	cash	flows.

We	are	also	subject	to	a	variety	of	foreign	and	domestic	laws,	and	their	implementing	regulations,	which	establish	requirements	for	the	collection,	processing, storage,	use	and	disclosure	of	personal	information,	require	notice	to	individuals	of	privacy	practices,	and	provide	individuals	with	certain	rights	to	prevent	use	and disclosure	of	protected	information.	Outside	the	United	States,	these	laws	include,	without	limitation,	the	EU	General	Data	Protection	Regulation.	As	a	result	of	our acquisition	of	AdvancedMD,	we	are	also	subject	to	laws	and	regulations	affecting	the	healthcare	industry,	including	but	not	limited	to	false	or	fraudulent	claim	laws; HIPAA	and	other	health	privacy	regulations;	prescribing	laws;	electronic	health	record	laws;	claims	and	transmission	laws;	and	prompt	pay	laws.	Under	HIPAA, covered	entities	and	business	associates	must	establish	administrative,	physical	and	technical	safeguards	to	protect	the	confidentiality,	integrity	and	availability	of electronic	protected	health	information	maintained	or	transmitted	by	them	or	by	others	on	their	behalf.	Compliance	with	these	laws	and	regulations	can	be	costly	and time	consuming,	adding	a	layer	of	complexity	to	business	practices	and	innovation.		As	with	other	regulatory	schemes,	our	failure	to	comply	could	result	in	public	or private	enforcement	action	and	accompanying	litigation	costs,	losses,	fines	and	penalties.

Portions	of	our	business	may	be	subject	to	the	Fair	Debt	Collection	Practices	Act,	the	Fair	Credit	Reporting	Act	and	similar	state	laws.	These	debt	collection	laws are	designed	to	eliminate	abusive,	deceptive	and	unfair	debt	collection	practices	and	may	require	licensing	at	the	state	level.	The	Fair	Credit	Reporting	Act	regulates	the use	and	reporting	of	consumer	credit	information	and	also	imposes	disclosure	requirements	on	entities	that	take	adverse	action	based	on	information	obtained	from credit	reporting	agencies.	If	we	fail	to	comply	with	any	of	these	laws,	to	the	extent	they	are	applicable	to	us,	we	may	be	subject	to	fines,	penalties	and	litigation.

Changes	to	legal	rules	and	regulations,	or	interpretation	or	enforcement	thereof,	even	if	not	directed	at	us,	may	require	significant	efforts	to	change	our	systems	and services	and	may	require	changes	to	how	we	price	our	services	to	customers,	adversely	affecting	our	business.	Even	an	inadvertent	failure	to	comply	with	laws	and regulations,	as	well	as	rapidly	evolving	social	expectations	of	corporate	fairness,	could	damage	our	business	or	our	reputation.	Furthermore,	we	are	subject	to	tax	laws	in each	jurisdiction	where	we	conduct	business.	Changes	in	such	laws	or	their	interpretations	could	decrease	the	value	of	revenues	we	receive,	the	value	of	tax	losses	and tax	credit	carry	forwards	recorded	on	our	balance	sheet	and	have	a	material	adverse	effect	on	our	financial	condition,	results	of	operations	and	cash	flows.

# We	are	subject	to	risks	associated	with	changes	in	interest	rates	or	currency	exchange	rates,	which	could	adversely	affect	our	business,	financial	position,	results	of operations	and	cash	flows,	and	we	may	not	effectively	hedge	against	these	risks.

A	substantial	portion	of	our	indebtedness	bears	interest	at	a	variable	rate,	and	we	may	incur	additional	variable-rate	indebtedness	in	the	future.	Increases	in	interest rates	will	reduce	our	operating	cash	flows	and	could	hinder	our	ability	to	fund	our	operations,	capital	expenditures,	acquisitions,	share	repurchases	or	dividends.

We	are	also	subject	to	risks	related	to	the	changes	in	currency	exchange	rates	as	a	result	of	our	investments	in	foreign	operations	and	from	revenues	generated	in currencies	other	than	the	U.S.	dollar.	Revenues	and	profit	generated	by	international	operations	will	increase	or	decrease	compared	to	prior	periods	as	a	result	of	changes in	currency	exchange	rates.	Volatility	in	currency	exchange	rates	has	affected	and	may	continue	to	affect	our	financial	results.

In	certain	of	the	jurisdictions	in	which	we	operate,	we	may	become	subject	to	exchange	control	regulations	that	might	restrict	or	prohibit	the	conversion	of	our foreign	currencies	into	U.S.	dollars	or	limit	our	ability	to	freely	move	currency	in	or	out	of	particular	jurisdictions.	The	occurrence	of	any	of	these	factors	could	decrease the	value	of	revenues	we	receive	from	our	international	operations	and	have	a	material	adverse	effect	on	our	business.

We	may	seek	to	reduce	our	exposure	to	fluctuations	in	interest	rates	or	currency	exchange	rates	through	the	use	of	hedging	arrangements.	To	the	extent	that	we hedge	our	interest	rate	or	currency	exchange	rate	exposures,	we	forgo	the	benefits	we	would	otherwise	experience	if	interest	rates	or	currency	exchange	rates	were	to change	in	our	favor.	Developing	an	effective	strategy	for	dealing	with	movements	in	interest	rates	and	currency	exchange	rates	is	complex,	and	no	strategy	can completely	insulate	us	from	risks	associated	with	such	fluctuations.	In	addition,	a	counterparty	to	the	arrangement	could	default	on	its	obligation,	thereby	exposing	us	to credit	risk.	We	may	have	to	repay	certain	costs,	such	as	transaction	fees	or	breakage	costs,	if	we	terminate	these	arrangements.

# Changes	in	the	method	for	determining	LIBOR	and	the	potential	replacement	of	the	LIBOR	benchmark	interest	rate	could	adversely	affect	our	business,	financial condition,	results	of	operations	and	cash	flows.

A	substantial	portion	of	our	indebtedness	bears	interest	at	a	variable	rate	based	on	LIBOR.	Furthermore,	we	have	entered	into	hedging	instruments	to	manage	our exposure	to	fluctuations	in	the	LIBOR	benchmark	interest	rate.	In	July	2017,	the	United	Kingdom's	Financial	Conduct	Authority	("FCA"),	a	regulator	of	financial services	firms	and	financial	markets	in	the	United	Kingdom,	stated	that	they	will	plan	for	a	phase	out	of	regulatory	oversight	of	LIBOR	interest	rates	indices.	The	FCA has	indicated	they	will	support	the	LIBOR	indices	through	2021,	to	allow	for	an	orderly	transition	to	an	alternative	reference	rate.	The	Alternative	Reference	Rates Committee	has	proposed	the	Secured	Overnight	Financing	Rate	("SOFR")	as	its	recommended	alternative	to	LIBOR,	and	the	Federal	Reserve	Bank	of	New	York	began publishing	SOFR	rates	in	April	2018.	SOFR	is	intended	to	be	a	broad	measure	of	the	cost	of	borrowing	cash	overnight	collateralized	by	U.S.	Treasury	securities.

We	are	evaluating	the	potential	impact	of	the	eventual	replacement	of	the	LIBOR	benchmark	interest	rate,	including	the	possibility	of	SOFR	as	the	dominant replacement.	The	market	transition	away	from	LIBOR	and	towards	SOFR	is	expected	to	be	gradual	and	complicated,	including	the	development	of	term	and	credit adjustments	to	accommodate	differences	between	LIBOR	and	SOFR.	Introduction	of	an	alternative	rate	also	may	introduce	additional	basis	risk	for	market	participants as	an	alternative	index	is	utilized	along	with	LIBOR.	There	can	be	no	guarantee	that	SOFR	will	become	widely	used	and	that	alternatives	may	or	may	not	be	developed with	additional	complications.	We	are	not	able	to	predict	whether	LIBOR	will	cease	to	be	available	after	2021,	whether	SOFR	will	become	a	widely	accepted	benchmark in	place	of	LIBOR,	or	what	the	impact	of	such	a	possible	transition	to	SOFR	may	be	on	our	business,	financial	condition,	and	results	of	operations.

# We	conduct	a	portion	of	our	business	in	various	foreign	countries	where	the	risk	of	continued	political,	economic	and	regulatory	change	that	could	affect	our operating	results	is	greater	than	in	the	United	States.

We	expect	to	continue	to	expand	our	operations	in	North	America,	Europe	and	the	Asia-Pacific	region.	Some	of	the	countries	in	which	we	operate,	such	as	the Russian	Federation,	India	and	the	United	Kingdom,	have	undergone	significant	political,	economic	and	social	change	in	recent	years,	and	the	risk	of	new,	unforeseen changes	in	these	countries	remains	greater	than	in	the	United	States.	Our	business,	growth,	financial	condition	or	results	of	operations	could	be	materially	adversely affected	by	instability	or	changes	in	a	country's	or	region's	economic	conditions;	inflation;	changes	in	laws	or	regulations	or	in	the	interpretation	of	existing	laws	or regulations,	whether	caused	by	a	change	in	government	or	otherwise;	increased	difficulty	of	conducting	business	in	a	country	or	region	due	to	actual	or	potential	political or	military	conflict;	or	action	by	the	European	Union	or	the	United	States,	Canada	or	other	governments	that	may	restrict	our	ability	to	transact	business	in	a	foreign country	or	with	certain	foreign	individuals	or	entities,	such	as	sanctions	by	or	against	the	Russian	Federation.	A	possible	slowdown	in	global	trade	caused	by	increasing tariffs	or	other	restrictions	could	decrease	consumer	or	corporate	confidence	and	reduce	consumer,	government	and	corporate	spending	in	countries	outside	the	United States,	which	could	adversely	affect	our	foreign	operations.

In	addition,	maintenance	of	certain	types	of	data	by	electronic	means	and	telecommunications	is	subject	to	specific	regulation	in	many	countries.	Changes	in	these regulations,	such	as	taxation	or	limitations	on	transfers	of	data	between	countries	or	the	type	of	permission	that	must	be	obtained	in	conjunction	with	the	use	of	such data,	could	have	a	material	adverse	effect	on	our	business,	growth,	financial	condition,	results	of	operations	or	cash	flows.

On	June	23,	2016,	the	United	Kingdom	held	a	referendum	in	which	voters	approved	an	exit	from	the	European	Union,	commonly	referred	to	as	"Brexit,"	and	on March	29,	2017,	notified	the	European	Union	that	it	intended	to	exit	as	provided	in	Article	50	of	the	Treaty	on	European	Union.	In	March	2018,	the	parties	agreed	to	a transition	period	of	21	months	-	from	March	29,	2019	until	the	end	of	2020	-	before	the	United	Kingdom	leaves	the	European	Union	completely,	assuming	approval	of the	negotiated	withdrawal	agreement.	The	terms	of	the	withdrawal	are	subject	to	ongoing	negotiation	that	has	created	uncertainty	about	the	future	relationship	between the	United	Kingdom	and	the	European	Union.

Brexit	has	caused,	and	may	continue	to	cause,	economic	uncertainty,	including	volatility	in	global	stock	markets	and	currency	exchange	rate	fluctuations,	which may	adversely	affect	the	profitability	of	our	U.K.	operations.	In	addition,	Brexit	could	lead	to	increased	regulatory	complexities,	including,	without	limitation,	regulation relating	to	data	security,	privacy	and	taxation.	With	a	range	of	outcomes	still	possible,	the	full	effect	of	Brexit	is	uncertain	and	depends	on	any	agreements	the	United Kingdom	may	make	to	retain	access	to	European	Union	markets.	Consequently,	no	assurance	can	be	given	about	the	effect	of	the	outcome	on	our	U.K.	business	and	its financial	conditions,	results	of	operations	and	cash	flows	may	be	adversely	affected.

# The	integration	and	conversion	of	our	acquired	operations	or	other	future	acquisitions,	if	any,	could	result	in	increased	operating	costs	if	the	anticipated	synergies of	operating	these	businesses	as	one	are	not	achieved,	a	loss	of	strategic	opportunities	if	management	is	distracted	by	the	integration	process,	and	a	loss	of customers	if	our	service	levels	drop	during	or	following	the	integration	process.

The	acquisition,	integration,	and	conversion	of	businesses	(such	as,	but	not	limited	to,	the	recent	acquisitions	of	AdvancedMD	and	SICOM)	and	the	formation	or operation	of	alliances,	such	as	joint	ventures	and	other	partnering	arrangements	involve	a	number	of	risks.	Core	risks	are	in	the	area	of	valuation	(negotiating	a	fair	price for	the	business	based	on	inherently	limited	diligence)	and	integration	and	conversion	(managing	the	complex	process	of	integrating	the	acquired	company's	people, services,	information	security	and	technology	and	other	assets	to	realize	the	projected	value	of	the	acquired	company	and	the	synergies	projected	to	be	realized	in connection	with	the	acquisition).	In	addition,	international	acquisitions	and	alliances	often	involve	additional	or	increased	risks	including,	for	example:	managing geographically	separated	organizations,	systems,	and	facilities;	integrating	personnel	with	diverse	business	backgrounds	and	organizational	cultures;	complying	with foreign	regulatory	requirements;	fluctuations	in	currency	exchange	rates;	enforcement	of	intellectual	property	rights	in	some	foreign	countries;	difficulty	entering	new foreign	markets	due	to,	among	other	things,	customer	acceptance	and	business	knowledge	of	those	new	markets;	and	general	economic	and	political	conditions.

If	the	integration	and	conversion	process	does	not	proceed	smoothly,	the	following	factors,	among	others,	could	reduce	our	revenues	and	earnings,	increase	our operating	costs,	and	result	in	us	not	achieving	projected	synergies:

•If	we	are	unable	to	successfully	integrate	the	benefits	plans,	duties	and	responsibilities,	and	other	factors	of	interest	to	the	management	and	employees	of	the acquired	business,	we	could	lose	employees	to	our	competitors	in	the	region,	which	could	significantly	affect	our	ability	to	operate	the	business	and	complete the	integration;

•If	the	integration	process	causes	any	delays	with	the	delivery	of	our	services,	or	the	quality	of	those	services,	we	could	lose	customers	to	our	competitors,	which would	reduce	our	revenues	and	earnings;

•The	acquisition	may	otherwise	cause	disruption	 to the	acquired	company's	business	and	operations	and	relationships	with	financial institution	sponsors, customers,	merchants,	employees	and	other	partners;

•The	acquisition	and	the	related	integration	could	divert	the	attention	of	our	management	from	other	strategic	matters	including	possible	acquisitions	and alliances	and	planning	for	new	product	development	or	expansion	into	new	markets	for	payments	technology	and	software	solutions;	and

•The	 costs	 related	 to	 the	 integration	 of	 the	 acquired	 company's	 business	 and	 operations	 into	 ours	 may	 be	 greater	 than anticipated.

# The	costs	and	effects	of	pending	and	future	litigation,	investigations	or	similar	matters,	or	adverse	facts	and	developments	related	thereto,	could	materially	affect our	business,	financial	position,	results	of	operations	and	cash	flows.

We	are	from	time-to-time	involved	in	various	litigation	matters	and	governmental	or	regulatory	investigations	or	similar	matters	arising	out	of	our	current	or	future business.	Our	insurance	or	indemnities	may	not	cover	all	claims	that	may	be	asserted	against	us,	and	any	claims	asserted	against	us,	regardless	of	merit	or	eventual outcome,	may	harm	our	reputation.	Furthermore,	there	is	no	guarantee	that	we	will	be	successful	in	defending	ourselves	in	pending	or	future	litigation	or	similar	matters under	various	laws.	Should	the	ultimate	judgments	or	settlements	in	any	pending	litigation	or	future	litigation	or	investigation	significantly	exceed	our	insurance coverage,	they	could	have	a	material	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.

# We	may	not	be	able	to	successfully	manage	our	intellectual	property	and	may	be	subject	to	infringement	claims.

In	our	rapidly	developing	legal	framework,	we	rely	on	a	combination	of	contractual	rights	and	copyright,	trademark,	patent	and	trade	secret	laws	to	establish	and protect	our	proprietary	technology.	Despite	our	efforts	to	protect	our	intellectual	property,	third	parties	may	infringe	or	misappropriate	our	intellectual	property	or	may develop	software	or	technology	that	competes	with	ours.	Our	competitors	may	independently	develop	similar	technology,	duplicate	our	services	or	design	around	our intellectual	property	rights.	We	may	have	to	litigate	to	enforce	and	protect	our	intellectual	property	rights,	trade	secrets	and	know-how	or	to	determine	their	scope, validity	or	enforceability,	which	is	expensive	and	could	cause	a	diversion	of	resources	and	may	not	prove	to	be	successful.	The	loss	of	intellectual	property	protection	or the	inability	to	secure	or	enforce	intellectual	property	protection	could	harm	our	business	and	ability	to	compete.

We	may	also	be	subject	to	costly	litigation	in	the	event	our	services	and	technology	infringe	upon	another	party's	proprietary	rights.	Third	parties	may	have,	or	may eventually	be	issued,	patents	that	would	be	infringed	by	our	services	or	technology.	Any	of	these	third	parties	could	make	a	claim	of	infringement	against	us	with	respect to	our	services	or	technology.	We	may	also	be	subject	to	claims	by	third	parties	for	breach	of	copyright,	trademark	or	license	usage	rights.	Any	such	claims	and	any resulting

litigation	could	subject	us	to	significant	liability	for	damages.	An	adverse	determination	in	any	litigation	of	this	type	could	limit	our	ability	to	use	the	intellectual property	subject	to	these	claims	and	require	us	to	design	around	a	third	party's	patent,	which	may	not	be	possible,	or	to	license	alternative	technology	from	another	party, which	may	be	costly.	In	addition,	 litigation	 is	often	 time	consuming	and	expensive	 to	defend	and	could	result	 in	 the	diversion	of	 the	 time	and	attention	of	our management	and	employees.

# New	or	revised	tax	regulations,	unfavorable	resolution	of	tax	contingencies	or	changes	to	enacted	tax	rates	could	adversely	affect	our	tax	expense.

Changes	in	tax	laws	or	their	interpretations	could	result	in	changes	to	enacted	tax	rates	and	may	require	complex	computations	to	be	performed	that	were	not previously	required,	significant	judgments	to	be	made	in	interpretation	of	the	new	or	revised	tax	regulations	and	significant	estimates	in	calculations,	as	well	as	the preparation	and	analysis	of	 information	not	previously	relevant	or	regularly	produced.	Future	changes	 in	enacted	 tax	rates	could	negatively	affect	our	results	of operations.

The	U.S.	Tax	Cuts	and	Jobs	Act	of	2017	(the	"2017	U.S.	Tax	Act")	significantly	changed	the	taxation	of	U.S.-based	multinational	corporations.	The	U.S.	Treasury Department,	the	U.S.	Internal	Revenue	Service	and	state	tax	authorities	have	issued	and	are	expected	to	continue	to	issue	guidance	on	how	the	provisions	of	the	2017 U.S.	Tax	Act	will	be	applied	or	otherwise	administered.	The	legislation	could	be	subject	to	potential	amendments	and	technical	corrections,	any	of	which	could materially	change	certain	effects	of	the	legislation.	As	regulations	and	guidance	evolve	with	respect	to	the	2017	U.S.	Tax	Act,	and	as	we	gather	information	and	perform more	analysis,	our	results	may	differ	from	previous	estimates	and	may	materially	affect	our	financial	position.

Our	tax	returns	and	positions	are	subject	to	review	and	audit	by	federal,	state,	local	and	international	taxing	authorities.	An	unfavorable	outcome	to	a	tax	audit could	result	in	higher	tax	expense,	thereby	negatively	affecting	our	results	of	operations	and	cash	flows.	We	have	recognized	estimated	liabilities	on	the	balance	sheet	for material	known	tax	exposures	relating	to	deductions,	transactions	and	other	matters	involving	some	uncertainty	as	to	the	proper	tax	treatment	of	the	item.	These liabilities	reflect	what	we	believe	to	be	reasonable	assumptions	as	to	the	likely	final	resolution	of	each	issue	if	raised	by	a	taxing	authority.	While	we	believe	that	the liabilities	are	adequate	to	cover	reasonably	expected	tax	risks,	there	can	be	no	assurance	that,	in	all	instances,	an	issue	raised	by	a	tax	authority	will	be	finally	resolved	at a	financial	amount	no	more	than	any	related	liability.	An	unfavorable	resolution,	therefore,	could	negatively	affect	our	financial	position,	results	of	operations	and	cash flows	in	the	current	and/or	future	periods.

# We	may	become	subject	to	additional	U.S.,	state	or	foreign	taxes	that	cannot	be	passed	through	to	our	customers,	in	which	case	our	earnings	could	be	adversely affected.

We	are	or	may	be	subject	in	various	jurisdictions	to	certain	taxes	that	are	not	derived	based	on	earnings	(e.g.	sales,	gross	receipts,	property,	value-added	and	other business	taxes).	Application	of	these	taxes	is	an	emerging	issue	in	our	industry	and	the	taxing	authorities	have	not	yet	all	adopted	uniform	regulations	on	certain	of	these topics.	If	we	are	required	to	pay	such	taxes	and	are	not	able	to	pass	the	tax	cost	through	to	our	customers,	our	earnings	and	cash	flows	would	be	negatively	affected.

We	have	structured	our	business	in	accordance	with	existing	tax	laws	and	interpretations	of	such	laws	which	have	been	confirmed	through	either	tax	rulings	or opinions	obtained	in	various	jurisdictions,	including	those	related	to	value-added	taxes	in	Europe.	Changes	in	tax	laws	or	their	interpretations	could	decrease	the	value	of revenues	we	receive	and	the	amount	of	our	cash	flows	and	have	a	material	adverse	effect	on	our	business.

# Risks	Related	to	Our	Organizational	and	Capital	Structure

# If	we	lose	key	personnel	or	are	unable	to	attract	additional	qualified	personnel	as	we	grow,	our	business	could	be	adversely	affected.

All	of	our	businesses	function	at	the	intersection	of	rapidly	changing	technological,	social,	economic	and	regulatory	developments	that	requires	a	wide	ranging	set of	expertise	and	intellectual	capital.	To	successfully	compete	and	grow,	we	must	recruit,	develop	and	retain	the	necessary	personnel	who	can	provide	the	needed expertise	across	the	entire	spectrum	of	intellectual	capital	needs.	In	addition,	we	must	develop	our	personnel	to	fulfill	succession	plans	capable	of	maintaining	continuity in	the	midst	of	the	inevitable	unpredictability	of	human	capital.	However,	the	market	for	qualified	personnel	is	competitive,	and	we	may	not	succeed	in	recruiting additional	personnel	or	may	fail	to	effectively	replace	current	personnel	who	depart	with	qualified	or	effective	successors.	We	cannot	assure	that	key	personnel, including	executive	officers,	will	continue	to	be	employed	or	that	we	will	be	able	to	attract	and	retain	qualified	personnel	in	the	future.	Failure	to	retain	or	attract	key personnel	could	have	a	material	adverse	effect	on	our	business,	financial	condition,	results	of	operations	and	cash	flows.

# Our	substantial	indebtedness	could	adversely	affect	us	and	decrease	our	business	flexibility.

We	have	a	significant	amount	of	 indebtedness.	Our	 level	of	debt	and	 the	covenants	 to	which	we	have	agreed	 in	connection	with	 this	and	other	financing transactions	could,	among	other	things,	(i)	require	us	to	dedicate	a	larger	portion	of	our	cash	flow	from	operations	to	servicing	and	repayment	of	the	debt,	(ii)	reduce funds	available	for	strategic	initiatives	and	opportunities,	working	capital,	capital	investment	and	other	general	corporate	needs	and	(iii)	limit	our	ability	to	incur	certain kinds	or	amounts	of	additional	indebtedness,	which	could	restrict	our	flexibility	to	react	to	changes	in	our	business,	our	industry	and	economic	conditions.

# The	Company's	debt	agreements	contain	restrictions	that	may	limit	our	flexibility	in	operating	our	business	and	our	ability	to	return	capital	to	our	shareholders.

Our	Credit	Facility	contains	various	covenants	that	limit	our	ability	and	the	ability	of	our	subsidiaries	to	engage	in	specified	types	of	transactions.	These	covenants limit	our	ability	in	certain	circumstances	to,	among	other	things:

•incur	additional	indebtedness;

•create	liens;

•consolidate,	 merge,	 sell	 or	 otherwise	 dispose	 of	 all	 or	 substantially	 all	 of	 our assets;

•enter into certain lines of business;

•enter	 into certain transactions	 with affiliates; and,

•pay dividends and repurchase shares of our common stock.

Our	Credit	Facility	also	contains	customary	financial	covenants	based	on	our	leverage	ratio	and	our	interest	coverage	ratio.

A	breach	of	any	of	these	covenants	could	result	in	a	default	under	one	or	more	of	these	agreements,	including	as	a	result	of	cross	default	provisions	and,	in	the	case of	the	Revolving	Credit	Facility	(described	in	"Note	8—Long-Term	Debt	and	Lines	of	Credit"	in	the	notes	to	the	accompanying	consolidated	financial	statements), permit	the	lenders	to	cease	making	loans	to	us.	Upon	the	occurrence	of	an	event	of	default	under	our	Credit	Facility,	the	lenders	could	elect	to	declare	all	amounts outstanding	under	our	Credit	Facility	to	be	immediately	due	and	payable	and	terminate	all	commitments	to	extend	further	credit.	If	we	are	unable	to	repay	those amounts,	the	lenders	under	our	Credit	Facility	could	accelerate	the	repayment	of	borrowings,	and	we	may	not	have	sufficient	assets	to	repay	our	indebtedness.

# We	may	need	to	raise	additional	funds	to	finance	our	future	capital	needs,	which	may	prevent	us	from	growing	our	business.

We	may	need	to	raise	additional	funds	to	finance	our	future	capital	needs,	including	developing	new	products	and	technologies	or	to	fund	future	acquisitions	or operating	needs.	If	we	raise	additional	funds	through	the	sale	of	equity	securities,	these	transactions	may	dilute	the	value	of	our	outstanding	common	stock.	We	may	also decide	to	issue	securities,	including	debt	securities	that	have	rights,	preferences	and	privileges	senior	to	our	common	stock.	We	may	be	unable	to	raise	additional	funds on	terms	favorable	to	us	or	at	all.	If	financing	is	not	available	or	is	not	available	on	acceptable	terms,	we	may	be	unable	to	fund	our	future	needs.	This	may	prevent	us from	increasing	our	market	share,	capitalizing	on	new	business	opportunities	or	remaining	competitive	in	our	industry.

# Our	balance	sheet	includes	significant	amounts	of	goodwill	and	intangible	assets.	The	impairment	of	a	portion	of	these	assets	could	negatively	affect	our	business, financial	condition	and	results	of	operations.

As	 a	 result	 of	 our	 acquisitions,	 a	 significant	 portion	 of	 our	 total	 assets	 are	 intangible	 assets	 (including	 goodwill).	Goodwill	 and	 intangible	 assets,	 net	 of amortization,	together	accounted	for	approximately	67%	of	our	total	assets	as	of	December	31,	2018.	We	expect	to	engage	in	additional	acquisitions,	which	may	result	in our	recognition	of	additional	intangible	assets	and	goodwill.	We	evaluate	on	a	regular	basis	whether	all	or	a	portion	of	our	goodwill	and	other	intangible	assets	may	be impaired.	Under	current	accounting	rules,	any	determination	that	impairment	has	occurred	would	require	us	to	record	an	impairment	charge,	which	would	negatively affect	our	earnings.	An	impairment	of	a	portion	of	our	goodwill	or	intangible	assets	could	have	a	material	adverse	effect	on	our	business,	financial	condition	and	results of	operations.

# We	may	not	be	able	or	permitted	to,	or	we	may	decide	not	to,	pay	dividends	or	repurchase	shares	at	a	level	anticipated	by	our	shareholders,	which	could	reduce shareholder	returns.

The	extent	to	which	we	pay	dividends	on	our	common	stock	and	repurchase	our	common	stock	in	the	future	is	at	the	discretion	of	our	board	of	directors	and	will depend	on,	among	other	factors,	our	results	of	operations,	financial	condition,	capital	requirements,	compliance	with	debt	covenants	and	such	other	factors	as	our	board of	directors	deems	relevant.	Our	Credit	Facility	may	prohibit

us	from	(i)	repurchasing	an	amount	more	than	the	greater	of	$350	million	or	3%	of	our	total	assets	of	our	common	stock	in	any	year	and	(ii)	paying	quarterly	dividends in	excess	of	$0.01	per	share.	No	assurance	can	be	given	that	we	will	be	able	to	or	will	choose	to	pay	any	dividends	or	repurchase	any	shares	in	the	foreseeable	future.

# Our	risk	management	policies	and	procedures	may	not	be	fully	effective	in	mitigating	our	risk	exposure	in	all	market	environments	or	against	all	types	of	risk.

We	operate	in	a	rapidly	changing	industry.	Accordingly,	our	risk	management	policies	and	procedures	may	not	be	fully	effective	to	identify,	monitor	and	manage our	risks.	If	our	policies	and	procedures	are	not	fully	effective	or	if	we	are	not	always	successful	in	identifying	and	mitigating	all	risks	to	which	we	are	or	may	be exposed,	we	may	suffer	uninsured	liability,	harm	to	our	reputation	or	be	subject	to	litigation	or	regulatory	actions	that	could	have	a	material	adverse	effect	on	our business,	financial	condition,	results	of	operations	and	cash	flows.

# Failure	to	maintain	effective	internal	controls	in	accordance	with	Section	404	of	the	Sarbanes-Oxley	Act	could	have	a	material	adverse	effect	on	our	business	and stock	price.

Section	404	of	the	Sarbanes-Oxley	Act	requires	us	to	evaluate	annually	the	effectiveness	of	our	internal	control	over	financial	reporting	as	of	the	end	of	each	year and	to	include	a	management	report	assessing	the	effectiveness	of	our	internal	control	over	financial	reporting	in	our	annual	report.		If	we	fail	to	maintain	the	adequacy of	our	internal	controls,	including,	but	not	limited	to,	preventing	unauthorized	access	to	our	systems,	we	may	not	be	able	to	ensure	that	we	can	conclude	on	an	ongoing basis	that	we	have	effective	internal	control	over	financial	reporting	in	accordance	with	Section	404	of	the	Sarbanes-Oxley	Act.	Furthermore,	this	assessment	may	be complicated	by	any	acquisitions	we	may	complete.

In	certain	markets,	including,	without	limitation,	China,	the	Republic	of	Malta	and	Spain,	our	member	sponsors	perform	payment	processing	operations	and related	support	services	pursuant	to	services	agreements.		We	expect	that	the	member	sponsors	will	continue	to	provide	these	services	until	such	time	as	we	may integrate	these	functions	into	our	operations.		Accordingly,	we	rely	on	our	member	sponsors	to	provide	financial	data,	such	as	amounts	billed	to	merchants,	to	assist	us with	compiling	our	accounting	records.		As	such,	our	internal	control	over	financial	reporting	could	be	materially	affected,	or	is	reasonably	likely	to	be	materially affected,	by	the	internal	control	and	procedures	of	our	member	sponsors	in	these	markets.

While	we	continue	to	dedicate	resources	and	management	time	to	ensuring	that	we	have	effective	internal	control	over	financial	reporting,	failure	to	achieve	and maintain	an	effective	internal	control	environment	could	have	a	material	adverse	effect	on	the	market's	perception	of	our	business	and	on	our	stock	price.

# Anti-takeover	provisions	of	our	articles	of	incorporation	and	by-laws	and	provisions	of	Georgia	law	could	delay	or	prevent	a	change	in	control	that	individual shareholders	favor.

Provisions	of	our	articles	of	incorporation	and	by-laws	and	provisions	of	applicable	Georgia	law	may	discourage,	delay	or	prevent	a	merger	or	other	change	in control	that	individual	shareholders	may	consider	favorable.	The	provisions	of	our	articles	and	by-laws,	among	other	things:

•divide	our	board	of	directors	into	three	classes,	with	members	of	each	class	to	be	elected	in	staggered	three-year terms;

•limit	 the right of shareholders to remove directors;

•regulate	how	shareholders	may	present	proposals	or	nominate	directors	for	election	at	annual	meetings	of	shareholders; and

•authorize	 our	 board	 of	 directors to issue	 preferred shares in	 one	 or	 more series,	 without shareholder approval.

# ITEM	2	-	PROPERTIES

We	have	properties	for	operational,	sales	and	administrative	purposes.	At	December	31,	2018,	we	leased	approximately	70	properties	in	the	United	States	and approximately	120	properties	in	countries	outside	the	United	States.	In	addition,	we	owned	four	properties	located	outside	the	United	States.

Our	principal	facilities	in	North	America	are	located	in	Atlanta,	Georgia;	Dallas,	Texas;	Jeffersonville,	Indiana;	Lansdale,	Pennsylvania,	Las	Vegas,	Nevada; Oklahoma	City,	Oklahoma;	Salt	Lake	City,	Utah;	and	Toronto,	Canada.	Our	principal	facilities	in	Europe	are	located	in	Barcelona,	Spain;	Dublin,	Ireland;	Leicester, England;	London,	England;	Moscow,	Russia;	and	Prague,	Czech	Republic.	Our	principal	facilities	in	the	Asia-Pacific	region	are	located	in	Brisbane,	Australia;	Hong Kong	Special	Administrative	Region,	China;	and	Manila,	Philippines.

We	believe	that	all	of	our	properties	will	be	suitable	and	adequate	for	our	business	as	presently	conducted.

# ITEM	3	-	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.

# Part	II

# ITEM	5	-	MARKET	FOR	REGISTRANT'S	COMMON	EQUITY,	RELATED	STOCKHOLDER	MATTERS	AND	ISSUER	PURCHASES	OF	EQUITY

# SECURITIES

Our	common	stock	trades	on	the	New	York	Stock	Exchange	under	the	ticker	symbol	"GPN."	As	of	February	19,	2019,	there	were	2,116	shareholders	of	record.

# Equity	Compensation	Plan	Information

The	information	regarding	our	compensation	plans	under	which	equity	securities	are	authorized	for	issuance	is	set	forth	in	"Item	12—Security	Ownership	of Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters"	of	this	Annual	Report.

# Stock	Performance	Graph

The	following	graph	compares	our	cumulative	shareholder	returns	with	the	Standard	&	Poor's	Information	Technology	Index	and	the	Standard	&	Poor's	500	Index for	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	years	ended	May	31,	2016,	2015	and	2014.	The	line	graph	assumes	the investment	of	$100	in	our	common	stock,	the	Standard	&	Poor's	500	Index	and	the	Standard	&	Poor's	Information	Technology	Index	on	May	31,	2013	and	assumes reinvestment	of	all	dividends.

# COMPARISON	OF	5-YEAR	CUMULATIVE	TOTAL	RETURN*

Among	Global	Payments	Inc.,	the	S&P	500	Index

and	the	S&P	Information	Technology	Index

# item5linegraphimage.jpg

*$100	invested	on	May	31,	2013	in	stock	or	index,	including	reinvestment	of	dividends.

Copyright©	2019	Standard	&	Poor's,	a	division	of	S&P	Global.	All	rights	reserved.

|  |  |  | S&amp;P |
| :--- | :--- | :--- | :--- |
|  | Global | S&amp;P | Information |
|  | Payments | 500\tIndex | Technology\tIndex |
| May\t31,\t2013 | $100.00 | $100.00 | $100.00 |
| May\t31,\t2014 | 143.14 | 120.45 | 123.89 |
| May\t31,\t2015 | 218.13 | 134.67 | 147.20 |
| May\t31,\t2016 | 324.92 | 136.98 | 151.80 |
| December\t31,\t2016 | 290.37 | 148.08 | 168.59 |
| December\t31,\t2017 | 419.54 | 180.41 | 234.05 |
| December\t31,\t2018 | 431.79 | 172.50 | 233.38 |

# Recent	Sales	of	Unregistered	Securities

There	were	no	unregistered	sales	of	equity	securities	during	the	year	ended	December	31,	2018.

# Issuer	Purchases	of	Equity	Securities

Information	about	the	shares	of	our	common	stock	that	we	repurchased	during	the	quarter	ended	December	31,	2018	is	set	forth	below:

| Period | Total	Number	of<br>Shares	Purchased	(1) | Approximate	Average<br>Price	Paid	per	Share | Total	Number	of<br>Shares	Purchased	as	Part	of<br>Publicly	Announced<br>Plans	or	Programs | Maximum<br>Number	(or<br>Approximate<br>Dollar	Value)	of<br>Shares	that	May	Yet	Be<br>Purchased	Under<br>the	Plans	or<br>Programs	(2) |
| :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | (in\tmillions) |
| October\t2018 | 784 | $114.94 | — |  |
| November\t2018 | 967 | 103.87 | — |  |
| December\t2018 | 315,260 | 99.37 | — |  |
| Total | 317,011 | $99.43 | — | $387.8 |

(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	December	31,	2018,	pursuant	to	our	employee	incentive	plans,	we	withheld	2,028	shares	at	an	average	price	per	share	of	$107.99	in order	to	satisfy	employees'	tax	withholding	and	payment	obligations	in	connection	with	the	vesting	of	awards	of	restricted	stock,	which	we	withheld	at	fair market	value	on	the	vesting	date.

(2)	On	February	6,	2018,	our	board	of	directors	approved	an	increase	to	our	existing	share	repurchase	program	authorization,	which	raised	the	total	available authorization	to	$600	million.	As	of	December	31,	2018,	the	approximate	dollar	value	of	shares	that	may	yet	be	purchased	under	our	share	repurchase	program was	$387.8	million.	 On	February	5,	2019,	 the	 board	 of	 directors	 increased	 its	 authorization	 to	 repurchase	 shares	 of	 our	 common	 stock	 to	$750	 million, inclusive	of	prior	share	repurchase	programs	authorized	by	the	board	and	repurchases	made	thereunder.	The	authorizations	by	the	board	of	directors	do	not expire,	but	could	be	revoked	at	any	time.	In	addition,	we	are	not	required	by	any	of	the	board's	authorizations	or	otherwise	to	complete	any	repurchases	by	any specific	time	or	at	all.

# ITEM	6	-	SELECTED	FINANCIAL	DATA

You	should	read	the	selected	financial	data	set	forth	below	in	conjunction	with	(i)	"Item	7	-	Management's	Discussion	and	Analysis	of	Financial	Condition	and Results	of	Operations,"	(ii)	"Item	8	-	Financial	Statements	and	Supplementary	Data"	and	(iii)	the	historical	consolidated	financial	statements	of	Global	Payments	and	the related	notes	presented	in	this	Annual	Report	on	Form	10-K.

|  | Year	Ended	December	31, | Year	Ended	December	31, | Seven	Months<br>Ended<br>December	31, |  | Year	Ended	May	31, |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 | 2015 | 2014 |
|  |  |  | (in\tthousands,\texcept\tper\tshare\tdata) | (in\tthousands,\texcept\tper\tshare\tdata) |  |  |
| Income\tstatement\tdata: |  |  |  |  |  |  |
| Revenues | $3,366,366 | $3,975,163 | $2,202,896 | $2,898,150 | $2,773,718 | $2,554,236 |
| Operating\tincome | 737,055 | 558,868 | 237,951 | 424,944 | 456,597 | 405,499 |
| Net\tincome | 484,667 | 494,070 | 137,683 | 290,217 | 309,115 | 269,952 |
| Net\tincome\tattributable\tto\tGlobal\nPayments | 452,053 | 468,425 | 124,931 | 271,666 | 278,040 | 245,286 |
| Per\tshare\tdata: |  |  |  |  |  |  |
| Basic\tearnings\tper\tshare | $2.85 | $3.03 | $0.81 | $2.05 | $2.07 | $1.70 |
| Diluted\tearnings\tper\tshare | 2.84 | 3.01 | 0.81 | 2.04 | 2.06 | 1.69 |
| Dividends\tper\tshare | 0.04 | 0.04 | 0.02 | 0.04 | 0.04 | 0.04 |
| Balance\tsheet\tdata\t(at\tperiod\tend): |  |  |  |  |  |  |
| Total\tassets | $13,230,774 | $12,998,069 | $10,664,350 | $10,509,952 | $5,779,301 | $4,002,527 |
| Settlement\tlines\tof\tcredit | 700,486 | 635,166 | 392,072 | 378,436 | 592,629 | 440,128 |
| Long-term\tdebt | 5,130,243 | 4,659,716 | 4,438,612 | 4,515,286 | 1,740,067 | 1,390,507 |
| Total\tequity | 4,186,343 | 3,965,231 | 2,779,342 | 2,877,404 | 863,553 | 1,132,799 |

As	more	fully	described	 in	"Note	1—Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies"	and	"Note	3—Revenues"	 in	 the	notes	 to	 the accompanying	consolidated	financial	statements,	we	adopted	a	new	revenue	accounting	standard	on	January	1,	2018	that	results	in	revenue	being	presented	net	of	certain fees	that	we	pay	to	third	parties,	including	payment	networks.	This	change	in	presentation	affected	our	reported	revenues	and	operating	expenses	during	the	year	ended December	31,	2018	by	the	same	amount	and	had	no	effect	on	operating	income.

The	selected	financial	data	in	the	table	above	reflect	the	effects	of	acquisitions	and	borrowings	to	fund	certain	of	those	acquisitions.	See	"Note	2—Acquisitions"	in the	notes	to	the	accompanying	consolidated	financial	statements	for	further	discussion	of	our	acquisitions.

Operating	income,	net	income,	net	income	attributable	to	Global	Payments	and	basic	and	diluted	earnings	per	share	in	the	table	above	reflect	acquisition	and integration	expenses	of	$56.1	million	for	the	year	ended	December	31,	2018,	$94.6	million	for	the	year	ended	December	31,	2017,	$91.6	million	for	the	2016	fiscal transition	period	and	$51.3	million	for	the	year	ended	May	31,	2016.

Net	income,	net	income	attributable	to	Global	Payments	and	basic	and	diluted	earnings	per	share	in	the	table	above	also	reflect:

(a)	the	effects	of	a	net	income	tax	benefit	of	$23.3	million	in	connection	with	adjustments	made	to	accounting	estimates	associated	with	the	2017	U.S.	Tax	Act	for the	year	ended	December	31,	2018	and	a	provisional	net	income	tax	benefit	of	$158.7	million	recorded	in	connection	with	the	2017	U.S.	Tax	Act	for	the	year	ended December	31,	2017.	See	"Note	10—Income	Tax"	in	the	notes	to	the	accompanying	consolidated	financial	statements	for	further	discussion;	and,

(b)	a	gain	of	$41.2	million	recorded	in	connection	with	the	sale	of	our	membership	interests	in	Visa	Europe	Limited	("Visa	Europe")	for	the	seven	months	ended December	31,	2016.	See	"Note	7—Other	Assets"	in	the	notes	to	the	accompanying	consolidated	financial	statements	for	further	discussion.

# ITEM	7	-	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	"Item	6	-	Selected	Financial	Data" and	"Item	8	-	Financial	Statements	and	Supplementary	Data."	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	as	a	result	of	many	known	and	unknown factors,	including	but	not	limited	to	those	discussed	in	"Item	1A	-	Risk	Factors."	See	"Cautionary	Notice	Regarding	Forward-Looking	Statements"	located	above	"Item	1 -	Business."

# General

We	were	incorporated	in	Georgia	as	Global	Payments	Inc.	in	2000	and	spun-off	from	our	former	parent	company	in	2001.	Including	our	time	as	part	of	our	former parent	company,	we	have	been	in	the	payment	technology	services	business	since	1967.	Since	our	spin-off,	we	have	expanded	in	existing	markets	and	into	new	markets internationally	by	pursuing	further	acquisitions	and	joint	ventures,	including	recent	acquisitions	of	technology-enabled	and	software-driven	businesses.	In	April	2016,	we merged	with	Heartland	Payment	Systems,	Inc.	("Heartland"),	which	significantly	expanded	our	small	and	medium-sized	enterprise	distribution,	merchant	base	and vertical	reach	in	the	United	States.

The	majority	of	our	revenues	is	generated	by	services	priced	as	a	percentage	of	transaction	value	or	a	specified	fee	per	transaction,	depending	on	the	card	type	or the	vertical.	We	also	earn	software	subscription	and	licensing	fees,	as	well	as	other	fees	based	on	specific	value-added	services	that	may	be	unrelated	to	the	number	or value	of	transactions.

Our	primary	business	model	is	to	actively	market	and	provide	our	payment	services,	enterprise	software	solutions	and	other	value-added	services	directly	to	our customers	through	a	variety	of	distribution	channels.	We	offer	high-touch	services	that	provide	our	customers	with	reliable	and	secure	solutions	coupled	with	high quality	and	responsive	support	services.	Through	our	direct	sales	force	worldwide,	as	well	as	bank	partnerships,	which	we	generally	refer	to	as	"direct	distribution,"	we offer	our	payment	technology	services,	software	and	other	value-added	solutions	directly	to	customers	in	the	markets	we	serve.	In	addition,	we	also	provide	certain	of our	services	through	a	wholesale	distribution	channel	where	we	do	not	maintain	the	face-to-face	relationship	with	the	customer.	As	we	continue	to	grow	and	control	our direct	distribution	by	adding	new	channels	and	partners,	including	expanding	our	ownership	of	additional	enterprise	software	solutions	in	select	vertical	markets,	our wholesale	distribution	channel	has	become	a	smaller	portion	of	our	business.

We	seek	to	leverage	the	continued	shift	to	electronic	payments	by	expanding	market	share	in	our	existing	markets	through	our	distribution	channels	or	through acquisitions	in	North	America,	Europe	and	the	Asia-Pacific	region	and	investing	in	and	leveraging	technology	and	people,	thereby	maximizing	shareholder	value.	We also	seek	to	enter	new	markets	through	acquisitions	in	Europe,	the	Asia-Pacific	region	and	the	Latin	America	region.

In	general,	our	business	has	not	experienced	pronounced	seasonality.	However,	each	geographic	channel	has	somewhat	higher	and	lower	quarters	given	the	nature of	the	merchant	portfolio.

In	2016,	we	changed	our	fiscal	year	end	from	May	31	to	December	31.	As	a	result,	the	period	consisting	of	the	seven	months	ended	December	31,	2016	is considered	the	"2016	fiscal	transition	period."	When	our	financial	results	for	the	year	ended	December	31,	2017	and	the	2016	fiscal	transition	period	are	compared	to	our financial	results	for	the	prior-year	periods,	the	results	compare	the	twelve-month	period	from	January	1,	2017	through	December	31,	2017	to	the	twelve-month	period from	January	1,	2016	through	December	31,	2016	and	compare	the	seven-month	period	from	June	1,	2016	through	December	31,	2016	to	the	seven-month	period	from June	1,	2015	through	December	31,	2015.	The	results	for	the	twelve	months	ended	December	31,	2016	and	the	seven	months	ended	December	31,	2015	are	unaudited.

# Segment	Information

For	a	description	of	our	reportable	segments	see	"Note	16—Segment	Information"	in	the	notes	to	the	accompanying	consolidated	financial	statements,	which	is incorporated	herein	by	reference.

# Executive	Overview

We	experienced	strong	business	and	financial	performance	around	 the	world	during	 the	year	ended	December	31,	2018.	 Highlights	 related to	 our	 financial condition	and	results	of	operations	as	of	December	31,	2018	and	for	the	year	then	ended	include	the	following:

•Consolidated	revenues	were	$3,366.4	million	 and	$3,975.2	million	for	the	years	ended	December	31,	2018	and	2017,	respectively.	Consolidated	revenues without	the	effect	of	the	new	revenue	accounting	standard	increased	by	12.6%	to	$4,475.6	million	for	the	year	ended	December	31,	2018	compared	to	$3,975.2 million	for	2017.	The	increase	in	revenues	without	the	effect	of	the	new	revenue	accounting	standard	was	primarily	due	to	organic	growth.

•Consolidated	operating	income	was	$737.1	million	and	$558.9	million	for	the	years	ended	December	31,	2018	and	2017,	respectively.	Our	operating	margin	for the	year	ended	December	31,	2018	was	21.9%.	Without	the	effect	of	the	new	revenue	accounting	standard,	our	operating	margin	for	the	year	ended	December 31,	2018	was	15.6%	compared	to	14.1%	for	2017.	The	increase	in	operating	income	and	operating	margin	without	the	effect	of	the	new	revenue	accounting standard	was	primarily	due	to	the	contribution	of	revenue	growth	and	a	decrease	in	costs	associated	with	acquisition	and	integration	expenses	of	$38.5	million.

•On	December	22,	2017,	the	United	States	enacted	the	U.S.	Tax	Cuts	and	Jobs	Act	of	2017	(the	"2017	U.S.	Tax	Act").	As	a	result,	we	recorded	a	provisional	net income	tax	benefit	of	$158.7	million,	which	increased	diluted	earnings	per	share	by	$1.02	for	the	year	ended	December	31,	2017.	During	2018,	we	continued	to analyze	other	provisions	of	the	2017	U.S.	Tax	Act	and	completed	our	accounting	for	the	transition	effects	of	the	2017	U.S.	Tax	Act,	which	resulted	in	an income	tax	benefit	of	$23.3	million.

For	a	further	discussion	of	trends,	uncertainties	and	other	factors	that	could	affect	our	continuing	operating	results,	see	the	section	entitled	"Risk	Factors"	in	Item 1A	in	this	Annual	Report	on	Form	10-K.

On	October	17,	2018,	we	acquired	SICOM	Systems,	Inc.	("SICOM")	for	total	purchase	consideration	of	approximately	$409	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"	in	the	notes	to	the	accompanying	consolidated financial	statements).	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.

On	September	4,	2018,	we	acquired	AdvancedMD,	Inc.	("AdvancedMD")	for	total	purchase	consideration	of	approximately	$707	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.

On	September	1,	2017,	we	acquired	the	communities	and	sports	divisions	of	Athlaction	Topco,	LLC	("ACTIVE	Network")	for	total	purchase	consideration	of	$1.2 billion,	consisting	of	approximately	$600	million	in	cash	and	6.4	million	shares	of	our	common	stock.	We	funded	the	cash	consideration	primarily	by	drawing	on	our Revolving	Credit	Facility.	ACTIVE	Network	delivers	cloud-based	enterprise	software,	including	payment	technology	solutions,	to	event	organizers	in	the	communities and	health	and	fitness	vertical	markets.

These	acquisitions	align	with	our	technology-enabled,	software	driven	strategy	and	add	enterprise	software	businesses	operating	in	existing	vertical	markets	that we	 serve	 and	 additional	 vertical	 markets	 that	 we	 believe	 offer	 attractive	 growth	 fundamentals.	 See	 "Note	2—Acquisitions"	 in	 the	 notes	 to	 the	 accompanying consolidated	financial	statements	for	further	discussion	of	these	and	other	acquisitions.

# Results	of	Operations

# Revenues

The	majority	of	our	revenues	is	generated	by	services	priced	as	a	percentage	of	transaction	value	or	a	specified	fee	per	transaction,	depending	on	card	type	or	the vertical.	We	also	earn	software	subscription	and	licensing	fees,	as	well	as	other	fees	based	on	specific	value-added	services	that	may	be	unrelated	to	the	number	or	value of	transactions.	These	revenues	depend	upon	a	number	of	factors,	such	as	demand	for	and	price	of	our	services,	the	technological	competitiveness	of	our	offerings,	our reputation	for	providing	timely	and	reliable	service,	competition	within	our	industry	and	general	economic	conditions.

We	provide	payment	technology	and	software	solutions	to	customers	and	fund	settlement	either	directly,	in	markets	where	we	have	direct	membership	with	the payment	networks,	or	through	our	relationship	with	a	member	financial	institution	in	markets	where	we	are	sponsored.	Revenues	are	recognized	in	the	amount	of customer	billing	net	of	interchange	fees	and,	beginning	in	2018,	payment	network	fees.	We	market	our	services	through	a	variety	of	sales	channels,	including	a	direct sales	force,	trade	associations,	agent	and	enterprise	software	providers	and	referral	arrangements	with	value-added	resellers	("VARs"),	which	we	generally	refer	to	as "direct	distribution."	We	also	sell	services	through	our	ISO	channel,	where	the	ISO	receives	a	share	of	the	customer	profitability	in	the	form	of	a	monthly	residual payment,	which	is	reflected	as	a	component	of	selling,	general	and	administrative	expenses	in	the	consolidated	statements	of	income.

# Operating	Expenses

# Cost	of	Service

Cost	of	service	consists	primarily	of	salaries,	wages	and	related	expenses	paid	to	operations	and	technology-related	personnel,	including	those	who	monitor	our transaction	 processing	 systems	 and	 settlement	 functions;	 the	 cost	 of	 transaction	 processing	 systems,	 including	 third-party	 services;	 the	 cost	 of	 network telecommunications	 capability;	 depreciation	 and	 occupancy	 costs	 associated	 with	 the	 facilities	 performing	 these	 functions;	 amortization	 of	 intangible	 assets	 and provisions	for	operating	losses.	For	periods	prior	to	2018,	payment	network	fees	were	included	in	cost	of	service.

# Selling,	General	and	Administrative	Expenses

Selling,	general	and	administrative	expenses	consist	primarily	of	salaries,	wages,	commissions	and	related	expenses	paid	to	sales	personnel,	customer	support functions	other	than	those	supporting	revenue,	administrative	employees	and	management;	acquisition	and	integration	expenses;	amortization	of	capitalized	customer acquisition	costs;	residuals	paid	to	ISOs;	fees	paid	to	VARs,	independent	contractors	and	other	third	parties;	other	selling	expenses;	occupancy	costs	of	leased	space directly	related	to	these	functions;	share-based	compensation	expense	and	advertising	costs.

# Operating	Income	and	Operating	Margin

For	the	purpose	of	discussing	segment	operations,	we	refer	to	"operating	income,"	which	is	calculated	by	subtracting	segment	direct	expenses	from	segment revenues.	Overhead	and	shared	expenses,	including	share-based	compensation,	are	not	allocated	to	segment	operations;	they	are	reported	in	the	caption	"Corporate." Similarly,	we	refer	to	"operating	margin"	regarding	segment	operations,	which	is	calculated	by	dividing	segment	operating	income	by	segment	revenues.

The	following	table	sets	forth	key	selected	financial	data	for	the	year	ended	December	31,	2018	 and	2017,	this	data	as	a	percentage	of	total	revenues,	and	the changes	between	periods	in	dollars	and	as	a	percentage	of	the	prior-period	amount.	The	income	statement	data	for	the	year	ended	December	31,	2018	 and	2017	are derived	from	the	audited	consolidated	financial	statements	included	in	Item	8	-	Financial	Statements	and	Supplementary	Data.

|  | Year	Ended	December	31, |  | Year	Ended	December	31, |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (dollar\tamounts\tin\tthousands) | 2018 | %\tof\tRevenue(1) | 2017 | %\tof\tRevenue(1) | Change | %\tChange |
| Revenues(2)(3): |  |  |  |  |  |  |
| North\tAmerica | $2,522,284 | 74.9\t% | $2,929,522 | 73.7\t% | $(407,238) | (13.9)% |
| Europe | 610,930 | 18.1\t% | 767,524 | 19.3\t% | (156,594) | (20.4)% |
| Asia-Pacific | 233,152 | 6.9\t% | 278,117 | 7.0\t% | (44,965) | (16.2)% |
| \t\t\t\t\t\t\t\t\t\tTotal\trevenues | $3,366,366 | 100.0\t% | $3,975,163 | 100.0\t% | $(608,797) | (15.3)% |
| Consolidated\toperating\texpenses(2)(3): |  |  |  |  |  |  |
| Cost\tof\tservice | $1,095,014 | 32.5\t% | $1,928,037 | 48.5\t% | $(833,023) | (43.2)% |
| Selling,\tgeneral\tand\tadministrative | 1,534,297 | 45.6\t% | 1,488,258 | 37.4\t% | 46,039 | 3.1\t% |
| \t\t\t\t\t\t\t\t\t\tOperating\texpenses | $2,629,311 | 78.1\t% | $3,416,295 | 85.9\t% | $(786,984) | (23.0)% |
| Operating\tincome\t(loss)(3): |  |  |  |  |  |  |
| North\tAmerica | $570,630 | 17.0\t% | $457,009 | 11.5\t% | $113,621 | 24.9\t% |
| Europe | 318,392 | 9.5\t% | 272,769 | 6.9\t% | 45,623 | 16.7\t% |
| Asia-Pacific | 93,402 | 2.8\t% | 81,273 | 2.0\t% | 12,129 | 14.9\t% |
| Corporate(4) | (245,369) | (7.3)% | (252,183) | (6.3)% | 6,814 | (2.7)% |
| \t\t\t\t\t\t\t\t\t\tOperating\tincome | $737,055 | 21.9\t% | $558,868 | 14.1\t% | $178,187 | 31.9\t% |

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

(2)	As	more	fully	described	in	"Note	1—Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies"	and	"Note	3—Revenues"	in	the	notes	to	the	accompanying consolidated	financial	statements,	we	adopted	a	new	revenue	accounting	standard	on	January	1,	2018	that	results	in	revenue	being	presented	net	of	certain	fees	that	we	pay to	third	parties,	including	payment	networks.	This	change	in	presentation	affected	our	reported	revenues	and	operating	expenses	during	the	year	ended	December	31,	2018 by	the	same	amount	and	had	no	effect	on	operating	income;	however,	the	change	in	presentation	did	have	the	effect	of	increasing	our	operating	margin,	which	is	calculated by	dividing	operating	income	by	revenue.

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

(4)	During	the	years	ended	December	31,	2018	and	2017,	operating	loss	for	Corporate	included	acquisition	and	integration	expenses	of	$56.1	million	 and	$94.6	million, respectively,	which	are	included	primarily	in	selling,	general	and	administrative	expenses	in	the	consolidated	statements	of	income.

Effective	January	1,	2018,	our	revenues	are	presented	net	of	certain	fees	that	we	pay	to	third	parties,	including	payment	networks.	This	change	in	presentation affected	our	reported	revenues	and	operating	expenses	for	2018	by	the	same	amount	and	had	no	effect	on	operating	income.	Consolidated	revenues	without	the	effect	of the	new	revenue	accounting	standard	increased	by	12.6%	to	$4,475.6	million	for	the	year	ended	December	31,	2018.

North	America	Segment.	The	change	in	presentation	decreased	our	reported	North	America	segment	revenues	for	the	year	ended	December	31,	2018	by	$726.3 million.	Revenues	from	our	North	America	segment	without	the	effect	of	the	new	revenue	accounting	standard	increased	by	10.8%	 to	$3,247.0	million	for	the	year ended	December	31,	2018	primarily	due	to	the	acquisition	of	ACTIVE	Network.

Europe Segment.	The	 change	 in	 presentation	 decreased	 our	 reported	 Europe	 segment	 revenues	 for	 the	 year	 ended	December	31,	2018	 by	$307.3	 million. Revenues	from	our	Europe	segment	without	the	effect	of	the	new	revenue	accounting	standard	increased	by	19.6%	to	$918.2	million	for	the	year	ended	December	31, 2018	primarily	due	to	organic	growth.

Asia-Pacific	Segment.	The	change	in	presentation	decreased	our	reported	Asia-Pacific	segment	revenues	for	the	year	ended	December	31,	2018	by	$77.2	million. Revenues	 from	 our	Asia-Pacific	 segment	 without	 the	 effect	 of	 the	 new	 revenue	 accounting	 standard	 increased	 by	11.6%	 to	$310.4	 million	 for	 the	 year	 ended December	31,	2018	primarily	due	to	organic	growth.

Cost	of	Service.	Effective	January	1,	2018,	the	new	revenue	accounting	standard	changed	our	presentation	of	certain	fees	that	we	pay	to	third	parties,	including payment	networks,	which	decreased	cost	of	service	by	$1,042.9	million	for	the	year	ended	December	31,	2018.	Cost	of	service	without	the	effect	of	the	new	revenue accounting	standard	increased	by	11.2%	to	$2,143.9	million	for	the	year	ended	December	31,	2018,	primarily	due	to	additional	costs	associated	with	revenue	growth	and an	increase	in	amortization	of	acquired	intangibles	of	$39.8	million.	Cost	of	service	without	the	effect	of	the	new	revenue	accounting	standard	as	a	percentage	of revenues	without	the	effect	of	the	new	revenue	accounting	standard	were	47.9%	for	the	year	ended	December	31,	2018,	compared	to	48.5%	for	the	prior	year.

Selling,	General	and	Administrative	Expenses.	Effective	January	1,	2018,	the	new	revenue	accounting	standard	changed	our	presentation	of	certain	fees	that	we pay	 to	 third	 parties,	 which	 decreased	 selling,	 general	 and	 administrative	 expenses	 by	$67.9	million	 for	 the	 year	 ended	December	31,	2018.	 Selling,	 general	 and administrative	expense	without	 the	effect	of	 the	new	revenue	accounting	standard	 increased	by	9.6%	 to	$1,631.4	million	 for	 the	 year	 ended	December	31,	2018, primarily	due	to	additional	costs	to	support	the	growth	of	our	business,	partially	offset	by	a	reduction	in	acquisition	and	integration	expenses	of	$38.5	million.	Selling, general	and	administrative	expenses	without	the	effect	of	the	new	revenue	accounting	standard	as	a	percentage	of	revenues	without	the	effect	of	the	new	revenue accounting	standard	decreased	to	36.5%	for	the	year	ended	December	31,	2018,	compared	to	37.4%	for	the	prior	year,	primarily	due	to	the	reduction	in	acquisition	and integration	expenses.

North	America	Segment.	Operating	income	in	our	North	America	segment	increased	by	24.9%	to	$570.6	million	for	the	year	ended	December	31,	2018,	compared to	the	prior	year,	primarily	due	to	the	acquisition	of	ACTIVE	Network.	Operating	margin	without	the	effect	of	the	new	revenue	accounting	standard	increased	to	16.5% for	the	year	ended	December	31,	2018,	compared	to	15.6%	for	the	prior	year.

Europe	Segment.	Operating	income	in	our	Europe	segment	increased	by	16.7%	to	$318.4	million	for	the	year	ended	December	31,	2018,	compared	to	the	prior year,	primarily	due	to	organic	growth.	Operating	margin	without	the	effect	of	the	new	revenue	accounting	standard	decreased	to	34.7%	for	the	year	ended	December	31, 2018,	compared	to	35.5%	for	the	prior	year,	due	to	the	unfavorable	effect	of	currency	fluctuations.

Asia-Pacific	Segment.	Operating	income	in	our	Asia-Pacific	segment	increased	by	14.9%	to	$93.4	million	for	the	year	ended	December	31,	2018,	compared	to	the prior	year,	primarily	due	 to	organic	growth.	Operating	margin	without	 the	effect	of	 the	new	revenue	accounting	standard	 increased	 to	29.8%	for	the	year	ended December	31,	2018,	compared	to	29.2%	for	the	prior	year.

Corporate.	Corporate	expenses	decreased	by	2.7%	 to	$245.4	million	for	 the	year	ended	December	31,	2018,	compared	to	the	prior	year,	primarily	due	to	a decrease	in	acquisition	and	integration	expenses	of	$38.5	million,	partially	offset	by	an	increase	in	share-based	compensation	expense	of	$18.7	million	and	additional costs	to	support	the	growth	of	our	business.

# Other	Income/Expense,	Net

Interest	and	other	income	increased	by	$12.1	million	to	$20.7	million	for	the	year	ended	December	31,	2018	compared	to	the	prior	year	primarily	due	to	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	$20.8	million	to	$195.6	million	for	the	year	ended	December	31,	2018	compared	to	the	prior	year.	Interest	expense	for	the year	ended	December	31,	2018	reflects	an	increase	in	our	outstanding	long-term	debt	to	fund	acquisitions	as	well	as	an	increase	in	the	London	Interbank	Offered	Rate ("LIBOR").

# Income	Tax	Benefit	(Provision)

We	reported	an	income	tax	provision	of	$77.5	million	for	the	year	ended	December	31,	2018.	During	the	year	ended	December	31,	2018,	we	continued	to	analyze our	foreign	tax	pools	and	resulting	foreign	tax	credits	and	reduced	our	estimated	transition	tax	liability,	which	resulted	in	an	income	tax	benefit	of	$23.3	million.	Our effective	tax	rate	for	the	year	ended	December	31,	2018	was	13.8%,	which	reflects	the	benefit	of	the	adjustment	to	the	one-time	transition	tax	liability.

For	the	year	ended	December	31,	2017,	we	reported	an	income	tax	benefit	of	$101.4	million,	reflecting	the	effect	of	a	provisional	net	income	tax	benefit	of $158.7	million	recorded	in	connection	with	the	2017	U.S.	Tax	Act.	Our	effective	tax	rate	for	the	year	ended	December	31,	2017	was	a	benefit	of	25.8%,	which	differs from	the	federal	U.S.	statutory	rate	and	the	effective	income	tax	rate	for	the	year	ended	December	31,	2018	primarily	due	to	the	net	tax	benefit	we	recorded	in connection	with	the	2017	U.S.	Tax	Act.	See	"Note	10—Income	Tax"	in	the	notes	to	the	accompanying	consolidated	financial	statements	for	more	discussion	about	the effects	of	the	2017	U.S.	Tax	Act	on	our	accounting	for	income	taxes	for	the	years	ended	December	31,	2018	and	2017.

The	following	table	sets	forth	key	selected	financial	data	for	the	years	ended	December	31,	2017	and	2016,	this	data	as	a	percentage	of	total	revenues,	and	the changes	between	periods	in	dollars	and	as	a	percentage	of	the	prior-period	amount.	The	income	statement	data	for	the	year	ended	December	31,	2017	are	derived	from the	 audited	 consolidated	 financial	 statements	 included	 in	 Item	8	-	Financial	Statements	and	Supplementary	Data.	The	 income	statement	data	for	 the	year	ended December	31,	2016	are	derived	from	our	unaudited	consolidated	financial	statements	for	that	period.

|  | Year	Ended	December	31, |  | Year	Ended	December	31, |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (dollar\tamounts\tin\tthousands) | 2017 | %\tof\tRevenue(1) | 2016 | %\tof\tRevenue(1) | Change | %\tChange |
| Revenues(2): |  |  |  |  |  |  |
| North\tAmerica | $2,929,522 | 73.7\t% | $2,475,323 | 73.4\t% | $454,199 | 18.3\t% |
| Europe | 767,524 | 19.3\t% | 655,477 | 19.4\t% | 112,047 | 17.1\t% |
| Asia-Pacific | 278,117 | 7.0\t% | 240,176 | 7.1\t% | 37,941 | 15.8\t% |
| \t\t\t\t\t\t\t\t\t\tTotal\trevenues | $3,975,163 | 100.0\t% | $3,370,976 | 100.0\t% | $604,187 | 17.9\t% |
| Consolidated\toperating\texpenses(2): |  |  |  |  |  |  |
| Cost\tof\tservice | $1,928,037 | 48.5\t% | $1,603,532 | 47.6\t% | $324,505 | 20.2\t% |
| Selling,\tgeneral\tand\tadministrative | 1,488,258 | 37.4\t% | 1,411,096 | 41.9\t% | 77,162 | 5.5\t% |
| \t\t\t\t\t\t\t\t\t\tOperating\texpenses | $3,416,295 | 85.9\t% | $3,014,628 | 89.4\t% | $401,667 | 13.3\t% |
| Operating\tincome\t(loss)(2): |  |  |  |  |  |  |
| North\tAmerica | $457,009 | 11.5\t% | $350,291 | 10.4\t% | $106,718 | 30.5\t% |
| Europe | 272,769 | 6.9\t% | 232,882 | 6.9\t% | 39,887 | 17.1\t% |
| Asia-Pacific | 81,273 | 2.0\t% | 58,709 | 1.7\t% | 22,564 | 38.4\t% |
| Corporate(3) | (252,183) | (6.3)% | (285,534) | (8.5)% | 33,351 | (11.7)% |
| \t\t\t\t\t\t\t\t\t\tOperating\tincome | $558,868 | 14.1\t% | $356,348 | 10.6\t% | $202,520 | 56.8\t% |

For	the	year	ended	December	31,	2017,	revenues	increased	by	$604.2	million,	or	17.9%,	compared	to	the	prior	year,	to	$3,975.2	million,	reflecting	growth	in	each of	our	operating	segments.

North	America	Segment.	For	the	year	ended	December	31,	2017,	revenues	from	our	North	America	segment	increased	by	$454.2	million,	or	18.3%,	compared	to the	prior	year,	to	$2,929.5	million	primarily	due	to	our	merger	with	Heartland,	the	results	of

which	were	included	in	our	consolidated	statement	of	income	for	a	full	year	during	the	year	ended	December	31,	2017,	compared	to	approximately	eight	months	during the	year	ended	December	31,	2016.

Europe	Segment.	For	the	year	ended	December	31,	2017,	revenues	from	our	Europe	segment	increased	by	$112.0	million,	or	17.1%,	compared	to	the	prior	year,	to $767.5	million,	primarily	due	to	organic	growth.

Asia-Pacific	Segment.	For	the	year	ended	December	31,	2017,	revenues	from	our	Asia-Pacific	segment	increased	by	$37.9	million,	or	15.8%,	compared	to	the	prior year,	to	$278.1	million,	primarily	due	to	organic	growth.

Cost	of	Service.	For	the	year	ended	December	31,	2017,	cost	of	service	increased	by	$324.5	million,	or	20.2%,	compared	to	the	prior	year,	to	$1,928.0	million.	As	a percentage	of	revenues,	cost	of	service	increased	to	48.5%	for	the	year	ended	December	31,	2017	compared	to	47.6%	for	the	prior	year.	These	increases	were	driven primarily	by	an	increase	in	the	variable	costs	associated	with	our	revenue	growth,	including	incremental	expenses	associated	with	acquired	businesses,	as	well	as additional	intangible	asset	amortization	associated	with	recently	acquired	businesses	of	$78.6	million.

Selling,	General	and	Administrative	Expenses.	For	the	year	ended	December	31,	2017,	selling,	general	and	administrative	expenses	increased	by	$77.2	million,	or 5.5%,	compared	to	the	prior	year,	to	$1,488.3	million.	The	increase	in	selling,	general	and	administrative	expenses	was	primarily	due	to	additional	costs	to	support	the growth	of	our	business,	including	incremental	expenses	associated	with	acquired	businesses.	As	a	percentage	of	revenues,	selling,	general	and	administrative	expenses decreased	to	37.4%	for	the	year	ended	December	31,	2017	compared	to	41.9%	for	the	prior	year.	The	decrease	in	selling,	general	and	administrative	expenses	as	a percentage	of	revenues	was	primarily	due	to	synergies	achieved	in	general	and	administrative	expenses	from	the	merger	with	Heartland,	as	well	as	the	decrease	in acquisition	and	integration	expenses	during	the	year	ended	December	31,	2017	of	$47.5	million.

North	America	Segment.	Operating	income	in	our	North	America	segment	increased	by	30.5%	to	$457.0	million	for	the	year	ended	December	31,	2017	compared to	the	prior	year	and	operating	margin	increased	by	1.4	percentage	points.	The	increase	in	operating	income	was	primarily	due	to	revenue	growth	in	our	U.S.	business, which	during	the	year	ended	December	31,	2017	was	partially	offset	by	additional	intangible	asset	amortization	associated	with	acquired	businesses.	The	increase	in operating	 margin	 during	 the	 year	 ended	December	31,	2017	was	primarily	due	 to	revenue	growth	and	a	decrease	 in	Heartland	customer-related	 intangible	asset amortization,	which	is	calculated	using	an	accelerated	method.

Europe	Segment.	Operating	income	in	our	Europe	segment	increased	by	17.1%	to	$272.8	million	for	the	year	ended	December	31,	2017	compared	to	the	prior year,	while	operating	margin	remained	equal	to	the	prior	year.	The	increase	in	operating	income	was	primarily	due	to	revenue	growth.

Asia-Pacific	Segment.	Operating	income	in	our	Asia-Pacific	segment	increased	by	38.4%	to	$81.3	million	for	the	year	ended	December	31,	2017	compared	to	the prior	year	and	operating	margin	increased	by	4.8	percentage	points.	The	increases	in	operating	income	and	operating	margin	were	primarily	due	to	organic	revenue growth.

Corporate.	Corporate	expenses	decreased	by	11.7% to	$252.2	million	for the	year	ended	December	31,	2017	compared	to	the	prior	year	primarily	due	to	a decrease	in	acquisition	and	integration	expenses.

Interest	and	other	income	decreased	by	$38.1	million	for	the	year	ended	December	31,	2017	compared	to	the	prior	year,	which	included	a	gain	of	$41.2	million	in connection	with	the	sale	of	our	membership	interests	in	Visa	Europe.

Interest	and	other	expense	increased	by	$28.7	million	for	the	year	ended	December	31,	2017	compared	to	the	prior	year.	The	outstanding	borrowings	on	our	long- term	debt	facilities	increased	significantly	in	April	2016	as	a	result	of	incremental	borrowings	we	made	to	fund	a	portion	of	the	total	consideration	for	our	merger	with Heartland.	Since	then,	we	have	made	principal	repayments

that	have	lowered	our	average	outstanding	borrowings,	and	we	have	lowered	the	leverage-based	margins	we	pay	on	interest	rates	through	refinancing	activities	that	we completed	in	October	2016	and	May	2017.	The	savings	in	interest	expense	that	we	realized	during	the	second	half	of	2017	due	to	these	refinancing	activities	were partially	offset	by	increases	in	LIBOR	during	the	intervening	time	frame	and	additional	borrowings	under	our	Revolving	Credit	Facility	to	complete	the	acquisition	of ACTIVE	Network.

We	reported	an	income	tax	benefit	of	$101.4	million	for	the	year	ended	December	31,	2017,	reflecting	the	effect	of	a	provisional	net	income	tax	benefit	of	$158.7 million	recorded	in	connection	with	the	2017	U.S.	Tax	Act.	Our	effective	tax	rate	for	the	year	ended	December	31,	2017	was	a	benefit	of	25.8%,	which	differs	from	the federal	U.S.	statutory	rate	and	the	effective	income	tax	rate	for	the	year	ended	December	31,	2016	primarily	due	to	the	net	tax	benefit	we	recorded	in	connection	with	the 2017	U.S.	Tax	Act.	See	"Note	10—Income	Tax"	in	the	notes	to	the	accompanying	consolidated	financial	statements	for	more	discussion	about	the	effects	of	the	2017 U.S.	Tax	Act	on	our	accounting	for	income	taxes	for	the	year	ended	December	31,	2017.

For	the	year	ended	December	31,	2016,	we	recorded	an	income	tax	provision	of	$36.3	million,	which	equated	to	an	effective	tax	rate	of	14.1%.	The	effective income	tax	rate	for	the	year	ended	December	31,	2016	included	a	benefit	from	eliminating	certain	net	deferred	tax	liabilities	associated	with	undistributed	earnings	from Canada,	as	a	result	of	management's	plans	at	that	time	to	reinvest	these	earnings	outside	the	United	States	indefinitely.

# Seven	Months	Ended	December	31,	2016	Compared	to	Seven	Months	Ended	December	31,	2015

The	following	table	sets	forth	key	selected	financial	data	for	the	seven	months	ended	December	31,	2016	and	2015,	this	data	as	a	percentage	of	total	revenues,	and the	changes	between	periods	in	dollars	and	as	a	percentage	of	the	prior-period	amount.	The	income	statement	data	for	the	seven	months	ended	December	31,	2016	are derived	from	the	audited	consolidated	financial	statements	included	in	Item	8	-	Financial	Statements	and	Supplementary	Data.	The	income	statement	data	for	the	seven months	ended	December	31,	2015	are	derived	from	our	unaudited	consolidated	financial	statements	for	that	period.

|  | Seven	Months	Ended	December	31, | Seven	Months	Ended	December	31, | Seven	Months	Ended	December	31, | Seven	Months	Ended	December	31, |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (dollar\tamounts\tin\tthousands) | 2016 | %\tof\nRevenue(1) | 2015 | %\tof\nRevenue(1) | Change | %\tChange |
| Revenues(2): |  |  |  |  |  |  |
| North\tAmerica | $1,650,616 | 74.9% | $1,227,916 | 71.0% | $422,700 | 34.4\t% |
| Europe | 403,823 | 18.3% | 380,246 | 22.0% | 23,577 | 6.2\t% |
| Asia-Pacific | 148,457 | 6.7% | 121,908 | 7.0% | 26,549 | 21.8\t% |
| \t\t\t\t\t\t\t\t\t\tTotal\trevenues | $2,202,896 | 100.0% | $1,730,070 | 100.0% | $472,826 | 27.3\t% |
| Consolidated\toperating\texpenses(2): |  |  |  |  |  |  |
| Cost\tof\tservice | $1,094,593 | 49.7% | $638,700 | 36.9% | $455,893 | 71.4\t% |
| Selling,\tgeneral\tand\tadministrative | 870,352 | 39.5% | 784,823 | 45.4% | 85,529 | 10.9\t% |
| \t\t\t\t\t\t\t\t\t\tOperating\texpenses | $1,964,945 | 89.2% | $1,423,523 | 82.3% | $541,422 | 38.0\t% |
| Operating\tincome\t(loss)(2): |  |  |  |  |  |  |
| North\tAmerica | $233,850 |  | $191,185 |  | $42,665 | 22.3\t% |
| Europe | 145,767 |  | 157,722 |  | (11,955) | (7.6)% |
| Asia-Pacific | 37,530 |  | 29,564 |  | 7,966 | 26.9\t% |
| Corporate(3) | (179,196) |  | (71,924) |  | (107,272) | 149.1\t% |
| \t\t\t\t\t\t\t\t\t\tOperating\tincome | $237,951 | 10.8% | $306,547 | 17.7% | $(68,596) | (22.4)% |

(2)	Revenues,	operating	expenses,	operating	income	and	operating	margin	reflect	the	effect	of	acquired	businesses	from	the	respective	dates	of	acquisition.	Notably,	on April	22,	2016,	we	merged	with	Heartland	as	further	discussed	in	"Note	2—Acquisitions"	in	the	notes	to	the	accompanying	consolidated	financial	statements.

(3)	During	the	seven	months	ended	December	31,	2016,	operating	loss	for	Corporate	included	acquisition	and	integration	costs	of	$91.6	million,	which	are	included	in	selling, general	and	administrative	expenses	in	the	consolidated	statements	of	income.

For	the	seven	months	ended	December	31,	2016,	revenues	increased	27.3%	to	$2,202.9	million	compared	to	the	prior-year	period,	reflecting	growth	in	each	of	our operating	segments,	in	spite	of	the	unfavorable	effect	of	fluctuations	in	foreign	currency	exchange	rates.	For	the	seven	months	ended	December	31,	2016,	currency exchange	rate	fluctuations	reduced	our	revenues	by	$35.3	million	compared	to	the	prior-year	period,	calculated	by	converting	revenues	for	the	seven	months	ended December	31,	2016	in	local	currencies	using	exchange	rates	for	the	seven	months	ended	December	31,	2015.

North	America	Segment.	For	the	seven	months	ended	December	31,	2016,	revenues	from	our	North	America	segment	increased	by	$422.7	million,	 or	34.4%, compared	to	the	prior-year	period	to	$1,650.6	million	primarily	due	to	our	merger	with	Heartland.

Europe	Segment.	For	the	seven	months	ended	December	31,	2016,	revenues	from	our	Europe	segment	increased	by	$23.6	million,	or	6.2%,	compared	to	the	prior- year	period	to	$403.8	million	due	to	a	joint	venture	with	Erste	Group	Bank	AG	("Erste	Group")	in	Central	and	Eastern	Europe	that	commenced	in	June	2016,	despite	the unfavorable	effect	of	currency	fluctuations	in	Europe	of	$34.3	million.

Asia-Pacific	Segment.	For	the	seven	months	ended	December	31,	2016,	revenues	from	our	Asia-Pacific	segment	increased	by	$26.5	million,	or	21.8%,	compared	to the	prior-year	period	to	$148.5	million,	primarily	due	to	organic	growth.

Cost	of	Service.	Cost	of	service	increased	by	71.4%	to	$1,094.6	million	for	the	seven	months	ended	December	31,	2016	compared	to	the	prior-year	period.	As	a percentage	of	revenues,	cost	of	service	increased	to	49.7%	for	the	seven	months	ended	December	31,	2016	compared	to	36.9%	in	the	prior	year.	The	increase	in	cost	of service	was	driven	primarily	by	an	increase	in	the	variable	costs	associated	with	our	revenue	growth,	including	those	related	to	our	merger	with	Heartland,	and	by additional	intangible	asset	amortization	associated	with	recently	acquired	businesses	of	$145.6	million	for	the	seven	months	ended	December	31,	2016.

Selling,	General	and	Administrative	Expenses.	Selling,	general	and	administrative	expenses	increased	by	10.9%	 to	$870.4	million	for	the	seven	months	ended December	31,	2016	compared	to	the	prior-year	period.	As	a	percentage	of	revenues,	selling,	general	and	administrative	expenses	decreased	to	39.5%	for	the	seven months	ended	December	31,	2016	compared	to	45.4%	in	the	prior	year.	The	increase	in	selling,	general	and	administrative	expenses	was	primarily	due	to	additional	costs to	support	the	growth	of	our	business,	including	incremental	expenses	associated	with	the	integration	of	Heartland.	The	decrease	in	selling,	general	and	administrative expenses	as	a	percentage	of	revenues	was	primarily	due	to	synergies	achieved	in	general	and	administrative	expenses	from	the	merger	with	Heartland.

North	America	Segment.	Operating	income	in	our	North	America	segment	increased	by	22.3%	to	$233.9	million	for	the	seven	months	ended	December	31,	2016 compared	to	the	prior-year	period.	The	increase	in	operating	income	was	primarily	due	to	revenue	growth	in	our	U.S.	business,	partially	offset	by	expenses	associated with	the	integration	of	Heartland	and	additional	intangible	asset	amortization	associated	with	the	merger.	Operating	margin	decreased	by	1.4	percentage	points	for	the seven	months	ended	December	31,	2016	compared	to	the	prior-year	period	primarily	as	a	result	of	the	incremental	merger-related	expenses.

Europe	Segment.	Operating	income	in	our	Europe	segment	decreased	by	7.6%	to	$145.8	million	for	the	seven	months	ended	December	31,	2016	compared	to	the prior-year	period,	including	the	effect	of	unfavorable	currency	fluctuations	of	$19.6	million.	Operating	margin	decreased	5.4	percentage	points	for	the	seven	months ended	December	31,	2016	compared	to	the	prior-year	period.	The	decreases	in	operating	income	and	operating	margin	were	primarily	driven	by	the	effect	of	unfavorable currency	fluctuations.

Asia-Pacific	Segment.	Operating	income	in	our	Asia	segment	increased	by	26.9%	to	$37.5	million	for	the	seven	months	ended	December	31,	2016	compared	to	the prior-year	period.	Operating	margin	increased	1.0	percentage	point	for	the	seven	months	ended	December	31,	2016	compared	to	the	prior-year	period.	The	increases	in operating	income	and	operating	margin	were	primarily	due	to	organic	revenue	growth.

Corporate.	Corporate	expenses	increased	by	$107.3	million	for	the	seven	months	ended	December	31,	2016	compared	to	the	prior-year	period,	primarily	due	to	the merger	with	Heartland	and	incremental	expenses	of	$91.6	million	associated	with	its	integration.

Interest	and	other	income	for	the	seven	months	ended	December	31,	2016	increased	primarily	due	to	a	gain	of	$41.2	million	recorded	in	connection	with	the	sale	of our	membership	interests	in	Visa	Europe.

Interest	and	other	expense	increased	by	$76.8	million	for	the	seven	months	ended	December	31,	2016	compared	to	the	prior-

year	period	primarily	due	to	an	increase	in	interest	expense	incurred	resulting	from	an	increase	in	the	outstanding	borrowings	to	fund	the	merger	with	Heartland.

# Income	Tax	Provision

Our	effective	income	tax	rates	were	20.6%	and	25.3%,	respectively,	for	the	seven	months	ended	December	31,	2016	and	2015.	The	decrease	in	our	effective income	tax	rate	was	primarily	due	to	a	higher	percentage	of	income	generated	in	international	jurisdictions	with	lower	tax	rates	(primarily	as	a	result	of	the	acquisition and	integration-related	expenses	incurred	in	the	United	States).

# Liquidity	and	Capital	Resources

In	the	ordinary	course	of	our	business,	a	significant	portion	of	our	liquidity	comes	from	operating	cash	flows.	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	our financing,	such	as	term	loans	and	our	Revolving	Credit	Facility,	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	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,	equity	or	otherwise.

At	December	31,	2018,	we	had	cash	and	cash	equivalents	totaling	$1,210.9	million.	Of	 this	amount,	we	consider	$434.5	million	to	be	available	for	general purposes,	of	which	approximately	$18	million	is	undistributed	foreign	earnings	considered	to	be	indefinitely	reinvested	outside	the	United	States.	Under	the	2017	U.S. Tax	Act,	a	company's	foreign	earnings	accumulated	under	legacy	tax	laws	are	deemed	repatriated,	and	the	2017	U.S.	Tax	Act	generally	eliminates	U.S.	federal	income taxes	on	dividends	from	foreign	subsidiaries.	The	available	cash	of	$434.5	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	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	$1,106.1	million	during	the	year	ended	December	31,	2018,	which	was	primarily	attributable	to	net	income	of	$484.7 million	adjusted	for	non-cash	items,	including	depreciation	and	amortization	expense	of	$522.8	million,	partially	offset	by	a	decrease	in	operating	assets	and	liabilities	of $44.5	million.

Fluctuations	in	operating	assets	and	liabilities	are	affected	primarily	by	timing	of	month-end	and	transaction	volume,	especially	changes	in	settlement	processing assets	and	liabilities,	and	by	the	effects	of	businesses	we	acquire	that	have	different	working	capital	requirements.	Changes	in	settlement	processing	assets	and	liabilities increased	operating	cash	flows	by	$83.5	million	during	the	year	ended	December	31,	2018	and	decreased	operating	cash	flows	by	$361.7	million	during	the	year	ended December	31,	2017.	Changes	in	settlement	processing	assets	and	liabilities	increased	operating	cash	flows	by	$35.6	million	during	the	2016	fiscal	transition	period	and $218.1	million	during	the	year	ended	May	31,	2016.

Operating	activities	provided	net	cash	of	$512.4	million,	$515.8	million	and	$592.9	million,	respectively,	during	the	year	ended	December	31,	2017,	the	transition period	ended	December	31,	2016	and	the	year	ended	May	31,	2016,	respectively.	The	increase	in	cash	flows	provided	by	operating	activities	since	2016,	during	which time	 we	 completed	 the	 acquisitions	 of	 Heartland,	ACTIVE	 Network,	AdvancedMD	 and	 SICOM,	 among	 others,	 was	 primarily	 due	 to	 our	 revenue	 growth	 and corresponding	increase	in	operating	income.	The	increase	in	operating	cash	flows	from	our	growing	business	during	this	period	was	partially	offset	by	investments	made to	integrate	the	acquired	businesses.	During	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016	we	incurred $56.1	million,	$94.6	million,	$91.6	million	and	$51.3	million,	respectively,	of	acquisition	and

integration	expenses	primarily	related	to	the	acquired	businesses.	In	addition,	during	that	same	period	of	time,	our	interest	expense	has	increased	as	a	result	of	long-term debt	we	have	issued,	primarily	to	help	fund	these	acquisitions,	as	well	as	increases	in	interest	rates.	During	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal transition	period	and	the	year	ended	May	31,	2016,	cash	paid	for	interest	expense	was	$177.5	million,	$154.2	million,	$93.6	million	 and	$58.7	million,	respectively. Based	on	the	recent	increase	in	our	level	of	indebtedness	to	fund	acquisitions,	together	with	recent	increases	in	interest	rates,	we	expect	our	interest	expense	for	the	year ending	December	31,	2019	to	increase	compared	to	interest	expense	for	the	year	ended	December	31,	2018,	which	could	affect	our	cash	flows	and	earnings.

We	used	net	cash	in	investing	activities	of	$1,476.3	million,	$736.0	million,	$86.7	million	and	$2,127.2	million	during	the	years	ended	December	31,	2018	and 2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016,	respectively.	Cash	used	for	investing	activities	represents	primarily	cash	used	to	fund	business acquisitions	and	capital	expenditures.

During	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016,	respectively,	we	used	cash	of	$1,259.7 million,	$562.7	million,	$33.9	million	 and	$2,034.4	million	 to	 complete	 acquisitions.	 In	 addition	 to	 cash,	 we	 used	 our	 common	 stock	 to	 fund	 a	 portion	 of	 the consideration	for	both	the	Heartland	and	ACTIVE	Network	acquisitions.	See	"Note	2—Acquisitions"	in	the	notes	to	the	accompanying	consolidated	financial	statements for	further	discussion	of	our	business	acquisitions	and	how	we	funded	acquired	businesses.

We	made	capital	expenditures	of	$213.3	million,	$181.9	million,	$88.9	million	 and	$91.6	million	to	purchase	property	and	equipment	(including	internal-use capitalized	software	development	projects)	during	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016, 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	the	year	ended	December	31,	2017,	we	sold	our	operating	facility	in	Jeffersonville,	Indiana	for	$37.5	million.	In	addition,	during	the	2016	fiscal	transition period	we	exchanged	all	of	our	membership	interest	in	Visa	Europe	to	Visa	for	up-front	consideration,	including	cash	of	approximately	$37.7	million.

Financing	activities	include	borrowings	and	repayments	made	under	our	Credit	Facility	(described	in	"Note	8—Long-Term	Debt	and	Lines	of	Credit"	in	the	notes to	the	accompanying	consolidated	financial	statements)	as	well	as	borrowings	and	repayments	made	under	specialized	lines	of	credit	to	fund	daily	settlement	activities. Our	borrowing	arrangements	are	further	described	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	financing	activities	provided	net	cash	of	$286.9	million	and	$352.3	million	during	the	years	ended	December	31,	2018	and	December	31,	2017,	respectively. During	the	2016	fiscal	transition	period,	we	used	net	cash	in	financing	activities	of	$278.8	million.	During	the	year	ended	May	31,	2016,	cash	flows	from	financing activities	provided	net	cash	of	$1,957.6	million.

Proceeds	from	long-term	debt	were	$2.8	billion,	$2.0	billion,	$1.3	billion	 and	$6.1	billion	for	 the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal transition	period	and	the	year	ended	May	31,	2016,	respectively.	Repayments	of	long-term	debt	were	$2.3	billion,	$1.8	billion,	$1.4	billion	and	$3.7	billion	for	the	years ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016,	respectively.	Proceeds	from	long-term	debt	include	borrowings that	we	make	from	time-to-time	under	our	Revolving	Credit	Facility,	including	those	we	have	made	to	fund	a	portion	of	the	cash	consideration	paid	for	acquired businesses.	Repayments	of	long-term	debt	include	repayments	that	we	make	from	time-to-time	under	our	Revolving	Credit	Facility	as	well	as	scheduled	principal repayments	 made	 under	 our	 term	 loans.	 Debt	 issuance	 costs	 reflect	 the	 amount	 of	 fees	 we	 paid	 to	 complete	 these	 borrowing	 activities.	 During	 the	 year	 ended December	31,	2018,	we	repatriated	$457.7	million	from	certain	of	our	foreign	subsidiaries	and	used	the	cash	to	reduce	outstanding	borrowings	under	our	Revolving Credit	Facility.

Because	we	often	receive	funding	from	the	payment	networks	after	we	fund	our	merchants,	we	have	specialized	lines	of	credit	in	various	markets	where	we	do business	to	fund	settlement.	Activity	under	our	settlement	lines	of	credit	is	affected	primarily	by	timing	of	month-end	and	transaction	volume.	During	the	years	ended December	31,	2018	and	2017	and	the	2016	fiscal	transition	period,	we	had	net	proceeds	from	settlement	lines	of	credit	of	$70.8	million,	$221.5	million	 and	$20.6 million,	respectively.	During	the	year	ended	May	31,	2016,	we	had	net	repayments	of	settlement	lines	of	credit	of	$206.0	million.

We	make	repurchases	of	our	common	stock	mainly	through	open	market	repurchase	plans	and,	at	times,	through	accelerated	share	repurchase	programs.	During the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016,	we	invested	cash	of	$208.2	million,	$34.8	million, $178.2	million	 and	$136.0	million,	respectively,	to	repurchase	shares	of	our	common	stock.	As	of	December	31,	2018,	 we	 had	$387.8	million	of	share	repurchase authority	remaining	under	a	program	authorized	by	the	board	of	directors,	announced	on	February	6,	2018.	On	February	5,	2019,	the	board	of	directors	increased	its authorization	to	repurchase	shares	of	our	common	stock	to	$750	million,	inclusive	of	prior	share	repurchase	programs	authorized	by	the	board	and	repurchases	made thereunder.

We	believe	that	our	current	level	of	cash	and	borrowing	capacity	under	our	long-term	debt	and	lines	of	credit	described	below,	together	with	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

We	are	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	"Credit	Facility").	As	of	December	31,	2018,	the	Credit	Facility	provided	for	secured	financing	comprised	of	(i)	a	$1.5	billion revolving	credit	facility	(the	"Revolving	Credit	Facility");	(ii)	a	$1.5	billion	term	loan	(the	"Term	A	Loan"),	(iii)	a	$1.37	billion	term	loan	(the	"Term	A-2	Loan"),	(iv)	a $1.14	billion term	 loan	 facility	 (the	 "Term	 B-2	 Loan")	 and	 (v)	 a	$500	million	 term	 loan	(the	"Term	B-4	Loan").	Substantially	all	of	 the	assets	of	our	domestic subsidiaries	are	pledged	as	collateral	under	the	Credit	Facility.	As	of	December	31,	2018,	the	aggregate	outstanding	balance	on	the	term	loans	was	$4.5	billion,	and	the outstanding	balance	on	the	Revolving	Credit	Facility	was	$704.0	million.

The	borrowings	outstanding	under	our	Credit	Facility	as	of	December	31,	2018	reflect	amounts	borrowed	for	acquisitions	and	other	activities	we	completed	in 2018,	including	a	reduction	to	the	interest	rate	margins	applicable	to	our	Term	A	Loan,	Term	A-2	Loan,	Term	B-2	Loan	and	the	Revolving	Credit	Facility,	an	extension of	the	maturity	dates	of	the	Term	A	Loan,	Term	A-2	Loan	and	the	Revolving	Credit	Facility,	and	an	increase	in	the	total	financing	capacity	under	the	Credit	Facility	to approximately	$5.5	billion	in	June	2018.

In	October	2018,	we	entered	into	an	additional	term	loan	in	the	amount	of	$500	million	(the	"Term	B-4	Loan").	We	used	the	proceeds	from	the	Term	B-4	Loan	to pay	down	a	portion	of	the	balance	outstanding	under	our	Revolving	Credit	Facility.

The	Credit	Facility	provides	for	an	interest	rate,	at	our	election,	of	either	LIBOR	or	a	base	rate,	in	each	case	plus	a	margin.	As	of	December	31,	2018,	the	interest rates	on	the	Term	A	Loan,	the	Term	A-2	Loan,	the	Term	B-2	Loan	and	the	Term	B-4	Loan	were	 4.02%,	4.01%,	4.27%	and	4.27%,	respectively,	and	the	interest	rate	on the	Revolving	Credit	Facility	was	3.92%.	In	addition,	we	are	required	to	pay	a	quarterly	commitment	fee	with	respect	to	the	unused	portion	of	the	Revolving	Credit Facility	at	an	applicable	rate	per	annum	ranging	from	0.20%	to	0.30%	depending	on	our	leverage	ratio.

The	Term	A	Loan	and	the	Term	A-2	Loan	mature,	and	the	Revolving	Credit	Facility	expires,	on	January	20,	2023.	The	Term	B-2	Loan	matures	on	April	22,	2023. The	Term	B-4	Loan	matures	on	October	18,	2025.	The	Term	A	Loan	and	Term	A-2	Loan	principal	amounts	must	each	be	repaid	in	quarterly	installments	in	the	amount of	0.625%	of	principal	through	June	2019,	increasing	to	1.25%	of	principal	through	June	2021,	increasing	to	1.875%	of	principal	through	June	2022	and	increasing	to 2.50%	of	principal	through	December	2022,	with	the	remaining	principal	balance	due	upon	maturity	in	January	2023.	The	Term	B-2	Loan	principal	must	be	repaid	in quarterly	installments	in	the	amount	of	0.25%	of	principal	through	March	2023,	with	the	remaining	principal	balance	due	upon	maturity	in	April	2023.	The	Term	B-4 Loan	principal	must	be	repaid	in	quarterly	installments	in	the	amount	of	0.25%	of	principal	through	September	2025,	with	the	remaining	principal	balance	due	upon maturity	in	October	2025.

We	may	issue	standby	letters	of	credit	of	up	to	$100	million	in	the	aggregate	under	the	Revolving	Credit	Facility.	Outstanding	letters	of	credit	under	the	Revolving Credit	Facility	reduce	the	amount	of	borrowings	available	to	us.	Borrowings	available	to	us	under	the	Revolving	Credit	Facility	are	further	limited	by	the	covenants described	below	under	"Compliance	with	Covenants."	The	total	available	commitments	under	the	Revolving	Credit	Facility	at	December	31,	2018	were	$783.6	million.

# 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	of	credit	may	exceed	 the	stated	credit	 limit.	As	of	December	31,	2018	 and	2017,	 a	 total	 of	$70.6	million	 and	$59.3	 million, respectively,	of	cash	on	deposit	was	used	to	determine	the	available	credit.

As	of	December	31,	2018	and	2017,	respectively,	we	had	$700.5	million	and	$635.2	million	outstanding	under	these	lines	of	credit	with	additional	capacity	of $710.3	million	as	of	December	31,	2018	to	fund	settlement.	The	weighted-average	interest	rate	on	these	borrowings	was	2.97%	and	1.97%	at	December	31,	2018	and 2017,	respectively.

# Compliance	with	Covenants

The	Credit	Facility	Agreement	contains	customary	affirmative	and	restrictive	covenants,	including,	among	others,	financial	covenants	based	on	our	leverage	and interest	coverage	ratios,	as	defined	in	the	agreement.	As	of	December	31,	2018,	financial	covenants	under	the	Credit	Facility	Agreement	required	a	leverage	ratio	no greater	than:	(i)	5.00	to	1.00	as	of	the	end	of	any	fiscal	quarter	ending	during	the	period	from	April	1,	2018	through	June	30,	2019;	(ii)	4.75	to	1.00	as	of	the	end	of	any fiscal	quarter	ending	during	the	period	from	July	1,	2019	through	June	30,	2020;	and	(iii)	4.50	to	1.00	as	of	the	end	of	any	fiscal	quarter	ending	thereafter.	The	interest coverage	ratio	is	required	to	be	no	less	than	3.25	to	1.00.

The	Credit	Facility	Agreement	and	settlement	lines	of	credit	also	include	various	other	covenants	that	are	customary	in	such	borrowings.	The	Credit	Facility Agreement	 includes	 covenants,	 subject	 in	 each	 case	 to	 exceptions	 and	 qualifications	 that	 may	 restrict	 certain	 payments,	 including,	 in	 certain	 circumstances,	 the repurchasing	of	our	common	stock	and	paying	cash	dividends	in	excess	of	our	current	rate	of	$0.01	per	share	per	quarter.	We	were	in	compliance	with	all	applicable covenants	as	of	December	31,	2018.

See	"Note	8—Long-Term	Debt	and	Lines	of	Credit"	in	the	notes	to	the	accompanying	consolidated	financial	statements	for	further	discussion	of	our	borrowing arrangements.

# 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,	other	than	the	guarantee	services	described	in	"Note	1—Basis	of	Presentation	and	Summary	of Significant	Accounting	Policies"	in	the	notes	to	the	accompanying	consolidated	financial	statements.

# BIN/ICA	Agreements

We	have	entered	into	sponsorship	or	depository	and	processing	agreements	with	certain	banks.	These	agreements	allow	us	to	use	the	banks'	identification	numbers, referred	to	as	Bank	Identification	Number	("BIN")	for	Visa	transactions	and	Interbank	Card	Association	("ICA")	number	for	Mastercard	transactions,	to	clear	credit	card transactions	 through	 Visa	 and	 Mastercard.	Certain	 of	 such	 agreements	 contain	 financial	 covenants,	 and	 we	 were	 in	 compliance	 with	 all	 such	 covenants	 as	 of December	31,	2018.

# Commitments	and	Contractual	Obligations

The	following	table	summarizes	our	contractual	obligations	and	commitments	as	of	December	31,	2018:

|  | Total | Less	than	1	Year | 1-3	Years | 3-5	Years | 5+	Years |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (in\tthousands) |  |  |
| Long-term\tdebt | $5,167,643 | $124,176 | $355,827 | $4,212,640 | $475,000 |
| Interest\ton\tlong-term\tdebt(1) | 888,317 | 206,112 | 410,538 | 235,158 | 36,509 |
| Settlement\tlines\tof\tcredit | 700,486 | 700,486 | — | — | — |
| Operating\tlease\tobligations(2) | 433,408 | 50,095 | 124,790 | 33,298 | 225,225 |
| Purchase\tobligations(3) | 302,001 | 88,022 | 157,532 | 22,909 | 33,538 |

(1)	Interest	on	long-term	debt	is	based	on	rates	effective	and	amounts	borrowed	as	of	December	31,	2018.	The	estimated	effect	of	interest	rate	swaps	is	included	in	interest	on long-term	debt.	Since	the	contractual	rates	for	our	long-term	debt	and	settlements	on	our	interest	rate	swaps	are	variable,	actual	cash	payments	may	differ	from	the	estimates provided.

(2)	Operating	lease	obligations	include	approximately	$70	million	for	operating	lease	agreements	not	commenced	at	December	31,	2018.

(3)	Includes	estimate	of	future	payments	for	noncancelable	contractual	obligations	related	to	service	arrangements	with	suppliers	for	fixed	or	minimum	amounts.

The	table	above	excludes	other	obligations	that	we	may	have,	such	as	employee	benefit	obligations	and	other	noncurrent	liabilities	reflected	in	our	consolidated balance	sheet,	because	the	timing	of	the	related	payments	is	not	determinable	or	because	there	is	no	contractual	obligation	associated	with	the	underlying	obligations.

# Critical	Accounting	Policies

Our	consolidated	financial	statements	have	been	prepared	in	accordance	with	GAAP,	which	often	require	the	judgment	of	management	in	the	selection	and application	of	certain	accounting	principles	and	methods.	We	consider	the	following	accounting	policies	to	be	critical	to	understanding	our	consolidated	financial statements	because	the	application	of	these	policies	requires	significant	judgment	on	the	part	of	management,	and	as	a	result,	actual	future	developments	may	be	different from	those	expected	at	the	time	that	we	make	these	critical	judgments.	We	have	discussed	these	critical	accounting	policies	with	the	audit	committee	of	the	board	of directors.

Accounting	 estimates	 necessarily	 require	 subjective	 determinations	 about	 future	 events	 and	 conditions.	Therefore,	 the	 following	 descriptions	 of	 our	 critical accounting	policies	are	forward-looking	statements,	and	actual	results	could	differ	materially	from	the	results	anticipated	by	these	forward-looking	statements.	You should	read	the	following	in	conjunction	with	"Note	1—Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies"	of	the	notes	to	the	accompanying consolidated	financial	statements	and	the	risk	factors	contained	in	"Item	1A	-	Risk	Factors"	of	this	Annual	Report	on	Form	10-K.

# Goodwill

We	perform	our	annual	goodwill	impairment	test	as	of	October	1.	We	test	goodwill	for	impairment	at	the	reporting	unit	level	annually	and	more	often	if	an	event occurs	or	circumstances	change	that	indicate	the	fair	value	of	a	reporting	unit	is	below	its	carrying	amount.	We	have	the	option	of	performing	a	qualitative	assessment	of impairment	to	determine	whether	any	further	quantitative	assessment	for	impairment	is	necessary.	The	option	of	whether	or	not	to	perform	a	qualitative	assessment	is made	annually	and	may	vary	by	reporting	unit.

Factors	we	consider	in	the	qualitative	assessment	include	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,	sustained	decrease	in	our share	price,	and	other	relevant	entity-specific	events.	If	we	elect	to

bypass	the	qualitative	assessment	or	if	we	determine,	on	the	basis	of	qualitative	factors,	that	the	fair	value	of	the	reporting	unit	is	more	likely	than	not	less	than	the carrying	amount,	a	quantitative	test	would	be	required.

We	have	seven	reporting	units:	North	America	Payments,	Integrated	Solutions	and	Vertical	Markets,	United	Kingdom,	Asia-Pacific,	Central	and	Eastern	Europe, Russia	and	Spain.	As	of	October	1,	2018,	we	elected	to	perform	a	qualitative	assessment	of	impairment	for	each	of	our	reporting	units.	We	determined	on	the	basis	of qualitative	factors	that	the	fair	value	of	each	reporting	unit	was	not	more	likely	than	not	less	than	the	respective	carrying	amounts.	We	believe	that	the	fair	value	of	each of	our	reporting	units	is	substantially	in	excess	of	its	carrying	amount.

# Intangible	and	Long-lived	Assets

Other	intangible	assets	include	customer-related	intangible	assets	(such	as	customer	lists	and	merchant	contracts),	contract-based	intangible	assets	(such	as	non- compete	agreements,	referral	agreements	and	processing	rights),	acquired	technologies	and	trademarks	and	trade	names	associated	with	business	combinations.	These assets	are	amortized	over	their	estimated	useful	lives.	The	useful	lives	for	customer-related	intangible	assets	are	determined	based	primarily	on	forecasted	cash	flows, which	include	estimates	for	the	revenues,	expenses,	and	customer	attrition	associated	with	the	assets.	The	useful	lives	of	contract-based	intangible	assets	are	equal	to	the terms	of	 the	agreements.	The	useful	lives	of	amortizable	trademarks	and	trade	names	are	based	on	our	plans	to	phase	out	the	trademarks	and	trade	names	in	the applicable	 markets.	We	 use	 the	 straight-line	 method	 of	 amortization	 for	 our	 amortizable	 acquired	 technologies,	 trademarks	 and	 trade	 names	 and	 contract-based intangibles.

Amortization	 for	 most	 of	 our	 customer-related	 intangible	 assets	 is	 calculated	 using	 an	 accelerated	 method.	 In	 determining	 amortization	 expense	 under	 our accelerated	method	for	any	given	period,	we	calculate	the	expected	cash	flows	for	that	period	that	were	used	in	determining	the	acquired	value	of	the	asset	and	divide	that amount	by	the	expected	total	cash	flows	over	the	estimated	life	of	the	asset.	We	multiply	that	percentage	by	the	initial	carrying	amount	of	the	asset	to	arrive	at	the amortization	expense	for	that	period.	If	the	cash	flow	patterns	that	we	experience	differ	significantly	from	our	initial	estimates,	we	adjust	the	amortization	schedule prospectively.	These	cash	flow	patterns	are	derived	using	certain	assumptions	and	cost	allocations	due	to	a	significant	amount	of	asset	interdependencies	that	exist	in	our business.	We	believe	that	our	accelerated	method	better	approximates	the	expected	distribution	of	cash	flows	generated	by	our	acquired	customer	relationships.	We	did not	make	any	significant	adjustments	to	the	amortization	schedules	of	our	intangible	assets	during	the	year	ended	December	31,	2018.

We	regularly	evaluate	whether	events	and	circumstances	have	occurred	that	indicate	the	carrying	amount	of	property	and	equipment	and	finite-life	intangible assets	may	not	be	recoverable.	When	factors	indicate	that	these	long-lived	assets	should	be	evaluated	for	possible	impairment,	we	assess	the	potential	impairment	by determining	whether	the	carrying	amount	of	such	long-lived	assets	will	be	recovered	through	the	future	undiscounted	cash	flows	expected	from	use	of	the	asset	and	its eventual	disposition.	If	the	carrying	amount	of	the	asset	is	determined	not	to	be	recoverable	and	exceeds	its	fair	value,	an	impairment	loss	is	recorded,	measured	as	the difference	between	the	fair	value	and	the	carrying	amount.	Fair	values	are	determined	based	on	quoted	market	prices	or	discounted	cash	flow	analysis	as	applicable.	We regularly	evaluate	whether	events	and	circumstances	have	occurred	that	indicate	the	useful	lives	of	property	and	equipment	and	finite-life	intangible	assets	may	warrant revision.

# Capitalization	of	Internal-Use	Software

We	develop	software	that	is	used	in	providing	services	to	customers.	Capitalization	of	internal-use	software,	primarily	associated	with	operating	platforms,	occurs when	we	have	completed	the	preliminary	project	stage,	management	authorizes	the	project,	management	commits	to	funding	the	project,	it	is	probable	the	project	will	be completed	and	the	project	will	be	used	to	perform	the	function	intended.	The	preliminary	project	stage	consists	of	the	conceptual	formulation	of	alternatives,	the evaluation	of	alternatives,	the	determination	of	existence	of	needed	technology	and	the	final	selection	of	alternatives.	Costs	incurred	during	the	preliminary	project	stage are	expensed	as	incurred.	Currently	unforeseen	circumstances	in	software	development,	such	as	a	significant	change	in	the	manner	in	which	the	software	is	intended	to be	used,	obsolescence	or	a	significant	reduction	in	revenues	due	to	merchant	attrition,	could	require	us	to	implement	alternative	plans	with	respect	to	a	particular	effort, which	could	result	in	the	impairment	of	previously	capitalized	software	development	costs.	The	carrying	amount	of	internal-use	software,	including	work-in-progress,	at December	31,	2018	was	$404.6	million.	Costs	capitalized	during	the	year	ended	December	31,	2018,	the	year	ended	December	31,	2017,	the	2016	fiscal	transition	period and	the	year	ended	May	31,	2016	totaled	$97.9	million,	$79.3	million,	$37.7	million	and	$36.5	million,	respectively.	Internal-use	software	is	amortized	over	its	estimated useful	life,	which	is	typically	2	to	10	years,	in	a	manner	that	best	reflects	the	pattern	of	economic	use	of	the	assets.

# Income	Taxes

We	determine	our	provision	for	income	taxes	using	management's	judgments,	estimates	and	the	interpretation	and	application	of	complex	tax	laws	in	each	of	the jurisdictions	in	which	we	operate.	Judgment	is	also	required	in	assessing	the	timing	and	amounts	of	deductible	and	taxable	items.	These	differences	result	in	deferred	tax assets	and	liabilities	in	our	consolidated	balance	sheet.

Accounting	Standards	Codification	("ASC")	Topic	740,	"Income	Taxes"	("ASC	740")	requires	companies	to	recognize	the	effect	of	tax	law	changes	in	the	period of	enactment.	To	address	the	application	of	GAAP	in	situations	when	a	registrant	does	not	have	the	necessary	information	available,	prepared	or	analyzed	in	reasonable detail	to	complete	the	accounting	for	certain	income	tax	effects	of	the	2017	U.S.	Tax	Act,	which	was	enacted	on	December	22,	2017,	the	SEC	issued	Staff	Accounting Bulletin	No.	118	("SAB	118"),	which	in	March	2018	was	codified	by	the	FASB	in	ASC	740.	SAB	118	provides	guidance	for	registrants	regarding	the	application	of ASC	Topic	740	in	the	reporting	period	that	includes	December	22,	2017,	including	reporting	provisional	amounts	for	those	specific	income	tax	effects	of	the	2017	U.S. Tax	Act	for	which	the	accounting	is	incomplete	but	a	reasonable	estimate	can	be	determined.	In	addition,	SAB	118	requires	provisional	amounts	or	adjustments	to provisional	amounts	identified	in	the	measurement	period,	as	defined,	to	be	included	as	an	adjustment	to	tax	expense	or	benefit	from	continuing	operations	in	the	period the	amounts	are	determined.

As	a	result	of	the	enactment	of	the	2017	U.S.	Tax	Act,	our	income	tax	benefit	for	the	year	ended	December	31,	2017	included	a	net	benefit	of	$158.7	million, reflecting	provisional	amounts	for	specific	income	tax	effects	as	a	result	of	the	enactment	of	the	2017	U.S.	Tax	Act	for	which	our	accounting	was	incomplete	but	could be	reasonably	estimated	as	of	December	31,	2017.	During	the	year	ended	December	31,	2018,	we	continued	to	analyze	our	foreign	tax	pools	and	resulting	foreign	tax credits	and	reduced	the	estimated	transition	tax	liability,	which	resulted	in	an	income	tax	benefit	of	$23.3	million.	As	of	December	31,	2018,	we	have	completed	our accounting	for	the	transition	effects	of	the	2017	U.S.	Tax	Act.

We	believe	our	tax	return	positions	are	fully	supportable;	however,	we	recognize	the	benefit	for	tax	positions	only	when	it	is	more	likely	than	not	that	the	position will	be	sustained	based	on	its	technical	merits.	Issues	raised	by	a	tax	authority	may	be	resolved	at	an	amount	different	than	the	related	benefit	recognized.	When	facts and	circumstances	change	(including	an	effective	settlement	of	an	issue	or	statute	of	limitations	expiration),	the	effect	is	recognized	in	the	period	of	change.	The unrecognized	tax	benefits	that	exist	at	December	31,	2018	would	affect	our	provision	for	income	taxes	in	the	future,	if	recognized.	Judgment	is	required	to	determine whether	or	not	some	portion	or	all	of	our	deferred	tax	assets	will	not	be	realized.	To	the	extent	we	determine	that	we	will	not	realize	the	benefit	of	some	or	all	of	our deferred	tax	assets,	then	these	deferred	tax	assets	are	adjusted	through	our	provision	for	income	taxes	in	the	period	in	which	this	determination	is	made.

# Effect	of	New	Accounting	Pronouncements	-	Recently	Issued	Pronouncements	Not	Yet	Adopted

As	more	fully	described	in	"Note	1—Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies"	in	the	notes	to	the	accompanying	consolidated financial	statements,	effective	January	1,	2019,	we	will	adopt	a	new	lease	accounting	standard	that	requires	lessees	to	recognize,	on	the	balance	sheet,	assets	and liabilities	for	the	rights	and	obligations	created	by	leases.	The	application	of	the	new	lease	accounting	standard	will	also	require	several	new	disclosures.	We	have	made substantial	 progress	 in	 the	 execution	 of	 our	 implementation	 plan,	 and	 we	 are	 substantially	 complete	 with	 our	 evaluation	 of	 the	 effect	 of	ASU	 2016-02	 on	 our consolidated	financial	statements.	We	currently	estimate	that	we	will	recognize	lease	liabilities	on	the	balance	sheet	of	approximately	$275	million	at	adoption	for	our operating	leases.	We	expect	right	of	use	assets	will	be	approximately	$235	million,	reflecting	adjustments	for	the	net	amount	of	lease-related	items	previously	recognized on	the	balance	sheet.	We	do	not	expect	adoption	to	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.

Refer	to	"Note	1—Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies"	in	the	notes	to	the	accompanying	consolidated	financial	statements	for additional	information	on	the	new	lease	accounting	standard	and	other	recently	issued	accounting	pronouncements	not	yet	adopted.

# ITEM	7A	-	QUANTITATIVE	AND	QUALITATIVE	DISCLOSURES	ABOUT	MARKET	RISK

# Foreign	Currency	Exchange	Rate	Risk

Certain	of	our	operations	are	conducted	in	foreign	currencies.	Consequently,	a	portion	of	our	revenues	and	expenses	may	be	affected	by	fluctuations	in	foreign currency	exchange	rates.	We	have	not	historically	hedged	our	translation	risk	on	foreign	currency	exposure,	but	we	may	do	so	in	the	future.	For	the	years	ended December	31,	2018	and	2017	and	the	2016	fiscal	transition	period,	currency	rate	fluctuations	calculated	by	converting	revenues	and	expenses	for	the	current	year	in	local currency	using	the	prior-year	period	rates	had	an	immaterial	effect	on	our	revenues	and	operating	income.	For	the	year	ended	May	31,	2016,	currency	rate	fluctuations reduced	our	revenues	by	$117.0	million	and	our	operating	income	by	$43.6	million	as	compared	to	the	prior-year	period,	calculated	by	converting	revenues	and	expenses for	the	year	ended	May	31,	2016	in	local	currency	using	prior-year	period	rates.

Generally,	the	functional	currency	of	our	various	subsidiaries	is	their	local	currency.	 	We	are	exposed	to	currency	fluctuations	on	transactions	that	are	not denominated	in	the	functional	currency.	Gains	and	losses	on	such	transactions	are	included	in	determining	net	income	for	the	period.	We	seek	to	mitigate	our	foreign currency	risk	through	timely	settlement	of	transactions	and	cash	flow	matching,	when	possible.	For	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal transition	period	and	the	year	ended	May	31,	2016,	our	transaction	gains	and	losses	were	insignificant.

Additionally,	we	are	affected	by	currency	fluctuations	in	our	funds	settlement	process	on	merchant	payment,	chargeback	and	card	network	settlement	transactions that	are	not	denominated	in	the	currency	of	the	underlying	credit	or	debit	card	transaction.	Gains	and	losses	on	these	transactions	are	included	in	revenues	for	the	period.

We	are	also	affected	by	fluctuations	in	exchange	rates	on	our	investments	in	foreign	operations.	Relative	to	our	net	investment	in	foreign	operations,	the	assets	and liabilities	of	subsidiaries	whose	functional	currency	is	a	foreign	currency	are	translated	at	the	period-end	rate	of	exchange.	The	resulting	translation	adjustment	is recorded	as	a	component	of	other	comprehensive	income	and	is	included	in	shareholders'	equity.	Transaction	gains	and	losses	on	intercompany	balances	of	a	long-term investment	nature	are	also	recorded	as	a	component	of	other	comprehensive	income.

# Interest	Rate	Risk

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

We	have	a	Credit	Facility	for	general	corporate	purposes,	as	well	as	various	lines	of	credit	that	we	use	to	fund	settlement	in	certain	of	our	markets.	Interest	rates on	these	debt	instruments	and	settlement	lines	of	credit	are	based	on	market	rates	and	fluctuate	accordingly.	As	of	December	31,	2018,	the	amount	outstanding	under these	variable-rate	debt	arrangements	and	settlement	lines	of	credit	was	$5.9	billion.

The	interest	earned	on	our	invested	cash	and	the	interest	paid	on	our	debt	are	based	on	variable	interest	rates;	therefore,	the	exposure	of	our	net	income	to	a	change in	interest	rates	is	partially	mitigated	as	an	increase	in	rates	would	increase	both	interest	income	and	interest	expense,	and	a	reduction	in	rates	would	decrease	both interest	income	and	interest	expense.	Under	our	current	policies,	we	may	selectively	use	derivative	instruments,	such	as	interest	rate	swaps	or	forward	rate	agreements, to	manage	all	or	a	portion	of	our	exposure	to	interest	rate	changes.	We	have	interest	rate	swaps	that	reduce	a	portion	of	our	exposure	to	market	interest	rate	risk	on	our LIBOR-based	debt	as	discussed	in	"Note	8—Long-Term	Debt	and	Lines	of	Credit"	in	the	notes	to	our	accompanying	consolidated	financial	statements.

Based	on	balances	outstanding	under	variable-rate	debt	agreements	and	invested	cash	balances	at	December	31,	2018,	a	hypothetical	increase	of	50	basis	points	in applicable	interest	rates	as	of	December	31,	2018	would	increase	our	annual	interest	expense	by	approximately	$17.5	million	and	increase	our	annual	interest	income	by approximately	$3.3	million.

# ITEM	8	-	FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

To	the	shareholders	and	the	Board	of	Directors	of	Global	Payments	Inc.

# Opinion	on	Internal	Control	over	Financial	Reporting

We	have	audited	the	internal	control	over	financial	reporting	of	Global	Payments	Inc.	and	subsidiaries	(the	"Company")	as	of	December	31,	2018,	based	on	criteria established	in	Internal	Control	—	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	In	our opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2018,	based	on	criteria	established	in Internal	Control	—	Integrated	Framework	(2013)	issued	by	COSO.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States)	(PCAOB),	the	consolidated	financial statements	and	financial	statement	schedule	as	of	and	for	the	year	ended	December	31,	2018,	of	the	Company	and	our	report	dated	February	21,	2019,	expressed	an unqualified	opinion	on	those	financial	statements	and	included	an	emphasis	of	a	matter	paragraph	regarding	the	Company's	change	of	its	fiscal	year	end	from	May	31	to December	31,	in	2016,	and	an	explanatory	paragraph	regarding	the	Company's	change	in	its	method	of	accounting	for	revenue	from	contracts	with	customers	in	fiscal year	2018,	due	to	the	adoption	of	ASU	2014-09,	Revenue	from	Contracts	with	Customers	(Topic	606).	As	described	in	Management's	Report	on	Internal	Control	over Financial	Reporting,	management	excluded	from	its	assessment	a	portion	of	the	internal	control	over	financial	reporting	at	AdvancedMD,	Inc.	("AdvancedMD"),	which was	acquired	on	September	4,	2018,	and	SICOM	Systems,	Inc.	("SICOM"),	which	was	acquired	on	October	17,	2018.	AdvancedMD	and	SICOM's	combined	financial statements	constitute	less	than	2%	of	consolidated	revenues	and	approximately	5%	of	consolidated	assets	(excluding	goodwill	related	to	the	transactions	which	were integrated	into	the	Company's	systems	and	control	environment),	as	of	and	for	the	year	ended	December	31,	2018.	AdvancedMD	and	SICOM	did	not	contribute	to	net income	for	the	year	ended	December	31,	2018.	Accordingly,	our	audit	did	not	include	the	internal	control	over	financial	reporting	at	AdvancedMD	and	SICOM	that	is excluded	from	management's	assessment.

# Basis	for	Opinion

The	Company's	management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal control	over	financial	reporting,	included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an opinion	on	the	Company's	internal	control	over	financial	reporting	based	on	our	audit.	We	are	a	public	accounting	firm	registered	with	the	PCAOB	and	are	required	to be	independent	with	respect	to	the	Company	in	accordance	with	the	U.S.	federal	securities	laws	and	the	applicable	rules	and	regulations	of	the	Securities	and	Exchange Commission	and	the	PCAOB.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audit	to	obtain	reasonable	assurance about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit	included	obtaining	an	understanding	of	internal control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating	the	design	and	operating	effectiveness	of	internal	control	based on	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe	that	our	audit	provides	a	reasonable	basis	for our	opinion.

# Definition	and	Limitations	of	Internal	Control	over	Financial	Reporting

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	 and	 directors	 of	 the	 company;	 and	 (3)	 provide	 reasonable	 assurance	 regarding	 prevention	 or	 timely	 detection	 of	 unauthorized	 acquisition,	 use,	 or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of	effectiveness to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or procedures	may	deteriorate.

/s/	DELOITTE	&	TOUCHE	LLP

Atlanta,	Georgia

# Opinion	on	the	Financial	Statements

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Global	Payments	Inc.	and	subsidiaries	(the	"Company")	as	of	December	31,	2018	and	2017,	the related	consolidated	statements	of	income,	comprehensive	income,	changes	in	equity,	and	cash	flows	for	the	years	ended	December	31,	2018	and	2017,	the	seven months	ended	December	31,	2016,	and	the	year	ended	May	31,	2016,	and	the	related	notes	and	the	schedule	listed	in	the	Index	at	Item	15	(collectively	referred	to	as	the "financial	statements").	In	our	opinion,	the	financial	statements	present	fairly,	in	all	material	respects,	the	financial	position	of	the	Company	as	of	December	31,	2018 and	2017,	and	the	results	of	its	operations	and	its	cash	flows	for	the	years	ended	December	31,	2018	and	2017,	the	seven	months	ended	December	31,	2016,	and	the	year ended	May	31,	2016,	in	conformity	with	the	applicable	accounting	principles	generally	accepted	in	the	United	States	of	America.	We	have	also	audited,	in	accordance with	 the	standards	of	 the	Public	Company	Accounting	Oversight	Board	(United	States)	(PCAOB),	 the	Company's	 internal	control	over	financial	reporting	as	of December	31,	2018,	based	on	criteria	established	in	Internal	Control	—	Integrated	Framework	(2013)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the Treadway	Commission	and	our	report	dated	February	21,	2019	expressed	an	unqualified	opinion	on	the	Company's	internal	control	over	financial	reporting.

# Emphasis	of	Matter

As	discussed	in	Note	1	to	the	consolidated	financial	statements,	the	Company	changed	its	fiscal	year	end	from	May	31	to	December	31	in	2016.

# Change	in	Accounting	Principle

As	discussed	in	Note	1	to	the	consolidated	financial	statements,	the	Company	has	changed	its	method	of	accounting	for	revenue	from	contracts	with	customers	in	fiscal year	2018	due	to	the	adoption	of	Accounting	Standards	Codification	Topic	606,	Revenue	from	Contracts	with	Customers.

These	financial	statements	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	the	Company's	financial	statements	based on	our	audits.	We	are	a	public	accounting	firm	registered	with	the	PCAOB	and	are	required	to	be	independent	with	respect	to	the	Company	in	accordance	with	the	U.S. federal	securities	laws	and	the	applicable	rules	and	regulations	of	the	Securities	and	Exchange	Commission	and	the	PCAOB.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	PCAOB.	Those	standards	require	that	we	plan	and	perform	the	audit	to	obtain	reasonable	assurance about	whether	the	financial	statements	are	free	of	material	misstatement,	whether	due	to	error	or	fraud.	Our	audits	included	performing	procedures	to	assess	the	risks	of material	misstatement	of	the	financial	statements,	whether	due	to	error	or	fraud,	and	performing	procedures	that	respond	to	those	risks.	Such	procedures	included examining,	on	a	test	basis,	evidence	regarding	the	amounts	and	disclosures	in	the	financial	statements.	Our	audits	also	included	evaluating	the	accounting	principles	used and	significant	estimates	made	by	management,	as	well	as	evaluating	the	overall	presentation	of	the	financial	statements.	We	believe	that	our	audits	provide	a	reasonable basis	for	our	opinion.

We	have	served	as	the	Company's	auditors	since	2002.

# CONSOLIDATED	STATEMENTS	OF	INCOME

(in	thousands,	except	per	share	data)

|  | Years	Ended<br>December	31,<br>2018 | 2017 | Seven	Months<br>Ended<br>December	31,<br>2016 | Year	Ended<br>May	31,<br>2016 |
| :--- | :--- | :--- | :--- | :--- |
| Revenues | $3,366,366 | $3,975,163 | $2,202,896 | $2,898,150 |
| Operating\texpenses: |  |  |  |  |
| Cost\tof\tservice | 1,095,014 | 1,928,037 | 1,094,593 | 1,147,639 |
| Selling,\tgeneral\tand\tadministrative | 1,534,297 | 1,488,258 | 870,352 | 1,325,567 |
|  | 2,629,311 | 3,416,295 | 1,964,945 | 2,473,206 |
| Operating\tincome | 737,055 | 558,868 | 237,951 | 424,944 |
| Interest\tand\tother\tincome | 20,719 | 8,662 | 44,382 | 5,284 |
| Interest\tand\tother\texpense | (195,619) | (174,847) | (108,989) | (69,316) |
|  | (174,900) | (166,185) | (64,607) | (64,032) |
| Income\tbefore\tincome\ttaxes | 562,155 | 392,683 | 173,344 | 360,912 |
| Income\ttax\t(provision)\tbenefit | (77,488) | 101,387 | (35,661) | (70,695) |
| Net\tincome | 484,667 | 494,070 | 137,683 | 290,217 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterests | (32,614) | (25,645) | (12,752) | (18,551) |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $452,053 | $468,425 | $124,931 | $271,666 |
| Earnings\tper\tshare\tattributable\tto\tGlobal\tPayments: |  |  |  |  |
| Basic\tearnings\tper\tshare | $2.85 | $3.03 | $0.81 | $2.05 |
| Diluted\tearnings\tper\tshare | $2.84 | $3.01 | $0.81 | $2.04 |

See	Notes	to	Consolidated	Financial	Statements.

# CONSOLIDATED	STATEMENTS	OF	COMPREHENSIVE	INCOME

|  | Years	Ended<br>December	31,<br>2018 | 2017 | Seven	Months<br>Ended<br>December	31,<br>2016 | Year	Ended<br>May	31,<br>2016 |
| :--- | :--- | :--- | :--- | :--- |
| Net\tincome | $484,667 | $494,070 | $137,683 | $290,217 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |  |
| \t\t\tForeign\tcurrency\ttranslation\tadjustments | (118,439) | 146,401 | (92,229) | (55,858) |
| \t\t\tIncome\ttax\tprovision\trelated\tto\tforeign\tcurrency\ttranslation\tadjustments | (832) | — | — | — |
| Net\tunrealized\tgains\t(losses)\ton\thedging\tactivities | (7,553) | 4,549 | 5,532 | (12,859) |
| Reclassification\tof\tnet\tunrealized\t(gains)\tlosses\ton\thedging\tactivities\tto\tinterest\nexpense | (4,792) | 5,673 | 4,222 | 8,240 |
| Income\ttax\tbenefit\t(provision)\trelated\tto\thedging\tactivities | 2,972 | (2,583) | (3,639) | 1,738 |
| \t\t\tOther,\tnet\tof\ttax | 760 | (660) | 1,030 | (848) |
| Other\tcomprehensive\tincome\t(loss) | (127,884) | 153,380 | (85,084) | (59,587) |
| Comprehensive\tincome | 356,783 | 647,450 | 52,599 | 230,630 |
| \t\t\tLess:\tcomprehensive\tincome\tattributable\tto\tnoncontrolling\tinterests | (29,918) | (39,452) | (4,335) | (19,022) |
| Comprehensive\tincome\tattributable\tto\tGlobal\tPayments | $326,865 | $607,998 | $48,264 | $211,608 |

# CONSOLIDATED	BALANCE	SHEETS

(in	thousands,	except	share	data)

|  | December	31,<br>2018 | December	31,<br>2017 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $1,210,878 | $1,335,855 |
| Accounts\treceivable,\tnet\tof\tallowances\tfor\tdoubtful\taccounts\tof\t$3,164\tand\t$1,827,\trespectively | 348,400 | 301,887 |
| Settlement\tprocessing\tassets | 1,600,222 | 2,459,292 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 216,708 | 206,545 |
| Total\tcurrent\tassets | 3,376,208 | 4,303,579 |
| Goodwill | 6,341,355 | 5,703,992 |
| Other\tintangible\tassets,\tnet | 2,488,618 | 2,181,707 |
| Property\tand\tequipment,\tnet | 653,542 | 588,348 |
| Deferred\tincome\ttaxes | 8,128 | 13,146 |
| Other\tnoncurrent\tassets | 362,923 | 207,297 |
| Total\tassets | $13,230,774 | $12,998,069 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Settlement\tlines\tof\tcredit | $700,486 | $635,166 |
| Current\tportion\tof\tlong-term\tdebt | 115,075 | 100,308 |
| Accounts\tpayable\tand\taccrued\tliabilities | 1,176,703 | 1,039,607 |
| Settlement\tprocessing\tobligations | 1,276,356 | 2,040,509 |
| Total\tcurrent\tliabilities | 3,268,620 | 3,815,590 |
| Long-term\tdebt | 5,015,168 | 4,559,408 |
| Deferred\tincome\ttaxes | 585,025 | 436,879 |
| Other\tnoncurrent\tliabilities | 175,618 | 220,961 |
| Total\tliabilities | 9,044,431 | 9,032,838 |
| Commitments\tand\tcontingencies |  |  |
| Equity: |  |  |
| Preferred\tstock,\tno\tpar\tvalue;\t5,000,000\tshares\tauthorized\tand\tnone\tissued | — | — |
| Common\t stock,\t no\t par\t value;\t 200,000,000\t shares\t authorized;\t 157,961,982\t issued\t and\t outstanding\t at\t December\t 31,\t 2018\t and\n159,180,317\tissued\tand\toutstanding\tat\tDecember\t31,\t2017 | — | — |
| Paid-in\tcapital | 2,235,167 | 2,379,774 |
| Retained\tearnings | 2,066,415 | 1,597,897 |
| Accumulated\tother\tcomprehensive\tloss | (310,175) | (183,144) |
| Total\tGlobal\tPayments\tshareholders'\tequity | 3,991,407 | 3,794,527 |
| Noncontrolling\tinterests | 194,936 | 170,704 |
| Total\tequity | 4,186,343 | 3,965,231 |
| Total\tliabilities\tand\tequity | $13,230,774 | $12,998,069 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

# (in	thousands)

|  | Year	Ended<br>December	31,<br>2018 | 2017 | Seven	Months<br>Ended<br>December	31,<br>2016 | Year	Ended<br>May	31,<br>2016 |
| :--- | :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |  |
| Net\tincome | $484,667 | $494,070 | $137,683 | $290,217 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |  |
| Depreciation\tand\tamortization\tof\tproperty\tand\tequipment | 145,128 | 113,273 | 53,242 | 74,192 |
| Amortization\tof\tacquired\tintangibles | 377,685 | 337,878 | 194,329 | 113,689 |
| Share-based\tcompensation\texpense | 57,826 | 39,095 | 18,707 | 30,809 |
| Provision\tfor\toperating\tlosses\tand\tbad\tdebts | 43,237 | 48,443 | 24,074 | 27,202 |
| Amortization\tof\tcapitalized\tcustomer\tacquisition\tcosts | 51,541 | 45,098 | 14,982 | 1,776 |
| Deferred\tincome\ttaxes | (1,451) | (250,670) | (33,523) | (18,162) |
| Gain\ton\tsale\tof\tinvestments | — | — | (41,150) | — |
| Other,\tnet | (8,025) | 44,070 | 32,718 | 15,370 |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\tthe\teffects\tof\tbusiness\tcombinations: |  |  |  |  |
| Accounts\treceivable | (33,386) | (14,096) | 2,189 | (14,542) |
| Settlement\tprocessing\tassets\tand\tobligations,\tnet | 83,478 | (361,673) | 35,599 | 218,061 |
| Prepaid\texpenses\tand\tother\tassets | (160,800) | (129,427) | (44,164) | (64,216) |
| Accounts\tpayable\tand\tother\tliabilities | 66,182 | 146,327 | 121,140 | (81,506) |
| Net\tcash\tprovided\tby\toperating\tactivities | 1,106,082 | 512,388 | 515,826 | 592,890 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |  |
| Business\tcombinations\tand\tother\tacquisitions,\tnet\tof\tcash\tacquired | (1,259,692) | (562,688) | (33,865) | (2,034,406) |
| Capital\texpenditures | (213,290) | (181,905) | (88,913) | (91,591) |
| Net\tproceeds\tfrom\tsale\tof\tinvestments | — | — | 37,717 | — |
| Net\tproceeds\tfrom\tsales\tof\tproperty\tand\tequipment | — | 37,565 | — | — |
| Other,\tnet | (3,305) | (28,997) | (1,622) | (1,251) |
| Net\tcash\tused\tin\tinvesting\tactivities | (1,476,287) | (736,025) | (86,683) | (2,127,248) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |  |
| Net\tproceeds\tfrom\t(repayments\tof)\tsettlement\tlines\tof\tcredit | 70,783 | 221,532 | 20,582 | (206,009) |
| Proceeds\tfrom\tlong-term\tdebt | 2,774,214 | 1,994,324 | 1,299,000 | 6,078,230 |
| Repayments\tof\tlong-term\tdebt | (2,304,314) | (1,781,541) | (1,381,161) | (3,691,608) |
| Payment\tof\tdebt\tissuance\tcosts | (16,345) | (9,520) | (9,279) | (63,382) |
| Repurchase\tof\tcommon\tstock | (208,198) | (34,811) | (178,165) | (135,954) |
| Proceeds\tfrom\tstock\tissued\tunder\tshare-based\tcompensation\tplans | 14,318 | 10,115 | 6,093 | 8,480 |
| Common\tstock\trepurchased\t-\tshare-based\tcompensation\tplans | (31,510) | (31,761) | (20,390) | (12,236) |
| Purchase\tof\tsubsidiary\tshares\tfrom\tnoncontrolling\tinterest | — | — | — | (7,550) |
| Proceeds\tfrom\tsale\tof\tsubsidiary\tshares\tto\tnoncontrolling\tinterest | — | — | — | 16,374 |
| Distributions\tto\tnoncontrolling\tinterests | (5,686) | (9,301) | (12,365) | (23,308) |
| Dividends\tpaid | (6,332) | (6,732) | (3,069) | (5,439) |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | 286,930 | 352,305 | (278,754) | 1,957,598 |
| Effect\tof\texchange\trate\tchanges\ton\tcash | (41,702) | 44,408 | (32,338) | (29,251) |
| Increase\t(decrease)\tin\tcash\tand\tcash\tequivalents | (124,977) | 173,076 | 118,051 | 393,989 |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tthe\tperiod | 1,335,855 | 1,162,779 | 1,044,728 | 650,739 |
| Cash\tand\tcash\tequivalents,\tend\tof\tthe\tperiod | $1,210,878 | $1,335,855 | $1,162,779 | $1,044,728 |

# CONSOLIDATED	STATEMENTS	OF	CHANGES	IN	EQUITY

|  | Number		of<br>Shares | Paid-in	Capital | Retained<br>Earnings | Accumulated	Other<br>Comprehensive	Loss | Total	Global<br>Payments<br>Shareholders'	Equity | Noncontrolling<br>Interests | Total	Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2017 | 159,180 | $2,379,774 | $1,597,897 | $(183,144) | $3,794,527 | $170,704 | $3,965,231 |
| Cumulative\teffect\tof\tadoption\tof\tnew\taccounting\tstandards |  |  | 50,969 | (1,843) | 49,126 |  | 49,126 |
| Net\tincome |  |  | 452,053 |  | 452,053 | 32,614 | 484,667 |
| Other\tcomprehensive\tloss |  |  |  | (125,188) | (125,188) | (2,696) | (127,884) |
| Stock\tissued\tunder\tshare-based\tcompensation\tplans | 988 | 14,318 |  |  | 14,318 |  | 14,318 |
| Common\tstock\trepurchased\t-\tshare-based\tcompensation\tplans | (279) | (32,727) |  |  | (32,727) |  | (32,727) |
| Share-based\tcompensation\texpense |  | 57,826 |  |  | 57,826 |  | 57,826 |
| Distributions\tto\tnoncontrolling\tinterest |  |  |  |  |  | (5,686) | (5,686) |
| Repurchase\tof\tcommon\tstock | (1,927) | (184,024) | (28,172) |  | (212,196) |  | (212,196) |
| Dividends\tpaid\t($0.04\tper\tshare) |  |  | (6,332) |  | (6,332) |  | (6,332) |
| Balance\tat\tDecember\t31,\t2018 | 157,962 | $2,235,167 | $2,066,415 | $(310,175) | $3,991,407 | $194,936 | $4,186,343 |

|  | Number		of<br>Shares | Paid-in	Capital | Retained<br>Earnings | Accumulated	Other<br>Comprehensive	Loss | Payments<br>Shareholders'	Equity | Noncontrolling<br>Interests | Total	Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2016 | 152,186 | $1,816,278 | $1,137,230 | $(322,717) | $2,630,791 | $148,551 | $2,779,342 |
| Net\tincome |  |  | 468,425 |  | 468,425 | 25,645 | 494,070 |
| Other\tcomprehensive\tincome |  |  |  | 139,573 | 139,573 | 13,807 | 153,380 |
| Stock\tissued\tunder\tshare-based\tcompensation\tplans | 1,350 | 10,115 |  |  | 10,115 |  | 10,115 |
| Common\tstock\trepurchased\t-\tshare-based\tcompensation\tplans | (338) | (32,006) |  |  | (32,006) |  | (32,006) |
| Share-based\tcompensation\texpense |  | 39,095 |  |  | 39,095 |  | 39,095 |
| Issuance\tof\tcommon\tstock\tin\tconnection\twith\ta\tbusiness\ncombination | 6,358 | 572,079 |  |  | 572,079 |  | 572,079 |
| Dissolution\tof\ta\tsubsidiary |  |  | 7,998 |  | 7,998 | (7,998) | — |
| Distributions\tto\tnoncontrolling\tinterests |  |  |  |  | — | (9,301) | (9,301) |
| Repurchase\tof\tcommon\tstock | (376) | (25,787) | (9,024) |  | (34,811) |  | (34,811) |
| Dividends\tpaid\t($0.04\tper\tshare) |  |  | (6,732) |  | (6,732) |  | (6,732) |
| Balance\tat\tDecember\t31,\t2017 | 159,180 | $2,379,774 | $1,597,897 | $(183,144) | $3,794,527 | $170,704 | $3,965,231 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

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

Business,	consolidation	and	presentation—	We	are	a	leading	worldwide	provider	of	payment	technology	and	software	services	delivering	innovative	solutions	to our	customers	globally.	Our	technologies,	services	and	employee	expertise	enable	us	to	provide	a	broad	range	of	solutions	that	allow	our	customers	to	accept	various payment	types	and	operate	their	businesses	more	efficiently.	We	distribute	our	services	across	a	variety	of	channels	in	 32	countries	throughout	North	America,	Europe, the	Asia-Pacific	region	and	Brazil	and	operate	in	three	reportable	segments:	North	America,	Europe	and	Asia-Pacific.

We	were	incorporated	in	Georgia	as	Global	Payments	Inc.	in	2000	and	spun-off	from	our	former	parent	company	in	2001.	Including	our	time	as	part	of	our	former parent	 company,	 we	 have	 been	 in	 the	 payment	 technology	 services	 business	 since	1967.	 Global	 Payments	 Inc.	 and	 its	 consolidated	 subsidiaries	 are	 referred	 to collectively	as	"Global	Payments,"	the	"Company,"	"we,"	"our"	or	"us,"	unless	the	context	requires	otherwise.

These	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	consolidated	financial	statements	have	been	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the	United States	("GAAP").	On	July	27,	2016,	the	board	of	directors	authorized	a	change	in	our	fiscal	year	end	from	May	31	to	December	31.	We	refer	to	the	period	consisting	of the	seven	months	ended	December	31,	2016	as	the	"2016	fiscal	transition	period."

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.

Recently	 Adopted	 Accounting	 Pronouncements	 and	 Rules Issued	 by the	 U.S.	 Securities	 and	 Exchange	 Commission (the	 "SEC")—We	 adopted	 Accounting Standards	Update	("ASU")	2014-09,	"Revenues	from	Contracts	with	Customers	(Topic	606)"	as	well	as	other	clarifications	and	technical	guidance	issued	by	the Financial	Accounting	Standards	Board	("FASB")	related	to	this	new	revenue	standard	("ASC	606")	and	ASC	Subtopic	340-40:	"Other	Assets	and	Deferred	Costs	- Contracts	with	Customers"	("ASC	340-40")	on	January	1,	2018.	We	elected	the	modified	retrospective	transition	method,	which	resulted	in	a	net	increase	to	retained earnings	 of	$51.0	million	 for	 the	 cumulative	 effect	 of	 applying	 the	 standard.	The	 primary	 components	 of	 the	 cumulative-effect	 adjustment	 were	 changes	 in	 the accounting	for	certain	costs	to	obtain	customer	contracts	and	the	related	income	tax	effects,	which	resulted	in	increases	to	other	noncurrent	assets	and	deferred	income tax	liabilities	of	$64.6	million	and	$15.6	million,	respectively.	Previously,	we	amortized	these	assets	to	expense	over	the	related	contract	term.	Under	ASC	340-40,	we now	amortize	these	assets	over	the	expected	period	of	benefit,	which	is	generally	longer	than	the	initial	contract	term.	Under	the	new	standard,	we	also	capitalized certain	costs	that	were	not	previously	capitalized,	including	certain	commissions	and	the	related	payroll	taxes	and	certain	costs	incurred	to	fulfill	a	contract	before	the performance	obligation	has	been	satisfied,	primarily	compensation	and	related	payroll	 taxes	for	employees	engaged	 in	customer	 implementation	activities	 in	our technology-enabled	businesses.

Prior	to	the	adoption	of	ASC	606,	we	presented	payments	made	to	certain	third	parties,	including	payment	networks,	as	a	component	of	operating	expenses.	For the	year	ended	December	31,	2018,	we	presented	revenue	net	of	these	third-party	payments.	This	change	in	presentation	had	the	effect	of	reducing	our	revenues	and operating	expenses	by	the	same	amounts.	As	a	result,	revenues,	cost	of	service	and	selling,	general	and	administrative	expenses	were	lower	than	the	amounts	that	would have	been	presented	if	not	for	the	effect	of	the	new	revenue	accounting	standard	by	$1,110.8	million,	$1,042.9	million	and	$67.9	million,	respectively,	for	the	year	ended December	31,	2018.	The	adoption	of	ASC	606	did	not	have	a	material	effect	on	any	other	line	items	in	our	consolidated	statement	of	income	for	year	ended	December 31,	2018	or	on	any	other	line	items	in	our	consolidated	balance	sheet	as	of	December	31,	2018	and	had	no	effect	on	our	cash	flows	from	operating	activities,	investing activities	or	financing	activities	included	in	our	consolidated	statement	of	cash	flows	for	the	year	ended	December	31,	2018.

In	October	2018,	the	FASB	issued	ASU	2018-16,	"Derivatives	and	Hedging	(Topic	815):	Inclusion	of	the	Secured	Overnight	Financing	Rate	(SOFR)	Overnight Index	Swap	(OIS)	Rate	as	a	Benchmark	Interest	Rate	for	Hedge	Accounting	Purposes."	ASU	2018-16	provides	for	the	use	of	the	Overnight	Index	Swap	("OIS")	rate based	on	Secured	Overnight	Financing	Rate	as	a	U.S.	benchmark	interest	rate	for	hedge	accounting	purposes	under	Topic	815.	In	addition	to	the	interest	rates	on	direct Treasury	obligations

of	the	U.S.	government,	the	London	Interbank	Offered	Rate	("LIBOR")	Swap	Rate,	the	OIS	rate	based	on	the	Fed	Funds	Effective	Rate	and	the	Securities	Industry	and Financial	Markets	Association	Municipal	Swap	Rate	are	also	permitted.	We	adopted	ASU	2018-16	with	no	effect	on	our	consolidated	financial	statements.

In	August	2018,	the	SEC	issued	a	final	rule	that	amends	certain	of	its	disclosure	requirements.	The	changes	are	generally	intended	to	reduce	or	eliminate	certain disclosures	that	have	become	redundant,	duplicative,	overlapping,	outdated	or	superseded	in	light	of	other	disclosures	requirements	or	changes	in	the	information environment.	The	rule	also	requires	SEC	registrants	to	present	changes	in	stockholders'	equity	and	the	amount	of	dividends	per	share	for	each	class	of	shares	on	a quarterly	basis	for	the	current	and	prior-year	periods.	The	final	rule	was	effective	for	SEC	filings	on	Forms	10-Q	and	10-K	made	on	or	after	November	5,	2018.	As	a result,	we	have	reduced	or	eliminated	certain	disclosures	in	this	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2018,	as	permitted,	and	we	will	present the	quarterly	changes	in	2019.

In	 February	 2018,	 the	 FASB	 issued	 ASU	 2018-02,	 "Income	 Statement-Reporting	 Comprehensive Income:	Reclassification	 of	 Certain	 Tax	 Effects from Accumulated	Other	Comprehensive	Income."	ASU	2018-02	provides	an	option	to	reclassify	stranded	tax	effects	within	accumulated	other	comprehensive	income ("AOCI")	to	retained	earnings	in	each	period	in	which	the	effect	of	the	change	in	the	U.S.	federal	corporate	income	tax	rate	in	the	U.S.	Tax	Cuts	and	Jobs	Act	of	2017 (the	"2017	U.S.	Tax	Act")	is	recorded.	We	adopted	this	ASU	during	2018	and	elected	the	option	to	reclassify	stranded	tax	effects	within	AOCI	to	retained	earnings	in	the period	of	adoption	with	no	material	effect	on	our	consolidated	financial	statements.	Under	this	transition	method,	we	did	not	recast	the	prior-period	financial	statements presented.

In	August	2017,	the	FASB	issued	ASU	2017-12,	"Derivatives	and	Hedging	(Topic	815):	Targeted	Improvements	to	Accounting	for	Hedging	Activities."	ASU 2017-12	expands	and	refines	hedge	accounting	for	both	nonfinancial	and	financial	risk	components	and	aligns	the	recognition	and	presentation	of	the	effects	of	the hedging	instrument	and	the	hedged	item	in	the	financial	statements.	In	addition,	the	amendments	in	this	update	modify	disclosure	requirements	for	presentation	of hedging	activities.	Those	modifications	include	a	tabular	disclosure	related	to	the	effect	on	the	income	statement	of	fair	value	and	cash	flow	hedges	and	eliminate	the requirement	to	disclose	the	ineffective	portion	of	the	change	in	fair	value	of	hedging	instruments,	if	any.	We	adopted	ASU	2017-12	on	January	1,	2018	with	no	effect	on our	consolidated	financial	statements,	except	required	revisions	to	our	disclosures.

In	January	2017,	 the	FASB	 issued	ASU	2017-01,	"Business	Combinations	(Topic	805):	Clarifying	the	Definition	of	a	Business."	ASU	2017-01	clarifies	 the definition	of	a	business,	which	affects	many	areas	of	accounting	including	acquisitions,	disposals,	goodwill	and	consolidation.	The	new	standard	is	intended	to	help companies	and	other	organizations	evaluate	whether	transactions	should	be	accounted	for	as	acquisitions	(or	disposals)	of	assets	or	businesses,	with	the	expectation	that fewer	will	qualify	as	acquisitions	(or	disposals)	of	businesses.	ASU	2017-01	became	effective	for	us	on	January	1,	2018.	These	amendments	have	been	applied prospectively	from	the	date	of	adoption.	We	applied	the	clarified	definition	of	a	business	to	the	business	combinations	we	completed	in	2018	with	no	effect	on	our consolidated	financial	statements.

In	October	2016,	the	FASB	issued	ASU	2016-16,	"Income	Taxes	(Topic	740):	Intra-Entity	Transfers	of	Assets	Other	Than	Inventory."	The	amendments	in	this update	state	that	an	entity	should	recognize	the	income	tax	consequences	of	an	intra-entity	transfer	of	an	asset	other	than	inventory,	such	as	intellectual	property	and property	and	equipment,	when	the	transfer	occurs.	We	adopted	ASU	2016-16	on	January	1,	2018	using	the	modified	retrospective	transition	method	with	no	material effect	on	our	consolidated	financial	statements.

In	January	2016,	the	FASB	issued	ASU	2016-01,	"Financial	Instruments	-	Overall	(Subtopic	825-10):	Recognition	and	Measurement	of	Financial	Assets	and Financial	Liabilities,"	which	was	further	clarified	in	ASU	2018-03,	issued	by	the	FASB	in	February	2018.	The	amendments	in	ASU	2016-01	and	ASU	2018-03	address certain	aspects	of	recognition,	measurement,	presentation	and	disclosure	of	financial	instruments.	The	amendments	supersede	the	guidance	to	classify	equity	securities with	readily	determinable	fair	values	into	different	categories	(that	is,	trading	or	available-for-sale)	and	require	equity	securities	(including	other	ownership	interests, such	as	partnerships,	unincorporated	joint	ventures	and	limited	liability	companies)	to	be	measured	at	fair	value	with	changes	in	the	fair	value	recognized	through earnings.	Equity	investments	that	are	accounted	for	under	the	equity	method	of	accounting	or	result	in	consolidation	of	an	investee	are	not	included	within	the	scope	of this	update.	The	amendments	allow	equity	investments	that	do	not	have	readily	determinable	fair	values	to	be	remeasured	at	fair	value	either	upon	the	occurrence	of	an observable	price	change	or	upon	identification	of	an	impairment.	The	amendments	also	require	enhanced	disclosures	about	those	investments.	We	adopted	ASU	2016-01 on	January	1,	2018	using	the	modified	retrospective	transition

method	and	elected	to	account	for	certain	of	our	equity	investments	that	have	no	readily	determinable	fair	value	using	the	alternative	cost	method,	which	had	no	effect	on our	consolidated	financial	statements.

Revenue	recognition—	Our	payment	services	customers	contract	with	us	for	payment	services,	which	we	provide	in	exchange	for	consideration	for	completed transactions.	Our	payment	solutions	are	similar	around	the	world	in	that	we	enable	our	customers	to	accept	card,	electronic,	check	and	digital-based	payments.	Our comprehensive	offerings	include,	but	are	not	limited	to,	authorization	services,	settlement	and	funding	services,	customer	support	and	help-desk	functions,	chargeback resolution,	payment	security	services,	consolidated	billing	and	statements	and	on-line	reporting.	In	addition,	we	may	sell	or	rent	point-of-sale	 terminals	or	other equipment	to	customers.

On	January	1,	2018,	we	adopted	ASC	606.	Pursuant	to	ASC	606,	at	contract	inception,	we	assess	the	goods	and	services	promised	in	our	contracts	with	customers and	identify	a	performance	obligation	for	each	promise	to	transfer	to	the	customer	a	good	or	service	that	is	distinct.	For	our	payment	services	specifically,	the	nature	of our	promise	to	the	customer	is	that	we	stand	ready	to	process	transactions	the	customer	requests	on	a	daily	basis	over	the	contract	term.	Since	the	timing	and	quantity	of transactions	to	be	processed	by	us	is	not	determinable,	we	view	payment	services	to	comprise	an	obligation	to	stand	ready	to	process	as	many	transactions	as	the customer	requests.	Under	a	stand-ready	obligation,	the	evaluation	of	the	nature	of	our	performance	obligation	is	focused	on	each	time	increment	rather	than	the underlying	activities.	Therefore,	we	view	payment	services	to	comprise	a	series	of	distinct	days	of	service	that	are	substantially	the	same	and	have	the	same	pattern	of transfer	to	the	customer.	Accordingly,	the	promise	to	stand	ready	is	accounted	for	as	a	single-series	performance	obligation.

In	order	to	provide	our	payment	services,	we	route	and	clear	each	transaction	through	the	applicable	payment	network.	We	obtain	authorization	for	the	transaction and	request	funds	settlement	from	the	card	issuing	financial	institution	through	the	payment	network.	When	third	parties	are	involved	in	the	transfer	of	goods	or	services to	our	customer,	we	consider	the	nature	of	each	specific	promised	good	or	service	and	apply	judgment	to	determine	whether	we	control	the	good	or	service	before	it	is transferred	to	the	customer	or	whether	we	are	acting	as	an	agent	of	the	third	party.	To	determine	whether	or	not	we	control	the	good	or	service	before	it	is	transferred	to the	customer,	we	assess	indicators	including	whether	we	or	the	third	party	is	primarily	responsible	for	fulfillment	and	which	party	has	discretion	in	determining	pricing for	the	good	or	service,	as	well	as	other	considerations.	Based	on	our	assessment	of	these	indicators,	we	have	concluded	that	our	promise	to	our	customer	to	provide	our payment	services	is	distinct	from	the	services	provided	by	the	card	issuing	financial	institutions	and	payment	networks	in	connection	with	payment	transactions.	We	do not	have	the	ability	to	direct	the	use	of	and	obtain	substantially	all	of	the	benefits	of	the	services	provided	by	the	card	issuing	financial	institutions	and	payment	networks before	those	services	are	transferred	to	our	customer,	and	on	that	basis,	we	do	not	control	those	services	prior	to	being	transferred	to	our	customer.	As	a	result,	upon adoption	of	ASC	606,	we	present	our	revenue	net	of	the	interchange	fees	charged	by	the	card	issuing	financial	institutions	and	the	fees	charged	by	the	payment	networks.

The	majority	of	our	payment	services	are	priced	as	a	percentage	of	transaction	value	or	a	specified	fee	per	transaction,	depending	on	the	card	type.	We	also	charge other	per	occurrence	fees	based	on	specific	services	that	may	be	unrelated	to	the	number	of	transactions	or	transaction	value.	Given	the	nature	of	the	promise	and	the underlying	fees	based	on	unknown	quantities	or	outcomes	of	services	to	be	performed	over	the	contract	term,	the	total	consideration	is	determined	to	be	variable consideration.	The	variable	consideration	for	our	payment	service	is	usage-based	and,	therefore,	it	specifically	relates	to	our	efforts	to	satisfy	our	payment	services obligation.	The	variability	is	satisfied	each	day	the	service	is	provided	to	the	customer.	We	directly	ascribe	variable	fees	to	the	distinct	day	of	service	to	which	it	relates, and	we	consider	the	services	performed	each	day	in	order	to	ascribe	the	appropriate	amount	of	total	fees	to	that	day.	Therefore,	we	measure	revenue	for	our	payment service	on	a	daily	basis	based	on	the	services	that	are	performed	on	that	day.

Certain	of	our	technology-enabled	customer	arrangements	contain	multiple	promises,	such	as	payment	services,	perpetual	software	licenses,	software-as-a-service ("SaaS"),	maintenance,	installation	services,	training	and	equipment,	each	of	which	is	evaluated	to	determine	whether	it	represents	a	separate	performance	obligation. SaaS	arrangements	are	generally	offered	on	a	subscription	basis,	providing	the	customers	with	access	to	the	SaaS	platform	along	with	general	support	and	maintenance services.	Because	these	promised	services	within	our	SaaS	arrangements	are	delivered	concurrently	over	the	contract	term,	we	account	for	these	promises	as	if	they	are	a single	performance	obligation	that	includes	a	series	of	distinct	services	with	the	same	pattern	of	transfer	to	the	customer.	In	addition,	certain	installation	services	are	not considered	distinct	from	the	SaaS	and	are	recognized	over	the	expected	period	of	benefit.

Once	we	determine	the	performance	obligations	and	the	transaction	price,	including	an	estimate	of	any	variable	consideration,	we	then	allocate	the	transaction price	to	each	performance	obligation	in	the	contract	using	a	relative	standalone	selling	price	method.	We	determine	standalone	selling	price	based	on	the	price	at	which the	good	or	service	is	sold	separately.	If	the	standalone	selling	price	is	not	observable	through	past	transactions,	we	estimate	the	standalone	selling	price	by	considering all	reasonably	available	information,	including	market	conditions,	trends	or	other	company-	or	customer-specific	factors.	Substantially	all	of	the	performance	obligations described	above	are	satisfied	over	time.	The	performance	obligations	associated	with	equipment	sales,	perpetual	software	licenses	and	certain	professional	services	are generally	satisfied	at	a	point	in	time	when	they	are	transferred	to	the	customer.	For	certain	other	professional	services	that	represent	separate	performance	obligations, we	generally	use	the	input	method	and	recognize	revenue	based	on	the	number	of	hours	incurred	or	services	performed	to	date	in	relation	to	the	total	services	expected	to be	required	to	satisfy	the	performance	obligation.

We	satisfy	the	combined	SaaS	performance	obligation	by	standing	ready	to	provide	access	to	the	SaaS.	Consideration	for	SaaS	arrangements	may	consist	of	fixed- or	usage-based	fees.	Revenue	is	recognized	over	the	period	for	which	the	services	are	provided	or	by	directly	ascribing	any	variable	fees	to	the	distinct	day	of	service based	on	the	services	that	are	performed	on	that	day.

For	 periods	 prior	 to	 our	 adoption	 of	ASC	 606,	 we	 recognized	 revenue	 when	 services	 were	 performed.	 For	 arrangements	 with	 multiple	 elements,	 such	 as equipment,	perpetual	licenses,	SaaS,	maintenance,	installation	and	training,	we	allocated	consideration	to	each	element	based	on	the	relative-selling-price	method.	In multiple	element	arrangements	where	more-than-incidental	software	elements	were	included,	the	entire	amount	of	revenue	under	the	arrangement	was	deferred	until	all elements	were	delivered	or	objective	evidence	of	the	fair	value	of	the	undelivered	items	was	established.	The	amounts	paid	in	advance	by	customers	and	amounts deferred	for	software	arrangements	were	reflected	as	unearned	revenue	in	the	consolidated	balance	sheets	with	the	portion	estimated	to	be	recognized	as	revenue	within the	next	twelve	months	reflected	in	current	liabilities	and	the	remainder	reflected	in	other	noncurrent	liabilities.

Cash	and	cash	equivalents—	Cash	and	cash	equivalents	include	cash	on	hand	and	all	liquid	investments	with	a	maturity	of	three	months	or	less	when	purchased. We	consider	certain	portions	of	our	cash	and	cash	equivalents	to	be	unrestricted	but	not	available	for	general	purposes.	The	amount	of	cash	that	we	consider	to	be available	for	general	purposes	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 agreement.	We	record	a	corresponding	liability	in	settlement	processing	assets	and	settlement	processing	obligations	in	our	consolidated	balance	sheet.	While	this	cash is	not	restricted	in	its	use,	we	believe	that	designating	this	cash	as	Merchant	Reserves	strengthens	our	fiduciary	standing	with	financial	institutions	that	sponsor	us	and	is in	accordance	with	guidelines	set	by	the	card	networks.	See	"Note	4—Settlement	Processing	Assets	and	Obligations"	and	discussion	below	for	further	information. Funds	held	for	customers	and	the	corresponding	liability	that	we	record	in	"customer	deposits"	include	amounts	collected	prior	to	remittance	on	our	customers'	behalf.

Accounts	receivable,	contract	assets	and	contract	liabilities—	Upon	adoption	of	ASC	606,	we	were	required	to	describe	our	accounting	policies	for	accounts receivable,	contract	assets	and	contract	liabilities.	A	contract	with	a	customer	creates	legal	rights	and	obligations.	As	we	perform	under	customer	contracts,	our	right	to consideration	that	is	unconditional	is	considered	to	be	accounts	receivable.	If	our	right	to	consideration	for	such	performance	is	contingent	upon	a	future	event	or satisfaction	of	additional	performance	obligations,	the	amount	of	revenues	we	have	recognized	in	excess	of	the	amount	we	have	billed	to	the	customer	is	recognized	as	a contract	asset.	Contract	 liabilities	represent	consideration	received	from	customers	 in	excess	of	revenues	recognized.	At	December	31,	2018,	contract	assets	and liabilities	are	presented	net	at	the	individual	contract	level	in	the	consolidated	balance	sheet	and	are	classified	as	current	or	noncurrent	based	on	the	nature	of	the underlying	contractual	rights	and	obligations.

Contract	Costs—	Upon	adoption	of	ASC	340-40,	we	capitalize	costs	we	incur	costs	to	obtain	contracts	with	customers,	including	employee	sales	commissions	and fees	to	business	partners.	At	contract	inception,	we	capitalize	such	costs	that	we	expect	to	recover	and	that	would	not	have	been	incurred	if	the	contract	had	not	been obtained.	We	also	capitalize	certain	costs	incurred	to	fulfill	our	contracts	with	customers	that	(i)	relate	directly	to	the	contract,	(ii)	are	expected	to	generate	resources	that will	be	used	to	satisfy	our	performance	obligation	under	the	contract	and	(iii)	are	expected	to	be	recovered	through	revenue	generated	under	the	contract.	Capitalized costs	to	obtain	and	to	fulfill	contracts	were	included	in	other	noncurrent	assets	as	of	December	31,	2018.

Contract	costs	are	amortized	on	a	systematic	basis	consistent	with	the	transfer	to	the	customer	of	the	goods	or	services	to	which	the	asset	relates.	A	straight-line	or proportional	amortization	method	is	used	depending	upon	which	method	best	depicts	the	pattern	of	transfer	of	the	goods	or	services	to	the	customer.	We	evaluate contract	costs	for	impairment	by	comparing,	on	a	pooled	basis,	the	expected	future	net	cash	flows	from	underlying	customer	relationships	to	the	carrying	amount	of	the capitalized	contract	costs.

We	 amortize	 these	 assets	 over	 the	 expected	 period	 of	 benefit,	 which,	 based	 on	 the	 factors	 noted	 above,	 is	 typically	seven	years.	 In	 order	 to	 determine	 the appropriate	amortization	period	for	capitalized	contract	costs,	we	consider	a	combination	of	factors,	including	customer	attrition	rates,	estimated	terms	of	customer relationships,	the	useful	lives	of	technology	we	use	to	provide	goods	and	services	to	our	customers,	whether	future	contract	renewals	are	expected	and	if	there	is	any incremental	commission	to	be	paid	associated	with	a	contract	renewal.	Costs	to	obtain	a	contract	with	an	expected	period	of	benefit	of	one	year	or	less	are	recognized	as an	expense	when	incurred.

Prior	to	our	adoption	of	ASC	606,	we	capitalized	certain	customer	acquisition	costs,	which	were	included	in	other	noncurrent	assets.	Capitalized	customer acquisition	costs	consisted	of	(1)	up-front	signing	bonus	payments	made	to	certain	salespersons	for	the	establishment	of	certain	of	our	new	merchant	relationships	and (2)	a	deferred	acquisition	cost	representing	the	estimated	cost	of	buying	out	the	residual	commissions	of	certain	vested	salespersons.	Capitalized	customer	acquisition costs	represented	incremental,	direct	customer	acquisition	costs	that	were	recoverable	through	merchant	profitability.	The	capitalized	customer	acquisition	costs	were amortized	using	a	method	which	approximated	a	proportional	revenue	approach	over	the	initial	term	of	the	related	merchant	contract.	Up-front	signing	bonuses	paid	for certain	 new	 accounts	 were	 based	 on	 the	 estimated	 profitability	 for	 the	 first	 year	 of	 the	 merchant	 contract.	 The	 signing	 bonus,	 amount	 capitalized,	 and	 related amortization	were	adjusted	after	the	first	year	to	reflect	the	actual	profitability	generated	by	the	merchant	contract	during	that	year.	The	deferred	customer	acquisition cost	asset	was	accrued	over	the	first	year	of	merchant	processing,	consistent	with	the	build-up	in	the	accrued	buyout	liability,	as	described	below.

Settlement	processing	assets	and	obligations—	Settlement	processing	assets	and	obligations	represent	intermediary	balances	arising	in	our	settlement	process.	In accordance	with	ASC	Subtopic	210-20,	"Offsetting,"	we	apply	offsetting	to	our	settlement	processing	assets	and	obligations	where	a	right	of	setoff	exists.	See	"Note 4—Settlement	Processing	Assets	and	Obligations"	for	further	information.

Reserve	for	operating	losses—	Our	merchant	customers	are	liable	for	any	charges	or	losses	that	occur	under	the	merchant	agreement.	We	experience	losses	in	our card	processing	services	when	we	are	unable	to	collect	amounts	from	merchant	customers	for	any	charges	properly	reversed	by	the	card	issuing	financial	institutions. When	we	are	not	able	to	collect	these	amounts	from	the	merchants	due	to	merchant	fraud,	insolvency,	bankruptcy	or	any	other	reason,	we	may	be	liable	for	the	reversed charges.	We	require	cash	deposits,	guarantees,	letters	of	credit	and	other	types	of	collateral	from	certain	merchants	to	minimize	any	such	contingent	liability,	and	we	also utilize	a	number	of	systems	and	procedures	to	manage	merchant	risk.	We	experience	check	guarantee	losses	when	we	are	unable	to	collect	the	full	amount	of	a guaranteed	check	from	the	checkwriter.	We	refer	to	both	merchant	credit	losses	and	check	guarantee	losses	as	"operating	losses."	We	record	an	estimated	liability	for operating	losses	comprised	of	estimated	known	losses	and	estimated	incurred	but	not	reported	losses.

Property	and	equipment—	Property	and	equipment	are	stated	at	cost	less	accumulated	depreciation	and	amortization.	Depreciation	and	amortization	are	calculated using	the	straight-line	method.	Leasehold	improvements	are	amortized	over	the	lesser	of	the	remaining	term	of	the	lease	and	the	useful	life	of	the	asset.

We	develop	software	that	is	used	to	provide	services	to	customers.	Capitalization	of	internal-use	software,	primarily	associated	with	operating	platforms,	occurs when	we	have	completed	the	preliminary	project	stage,	management	authorizes	the	project,	management	commits	to	funding	the	project,	it	is	probable	the	project	will	be completed	and	the	project	will	be	used	to	perform	the	function	intended.	The	preliminary	project	stage	consists	of	the	conceptual	formulation	of	alternatives,	the evaluation	of	alternatives,	the	determination	of	existence	of	needed	technology	and	the	final	selection	of	alternatives.	Costs	incurred	during	the	preliminary	project	stage are	expensed	as	incurred.

Goodwill—	We	perform	our	annual	goodwill	impairment	test	as	of	October	1.	We	test	goodwill	for	impairment	at	the	reporting	unit	level	annually	and	more	often if	an	event	occurs	or	circumstances	change	that	indicate	the	fair	value	of	a	reporting	unit	is	below	its	carrying	amount.	We	have	the	option	of	performing	a	qualitative assessment	of	impairment	to	determine	whether	any

further	quantitative	assessment	for	impairment	is	necessary.	The	option	of	whether	or	not	to	perform	a	qualitative	assessment	is	made	annually	and	may	vary	by reporting	unit.

Factors	we	consider	in	the	qualitative	assessment	include	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,	sustained	decrease	in	our share	price,	and	other	relevant	entity-specific	events.	If	we	elect	to	bypass	the	qualitative	assessment	or	if	we	determine,	on	the	basis	of	qualitative	factors,	that	the	fair value	of	the	reporting	unit	is	more	likely	than	not	less	than	the	carrying	amount,	a	quantitative	test	would	be	required.

We	have	seven	reporting	units:	North	America	Payments,	Integrated	Solutions	and	Vertical	Markets,	United	Kingdom,	Asia-Pacific,	Central	and	Eastern	Europe, Russia	and	Spain.	As	of	October	1,	2018,	we	elected	to	perform	a	qualitative	assessment	of	impairment	for	each	of	our	reporting	units.	We	determined	on	the	basis	of qualitative	factors	that	the	fair	value	of	each	reporting	unit	was	not	more	likely	than	not	less	than	the	respective	carrying	amount.	We	believe	that	the	fair	value	of	each of	our	reporting	units	is	substantially	in	excess	of	its	carrying	amount.

Other intangible	assets—	Other intangible	assets	 include	customer-related	 intangible	assets	(such	as	customer	 lists	and	merchant	contracts),	contract-based intangible	assets	(such	as	noncompete	agreements,	referral	agreements	and	processing	rights),	acquired	technologies,	trademarks	and	trade	names	associated	with business	combinations.	These	assets	are	amortized	over	 their	estimated	useful	 lives.	The	useful	 lives	for	customer-related	 intangible	assets	are	determined	based primarily	on	forecasted	cash	flows,	which	include	estimates	for	the	revenues,	expenses,	and	customer	attrition	associated	with	the	assets.	The	useful	lives	of	contract- based	intangible	assets	are	equal	to	the	terms	of	the	agreements.	The	useful	lives	of	amortizable	trademarks	and	trade	names	are	based	on	our	plans	to	use	the	trademarks and	trade	names	in	the	applicable	markets.

We	 use	 the	 straight-line	 method	 of	 amortization	 for	 our	 amortizable	 acquired	 technologies,	 trademarks	 and	 trade	 names	 and	 contract-based	 intangibles. Amortization	for	most	of	our	customer-related	intangible	assets	is	calculated	using	an	accelerated	method	in	which	we	calculate	the	expected	cash	flows	for	that	period that	were	used	in	determining	the	acquisition-date	fair	value	of	the	asset	and	divide	that	amount	by	the	expected	total	cash	flows	over	the	estimated	life	of	the	asset.	We multiply	that	percentage	by	the	initial	carrying	amount	of	the	asset	to	arrive	at	the	amortization	expense	for	that	period.	If	the	cash	flow	patterns	that	we	experience differ	significantly	from	our	initial	estimates,	we	adjust	the	amortization	schedule	prospectively.	These	cash	flow	patterns	are	derived	using	certain	assumptions	and	cost allocations	due	to	a	significant	number	of	asset	interdependencies	that	exist	in	our	business.	We	believe	that	our	accelerated	method	reflects	the	expected	pattern	of	the benefit	to	be	derived	from	the	acquired	customer	relationships.

Impairment	of	long-lived	assets—	We	regularly	evaluate	whether	events	and	circumstances	have	occurred	that	indicate	the	carrying	amount	of	property	and equipment	and	finite-life	intangible	assets	may	not	be	recoverable.	When	factors	indicate	that	these	long-lived	assets	should	be	evaluated	for	possible	impairment,	we assess	the	potential	impairment	by	determining	whether	the	carrying	amount	of	such	long-lived	assets	will	be	recovered	through	the	future	undiscounted	cash	flows expected	from	use	of	the	asset	and	its	eventual	disposition.	If	the	carrying	amount	of	the	asset	is	determined	not	to	be	recoverable,	a	write-down	to	fair	value	is	recorded. Fair	values	are	determined	based	on	quoted	market	prices	or	discounted	cash	flow	analysis	as	applicable.	We	regularly	evaluate	whether	events	and	circumstances	have occurred	that	indicate	the	useful	lives	of	property	and	equipment	and	finite-life	intangible	assets	may	warrant	revision.

Accrued	buyout	liability—	Certain	of	our	salespersons	are	paid	residual	commissions	based	on	the	profitability	generated	by	certain	merchants.	We	have	the	right, but	not	the	obligation,	to	buy	out	some	or	all	of	these	commissions	and	intend	to	do	so	periodically.	Such	purchases	of	the	commissions	are	at	a	fixed	multiple	of	the	last 12	months'	commissions.	Because	of	our	intent	and	ability	to	execute	purchases	of	the	residual	commissions,	and	the	mutual	understanding	between	us	and	our salespersons,	we	have	accounted	for	this	deferred	compensation	arrangement	pursuant	to	the	substantive	nature	of	the	plan.	We	therefore	record	the	amount	that	we would	have	to	pay	(the	"settlement	cost")	to	buy	out	non-servicing	related	commissions	in	their	entirety	from	vested	salespersons,	and	an	estimated	amount	for	unvested salespersons	based	on	their	progress	towards	vesting	and	the	expected	percentage	that	will	become	vested.	As	noted	above,	as	the	liability	increases	over	the	first	year	of the	related	merchant	contract,	we	record	a	related	asset.	Subsequent	changes	in	the	estimated	accrued	buyout	liability	due	to	merchant	attrition,	same-store	sales	growth or	contraction	and	changes	in	profitability	are	included	in	the	selling,	general	and	administrative	expense	in	the	consolidated	statements	of	income.

The	classification	of	the	accrued	buyout	liability	between	current	and	noncurrent	on	the	consolidated	balance	sheet	is	based	upon	our	estimate	of	the	amount	of	the accrued	buyout	liability	that	we	reasonably	expect	to	pay	over	the	next	12	months.

Income	taxes—	Deferred	income	taxes	are	determined	based	on	the	difference	between	the	financial	statement	and	tax	bases	of	assets	and	liabilities	using	enacted tax	laws	and	rates.	A	valuation	allowance	is	provided	when	it	is	more	likely	than	not	that	some	portion	or	all	of	the	deferred	tax	assets	will	not	be	realized.

ASC	Topic	740,	"Income	Taxes"	("ASC	740")	requires	companies	to	recognize	the	effect	of	tax	law	changes	in	the	period	of	enactment.	To	address	the	application of	GAAP	in	situations	when	a	registrant	does	not	have	the	necessary	information	available,	prepared	or	analyzed	in	reasonable	detail	to	complete	the	accounting	for certain	income	tax	effects	of	the	2017	U.S.	Tax	Act,	which	was	enacted	on	December	22,	2017,	the	SEC	issued	Staff	Accounting	Bulletin	No.	118	("SAB	118"),	which in	March	2018	was	codified	by	the	FASB	in	ASC	740.	SAB	118	provided	guidance	for	registrants	regarding	the	application	of	ASC	740	and	permitted	up	to	one	year after	the	enactment	date	for	the	registrant	to	complete	its	accounting.

In	applying	the	provisions	of	SAB	118,	our	income	tax	benefit	for	the	year	ended	December	31,	2017	reflected	provisional	amounts	for	specific	income	tax	effects as	a	result	of	the	enactment	of	the	2017	U.S.	Tax	Act	for	which	our	accounting	was	incomplete	but	could	be	reasonably	estimated	as	of	December	31,	2017.	During	the year	ended	December	31,	2018,	we	continued	to	analyze	our	foreign	tax	pools	and	resulting	foreign	tax	credits	and	reduced	the	estimated	transition	tax	liability,	which completed	our	accounting	for	the	transition	effects	of	the	2017	U.S.	Tax	Act.	In	accounting	for	the	effects	of	the	2017	U.S.	Tax	Act,	we	made	a	policy	election	to	treat taxes	due,	if	any,	under	the	Global	Intangible	Low-taxed	Income	provision	as	an	expense	in	the	period	incurred.

We	periodically	assess	our	tax	exposures	related	to	periods	that	are	open	to	examination.	Based	on	the	latest	available	information,	we	evaluate	our	tax	positions to	determine	whether	the	position	will	more	likely	than	not	be	sustained	upon	examination	by	the	U.S.	Internal	Revenue	Service	or	other	taxing	authorities.	If	we	cannot reach	a	more-likely-than-not	determination,	no	benefit	is	recorded.	If	we	determine	that	the	tax	position	is	more	likely	than	not	to	be	sustained,	we	record	the	largest amount	of	benefit	that	is	more	likely	than	not	to	be	realized	when	the	tax	position	is	settled.	We	record	interest	and	penalties	related	to	unrecognized	income	tax	benefits in	interest	and	selling,	general	and	administrative	expenses,	respectively,	in	our	consolidated	statements	of	income.

Derivative	instruments—	We	may	use	interest	rate	swaps	or	other	derivative	instruments	to	manage	a	portion	of	our	exposure	to	the	variability	in	interest	rates. Our	objective	in	managing	our	exposure	to	fluctuation	in	interest	rates	is	to	better	control	this	element	of	cost	and	to	mitigate	the	earnings	and	cash	flow	volatility associated	with	changes	in	applicable	rates.	We	have	established	policies	and	procedures	that	encompass	risk-management	philosophy	and	objectives,	guidelines	for derivative	instrument	usage,	counterparty	credit	approval,	and	the	monitoring	and	reporting	of	derivative	activity.	We	do	not	enter	into	derivative	instruments	for	the purpose	of	speculation.

We	formally	designate	and	document	instruments	at	inception	that	qualify	for	hedge	accounting	of	underlying	exposures.	When	qualified	for	hedge	accounting, these	 financial	 instruments	 are	 recognized	 at	 fair	 value	 in	 our	 consolidated	 balance	 sheets,	 and	 changes	 in	 fair	 value	 are	 recognized	 as	 a	 component	 of	 other comprehensive	 income	 and	 included	 in	 accumulated	 other	 comprehensive	 income	 within	 equity	 in	 our	 consolidated	 balance	 sheets.	 Cash	 flows	 resulting	 from settlements	are	presented	as	a	component	of	cash	flows	from	operating	activities	within	our	consolidated	statements	of	cash	flows.

We	formally	assess,	both	at	inception	and	at	least	quarterly,	whether	the	financial	instruments	used	in	hedging	transactions	are	effective	at	offsetting	changes	in cash	flows	of	the	related	underlying	exposure.	Fluctuations	in	the	value	of	these	instruments	generally	are	offset	by	changes	in	the	forecasted	cash	flows	of	the underlying	exposures	being	hedged.	This	offset	is	driven	by	the	high	degree	of	effectiveness	between	the	exposure	being	hedged	and	the	hedging	instrument.	We designated	each	of	our	interest	rate	swap	agreements	as	a	cash	flow	hedge	of	interest	payments	on	variable	rate	borrowings.	See	"Note	8—Long-Term	Debt	and	Lines	of Credit"	for	more	information	about	our	interest	rate	swaps.

Fair	value	measurements—	Fair	value	is	defined	as	the	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction	between market	participants	at	the	reporting	date.	GAAP	establishes	a	fair	value	hierarchy	that	categorizes	the	inputs	to	valuation	techniques	into	three	broad	levels.	Level	1 inputs	utilize	quoted	prices	in	active	markets	for	identical	assets	or	liabilities.	Level	2	inputs	are	based	on	other	observable	market	data,	such	as	quoted	prices	for	similar assets	and

liabilities,	and	inputs	other	than	quoted	prices	that	are	observable	such	as	interest	rates	and	yield	curves.	Level	3	inputs	are	developed	from	unobservable	data	reflecting our	assumptions	and	include	situations	where	there	is	little	or	no	market	activity	for	the	asset	or	liability.

Fair	value	of	financial	instruments—	The	carrying	amounts	of	cash	and	cash	equivalents,	receivables,	settlement	lines	of	credit,	accounts	payable	and	accrued liabilities,	approximate	their	fair	value	given	the	short-term	nature	of	these	items.	Our	long-term	debt	includes	variable	interest	rates	based	on	LIBOR,	the	Federal	Funds Effective	Rate	(as	defined	in	the	debt	agreements)	or	the	prime	rate,	plus	a	margin	based	on	our	leverage	position.	At	December	31,	2018,	the	carrying	amount	of	our long-term	debt,	exclusive	of	debt	issuance	costs,	approximated	fair	value,	which	is	calculated	using	Level	2	inputs.	The	fair	values	of	our	swap	agreements	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,	and	classified within	Level	2	of	the	valuation	hierarchy.	See	"Note	8—Long-Term	Debt	and	Lines	of	Credit"	for	further	information.

We	have	investments	in	equity	instruments	without	readily	determinable	fair	value,	including	our	investment	in	certain	preferred	shares	of	Visa	Inc.	("Visa")	that we	accounted	for	using	the	cost	method.	Upon	the	adoption	of	ASU	2016-01	on	January	1,	2018,	we	elected	a	measurement	alternative	for	equity	instruments	that	do	not have	readily	determinable	fair	values.	Under	such	alternative,	these	instruments	are	measured	at	cost	plus	or	minus	any	changes	resulting	from	observable	price	changes in	orderly	transactions	for	an	identical	or	similar	investment	of	the	same	issuer.	Any	resulting	change	in	carrying	amount	would	be	reflected	in	net	income.	See	"Note 7—Other	Assets"	for	more	information	about	our	investment	in	certain	preferred	shares	of	Visa.

Foreign	currencies—	We	have	significant	operations	in	a	number	of	foreign	subsidiaries	whose	functional	currency	is	the	local	currency.	The	assets	and	liabilities of	subsidiaries	whose	functional	currency	is	a	foreign	currency	are	translated	into	the	reporting	currency	at	the	period-end	rate	of	exchange.	Income	statement	items	are translated	at	the	weighted-average	rates	prevailing	during	the	period.	The	resulting	translation	adjustment	is	recorded	as	a	component	of	other	comprehensive	income and	is	included	in	accumulated	comprehensive	income	within	equity	in	our	consolidated	balance	sheets.

Gains	and	losses	on	transactions	denominated	in	currencies	other	than	the	functional	currency	are	generally	included	in	determining	net	income	for	the	period.		For the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016,	our	transaction	gains	and	losses	were	insignificant. Transaction	gains	and	losses	on	intercompany	balances	of	a	long-term	investment	nature	are	recorded	as	a	component	of	other	comprehensive	income	and	included	in accumulated	comprehensive	income	within	equity	in	our	consolidated	balance	sheets.

Earnings	per	share—	Basic	earnings	per	share	("EPS")	is	computed	by	dividing	reported	net	income	attributable	to	Global	Payments	by	the	weighted-average number	of	shares	outstanding	during	the	period.	Earnings	available	to	common	shareholders	is	the	same	as	reported	net	income	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	earnings	per	share.	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.	There	were	no	stock	options	that	would	have	an	antidilutive	effect	on	the computation	of	diluted	EPS	for	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	or	for	the	year	ended	May	31,	2016.

The	following	table	sets	forth	the	computation	of	the	diluted	weighted-average	number	of	shares	outstanding	for	all	periods	presented:

|  | Years	Ended	December	31,<br>2018 | 2017 | Seven	Months<br>Ended<br>December	31,<br>2016 | Year	Ended<br>May	31,<br>2016 |
| :--- | :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) | (in\tthousands) |  |
| Basic\tweighted-average\tnumber\tof\tshares\toutstanding | 158,672 | 154,652 | 153,342 | 132,284 |
| Plus:\tDilutive\teffect\tof\tstock\toptions\tand\tother\tshare-based\tawards | 599 | 876 | 889 | 883 |
| Diluted\tweighted-average\tnumber\tof\tshares\toutstanding | 159,271 | 155,528 | 154,231 | 133,167 |

Repurchased	shares—	We	account	for	the	retirement	of	repurchased	shares	using	the	par	value	method	under	which	the	repurchase	price	is	charged	to	paid-in capital	up	to	the	amount	of	the	original	issue	proceeds	of	those	shares.	When	the	repurchase	price	is	greater	than	the	original	issue	proceeds,	the	excess	is	charged	to retained	earnings.	We	use	a	last-in,	first-out	cost	flow	assumption	to	identify	the	original	issue	proceeds	of	the	shares	repurchased.

Conforming	Presentation—	To	conform	to	the	presentation	for	the	year	ended	December	31,	2018,	we	modified	the	consolidated	statements	of	cash	flows	for	the year	ended	December	31,	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016	to	include	changes	in	"capitalized	customer	acquisition	costs"	of	$82.9 million,	$58.2	million	 and	$12.0	million,	respectively,	within	"prepaid	expenses	and	other	assets"	among	the	changes	in	operating	assets	and	liabilities.	Previously, changes	in	"capitalized	customer	acquisition	costs"	were	presented	as	a	separate	line	in	the	consolidated	statements	of	cash	flows.	These	modifications	had	no	effect	on net	cash	provided	by	operating	activities	for	any	period.

# Recently	Issued	Pronouncements	Not	Yet	Adopted

# ASC	842	-	New	Lease	Accounting	Standard

In	February	2016,	the	FASB	issued	ASU	2016-02,	"Leases."	ASU	2016-02	will	require	us	to	recognize,	on	the	balance	sheet,	assets	and	liabilities	for	the	rights and	obligations	created	by	leases.	In	addition,	several	new	disclosures	will	be	required.

We	will	adopt	ASU	2016-02,	as	well	as	other	related	clarifications	and	interpretive	guidance	issued	by	the	FASB,	when	it	becomes	effective	for	us	on	January	1, 2019.	We	will	elect	 the	optional	modified	retrospective	 transition	method	 to	apply	 the	provisions	of	 the	new	standard	at	 the	adoption	date,	which	will	result	 in measurement	and	recognition	of	assets	and	liabilities	for	the	rights	and	obligations	created	by	leases.	The	lease	liability	will	be	measured	as	the	present	value	of remaining	lease	payments,	and	the	corresponding	right	of	use	asset	will	be	measured	at	an	amount	equal	to	the	lease	liability	adjusted	by	the	amount	of	certain	assets	and liabilities,	such	as	deferred	lease	obligations	and	prepaid	rent,	related	to	our	operating	leases	previously	recognized	on	the	balance	sheet	immediately	before	the	date	of initial	application.	Under	this	transition	method,	we	will	not	recast	the	prior-period	financial	statements	presented.

We	have	made	progress	in	the	execution	of	our	implementation	plan,	and	we	are	substantially	complete	with	our	evaluation	of	the	effect	of	ASU	2016-02	on	our consolidated	financial	statements.	We	currently	estimate	that	we	will	recognize	lease	liabilities	on	the	balance	sheet	of	approximately	$275	million	at	adoption	for	our operating	leases.	We	expect	right	of	use	assets	will	be	approximately	$235	million,	reflecting	adjustments	for	the	net	amount	of	lease-related	items	previously	recognized on	the	balance	sheet.	We	do	not	expect	adoption	to	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.

We	will	elect	the	transition	package	of	three	practical	expedients,	which	among	other	things,	allows	for	the	carryforward	of	historical	lease	classifications,	and	we will	make	an	accounting	policy	election	to	not	apply	the	recognition	requirements	to	leases	with	a	term	of	less	than	twelve	months.	We	will	also	elect	a	lessee	practical expedient,	as	an	accounting	policy	election	by	class	of	underlying	asset,	to	account	for	lease	and	nonlease	components	as	a	combined	single	lease	component.	Finally, we	will	make

an	accounting	policy	election	to	determine	the	incremental	borrowing	rate	at	transition,	based	on	the	remaining	lease	term	at	the	date	of	adoption.

Our	existing	leases	consist	primarily	of	real	estate	leases	for	office	space	throughout	the	markets	in	which	we	conduct	business.	We	are	currently	finalizing	the analysis	of	our	existing	lease	arrangements.	We	will	implement	new	accounting	processes	and	internal	controls	to	meet	the	requirements	for	financial	reporting	and disclosures	 of	 our	 leases.	 We	 have	 implemented	 a	 new	 technology	 solution	 to	 assist	 with	 the	 necessary	 calculations	 to	 support	 the	 accounting	 and	 disclosure requirements	of	the	new	lease	accounting	standard.	We	are	coordinating	with	various	internal	stakeholders	to	evaluate	and	test	the	newly	implemented	technology, processes	and	controls.	We	expect	these	final	implementation	and	evaluation	activities	will	continue	during	the	first	quarter	of	2019.

# Other	Accounting	Standards	Updates	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	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	that	is	a	service	contract.	The amendments	in	this	update	also	provide	additional	disclosure	requirements	to	disclose	the	nature	of	an	entity's	hosting	arrangements	that	are	service	contracts.	ASU 2018-15	is	effective	for	annual	and	interim	periods	beginning	after	December	15,	2019.	We	are	evaluating	the	effect	of	ASU	2018-15	on	our	consolidated	financial statements.

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

# NOTE	2—	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.

| Table	of	Contents |  |
| :--- | :--- |
| The\t provisional\t estimated\t acquisition-date\t fair\t values\t of\t major\t classes\t of\t assets\t acquired\t and\nliabilities\t assumed\t as\t of\t December\t 31,\t 2018,\nreconciliation\tto\tthe\ttotal\tpurchase\tconsideration,\twere\tas\tfollows\t(in\tthousands): | including\t a |
| Cash\tand\tcash\tequivalents | $7,540 |
| Property\tand\tequipment | 5,943 |
| Identified\tintangible\tassets | 188,294 |
| Other\tassets | 22,278 |
| Deferred\tincome\ttaxes | (48,448) |
| Other\tliabilities | (31,250) |
| Total\tidentifiable\tnet\tassets | 144,357 |
| Goodwill | 264,844 |
| Total\tpurchase\tconsideration | $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:

|  | (in	thousands) | (years) |
| :--- | :--- | :--- |
| Customer-related\tintangible\tassets | $104,900 | 14 |
| Acquired\ttechnologies | 65,312 | 6 |
| Trademarks\tand\ttrade\tnames | 11,202 | 5 |
| Covenants-not-to-compete | 6,880 | 5 |
| Total\testimated\tacquired\tintangible\tassets | $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):

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:

|  | (in	thousands) | (years) |
| :--- | :--- | :--- |
| Customer-related\tintangible\tassets | $303,100 | 11 |
| Acquired\ttechnologies | 83,700 | 5 |
| Trademarks\tand\ttrade\tnames | 32,700 | 15 |
| Total\testimated\tacquired\tintangible\tassets | $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):

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:

| Cash	and	cash	equivalents | $42,913 | $— | $42,913 |
| :--- | :--- | :--- | :--- |
| Property\tand\tequipment | 21,985 | (133) | 21,852 |
| Identified\tintangible\tassets | 410,545 | — | 410,545 |
| Other\tassets | 87,240 | (97) | 87,143 |
| Deferred\tincome\ttaxes | (31,643) | 4,003 | (27,640) |
| Other\tliabilities | (144,132) | (3,349) | (147,481) |
| Total\tidentifiable\tnet\tassets | 386,908 | 424 | 387,332 |
| Goodwill | 784,668 | (424) | 784,244 |
| Total\tpurchase\tconsideration | $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:

|  | (in	thousands) | (years) |
| :--- | :--- | :--- |
| Customer-related\tintangible\tassets | $189,000 | 17 |
| Acquired\ttechnologies | 153,300 | 9 |
| Trademarks\tand\ttrade\tnames | 59,400 | 15 |
| Covenants-not-to-compete | 8,845 | 3 |
| Total\testimated\tacquired\tintangible\tassets | $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):

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.

| Cash	and	cash	equivalents | $304,747 | $— | $304,747 |
| :--- | :--- | :--- | :--- |
| Accounts\treceivable | 70,385 | — | 70,385 |
| Prepaid\texpenses\tand\tother\tassets | 103,090 | (5,131) | 97,959 |
| Identified\tintangible\tassets | 1,639,040 | — | 1,639,040 |
| Property\tand\tequipment | 106,583 | — | 106,583 |
| Debt | (437,933) | — | (437,933) |
| Accounts\tpayable\tand\taccrued\tliabilities | (457,763) | (65) | (457,828) |
| Settlement\tprocessing\tobligations | (36,578) | (3,727) | (40,305) |
| Deferred\tincome\ttaxes | (518,794) | 18,907 | (499,887) |
| Other\tliabilities | (64,938) | (33,495) | (98,433) |
| Total\tidentifiable\tnet\tassets | 707,839 | (23,511) | 684,328 |
| Goodwill | 3,214,981 | 23,511 | 3,238,492 |
| Total\tpurchase\tconsideration | $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.

|  | (in	thousands) | (years) |
| :--- | :--- | :--- |
| Customer-related\tintangible\tassets | $977,400 | 15 |
| Acquired\ttechnologies | 457,000 | 5 |
| Trademarks\tand\ttrade\tnames | 176,000 | 7 |
| Covenants-not-to-compete | 28,640 | 1 |
| Total\testimated\tacquired\tintangible\tassets | $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):

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.

# NOTE	3—REVENUES

We	are	a	leading	worldwide	provider	of	payment	technology	and	software	solutions	delivering	innovative	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	accept	various	payment	types	and	operate	their	businesses more	efficiently.	We	distribute	our	services	across	a	variety	of	channels	to	customers.	The	disclosures	in	this	note	are	applicable	for	the	year	ended	December	31,	2018.

The	following	table	presents	a	disaggregation	of	our	revenue	from	contracts	with	customers	by	distribution	channel:

ASC	606	requires	that	we	determine	for	each	customer	arrangement	whether	revenue	should	be	recognized	at	a	point	in	time	or	over	time.	For	the	year	ended December	31,	2018	substantially	all	of	our	revenues	were	recognized	over	time.

ASC	606	requires	disclosure	of	the	aggregate	amount	of	the	transaction	price	allocated	to	unsatisfied	performance	obligations;	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.	As	described	above,	our	most	significant	performance	obligations	consist	of	variable	consideration	under	a	stand-ready	series	of	distinct	days	of	service.	Such variable	consideration	meets	the	specified	criteria	for	the	disclosure	exclusion;	therefore,	the	majority	of	the	aggregate	amount	of	transaction	price	that	is	allocated	to performance	obligations	that	have	not	yet	been	satisfied	is	variable	consideration	that	is	not	required	for	this	disclosure.	The	aggregate	fixed	consideration	portion	of customer	contracts	with	an	initial	contract	duration	greater	than	one	year	is	not	material.

# Contract	Assets	and	Contract	Liabilities

Net	contract	liabilities	included	in	accounts	payable	and	accrued	liabilities	on	our	consolidated	balance	sheet	were	$146.9	million	 at	December	31,	2018	and $100.6	million	at	January	1,	2018.	Net	contract	liabilities	included	in	other	noncurrent	liabilities	on	our	consolidated	balance	sheet	were	$8.6	million	at	December	31, 2018	and	$6.0	million	at	January	1,	2018.	The	increase	in	contract	liabilities	during	2018	reflects	the	effects	of	business	combinations.	Revenues	for	the	year	ended December	31,	2018	included	$97.3	million	that	was	in	contract	liabilities	at	January	1,	2018.	Net	contract	assets	were	not	material	at	December	31,	2018	or	at	January	1, 2018.

# Contract	Costs

At	December	31,	2018,	we	had	net	capitalized	costs	to	obtain	and	to	fulfill	contracts	of	$194.6	million	and	$13.0	million,	respectively.	During	the	year	ended December	31,	2018,	amortization	of	capitalized	contract	costs	was	$51.5	million.

# NOTE	4—SETTLEMENT	PROCESSING	ASSETS	AND	OBLIGATIONS

Funds	settlement	refers	to	the	process	of	transferring	funds	for	sales	and	credits	between	card	issuers	and	merchants.	For	transactions	processed	on	our	systems, we	use	our	internal	network	to	provide	funding	instructions	to	financial	institutions	that	in	turn	fund	the	merchants.	We	process	funds	settlement	under	two	models,	a sponsorship	model	and	a	direct	membership	model.

Under	 the	sponsorship	model,	we	are	designated	as	an	 independent	sales	organization	by	Mastercard	and	Visa,	which	means	 that	member	clearing	banks ("Member")	sponsor	us	and	require	our	adherence	to	the	standards	of	the	payment	networks.	In	certain	markets,	we	have	sponsorship	or	depository	and	clearing agreements	with	financial	institution	sponsors.	These	agreements	allow	us	to	route	transactions	under	the	Members'	control	and	identification	numbers	to	clear	credit card	transactions	through	Mastercard	and	Visa.	In	this	model,	the	standards	of	the	payment	networks	restrict	us	from	performing	funds	settlement	or	accessing	merchant settlement	funds,	and,	instead,	require	that	these	funds	be	in	the	possession	of	the	Member	until	the	merchant	is	funded.

Under	the	direct	membership	model,	we	are	members	in	various	payment	networks,	allowing	us	to	process	and	fund	transactions	without	third-party	sponsorship. In	this	model,	we	route	and	clear	transactions	directly	through	the	card	brand's	network	and	are	not	restricted	from	performing	funds	settlement.	Otherwise,	we	process these	transactions	similarly	to	how	we	process	transactions	in	the	sponsorship	model.	We	are	required	to	adhere	to	the	standards	of	the	payment	networks	in	which	we	are direct	members.	We	maintain	relationships	with	financial	institutions,	which	may	also	serve	as	our	Member	sponsors	for	other	card	brands	or	in	other	markets,	to	assist with	funds	settlement.

Timing	differences,	interchange	fees,	Merchant	Reserves	and	exception	items	cause	differences	between	the	amount	received	from	the	payment	networks	and	the amount	funded	to	the	merchants.	These	intermediary	balances	arising	in	our	settlement	process	for	direct	merchants	are	reflected	as	settlement	processing	assets	and obligations	on	our	consolidated	balance	sheets.

Settlement	processing	assets	and	obligations	include	the	components	outlined	below:

•Interchange	reimbursement.	Our	receivable	from	merchants	for	the	portion	of	the	discount	fee	related	to	reimbursement	of	the	interchange fee.

•Receivable	from	Members.	Our	receivable	from	the	Members	for	transactions	in	which	we	have	advanced	funding	to	the	Members	to	fund	merchants	in advance	of	receipt	of	funding	from	networks.

•Receivable	from	networks.	Our	receivable	from	a	payment	network	for	transactions	processed	on	behalf	of	merchants	where	we	are	a	direct	member	of	that particular	network.

•Exception items. Items such as customer chargeback amounts received from merchants.

•Merchant	 Reserves.	 Reserves	 held to	 minimize	 contingent liabilities	 associated	 with losses that	 may	 occur	 under the	 merchant agreement.

•Liability	to	Members.	Our	liability	to	the	Members	for	transactions	for	which	funding	from	the	payment	network	has	been	received	by	the	Members	but merchants	have	not	yet	been	funded.

•Liability	to	merchants.	Our	liability	to	merchants	for	transactions	that	have	been	processed	but	not	yet	funded	where	we	are	a	direct	member	of	a	particular payment	network.

•Reserve	for	operating	losses	and	sales	allowances.	Our	reserve	for	allowances,	charges	or	losses	that	we	do	not	expect	to	collect	from	the	merchants	due	to concessions,	merchant	fraud,	insolvency,	bankruptcy	or	any	other	merchant-related	reason.

We	apply	offsetting	to	our	settlement	processing	assets	and	obligations	where	a	right	of	setoff	exists.	In	the	sponsorship	model,	we	apply	offsetting	by	Member agreement	because	the	Member	is	ultimately	responsible	for	funds	settlement.	With	these	Member	transactions,	we	do	not	have	access	to	the	gross	proceeds	of	the receivable	from	the	payment	networks	and,	thus,	do	not	have	a	direct	obligation	or	any	ability	to	satisfy	the	payable	to	fund	the	merchant.	In	these	situations,	we	apply offsetting	to	determine	a	net	position	for	each	Member	agreement.	If	that	net	position	is	an	asset,	we	reflect	the	net	amount	in	settlement	processing	assets	on	our consolidated	balance	sheet,	and	we	present	the	individual	components	in	the	settlement	processing	assets	table	below.	If	that	net	position	is	a	liability,	we	reflect	the	net amount	in	settlement	processing	obligations	on	our	consolidated	balance	sheet,	and	we	present	the	individual	components	in	the	settlement	processing	obligations	table below.	In	the	direct	membership	model,	offsetting	is	not	applied,	and	the	individual	components	are	presented	as	an	asset	or	obligation	based	on	the	nature	of	that component.

As	of	December	31,	2018	and	2017	settlement	processing	assets	and	obligations	consisted	of	the	following:

| Interchange	reimbursement | $154,978 | $304,964 |
| :--- | :--- | :--- |
| Receivable\tfrom\tMembers | 228,107 | 104,339 |
| Receivable\tfrom\tnetworks | 1,221,060 | 2,055,390 |
| Exception\titems | 7,636 | 7,867 |
| Merchant\tReserves | (11,559) | (13,268) |
|  | $1,600,222 | $2,459,292 |
| Settlement\tprocessing\tliabilities: |  |  |
| Interchange\treimbursement | $193,235 | $72,053 |
| Liability\tto\tMembers | (182,450) | (20,369) |
| Liability\tto\tmerchants | (1,144,249) | (1,961,107) |
| Exception\titems | 7,146 | 6,863 |
| Merchant\tReserves | (145,826) | (133,907) |
| Reserve\tfor\toperating\tlosses\tand\tsales\tallowances | (4,212) | (4,042) |
|  | $(1,276,356) | $(2,040,509) |

# NOTE	5—PROPERTY	AND	EQUIPMENT

As	of	December	31,	2018	and	2017,	property	and	equipment	consisted	of	the	following:

|  | (Years) | 2018 | 2017 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) | (in\tthousands) |
| Land |  | $3,518 | $2,742 |
| Buildings | 25-30 | 27,179 | 29,309 |
| Equipment | 2-20 | 337,589 | 280,774 |
| Software | 2-10 | 539,879 | 411,975 |
| Leasehold\timprovements | 3-15 | 73,298 | 63,154 |
| Furniture\tand\tfixtures | 3-7 | 45,346 | 24,054 |
|  |  | 1,026,809 | 812,008 |
| Less\taccumulated\tdepreciation\tand\tamortization |  | (503,827) | (314,336) |
| Work-in-progress |  | 130,560 | 90,676 |
|  |  | $653,542 | $588,348 |

# NOTE	6—GOODWILL	AND	INTANGIBLE	ASSETS

As	of	December	31,	2018	and	2017,	goodwill	and	other	intangible	assets	consisted	of	the	following:

|  | 2018 | 2017 |
| :--- | :--- | :--- |
|  | (in\tthousands) | (in\tthousands) |
| Goodwill | $6,341,355 | $5,703,992 |
| Other\tintangible\tassets: |  |  |
| Customer-related\tintangible\tassets | $2,486,217 | $2,078,891 |
| Acquired\ttechnologies | 896,701 | 722,466 |
| Trademarks\tand\ttrade\tnames | 289,588 | 247,688 |
| Contract-based\tintangible\tassets | 178,391 | 171,522 |
|  | 3,850,897 | 3,220,567 |
| Less\taccumulated\tamortization: |  |  |
| Customer-related\tintangible\tassets | 860,715 | 685,869 |
| Acquired\ttechnologies | 351,170 | 210,063 |
| Trademarks\tand\ttrade\tnames | 83,234 | 50,849 |
| Contract-based\tintangible\tassets | 67,160 | 92,079 |
|  | 1,362,279 | 1,038,860 |
|  | $2,488,618 | $2,181,707 |

The	following	table	sets	forth	the	changes	in	the	carrying	amount	of	goodwill	for	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period and	the	year	ended	May	31,	2016:

|  | North	America | Europe | Asia-Pacific | Total |
| :--- | :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) | (in\tthousands) |  |
| Balance\tat\tMay\t31,\t2015 | $779,734 | $485,921 | $226,178 | $1,491,833 |
| Goodwill\tacquired | 3,318,768 | — | 53,402 | 3,372,170 |
| Effect\tof\tforeign\tcurrency\ttranslation | (3,872) | (13,737) | (15,397) | (33,006) |
| Measurement-period\tadjustments | (8,200) | (411) | 7,019 | (1,592) |
| Balance\tat\tMay\t31,\t2016 | 4,086,430 | 471,773 | 271,202 | 4,829,405 |
| Goodwill\tacquired | — | 28,820 | — | 28,820 |
| Effect\tof\tforeign\tcurrency\ttranslation | (1,911) | (45,265) | (2,160) | (49,336) |
| Measurement-period\tadjustments | (1,267) | (28) | — | (1,295) |
| Balance\tat\tDecember\t31,\t2016 | 4,083,252 | 455,300 | 269,042 | 4,807,594 |
| Goodwill\tacquired | 784,668 | — | — | 784,668 |
| Effect\tof\tforeign\tcurrency\ttranslation | 5,060 | 57,838 | 18,291 | 81,189 |
| Measurement-period\tadjustments | 23,511 | — | 7,030 | 30,541 |
| Balance\tat\tDecember\t31,\t2017 | 4,896,491 | 513,138 | 294,363 | 5,703,992 |
| Goodwill\tacquired | 641,483 | — | 57,387 | 698,870 |
| Effect\tof\tforeign\tcurrency\ttranslation | (7,463) | (28,377) | (25,243) | (61,083) |
| Measurement-period\tadjustments | (424) | — | — | (424) |
| Balance\tat\tDecember\t31,\t2018 | $5,530,087 | $484,761 | $326,507 | $6,341,355 |

There	were	no	accumulated	impairment	losses	for	goodwill	at	any	balance	sheet	date	reflected	in	the	table	above.

Customer-related	 intangible	assets,	acquired	 technologies,	contract-based	 intangible	assets	and	 trademarks	and	 trade	names	acquired	during	 the	year	ended December	31,	2018	had	weighted-average	amortization	periods	of	11.5	 years,	6.2	 years,	19.3	years	and	12.5	years,	respectively.	Customer-related	intangible	assets, acquired	technologies,	contract-based	intangible	assets	and	trademarks	and	trade	names	acquired	during	the	year	ended	December	31,	2017	had	weighted-average amortization	 periods	 of	16.8	 years,	8.8	 years,	3	 years	 and	15	 years,	 respectively.	 Customer-related	 intangible	 assets	 acquired	 2016	 fiscal	 transition	 period	 had	 a weighted-average	amortization	period	of	12.1	years.	Customer-related	intangible	assets,	acquired	technologies	and	trademarks	and	trade	names	acquired	during	the	year ended	May	31,	2016	had	weighted-average	amortization	periods	of	13.9	years,	5.0	years	and	7.0	years,	respectively.	Amortization	expense	of	acquired	intangibles	was $377.7	million	for	the	year	ended	December	31,	2018,	$337.9	million	for	the	year	ended	December	31,	2017,	$194.3	million	for	the	2016	fiscal	transition	period	and $113.7	million	for	the	year	ended	May	31,	2016,	respectively.

The	estimated	amortization	expense	of	acquired	intangibles	as	of	December	31,	2018	for	the	next	five	years,	calculated	using	the	currency	exchange	rate	at	the date	of	acquisition,	if	applicable,	is	as	follows	(in	thousands):

# NOTE	7—OTHER	ASSETS

Through	certain	of	our	subsidiaries	in	Europe,	we	were	a	member	and	shareholder	of	Visa	Europe	Limited	("Visa	Europe").	On	June	21,	2016,	Visa	acquired	all	of the	membership	interests	in	Visa	Europe,	including	ours,	upon	which	we	recorded	a	gain	of	$41.2	million	included	in	interest	and	other	income	in	our	consolidated statements	of	income	for	the	2016	fiscal	transition	period.	We	received	up-front	consideration	comprised	of	€33.5	million	($37.7	million	equivalent	at	June	21,	2016)	in cash	and	Series	B	and	C	convertible	preferred	shares	whose	initial	conversion	rate	equates	to	Visa	common	shares	valued	at	$22.9	million	as	of	June	21,	2016.	The preferred	shares	were	assigned	a	value	of	zero	based	on	transfer	restrictions,	Visa's	ability	to	adjust	the	conversion	rate	and	the	estimation	uncertainty	associated	with those	factors.	Based	on	the	outcome	of	potential	litigation	involving	Visa	Europe	in	the	United	Kingdom	and	elsewhere	in	Europe,	the	conversion	rate	of	the	preferred shares	could	be	adjusted	down	such	that	the	number	of	Visa	common	shares	we	ultimately	receive	could	be	as	low	as	zero,	and	approximately	€25.6	million	($28.8 million	equivalent	at	June	21,	2016)	of	the	up-front	cash	consideration	could	be	refundable.	On	the	third	anniversary	of	the	closing	of	the	acquisition	by	Visa,	we	are contractually	entitled	to	receive	€3.1	million	($3.5	million	equivalent	at	June	21,	2016)	of	deferred	consideration	(plus	compounded	interest	at	a	rate	of	4.0%	per	annum).

# NOTE	8—LONG-TERM	DEBT	AND	LINES	OF	CREDIT

As	of	December	31,	2018	and	2017,	long-term	debt	consisted	of	the	following:

| Term	loans	(face	amounts	of	$4,463,643	and	$3,932,677	at	December	31,	2018	and	2017,	respectively,	less	unamortized	debt<br>issuance	costs	of	$37,400	and	$37,961	at	December	31,	2018	and	2017,	respectively) | $4,426,243 | $3,894,716 |
| :--- | :--- | :--- |
| Revolving\tCredit\tFacility | 704,000 | 765,000 |
| Total\tlong-term\tdebt | 5,130,243 | 4,659,716 |
| Less\tcurrent\tportion\tof\tCredit\tFacility\t(face\tamounts\tof\t$124,176\tand\t$108,979\tat\tDecember\t31,\t2018\tand\t2017,\trespectively,\nless\tunamortized\tdebt\tissuance\tcosts\tof\t$9,101\tand\t$8,671\tat\tDecember\t31,\t2018\tand\t2017,\trespectively) | 115,075 | 100,308 |
| Long-term\tdebt,\texcluding\tcurrent\tportion | $5,015,168 | $4,559,408 |

# Maturity	requirements	on	long-term	debt	as	of	December	31,	2018	by	year	are	as	follows	(in	thousands):

| Years	ending	December	31, |  |
| :--- | :--- |
| 2019 | $124,176 |
| 2020 | 159,979 |
| 2021 | 195,848 |
| 2022 | 267,587 |
| 2023 | 3,945,053 |
| 2024\tand\tthereafter | 475,000 |
| Total | $5,167,643 |

# Credit	Facility

We	are	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	"Credit	Facility").	As	of	December	31,	2018,	the	Credit	Facility	provided	for	secured	financing	comprised	of	(i)	a	$1.5	billion revolving	credit	facility	(the	"Revolving	Credit	Facility");	(ii)	a	$1.5	billion	term	loan	(the	"Term	A	Loan"),	(iii)	a	$1.37	billion	term	loan	(the	"Term	A-2	Loan"),	(iv)	a $1.14	billion term	 loan	 facility	 (the	 "Term	 B-2	 Loan")	 and	 (v)	 a	$500	million	 term	 loan	(the	"Term	B-4	Loan").	Substantially	all	of	 the	assets	of	our	domestic subsidiaries	are	pledged	as	collateral	under	the	Credit	Facility.

In	October	2018,	we	entered	into	an	additional	term	loan	under	the	Credit	Facility	in	the	amount	of	$500	million	(the	"Term	B-4	Loan").	We	used	the	proceeds from	the	Term	B-4	Loan	to	pay	down	a	portion	of	the	balance	outstanding	under	our	Revolving	Credit	Facility.

The	portion	of	deferred	debt	issuance	costs	related	to	the	Revolving	Credit	Facility	is	included	in	other	noncurrent	assets,	and	the	portion	of	deferred	debt	issuance costs	related	to	the	term	loans	is	reported	as	a	reduction	to	the	carrying	amount	of	the	term	loans.	Debt	issuance	costs	are	amortized	as	an	adjustment	to	interest	expense over	the	terms	of	the	respective	facilities.

As	of	December	31,	2018	and	2017,	respectively,	we	had	$700.5	million	and	$635.2	million	outstanding	under	these	lines	of	credit	with	additional	capacity	of $710.3	million	as	of	December	31,	2018	to	fund	settlement.	The	weighted-average	interest	rate	on	these	borrowings	was	2.97%	and	1.97%	at	December	31,	2018	and 2017,	respectively.	During	the	year	ended	December	31,	2018,	the	maximum	and	average	outstanding	balances	under	these	lines	of	credit	were	$828.2	million	and $398.3	million,	respectively.

The	Credit	Facility	Agreement	includes	covenants,	subject	in	each	case	to	exceptions	and	qualifications	that	may	restrict	certain	payments,	including,	in	certain circumstances,	the	repurchasing	of	our	common	stock	and	paying	cash	dividends	in	excess	of	our	current	rate	of	$0.01	per	share	per	quarter.	We	were	in	compliance with	all	applicable	covenants	as	of	December	31,	2018.

# Interest	Rate	Swap	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.	The	fair	values	of	the	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	our	derivative	financial	instruments	designated	as	cash	flow	hedges	included	in	the	consolidated	balance	sheets:

| Location | December	31,	2018 | December	31,	2018 | 2018<br>(in	thousands) | 2017 |
| :--- | :--- | :--- | :--- | :--- |
| Prepaid\texpenses |  | February\t28, |  |  |
| and\tother\tcurrent | 1.54% | 2019\t-\tDecember | $3,200 | $— |
| assets |  | 31,\t2019 |  |  |
| Other\tnoncurrent |  | July\t31,\t2020\t- |  |  |
| assets | 1.65% | March\t31,\t2021 | $8,256 | $9,202 |
| Accounts\tpayable |  |  |  |  |
| and\taccrued | 2.82% | December\t31, | $14,601 | $— |
| liabilities |  | 2022 |  |  |

The	table	below	presents	the	effects	of	our	interest	rate	swaps	on	the	consolidated	statements	of	income	and	comprehensive	income	for	the	periods	presented:

|  | Year	Ended<br>December	31, |  | Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
|  |  | (in\tthousands) |  |  |
| Amount\tof\tunrealized\tgains\t(losses)\trecognized\tin\tother\tcomprehensive\tincome\t(loss) | $(7,553) | $4,549 | $5,532 | $(12,859) |
| Amount\tof\tunrealized\t(gains)\tlosses\treclassified\tout\tof\tother\tcomprehensive\tincome\n(loss)\tto\tinterest\texpense | $(4,792) | $5,673 | $4,222 | $8,240 |

At	December	31,	2018,	the	amount	of	gain	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	$5.5	million.

# Interest	Expense

# NOTE	9—ACCOUNTS	PAYABLE	AND	ACCRUED	LIABILITIES

As	of	December	31,	2018	and	2017,	accounts	payable	and	accrued	liabilities	consisted	of	the	following:

|  | (in	thousands) | (in	thousands) |
| :--- | :--- | :--- |
| Customer\tdeposits | $406,117 | $397,085 |
| Contract\tliabilities(1) | 146,947 | 101,029 |
| Compensation\tand\tbenefits | 117,739 | 102,187 |
| Payment\tnetwork\tfees | 96,495 | 97,304 |
| Trade\taccounts\tpayable | 76,229 | 47,391 |
| Income\ttaxes\tpayable(2) | 51,108 | 35,405 |
| Commissions\tpayable\tto\tthird\tparties | 24,998 | 35,855 |
| Third-party\tprocessing\tfees | 24,987 | 24,267 |
| Unclaimed\tproperty | 24,369 | 26,468 |
| Current\tportion\tof\taccrued\tbuyout\tliability(3) | 14,011 | 20,739 |
| Other | 193,703 | 151,877 |
|  | $1,176,703 | $1,039,607 |

(1)	Following	the	adoption	of	ASC	606	on	January	1,	2018,	amounts	previously	reported	as	unearned	revenue	are	now	a	component	of	contract	liabilities.

(2)	The	2017	U.S.	Tax	Act	created	a	territorial	tax	system	(with	a	one-time	mandatory	"transition"	tax	on	previously	deferred	foreign	earnings),	effective	January	1,	2018.	In 2017,	upon	the	enactment	of	the	new	tax	law,	we	recognized	an	estimate	for	income	taxes	payable	of	$63.7	million	on	previously	deferred	foreign	earnings,	of	which	$55.7 million	was	included	in	other	noncurrent	liabilities	on	the	consolidated	balance	sheet	at	December	31,	2017.	As	of	December	31,	2018,	we	have	no	liability	for	the	transition tax	on	previously	deferred	foreign	earnings.

(3)	The	noncurrent	portion	of	accrued	buyout	liability	of	$59.4	million	and	$64.1	million	is	included	in	other	noncurrent	liabilities	on	the	consolidated	balance	sheets	as	of December	31,	2018	and	2017,	respectively.

# NOTE	10—INCOME	TAX

The	income	tax	provision	(benefit)	for	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016	consisted of	the	following:

|  | Year	Ended<br>December	31, |  | Seven	Months<br>Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
|  |  | (in\tthousands) | (in\tthousands) |  |
| Current\tincome\ttax\tprovision\t(benefit): |  |  |  |  |
| Federal | $(20,984) | $79,903 | $22,859 | $26,493 |
| State | 21,122 | 3,468 | 3,443 | 5,454 |
| Foreign | 79,320 | 67,851 | 42,681 | 56,689 |
|  | 79,458 | 151,222 | 68,983 | 88,636 |
| Deferred\tincome\ttax\tprovision\t(benefit): |  |  |  |  |
| Federal | (8,760) | (266,869) | (36,447) | (18,205) |
| State | (1,684) | 9,678 | (1,842) | (3,620) |
| Foreign | 8,474 | 4,582 | 4,967 | 3,884 |
|  | (1,970) | (252,609) | (33,322) | (17,941) |
|  | $77,488 | $(101,387) | $35,661 | $70,695 |

The	income	tax	provision	allocated	to	noncontrolling	interests	was	$10.6	million	and	$8.6	million	for	the	years	ended	December	31,	2018	and	2017,	$4.4	million for	the	2016	fiscal	transition	period	and	$7.3	million	for	the	year	ended	May	31,	2016.

The	following	table	presents	income	(loss)	before	income	taxes	for	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year ended	May	31,	2016:

|  | Year	Ended<br>December	31, |  | Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
|  |  | (in\tthousands) |  |  |
| United\tStates | $131,067 | $29,692 | $(55,279) | $59,876 |
| Foreign | 431,089 | 362,991 | 228,623 | 301,036 |
|  | $562,156 | $392,683 | $173,344 | $360,912 |

On	December	22,	2017,	the	United	States	enacted	the	2017	U.S.	Tax	Act,	which	resulted	in	numerous	changes,	including	a	reduction	in	the	U.S.	federal	tax	rate from	35%	to	21%	effective	January	1,	2018	and	the	transition	of	the	U.S.	federal	tax	system	to	a	territorial	regime.	As	part	of	this	transition,	the	2017	U.S.	Tax	Act imposed	a	one-time	mandatory	"transition"	tax	on	foreign	earnings	not	previously	subjected	to	U.S.	income	tax.

Following	the	guidance	in	SAB	118,	we	made	reasonable	estimates	of	the	effects	of	the	2017	U.S.	Tax	Act	on	our	existing	deferred	tax	balances	and	the	one-time transition	tax.	For	these	items,	which	are	further	described	below,	we	recognized	a	provisional	net	income	tax	benefit	of	$158.7	million,	which	was	included	as	a component	of	income	tax	benefit	in	our	consolidated	statement	of	income	for	the	year	ended	December	31,	2017.

We	remeasured	our	U.S.	deferred	tax	assets	and	liabilities	based	on	the	rates	at	which	they	are	expected	to	reverse,	which	is	now	21%	instead	of	35%	and	recorded a	provisional	income	tax	benefit	of	$222.4	million	for	the	year	ended	December	31,	2017.	The	one-time	transition	tax	established	by	the	2017	U.S.	Tax	Act	is	based	on our	total	post-1986	foreign	earnings	and	profits,	offset	by	allowable	foreign	tax	credits.	The	transition	tax	rate	applied	to	our	foreign	earnings	is	based	on	the	amount	of those	earnings	held	in	cash	and	cash	equivalents,	as	well	as	other	assets.	For	the	year	ended	December	31,	2017,	we	recorded	a	provisional	income	tax	expense	of	$63.7 million	for	the	transition	tax	on	our	previously	deferred	foreign	earnings.	During	2018,	we	continued	to	analyze	other	provisions	of	the	2017	U.S.	Tax	Act,	including	the effects	on	our	foreign	tax	pools	and	resulting	foreign	tax	credits,	and	reduced	our	estimated	transition	tax	liability	to	$40.4	million,	which	resulted	in	an	income	tax benefit	of	$23.3	million.	As	of	December	31,	2018,	we	have	completed	our	accounting	for	the	transition	effects	of	the	2017	U.S.	Tax	Act.

Approximately	$18	million	of	our	undistributed	foreign	earnings	are	considered	to	be	indefinitely	reinvested	outside	the	United	States	as	of	December	31,	2018. Because	those	earnings	are	considered	to	be	indefinitely	reinvested,	no	deferred	income	taxes	have	been	provided	thereon.	If	we	were	to	make	a	distribution	of	any portion	of	those	earnings	in	the	form	of	dividends	or	otherwise,	any	such	amounts	would	be	subject	to	withholding	taxes	payable	to	various	foreign	jurisdictions; however,	the	amounts	would	not	be	subject	to	any	additional	U.S.	income	tax.

Our	effective	tax	rates	for	periods	presented	differ	from	the	federal	statutory	rate	for	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period and	the	year	ended	May	31,	2016	as	follows:

|  | Year	Ended<br>December	31, |  | Seven	Months<br>Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
| Federal\tU.S.\tstatutory\trate | 21.0\t% | 35.0\t% | 35.0\t% | 35.0\t% |
| State\tincome\ttaxes,\tnet\tof\tfederal\tincome\ttax\tbenefit | 2.7 | 1.9 | 0.6 | 0.4 |
| Foreign\tincome\ttaxes\t(primarily\tU.K.) | (0.5) | (12.0) | (12.6) | (10.1) |
| Foreign\tinterest\tincome\tnot\tsubject\tto\ttax | (1.7) | (2.2) | (2.3) | (2.6) |
| Federal\tU.S.\ttransition\ttax | (4.1) | 16.2 | — | — |
| Federal\tU.S.\trate\treduction | — | (55.6) | — | — |
| Other\tSAB\t118\tadjustments | (0.6) | — | — | — |
| Share-based\tcompensation\texpense | (2.1) | (4.2) | — | — |
| Foreign-derived\tintangible\tincome\tdeduction | (1.6) | — | — | — |
| Taxes\ton\tunremitted\tearnings | — | — | — | (3.5) |
| Valuation\tallowance | 1.4 | (3.2) | — | — |
| Other | (0.7) | (1.7) | (0.1) | 0.4 |
| Effective\ttax\trate | 13.8\t% | (25.8)% | 20.6\t% | 19.6\t% |

Deferred	income	taxes	are	determined	based	on	the	difference	between	the	financial	statement	and	tax	bases	of	assets	and	liabilities	using	enacted	tax	laws	and rates.	Deferred	income	taxes	as	of	December	31,	2018	and	2017	reflect	the	effect	of	temporary	differences	between	the	amounts	of	assets	and	liabilities	for	financial accounting	and	income	tax	purposes.	As	of	December	31,	2018	and	2017,	principal	components	of	deferred	tax	items	were	as	follows:

| Basis	difference	-	U.K.	business | $4,890 | $8,961 |
| :--- | :--- | :--- |
| Domestic\tnet\toperating\tloss\tcarryforwards | 20,096 | 17,228 |
| Foreign\tnet\toperating\tloss\tcarryforwards | 10,833 | 3,819 |
| Share-based\tcompensation\texpense | 11,333 | 7,856 |
| Accrued\texpenses | 35,913 | 34,582 |
| Other | 16,906 | 18,502 |
|  | 99,971 | 90,948 |
| Less\tvaluation\tallowance | (23,390) | (16,550) |
|  | 76,581 | 74,398 |
| Deferred\ttax\tliabilities: |  |  |
| Acquired\tintangibles | 522,636 | 410,563 |
| Property\tand\tequipment | 102,654 | 77,481 |
| Other | 28,188 | 10,087 |
|  | 653,478 | 498,131 |
| Net\tdeferred\tincome\ttax\tliability | $(576,897) | $(423,733) |

The	net	deferred	income	taxes	reflected	on	our	consolidated	balance	sheets	as	of	December	31,	2018	and	2017	are	as	follows:

|  | (in	thousands) | (in	thousands) |
| :--- | :--- | :--- |
| Noncurrent\tdeferred\tincome\ttax\tasset | $8,128 | $13,146 |
| Noncurrent\tdeferred\tincome\ttax\tliability | (585,025) | (436,879) |
| Net\tdeferred\tincome\ttax\tliability | $(576,897) | $(423,733) |

A	valuation	allowance	is	provided	against	deferred	tax	assets	when	it	is	more	likely	than	not	that	some	portion	or	all	of	the	deferred	tax	assets	will	not	be	realized. Changes	to	our	valuation	allowance	during	the	years	ended	December	31,	2018	 and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016	are summarized	below	(in	thousands):

| summarized	below	(in	thousands): |  |
| :--- | :--- |
| Balance\tat\tMay\t31,\t2015 | $(3,823) |
| Allowance\tfor\tforeign\tincome\ttax\tcredit\tcarryforward | (7,140) |
| Allowance\tfor\tdomestic\tnet\toperating\tloss\tcarryforwards | (4,474) |
| Allowance\tfor\tdomestic\tnet\tunrealized\tcapital\tloss | (1,526) |
| Release\tof\tallowance\tof\tdomestic\tcapital\tloss\tcarryforward | 1,746 |
| Other | 98 |
| Balance\tat\tMay\t31,\t2016 | (15,119) |
| Allowance\tfor\tdomestic\tnet\toperating\tloss\tcarryforwards | (1,504) |
| Release\tof\tallowance\tof\tdomestic\tnet\tunrealized\tcapital\tloss | 12 |
| Balance\tat\tDecember\t31,\t2016 | (16,611) |
| Allowance\tfor\tforeign\tnet\toperating\tloss\tcarryforwards | (6,469) |
| Allowance\tfor\tdomestic\tnet\toperating\tloss\tcarryforwards | (3,793) |
| Allowance\tfor\tstate\tcredit\tcarryforwards | (685) |
| Rate\tchange\ton\tdomestic\tnet\toperating\tloss\tand\tcapital\tloss\tcarryforwards | 3,868 |
| Utilization\tof\tforeign\tincome\ttax\tcredit\tcarryforward | 7,140 |
| Balance\tat\tDecember\t31,\t2017 | (16,550) |
| Allowance\tfor\tforeign\tnet\toperating\tloss\tcarryforwards | (7,979) |
| Allowance\tfor\tdomestic\tnet\toperating\tloss\tcarryforwards | 1,145 |
| Allowance\tfor\tstate\tcredit\tcarryforwards | (6) |
| Balance\tat\tDecember\t31,\t2018 | $(23,390) |

The	increase	in	the	valuation	allowance	related	to	foreign	net	operating	loss	carryforwards	of	$8.0	million	for	the	year	ended	December	31,	2018.	The	increase	in the	valuation	allowance	of	$10.3	million	for	the	year	ended	December	31,	2017	relates	primarily	to	carryforward	assets	recorded	as	part	of	the	acquisition	of	ACTIVE Network.	The	increase	in	the	valuation	allowance	related	to	domestic	net	operating	loss	carryforwards	of	$1.5	million	and	$4.5	million	for	the	2016	fiscal	transition period	and	the	year	ended	May	31,	2016,	respectively,	relates	to	acquired	carryforwards	from	the	merger	with	Heartland.

Foreign	net	operating	 loss	carryforwards	of	$68.3	million	and	domestic	net	operating loss	carryforwards	of	$38.6	million at	December	31,	2018	will	expire between	December	31,	2026	and	December	31,	2038	if	not	utilized.

We	conduct	business	globally	and	file	income	tax	returns	in	the	domestic	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.	We	are	no	longer	subjected	to	state	income	tax	examinations	for	fiscal	years	ended	on	or before	May	31,	2008,	U.S.	federal	income	tax	examinations	for	fiscal	ended	on	or	before	May	31,	2013	and	U.K.	federal	income	tax	examinations	for	fiscal	years	ended on	or	before	May	31,	2014.

A	reconciliation	of	the	beginning	and	ending	amounts	of	unrecognized	income	tax	benefits,	excluding	penalties	and	interest,	for	the	years	ended	December	31, 2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016	is	as	follows:

|  | Year	Ended<br>December	31, |  | Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
|  |  | (in\tthousands) |  |  |
| Balance\tat\tthe\tbeginning\tof\tthe\tyear | $31,218 | $17,916 | $7,803 | $2,559 |
| Additions\tbased\ton\tincome\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | — | 7,537 | 4,626 | 287 |
| Additions\trelated\tto\tacquisition | — | 13,061 | 6,149 | 6,151 |
| Additions\tfor\tincome\ttax\tpositions\tof\tprior\tyears | — | 411 | 247 | 753 |
| Effect\tof\tforeign\tcurrency\tfluctuations\ton\tincome\ttax\tpositions | — | 27 | (3) | 2 |
| Reductions\tfor\tincome\ttax\tpositions\tof\tprior\tyears | (10,021) | (7,285) | (906) | (123) |
| Settlements\twith\tincome\ttax\tauthorities | — | (449) | — | (1,826) |
| Balance\tat\tthe\tend\tof\tthe\tyear | $21,197 | $31,218 | $17,916 | $7,803 |

As	of	December	31,	2018,	the	total	amount	of	gross	unrecognized	income	tax	benefits	that,	if	recognized,	would	affect	the	provision	for	income	taxes	is	$21.2 million.

# NOTE	11—SHAREHOLDERS'	EQUITY

We	make	repurchases	of	our	common	stock	mainly	through	the	use	of	open	market	purchases	and,	at	times,	through	accelerated	share	repurchase	programs ("ASRs").	As	of	December	31,	2018,	we	were	authorized	to	repurchase	up	to	$387.8	million	of	our	common	stock.	On	February	5,	2019,	the	board	of	directors	increased its	authorization	to	repurchase	shares	of	our	common	stock	to	$750	million,	inclusive	of	prior	share	repurchase	programs	authorized	by	the	board	and	repurchases	made thereunder.

Information	about	shares	repurchased	and	retired	was	as	follows	for	the	periods	indicated:

|  | Year	Ended<br>December	31, | Year	Ended<br>December	31, | Seven	Months<br>Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
|  |  | (in\tthousands,\texcept\tper\tshare\tamounts) | (in\tthousands,\texcept\tper\tshare\tamounts) |  |
| Number\tof\tshares\trepurchased\tand\tretired | 1,927 | 376 | 2,518 | 2,152 |
| Cost\tof\tshares\trepurchased,\tincluding\tcommissions | $212,196 | $34,811 | $178,165 | $135,954 |
| Average\tcost\tper\tshare | $110.11 | $92.51 | $70.77 | $63.17 |

On	April	25,	2016,	we	entered	into	an	ASR	with	a	financial	institution	to	repurchase	an	aggregate	of	$50	million	of	our	common	stock.	In	exchange	for	an	up- front	payment	of	$50	million,	the	financial	institution	committed	to	deliver	a	number	of	shares	during	the	ASR's	purchase	period,	which	ended	on	June	23,	2016.	On April	26,	2016,	545,777	shares	were	initially	delivered	to	us.	At	May	31,	2016,	we	accounted	for	the	variable	component	of	remaining	shares	to	be	delivered	under	the ASR	as	a	forward	contract	indexed	to	our	common	stock	which	met	all	of	the	applicable	criteria	for	equity	classification.	On	June	23,	2016,	an	additional	127,435	shares were	delivered	to	us.	The	total	number	of	shares	delivered	under	this	ASR	was	673,212	shares	at	an	average	price	of	$74.27	per	share.	In	addition	to	shares	repurchased under	the	ASR	during	the	year	ended	May	31,	2016,	we	repurchased	and	retired	1.5	million	shares	of	our	common	stock	at	a	cost	of	$85.9	million,	or	an	average	cost	of $58.12	per	share,	including	commissions,	through	open	market	repurchase	plans.

# NOTE	12—SHARE-BASED	AWARDS	AND	OPTIONS

We	have	granted	nonqualified	stock	options	and	restricted	stock	awards	to	key	employees,	officers	and	directors	under	a	long-term	incentive	plan,	which	permits grants	of	equity	to	employees,	officers,	directors	and	consultants.	A	total	of	14.0	million	shares	of	our	common	stock	was	reserved	and	made	available	for	issuance pursuant	to	awards	granted	under	the	plan.	The	awards	are	held	in	escrow	and	released	upon	the	grantee's	satisfaction	of	conditions	of	the	award	certificate.

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

|  | Year	Ended<br>December	31,<br>2018 | 2017 | Ended<br>December	31,<br>2016 | Year	Ended<br>May	31,<br>2016 |
| :--- | :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) | (in\tthousands) |  |
| Share-based\tcompensation\texpense | $57,826 | $39,095 | $18,707 | $30,809 |
| Income\ttax\tbenefit | $13,038 | $13,849 | $6,582 | $9,879 |

# Restricted	Stock

Restricted	stock	awards	vest	in	equal	annual	installments	over	a	three-year	period	and	in	some	cases	vest	at	the	end	of	a	three-year	service	period.	Restricted	shares cannot	be	sold	or	transferred	until	they	have	vested.	The	grant	date	fair	value	of	restricted	stock	awards,	which	is	based	on	the	quoted	market	value	of	our	common	stock on	the	grant	date,	is	recognized	as	share-based	compensation	expense	on	a	straight-line	basis	over	the	vesting	period.

# Performance	Units

Certain	of	our	executives	have	been	granted	performance	units	under	our	long-term	incentive	plan.	Performance	units	are	performance-based	restricted	stock units	that,	after	a	performance	period,	may	convert	into	common	shares,	which	may	be	restricted.	The	number	of	shares	is	dependent	upon	the	achievement	of	certain performance	measures	during	the	performance	period.	The	target	number	of	performance	units	and	any	market-based	performance	measures	("at	threshold,"	"target," and	"maximum")	are	set	by	the	compensation	committee	of	our	board	of	directors	("Compensation	Committee").	Performance	units	are	converted	only	after	the compensation	committee	certifies	performance	based	on	pre-established	goals.

The	Compensation	Committee	may	set	a	range	of	possible	performance-based	outcomes	for	performance	units.	For	awards	with	only	performance	conditions,	we recognize	compensation	expense	on	a	straight-line	basis	over	the	performance	period	using	the	grant	date	fair	value	of	the	award,	which	is	based	on	the	number	of	shares expected	to	be	earned	according	to	the	level	of	achievement	of	performance	goals.	If	the	number	of	shares	expected	to	be	earned	were	to	change	at	any	time	during	the performance	period,	we	would	make	a	cumulative	adjustment	to	share-based	compensation	expense	based	on	the	revised	number	of	shares	expected	to	be	earned.	The performance	periods	for	awards	granted	generally	range	from	28	months	to	three	years.

During	the	year	ended	December	31,	2018,	certain	of	our	executives	were	granted	performance	units	that	may	be	earned	based	on	achievement	of	an	annual adjusted	EPS	growth	target,	as	modified	up	or	down	by	our	total	shareholder	return	performance	rank	relative	to	the	Standard	&	Poors	500	Index	over	a	three-year performance	 period.	 The	 maximum	 payout	 is	four	 times	 the	 target	 number	 of	 performance	 units	 and	 the	 minimum	 payout	 is	zero.	To	 the	 extent	 earned,	 these performance	units	convert	into	unrestricted	shares	after	performance	results	for	the	three-year	performance	period	are	certified	by	the	Compensation	Committee.	We recognize	share-based	compensation	expense	based	on	the	grant-date	fair	value	of	the	performance-based	restricted	stock	units,	as	determined	by	use	of	a	Monte	Carlo model,	on	a	straight-line	basis	over	the	performance	period.

# Leveraged	Performance	Units

During	the	year	ended	May	31,	2015,	certain	executives	were	granted	performance	units	that	we	refer	to	as	"leveraged	performance	units,"	or	"LPUs."	LPUs contain	a	market	condition	based	on	our	relative	stock	price	growth	over	a	three-year	performance	period.	The	LPUs	contain	a	minimum	threshold	performance	which,	if not	met,	would	result	in	no	payout.	The	LPUs

also	contain	a	maximum	award	opportunity	set	as	a	fixed	dollar	and	fixed	number	of	shares.	After	the	three-year	performance	period,	which	concluded	in	October	2017, one-third	of	the	earned	units	converted	to	unrestricted	common	stock.	The	remaining	two-thirds	converted	to	restricted	stock	that	will	vest	in	equal	installments	on	each of	the	first	two	anniversaries	of	the	conversion	date.	We	recognize	share-based	compensation	expense	based	on	the	grant	date	fair	value	of	the	LPUs,	as	determined	by use	of	a	Monte	Carlo	model,	on	a	straight-line	basis	over	the	requisite	service	period	for	each	separately	vesting	portion	of	the	LPU	award.

The	following	table	summarizes	the	changes	in	unvested	restricted	stock	and	performance	awards	for	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal transition	period	and	the	year	ended	May	31,	2016:

| Unvested	at	May	31,	2015 | 1,848 | $28.97 |
| :--- | :--- | :--- |
| Granted | 461 | 57.04 |
| Vested | (633) | 27.55 |
| Forfeited | (70) | 34.69 |
| Unvested\tat\tMay\t31,\t2016 | 1,606 | 37.25 |
| Granted | 348 | 74.26 |
| Vested | (639) | 31.38 |
| Forfeited | (52) | 45.27 |
| Unvested\tat\tDecember\t31,\t2016 | 1,263 | 49.55 |
| Granted | 899 | 79.79 |
| Vested | (858) | 39.26 |
| Forfeited | (78) | 59.56 |
| Unvested\tat\tDecember\t31,\t2017 | 1,226 | 78.29 |
| Granted | 650 | 109.85 |
| Vested | (722) | 60.08 |
| Forfeited | (70) | 91.47 |
| Unvested\tat\tDecember\t31,\t2018 | 1,084 | $108.51 |

The	total	fair	value	of	restricted	stock	and	performance	awards	vested	was	$43.4	million	 and	$33.7	million	for	the	years	ended	December	31,	2018 and	2017, respectively,	$20.0	million	for	the	2016	fiscal	transition	period	and	$17.4	million	for	the	year	ended	May	31,	2016.

For	restricted	stock	and	performance	awards,	we	recognized	compensation	expense	of	$53.2	million	and	$35.2	million	for	the	years	ended	December	31,	2018	and 2017,	respectively,	$17.2	million	for	the	2016	fiscal	transition	period	and	$28.8	million	for	the	year	ended	May	31,	2016.	As	of	December	31,	2018,	 there	was	$62.7 million	of	unrecognized	compensation	expense	related	to	unvested	restricted	stock	and	performance	awards	that	we	expect	to	recognize	over	a	weighted-average	period of	2.0	years.	Our	restricted	stock	and	performance	award	plans	provide	for	accelerated	vesting	under	certain	conditions.

# Stock	Options

Stock	options	are	granted	with	an	exercise	price	equal	to	100%	of	fair	market	value	of	our	common	stock	on	the	date	of	grant	and	have	a	term	of	ten	years.	Stock options	vest	 in	equal	 installments	on	each	of	 the	first	three	anniversaries	of	 the	grant	date.	Our	stock	option	plans	provide	for	accelerated	vesting	under	certain conditions.

The	following	table	summarizes	changes	in	stock	option	activity	for	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year ended	May	31,	2016:

|  | Options | Weighted-Average<br>Exercise	Price | Weighted-<br>Average<br>Remaining<br>Contractual<br>Term | Aggregate	Intrinsic<br>Value |
| :--- | :--- | :--- | :--- | :--- |
|  | (in\tthousands) |  | (years) | (in\tmillions) |
| Outstanding\tat\tMay\t31,\t2015 | 894 | $25.47 | 5.2 | $23.9 |
| Granted | 145 | 55.92 |  |  |
| Forfeited | (8) | 16.10 |  |  |
| Exercised | (220) | 22.46 |  | 9.4 |
| Outstanding\tat\tMay\t31,\t2016 | 811 | 31.81 | 5.8 | 36.8 |
| Granted | 73 | 74.66 |  |  |
| Forfeited | (1) | 22.93 |  |  |
| Exercised | (124) | 22.26 |  | 6.5 |
| Outstanding\tat\tDecember\t31,\t2016 | 759 | 37.51 | 6.0 | 24.5 |
| Granted | 124 | 79.45 |  |  |
| Forfeited | — | — |  |  |
| Exercised | (160) | 23.50 |  | 10.1 |
| Outstanding\tat\tDecember\t31,\t2017 | 723 | 47.79 | 6.4 | 37.9 |
| Granted | 103 | 114.70 |  |  |
| Forfeited | (22) | 100.38 |  |  |
| Exercised | (206) | 42.65 |  | 16.5 |
| Outstanding\tat\tDecember\t31,\t2018 | 598 | $59.16 | 6.2 | $27.3 |
| Options\tvested\tand\texercisable\tat\tDecember\t31,\t2018 | 427 | $44.34 | 5.2 | $25.1 |

We	recognized	compensation	expense	for	stock	options	of	$2.7	million	and	$2.6	million	during	the	years	ended	December	31,	2018	and	2017,	respectively,	$1.1 million	 during	 the	 2016	 fiscal	 transition	 period	 and	$1.4	million	 during	 the	 fiscal	 year	 ended	May	31,	2016.	 As	 of	December	31,	2018,	 we	 had	$3.3	 million	 of unrecognized	compensation	expense	related	to	unvested	stock	options	that	we	expect	to	recognize	over	a	weighted-average	period	of	1.8	years.

The	weighted-average	grant-date	fair	value	of	stock	options	granted	during	the	years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and during	 the	year	ended	May	31,	2016	 was	$35.09,	$23.68,	$21.87	 and	$15.60,	respectively.	Fair	value	was	estimated	on	the	date	of	grant	using	the	Black-Scholes valuation	model	with	the	following	weighted-average	assumptions:

|  | Year	Ended<br>December	31, |  | Seven	Months<br>Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
| Risk-free\tinterest\trate | 2.60% | 1.99% | 1.05% | 1.62% |
| Expected\tvolatility | 29% | 30% | 32% | 29% |
| Dividend\tyield | 0.04% | 0.06% | 0.06% | 0.10% |
| Expected\tterm\t(years) | 5 | 5 | 5 | 5 |

The	risk-free	interest	rate	is	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	is	based	on	our	historical	volatility.	The	dividend	yield	assumption	is	calculated	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	13—SUPPLEMENTAL	CASH	FLOW	INFORMATION

Supplemental	cash	flow	disclosures	for	the	periods	presented	are	as	follows:

|  | Year	Ended<br>December	31, |  | Seven	Months<br>Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
|  |  | (in\tthousands) | (in\tthousands) |  |
| Income\ttaxes\tpaid\t(refunded),\tnet | $101,302 | $97,002 | $(3,680) | $89,684 |
| Interest\tpaid | $177,525 | $154,200 | $93,624 | $58,730 |

# NOTE	14—NONCONTROLLING	INTERESTS

The	following	table	is	the	reconciliation	of	net	income	attributable	to	noncontrolling	interests	to	comprehensive	income	attributable	to	noncontrolling	interests	for the	periods	presented:

|  | Year	Ended<br>December	31, |  | Ended<br>December	31, | Year	Ended<br>May	31, |
| :--- | :--- | :--- | :--- | :--- |
|  | 2018 | 2017 | 2016 | 2016 |
|  |  | (in\tthousands) |  |  |
| Net\tincome\tattributable\tto\tnoncontrolling\tinterests | $32,614 | $25,645 | $12,752 | $18,551 |
| Foreign\tcurrency\ttranslation\tattributable\tto\tnoncontrolling\tinterests | (2,696) | 13,807 | (8,417) | 471 |
| Comprehensive\tincome\tattributable\tto\tnoncontrolling\tinterests | $29,918 | $39,452 | $4,335 | $19,022 |

# NOTE	15—ACCUMULATED	OTHER	COMPREHENSIVE	LOSS

The	changes	in	the	accumulated	balances	for	each	component	of	other	comprehensive	income	(loss),	net	of	tax,	were	as	follows	for	the	periods	presented:

|  | Foreign	Currency<br>Translation | (Losses)	on	Hedging<br>Activities | Other | Accumulated	Other<br>Comprehensive	Loss |
| :--- | :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |  |
| Balance\tat\tMay\t31,\t2015 | $(178,309) | $(3,874) | $(3,809) | $(185,992) |
| Other\tcomprehensive\tloss | (56,329) | (2,881) | (848) | (60,058) |
| Balance\tat\tMay\t31,\t2016 | (234,638) | (6,755) | (4,657) | (246,050) |
| Other\tcomprehensive\tincome\t(loss) | (83,812) | 6,115 | 1,030 | (76,667) |
| Balance\tat\tDecember\t31,\t2016 | (318,450) | (640) | (3,627) | (322,717) |
| Other\tcomprehensive\tincome\t(loss) | 132,594 | 7,639 | (660) | 139,573 |
| Balance\tat\tDecember\t31,\t2017 | (185,856) | 6,999 | (4,287) | (183,144) |
| Cumulative\teffect\tof\tadoption\tof\tnew\taccounting\tstandards | (1,843) | — | — | (1,843) |
| Other\tcomprehensive\tincome\t(loss) | (116,575) | (9,373) | 760 | (125,188) |
| Balance\tat\tDecember\t31,\t2018 | $(304,274) | $(2,374) | $(3,527) | $(310,175) |

# NOTE	16—SEGMENT	INFORMATION

# Information	About	Profit	and	Assets

We	operate	in	three	reportable	segments:	North	America,	Europe	and	Asia-Pacific.	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	certain	compensation	costs	are	included	in	Corporate	in	the	following	table.	Interest	and	other	income,	interest	and	other expense	and	provision	for	income	taxes	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	the	Summary	of	Significant	Accounting Policies	in	"Note	1	-	Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies."

Information	on	segments	and	reconciliations	to	consolidated	revenues	and	consolidated	operating	income	are	as	follows	for	the	periods	presented:

| North	America | $2,522,284 | $2,929,522 | $1,650,616 | $2,052,623 |
| :--- | :--- | :--- | :--- | :--- |
| Europe | 610,930 | 767,524 | 403,823 | 631,900 |
| Asia-Pacific | 233,152 | 278,117 | 148,457 | 213,627 |
| Consolidated\trevenues | $3,366,366 | $3,975,163 | $2,202,896 | $2,898,150 |
| Operating\tincome\t(loss)\t(2): |  |  |  |  |
| North\tAmerica | $570,630 | $457,009 | $233,850 | $307,626 |
| Europe | 318,392 | 272,769 | 145,767 | 244,837 |
| Asia-Pacific | 93,402 | 81,273 | 37,530 | 50,743 |
| Corporate(2) | (245,369) | (252,183) | (179,196) | (178,262) |
| Consolidated\toperating\tincome | $737,055 | $558,868 | $237,951 | $424,944 |
| Depreciation\tand\tamortization\t(2): |  |  |  |  |
| North\tAmerica | $444,182 | $379,953 | $208,198 | $128,618 |
| Europe | 46,007 | 46,928 | 26,178 | 40,194 |
| Asia-Pacific | 24,935 | 16,466 | 10,385 | 13,935 |
| Corporate | 7,689 | 7,804 | 2,810 | 5,134 |
| Consolidated\tdepreciation\tand\tamortization | $522,813 | $451,151 | $247,571 | $187,881 |

(1)	As	more	fully	described	in	"Note	1—Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies"	and	"Note	3—Revenues"	we	adopted	a	new revenue	accounting	standard	on	January	1,	2018	that	results	in	revenue	being	presented	net	of	certain	fees	that	we	pay	to	third	parties,	including	payment networks.	This	change	in	presentation	affected	our	reported	revenues	and	operating	expenses	during	the	year	ended	December	31,	2018	by	the	same	amount and	had	no	effect	on	operating	income.

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

(3)	During	the	years	ended	December	31,	2018	and	2017,	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016,	operating	loss	for	Corporate	included acquisition	and	integration	expenses	of	$56.1	million,	$94.6	million,	$91.6	million,	and	$51.3	million,	respectively.

# Enterprise-Wide	Information

As	 a	 percentage	 of	 our	 total	 consolidated	 revenues,	 revenues	 from	 external	 customers	 in	 the	 United	 States	 and	 the	 United	 Kingdom	 were	67%	 and	9%, respectively,	for	the	year	ended	December	31,	2018,	66%	and	11%,	respectively,	for	the	year	ended	December	31,	2017	and	67%	and	10%,	respectively,	for	the	2016 transition	period.	Revenues	from	external	customers	in	the	United	States,	the	United	Kingdom,	and	Canada	were	61%,	10%	and	10%,	respectively,	for	the	year	ended May	31,	2016.	Revenues	from	external	customers	are	attributed	to	individual	countries	based	on	the	location	of	the	customer	arrangements.	Our	results	of	operations	and our	financial	condition	are	not	significantly	reliant	upon	any	single	customer.

Long-lived	assets,	excluding	goodwill	and	other	intangible	assets,	by	location	as	of	December	31,	2018	and	2017	were	as	follows:

|  | (in	thousands) | (in	thousands) |
| :--- | :--- | :--- |
| United\tStates | $516,449 | $451,436 |
| Foreign\tcountries | 137,093 | 136,912 |
|  | $653,542 | $588,348 |

# NOTE	17—COMMITMENTS	AND	CONTINGENCIES

# Leases	and	Purchase	Obligations

We	conduct	a	major	part	of	our	operations	using	leased	facilities	and	equipment.	Many	of	our	operating	leases	include	escalating	rental	payments,	renewal	options and	purchase	options.	Certain	of	the	agreements	provide	that	we	pay	the	cost	of	property	taxes,	insurance	and	maintenance.	Rent	expense	on	all	operating	leases	for	the years	ended	December	31,	2018	and	2017,	the	2016	fiscal	transition	period	and	the	year	ended	May	31,	2016	was	$47.1	million,	$44.7	million,	$19.2	million	and	$19.7 million,	respectively.	We	also	have	contractual	obligations	related	to	service	arrangements	with	suppliers	for	fixed	or	minimum	amounts.

In	May	2017,	we	sold	our	operating	facility	in	Jeffersonville,	Indiana	for	$37.5	million	and	simultaneously	leased	the	property	back	for	an	initial	term	of	20	years, followed	by	four	optional	renewal	terms	of	5	years.	The	arrangement	met	the	criteria	to	be	treated	as	a	sale	for	accounting	purposes,	and	as	a	result,	we	derecognized	the associated	property.	There	was	no	resulting	gain	or	loss	on	the	sale	because	the	proceeds	received	were	equal	to	the	carrying	amount	of	the	property.	We	are	accounting for	the	lease	as	an	operating	lease.

Future	minimum	payments	at	December	31,	2018	for	noncancelable	operating	leases	and	purchase	obligations	were	as	follows:

| 2019 | $50,095 | $88,022 |
| :--- | :--- | :--- |
| 2020 | 47,700 | 69,878 |
| 2021 | 40,035 | 62,234 |
| 2022 | 37,055 | 25,420 |
| 2023 | 33,298 | 22,909 |
| Thereafter | 225,225 | 33,538 |
| \t\t\tTotal\tfuture\tminimum\tpayments(1) | $433,408 | $302,001 |

(1)	Future	minimum	lease	payments	include	approximately	$70	million	for	operating	lease	agreements	not	commenced	at	December	31,	2018.

# Legal

# Operating	Taxes

We	are	subject	to	certain	taxes	that	are	not	derived	based	on	earnings	(e.g.,	sales,	gross	receipts,	property,	value-added	and	other	business	taxes).	During	the course	of	operations,	we	must	interpret	the	meaning	of	various	operating	tax	regulations	in	the	United	States	and	in	the	foreign	jurisdictions	in	which	we	do	business. Taxing	authorities	in	those	various	jurisdictions	may	arrive	at	different	interpretations	of	applicable	tax	laws	and	regulations	which	could	result	in	the	payment	of additional	taxes	in	those	jurisdictions.

We	have	entered	into	sponsorship	or	depository	and	processing	agreements	with	certain	banks.	These	agreements	allow	us	to	use	the	banks'	identification	numbers, referred	to	as	Bank	Identification	Number	("BIN")	for	Visa	transactions	and	an	Interbank	Card	Association	("ICA")	number	for	Mastercard	transactions,	to	clear	credit card	transactions	through	Visa	and	Mastercard.	Certain	of	these	agreements	contain	financial	covenants,	and	we	were	in	compliance	with	all	such	covenants	as	of December	31,	2018.

# NOTE	18—COMPARATIVE	DATA	FOR	THE	YEAR	ENDED	DECEMBER	31,	2016	AND	THE	SEVEN	MONTHS	ENDED	DECEMBER	31,	2015 (UNAUDITED)

The	condensed	consolidated	statement	of	income	for	the	year	ended	December	31,	2016	and	the	seven	months	ended	December	31,	2015	is	as	follows	(in thousands,	except	per	share	data):

|  | Year	Ended<br>December	31,<br>2016 | Seven	Months<br>Ended<br>December	31,<br>2015 |
| :--- | :--- | :--- |
| Revenues | $3,370,976 | $1,730,070 |
| Operating\texpenses: |  |  |
| Cost\tof\tservice | 1,603,532 | 638,700 |
| Selling,\tgeneral\tand\tadministrative | 1,411,096 | 784,823 |
|  | 3,014,628 | 1,423,523 |
| Operating\tincome | 356,348 | 306,547 |
| Interest\tand\tother\tincome | 46,780 | 2,886 |
| Interest\tand\tother\texpense | (146,156) | (32,149) |
|  | (99,376) | (29,263) |
| Income\tbefore\tincome\ttaxes | 256,972 | 277,284 |
| Provision\tfor\tincome\ttaxes | (36,267) | (70,089) |
| Net\tincome | 220,705 | 207,195 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterests | (18,952) | (12,351) |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $201,753 | $194,844 |
| Earnings\tper\tshare\tattributable\tto\tGlobal\tPayments: |  |  |
| Basic\tearnings\tper\tshare | $1.38 | $1.50 |
| Diluted\tearnings\tper\tshare | $1.37 | $1.49 |

# NOTE	19—QUARTERLY	CONSOLIDATED	FINANCIAL	INFORMATION	(UNAUDITED)

Summarized	quarterly	results	for	the	years	ended	December	31,	2018	and	2017	are	as	follows	(in	thousands,	except	per	share	data):

|  | March	31,	2018 | June	30,	2018 | September	30,	2018 | December	31,	2018 |
| :--- | :--- | :--- | :--- | :--- |
| Year\tEnded\tDecember\t31,\t2018 |  |  |  |  |
| Revenues | $794,977 | $833,164 | $857,670 | $880,555 |
| Operating\tincome | 156,170 | 190,737 | 223,162 | 166,986 |
| Net\tincome | 97,586 | 117,729 | 186,029 | 83,323 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | 91,399 | 109,069 | 176,370 | 75,215 |
| Basic\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.57 | 0.69 | 1.12 | 0.48 |
| Diluted\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.57 | 0.68 | 1.11 | 0.47 |

|  | March	31,	2017 | June	30,	2017 | September	30,	2017 | December	31,	2017 |
| :--- | :--- | :--- | :--- | :--- |
| Year\tEnded\tDecember\t31,\t2017 |  |  |  |  |
| Revenues | $919,762 | $962,240 | $1,038,907 | $1,054,253 |
| Operating\tincome | 104,970 | 131,852 | 172,471 | 149,575 |
| Net\tincome | 52,959 | 72,443 | 118,362 | 250,305 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | 48,813 | 66,909 | 110,740 | 241,962 |
| Basic\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.32 | 0.44 | 0.72 | 1.52 |
| Diluted\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.32 | 0.44 | 0.71 | 1.51 |

As	more	fully	described	in	"Note	1—Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies"	and	"Note	3—Revenues"	we	adopted	a	new	revenue accounting	standard	on	January	1,	2018	that	results	in	revenue	being	presented	net	of	certain	fees	that	we	pay	to	third	parties,	including	payment	networks.	This	change in	presentation	affected	our	reported	revenues	and	operating	expenses	during	each	of	the	quarterly	periods	in	the	year	ended	December	31,	2018	by	the	same	amount	and had	no	effect	on	operating	income.

The	quarterly	financial	data	in	the	table	above	reflect	the	effects	of	acquisitions	and	borrowings	to	fund	certain	of	those	acquisitions.	Notably,	we	acquired ACTIVE	Network	during	the	quarter	ended	September	30,	2017,	AdvancedMD	during	the	quarter	ended	September	30,	2018	and	SICOM	during	the	quarter	ended December	31,	2018.	Additionally,	our	consolidated	results	reflected	incremental	expenses	associated	with	the	acquisition	and	integration	of	acquired	businesses.	See "Note	2—Acquisitions"	for	further	discussion	of	our	acquisitions.

Results	for	the	quarter	ended	December	31,	2017	reflect	the	effects	of	a	net	income	tax	benefit	of	$158.7	million	in	connection	with	the	2017	U.S.	Tax	Act,	which was	enacted	on	December	22,	2017.	Results	for	the	quarter	ended	September	30,	2018	reflect	the	effects	of	a	net	income	tax	benefit	of	$23.3	million	in	connection	with adjustments	made	to	accounting	estimates	associated	with	the	2017	U.S.	Tax	Act.	See	"Note	10—Income	Tax"	for	further	discussion	of	the	recently	enacted	U.S.	tax legislation.

# SCHEDULE	II

# Valuation	&	Qualifying	Accounts

| (a)<br>Description | (b)<br>Balance	at	Beginning<br>of	Period | (c)<br>Additions:<br>Charged	to	Costs<br>and	Expenses | (d)<br>Deductions:<br>Uncollectible	Accounts	Write-<br>Offs	(Recoveries) | (e)<br>Balance	at	End	of<br>Period |
| :--- | :--- | :--- | :--- | :--- |
| Allowance\tfor\tdoubtful\taccounts |  |  |  |  |
| May\t31,\t2016 | $468 | $515 | $630 | $353 |
| December\t31,\t2016(1) | 353 | 4,283 | 3,544 | 1,092 |
| December\t31,\t2017 | 1,092 | 6,113 | 5,378 | 1,827 |
| December\t31,\t2018 | $1,827 | $10,430 | $9,093 | $3,164 |
| Reserve\tfor\toperating\tlosses-merchant\tcard\tprocessing\t(2) |  |  |  |  |
| May\t31,\t2016 | $1,286 | $3,729 | $2,555 | $2,460 |
| December\t31,\t2016(1) | 2,460 | 4,629 | 4,810 | 2,279 |
| December\t31,\t2017 | 2,279 | 14,893 | 13,712 | 3,460 |
| December\t31,\t2018 | $3,460 | $16,068 | $16,740 | $2,788 |
| Reserve\tfor\tsales\tallowances-merchant\tcard\tprocessing\t(2) |  |  |  |  |
| May\t31,\t2016 | $4,929 | $3,571 | $7,450 | $1,050 |
| December\t31,\t2016(1) | 1,050 | 2,637 | 3,027 | 660 |
| December\t31,\t2017 | 660 | 3,874 | 3,954 | 580 |
| December\t31,\t2018 | $580 | $6,244 | $5,400 | $1,424 |
| Reserve\tfor\toperating\tlosses-check\tguarantee\tprocessing |  |  |  |  |
| May\t31,\t2016 | $2,684 | $22,827 | $20,643 | $4,868 |
| December\t31,\t2016(1) | 4,868 | 15,204 | 14,286 | 5,786 |
| December\t31,\t2017 | 5,786 | 28,064 | 28,112 | 5,738 |
| December\t31,\t2018 | $5,738 | $19,314 | $19,987 | $5,065 |
| Deferred\tincome\ttax\tasset\tvaluation\tallowance |  |  |  |  |
| May\t31,\t2016 | $3,823 | $11,296 | $— | $15,119 |
| December\t31,\t2016(1) | 15,119 | 1,492 | — | 16,611 |
| December\t31,\t2017 | 16,611 | 7,079 | 7,140 | 16,550 |
| December\t31,\t2018 |  |  |  |  |
|  | $16,550 | $6,840 | $— | $23,390 |

(1)	Additions	and	deductions	in	columns	(c)	and	(d),	respectively,	are	for	the	seven	months	ended	December	31,	2016.

(2)	Included	in	settlement	processing	obligations.

# ITEM	9	-	CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL	DISCLOSURE

None.

# ITEM	9A	-	CONTROLS	AND	PROCEDURES

# Evaluation	of	Disclosure	Controls	and	Procedures

As	 of	December	31,	2018,	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).	Based	on	this	evaluation,	our	principal	executive	officer	and	principal	financial	officer	concluded	that,	as	of	December	31,	2018,	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.

# Management's	Report	on	Internal	Control	over	Financial	Reporting

Our	management	team	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	as	defined	in	Rules	13a-15(f)	and	15d- 15(f)	under	the	Securities	Exchange	Act	of	1934.	Our	management	assessed	the	effectiveness	of	our	internal	control	over	financial	reporting	as	of	December	31,	2018.	In making	this	assessment,	our	management	used	the	criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	("COSO")	in	the Internal	Control	—	Integrated	Framework	(2013).

We	completed	acquisitions	of	AdvancedMD	and	SICOM	in	the	third	and	fourth	quarters	of	2018,	respectively.	As	permitted	by	the	SEC	rules	and	regulations, management's	assessment	did	not	include	the	internal	control	of	the	acquired	operations	of	these	acquired	businesses	which	are	included	in	our	consolidated	financial statements	as	of	December	31,	2018	and	for	the	periods	from	the	acquisition	dates	through	December	31,	2018.	In	accordance	with	our	integration	efforts,	we	plan	to incorporate	the	operations	of	the	acquired	businesses	into	our	internal	control	over	financial	reporting	program	within	the	time	period	provided	by	applicable	SEC	rules and	regulations.	The	assets,	excluding	goodwill,	of	these	acquired	businesses	constituted	approximately	5%	of	our	total	consolidated	assets	as	of	December	31,	2018. These	acquired	businesses	comprised	less	than	2%	of	our	total	consolidated	revenues	and	did	not	contribute	to	our	consolidated	operating	income	for	the	year	ended December	31,	2018.

Based	on	the	results	of	its	evaluation,	which	excluded	assessments	of	the	internal	control	of	the	acquired	operations	of	AdvancedMD	and	SICOM,	management believes	that	as	of	December	31,	2018,	our	internal	control	over	financial	reporting	is	effective	based	on	those	criteria.

Because	of	 its	 inherent	 limitations,	 internal	control	over	financial	reporting	may	not	prevent	or	detect	all	misstatements.	 	Projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.		Internal	control	over	financial	reporting	cannot	provide	absolute	assurance	of	achieving	financial	reporting	objectives	because	of its	inherent	limitations.		Internal	control	over	financial	reporting	is	a	process	that	involves	human	diligence	and	compliance	and	is	subject	to	lapses	in	judgment	and breakdowns	resulting	from	human	failures.		Internal	control	over	financial	reporting	also	can	be	circumvented	by	collusion	or	improper	management	override.	Due	to such	limitations,	there	is	a	risk	that	material	misstatements	may	not	be	prevented	or	detected	on	a	timely	basis	by	internal	control	over	financial	reporting.		However, these	inherent	limitations	are	known	features	of	the	financial	reporting	process.		Therefore,	it	is	possible	to	design	into	the	process	safeguards	to	reduce,	though	not eliminate,	such	risk.

# Attestation	Report	of	Public	Accounting	Firm

Deloitte	&	Touche	LLP	has	issued	an	attestation	report	on	our	internal	control	over	financial	reporting,	which	is	included	herein	as	the	Report	of	Independent Registered	Public	Accounting	Firm	under	Item	8	-	Financial	Statements	and	Supplementary	Data	for	the	year	ended	December	31,	2018.

# Changes	in	Internal	Control	over	Financial	Reporting

On	September	1,	2017,	we	completed	our	acquisition	of	ACTIVE	Network,	which	we	have	since	been	integrating	into	our	North	America	segment.	As	part	of	our integration	activities,	we	have	completed	the	incorporation	of	ACTIVE	Network's	operations	into	our	internal	control	over	financial	reporting	program.

In	the	fourth	quarter	of	2018,	we	completed	our	acquisition	of	SICOM,	which	is	being	integrated	into	our	North	America	segment.	In	accordance	with	our integration	efforts,	we	plan	to	incorporate	the	operations	of	SICOM	into	our	internal	control	over	financial	reporting	program	within	the	time	period	provided	by	the applicable	SEC	rules	and	regulations.

In	the	fourth	quarter	of	2018,	we	also	added	internal	controls	over	disclosure	related	to	the	expected	accounting	and	reporting	effects	of	the	new	lease	accounting standard,	which	is	effective	for	us	on	January	1,	2019.	We	also	implemented	a	new	technology	solution	to	assist	with	the	necessary	calculations	to	support	the	accounting and	disclosure	requirements	of	the	new	lease	accounting	standard.

# PART	III

# ITEM	10	-	DIRECTORS,	EXECUTIVE	OFFICERS	AND	CORPORATE	GOVERNANCE

We	 incorporate	by	reference	 in	 this	Item	10	information	about	our	directors,	executive	officers	and	our	corporate	governance	contained	under	the	headings "Proposal	1:	Election	of	Directors"	and	"Biographical	Information	About	Our	Executive	Officers"	and	information	about	compliance	with	Section	16(a)	of	the	Securities and	 Exchange	 Act	 of	 1934	 by	 our	 directors	 and	 executive	 officers	 under	 the	 heading	 "Additional	 Information-Section	 16(a)	 Beneficial	 Ownership	 Reporting Compliance"	from	our	proxy	statement	to	be	delivered	in	connection	with	our	2019	Annual	Meeting	of	Shareholders	to	be	held	on	April	25,	2019	("2019	Proxy Statement").

We	have	adopted	codes	of	ethics	that	apply	to	our	senior	financial	officers.	The	senior	financial	officers	include	our	Chief	Executive	Officer,	Chief	Financial Officer,	Chief	Accounting	Officer,	Controller	or	persons	performing	similar	functions.	 The	code	of	ethics	is	available	in	the	investor	relations	section	of	our	website	at www.globalpaymentsinc.com	and	as	indicated	in	the	section	entitled	"Where	To	Find	Additional	Information"	in	Part	I	to	this	Annual	Report.	We	intend	to	satisfy	the disclosure	requirement	under	Item	5.05	of	Form	8-K	regarding	an	amendment	to,	or	a	waiver	from,	a	provision	of	our	code	of	ethics	by	posting	such	information	on	our website	at	the	address	and	location	set	forth	above.

# ITEM	11	-	EXECUTIVE	COMPENSATION

We	incorporate	by	reference	in	this	Item	11	the	information	relating	to	executive	and	director	compensation	and	the	report	of	the	Compensation	Committee contained	under	the	headings	"Compensation	Discussion	and	Analysis"	and	"Board	and	Corporate	Governance-Director	Compensation"	from	our	2019	Proxy	Statement.

# ITEM	12	-	SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT	AND	RELATED	STOCKHOLDER	MATTERS

We	incorporate	by	reference	in	this	Item	12	the	information	relating	to	ownership	of	our	common	stock	by	certain	persons	contained	under	the	headings	"Common Stock	Ownership-Common	Stock	Ownership	by	Management"	and	"Common	Stock	Ownership-Common	Stock	Ownership	by	Non-Management	Shareholders"	from our	2019	Proxy	Statement.

The	following	table	provides	certain	information	as	of	December	31,	2018	concerning	the	shares	of	our	common	stock	that	may	be	issued	under	existing	equity compensation	plans.	For	more	information	on	these	plans,	see	"Note	12—Share-Based	Awards	and	Options"	in	the	notes	to	the	accompanying	consolidated	financial statements.

| Plan	category | Number	of	securities	to	be<br>issued	upon	exercise	of<br>outstanding	options,<br>warrants	and	rights<br>(a) | Weighted-average	exercise<br>price	of	outstanding	options,<br>warrants	and	rights<br>(b) | Number	of	securities<br>remaining	available	for<br>future	issuance	under<br>equity	compensation	plans<br>(excluding	securities<br>reflected	in	column	(a))<br>(c) |
| :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders | 597,669 | $59.16 | 12,883,324 |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tsecurity\tholders | — | — | — |
| Total | 597,669 | $59.16 | 12,883,324 |

The	number	of	securities	remaining	available	for	future	issuance	under	equity	compensation	plans	reflected	in	column	(c)	above	includes	10,610,164	shares authorized	for	issuance	under	our	2011	Amended	and	Restated	Incentive	Plan,	all	of	which	are	available	for	issuance	pursuant	to	grants	of	full-value	stock	awards, 2,173,140	shares	authorized	under	our	2000	Employee	Stock	Purchase	Plan,	33,684	shares	authorized	under	our	Amended	and	Restated	2005	Incentive	Plan	and	66,336 shares	authorized	under	our	2000	Non-Employee	Director	Stock	Option	Plan.	We	do	not	intend	to	issue	shares	under	either	the	Amended	and	Restated	2005	Incentive Plan	or	the	2000	Non-Employee	Director	Stock	Option	Plan.

# ITEM	13	-	CERTAIN	RELATIONSHIPS	AND	RELATED	TRANSACTIONS,	AND	DIRECTOR	INDEPENDENCE

We	 incorporate	 by	 reference	 in	 this	 Item	13	 the	 information	 regarding	 certain	 relationships	 and	 related	 transactions	 between	 us	 and	 our	 affiliates	 and	 the independence	 of	 our	 directors	 contained	 under	 the	 headings	 "Additional	 Information--Relationships	 and	 Related	 Party	 Transactions"	 and	 "Board	 and	 Corporate Governance-Board	Independence"	from	our	2019	Proxy	Statement.

# ITEM	14	-	PRINCIPAL	ACCOUNTING	FEES	AND	SERVICES

We incorporate	by	reference in this	Item	14	the	information	regarding	principal	accounting	fees	and	services	contained	under	the	heading	"Proposal	Three: Ratification	of	Reappointment	of	Auditors"	from	our	2019	Proxy	Statement.

# PART	IV

# ITEM	15	-	EXHIBITS,	FINANCIAL	STATEMENT	SCHEDULES:

The	following	documents	are	filed	as	part	of	this	Annual	Report	on	Form	10-K:

# (1)	Consolidated	Financial	Statements

Our	consolidated	financial	statements	listed	below	are	set	forth	in	"Item	8	-	Financial	Statements	and	Supplementary	Data"	of	this	Annual	Report	on	Form	10-K:

|  | Page	Number |
| :--- | :--- |
| Reports\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 51 |
| Consolidated\tStatements\tof\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2018\tand\t2017,\tthe\tseven\tmonths\tended\tDecember\t31,\t2016\tand\tthe\tyear\nended\tMay\t31,\t2016 | 54 |
| Consolidated\tStatements\tof\tComprehensive\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2018\tand\t2017,\tthe\tseven\tmonths\tended\tDecember\t31,\t2016\nand\tthe\tyear\tended\tMay\t31,\t2016 | 55 |
| Consolidated\tBalance\tSheets\tas\tof\tDecember\t31,\t2018\tand\t2017 | 56 |
| Consolidated\tStatements\tof\tCash\tFlows\tfor\tthe\tyears\tended\tDecember\t31,\t2018\tand\t2017,\tthe\tseven\tmonths\tended\tDecember\t31,\t2016\tand\tthe\tyear\nended\tMay\t31,\t2016 | 57 |
| Consolidated\tStatements\tof\tChanges\tin\tEquity\tfor\tthe\tyears\tended\tDecember\t31,\t2018\tand\t2017,\tthe\tseven\tmonths\tended\tDecember\t31,\t2016\tand\nthe\tyear\tended\tMay\t31,\t2016 | 58 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 60 |

# (2)	Financial	Statement	Schedules

All	other	schedules	to	our	consolidated	financial	statements	have	been	omitted	because	they	are	not	required	under	the	related	instruction	or	are	inapplicable,	or because	we	have	included	the	required	information	in	our	consolidated	financial	statements	or	related	notes.

# (3)	Exhibits

The	following	exhibits	either	(i)	are	filed	with	this	Annual	Report	on	Form	10-K	or	(ii)	have	previously	been	filed	with	the	SEC	and	are	incorporated	in	this	Item 15	by	reference	to	those	prior	filings.

2.3++ Stock	Purchase	and	Merger	Agreement,	dated	as	of	August	2,	2017,	by	and	among	Athlaction	Topco,	LLC,	the	Vista	Blocker	Sellers	(as	defined therein),	Vista	Equity	Partners	Management,	LLC,	as	Sellers'	Representative,	Global	Payments	Inc.,	Athens	Merger	Sub,	LLC	and	the	Vista	AIVs and	Vista	GPs	(as	defined	therein	and	solely	for	the	limited	purposes	set	forth	therein),	incorporated	by	reference	to	Exhibit	2.1	to	the	Company's Current	Report	on	Form	8-K	filed	on	August	8,	2017.

10.19+ Form	of	Restricted	Stock	Award	pursuant	to	the	2011	Amended	and	Restated	Incentive	Plan	for	Executive	Officers	(calendar	2017),	incorporated	by reference	to	Exhibit	10.1	to	the	Company's	Form	10-Q	filed	on	May	4,	2017.

101.1* The	following	financial	information	from	the	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2018,	formatted	in	XBRL	(eXtensible Business	Reporting	Language)	and	filed	electronically	herewith:	(i)	the	Consolidated	Statements	of	Income;	(ii)	the	Consolidated	Statements	of Comprehensive	Income;	(iii)	the	Consolidated	Balance	Sheets;	(iv)	the	Consolidated	Statements	of	Cash	Flows;	(v)	the	Consolidated	Statements	of Changes	in	Equity;	and	(vi)	the	Notes	to	Consolidated	Financial	Statements.

*	Filed	herewith.

+	Management	contract	or	compensatory	plan	or	arrangement.

++	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	SEC	a	copy	of	any	omitted	schedule	and/or	exhibit	upon	request.

# (b)	Exhibits

# (c)				Financial	Statement	Schedules

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	Global	Payments	Inc.	has	duly	caused	this	report	to	be	signed	on	its behalf	by	the	undersigned,	thereunto	duly	authorized,	on	February	21,	2019.

/s/	Jeffrey	S.	Sloan

# Jeffrey	S.	Sloan

# Chief	Executive	Officer

(Principal	Executive	Officer)

# /s/	Cameron	M.	Bready

# Cameron	M.	Bready

# Senior	Executive	Vice	President	and	Chief	Financial	Officer

(Principal	Financial	Officer)

# /s/	David	M.	Sheffield

# David	M.	Sheffield

# Senior	Vice	President	and	Chief	Accounting	Officer

# (Principal	Accounting	Officer)

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	Global	Payments Inc.	and	in	the	capacities	and	on	the	dates	indicated.

| Signature | Title | Date |
| :--- | :--- | :--- |
| /s/\t\tWilliam\tI\tJacobs\t* |  |  |
| William\tI\tJacobs | Chairman\tof\tthe\tBoard | February\t21,\t2019 |
| /s/\tRobert\tH.B.\tBaldwin,\tJr.* |  |  |
| Robert\tH.B.\tBaldwin,\tJr. | Director | February\t21,\t2019 |
| /s/\tJohn\tG.\tBruno* |  |  |
| John\tG.\tBruno | Director | February\t21,\t2019 |
| /s/\tMitchell\tL.\tHollin* |  |  |
| Mitchell\tL.\tHollin | Director | February\t21,\t2019 |
| /s/\t\tRuth\tAnn\tMarshall\t* |  |  |
| Ruth\tAnn\tMarshall | Director | February\t21,\t2019 |
| /s/\t\tJohn\tM.\tPartridge\t* |  |  |
| John\tM.\tPartridge | Director | February\t21,\t2019 |
| /s/\t\tWilliam\tB.\tPlummer\t* |  |  |
| William\tB.\tPlummer | Director | February\t21,\t2019 |
| /s/\t\tAlan\tM.\tSilberstein\t* |  |  |
| Alan\tM.\tSilberstein | Director | February\t21,\t2019 |
| /s/\tJeffrey\tS.\tSloan |  |  |
| Jeffrey\tS.\tSloan | Director | February\t21,\t2019 |



Question: what was the value in thousands of unvested restricted stock and performance awards at the weighted-averagegrant-datefair value as of december 31 , 2017?\\n
Calculation:    unvested_restricted_stock_and_performance_awards = 1226
 grant_date_fair_value = 78.29
 answer = unvested_restricted_stock_and_performance_awards * grant_date_fair_value
Answer: 95983.54