Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

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

# SECURITIES	EXCHANGE	ACT	OF	1934

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

# GLOBAL	PAYMENTS	INC.

(Exact	name	of	registrant	as	specified	in	charter)

Georgia

(State	or	other	jurisdiction	of incorporation	or	organization)

10	Glenlake	Parkway,	North	Tower,	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

Series	A	Junior	Participating	Preferred	Share	Purchase	Rights

(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	and	posted	on	its	corporate	web	site,	if	any,	every	Interactive	Data	File	required	to	be	submitted	and	posted	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	and	post	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.	Yes	o			No	x

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"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.

Large	accelerated	filer	x				Accelerated	filer	o

Non-accelerated	filer	o				Smaller	reporting	company	o

(Do	not	check	if	a	smaller	reporting	company)

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

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	$3,416,096,919.

The	number	of	shares	of	the	registrant's	common	stock	outstanding	at	July	16,	2013	was	75,579,170	shares.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Specifically	identified	portions	of	the	registrant's	proxy	statement	for	the	2013	annual	meeting	of	shareholders	are	incorporated	by	reference	in	Part	III.

|  | GLOBAL	PAYMENTS	INC.<br>2013	FORM	10-K	ANNUAL	REPORT<br>PART	I | Page |
| :--- | :--- | :--- |
| ITEM\t1. | BUSINESS | 4 |
| ITEM\t1A. | RISK\tFACTORS | 13 |
| ITEM\t2. | PROPERTIES | 22 |
| ITEM\t3. | LEGAL\tPROCEEDINGS | 22 |
|  | PART\tII |  |
|  | MARKET\tFOR\tREGISTRANT'S\tCOMMON\tEQUITY,\tRELATED\tSTOCKHOLDER\tMATTERS\tAND |  |
| ITEM\t5. | ISSUER\tPURCHASES\tOF\tEQUITY\tSECURITIES | 23 |
| ITEM\t6. | SELECTED\tFINANCIAL\tDATA | 25 |
|  | MANAGEMENT'S\tDISCUSSION\tAND\tANALYSIS\tOF\tFINANCIAL\tCONDITION\tAND\tRESULTS\tOF |  |
| ITEM\t7. | OPERATIONS | 26 |
| ITEM\t7A. | QUANTITATIVE\tAND\tQUALITATIVE\tDISCLOSURES\tABOUT\tMARKET\tRISK | 47 |
| ITEM\t8. | FINANCIAL\tSTATEMENTS\tAND\tSUPPLEMENTARY\tDATA | 48 |
|  | CHANGES\tIN\tAND\tDISAGREEMENTS\tWITH\tACCOUNTANTS\tON\tACCOUNTING\tAND\tFINANCIAL |  |
| ITEM\t9. | DISCLOSURE | 87 |
| ITEM\t9A. | CONTROLS\tAND\tPROCEDURES | 87 |
| ITEM\t9B. | OTHER\tINFORMATION | 87 |
|  | PART\tIII |  |
| ITEM\t10. | DIRECTORS,\tEXECUTIVE\tOFFICERS\tAND\tCORPORATE\tGOVERNANCE | 87 |
| ITEM\t11. | EXECUTIVE\tCOMPENSATION | 90 |
|  | SECURITY\tOWNERSHIP\tOF\tCERTAIN\tBENEFICIAL\tOWNERS\tAND\tMANAGEMENT\tAND\tRELATED |  |
| ITEM\t12. | STOCKHOLDER\tMATTERS | 90 |
| ITEM\t13. | CERTAIN\tRELATIONSHIPS\tAND\tRELATED\tTRANSACTIONS,\tAND\tDIRECTOR\tINDEPENDENCE | 90 |
| ITEM\t14. | PRINCIPAL\tACCOUNTING\tFEES\tAND\tSERVICES | 90 |
|  | PART\tIV |  |
| ITEM\t15. | EXHIBITS,\tFINANCIAL\tSTATEMENT\tSCHEDULES | 90 |
|  | SIGNATURES | 95 |

# CAUTIONARY	NOTICE	REGARDING

# FORWARD-LOOKING	STATEMENTS

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

We	believe	that	it	is	important	to	communicate	our	plans	and	expectations	about	the	future	to	our	shareholders	and	to	the	public.	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 revenue,	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	products	or	services	and	expanding	our	business;	and	the	successful	integration	of	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	and	estimates	that	are	inherently	subject	to	significant	risks	and	uncertainties,	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.	These	factors	include,	but	are	not	limited	to,	those	set	forth	in Item	1A	-	Risk	Factors	of	this	report,	those	set	forth	elsewhere	in	this	report	and	those	set	forth	in	our	press	releases,	reports	and	other	filings	made	with	the	Securities and	Exchange	Commission,	or	SEC.	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.

# PART	I

# ITEM	1-	BUSINESS

# General	Developments

# Financial	Highlights

In	the	year	ended	May	31,	2013,	or	fiscal	2013,	revenue	increased	7.8%	to	$2,375.9	million	from	$2,203.8	million	in	the	year	ended	May	31,	2012,	or	fiscal	2012. This	revenue	growth	is	primarily	due	to	growth	driven	by	our	U.S.	ISO	channel,	growth	from	our	direct	sales	channels	and	gaming	business,	and	growth	in	Europe; partially	offset	by	market-based	pricing	compression	in	Canada.

Consolidated	operating	income	was	$357.2	million	for	fiscal	2013,	compared	to	$307.3	million	for	fiscal	2012.	Consolidated	operating	income	for	both	fiscal	years 2013	and	2012	includes	processing	system	intrusion	costs	of	$36.8	million	and	$84.4	million,	respectively.	Net	income	attributable	to	Global	Payments	increased	$27.9 million,	or	14.8%,	to	$216.1	million	in	fiscal	2013	from	$188.2	million	in	the	prior	year,	resulting	in	a	$0.39	increase	in	diluted	earnings	per	share	to	$2.76	in	fiscal	2013 from	$2.37	in	fiscal	2012.

Refer	to	"Item	7	-	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations"	for	a	detailed	explanation	of	these	results.

# Fiscal	2013	Acquisitions

During	fiscal	2013,	we	completed	three	strategic	acquisitions	which	expanded	our	distribution	capabilities	in	the	United	States,	the	Asia-Pacific	region	and	Spain. In	October	2012,	we	acquired	Accelerated	Payment	Technologies	("APT"),	a	U.S.	provider	of	fully-integrated	payment	technology	solutions	for	small	and	medium	sized merchants	for	a	purchase	price	of	$413.0	million,	less	working	capital.	In	December	2012,	we	completed	the	purchase	of	HSBC	Asia's	("HSBC")	44%	interest	in	Global Payments	Asia-Pacific	Limited	("GPAP")	for	$242.0	million.	Also	in	December	2012,	Comercia	Global	Payments	Entidad	de	Pago,	S.L.	("Comercia")	completed	the acquisition	of	the	merchant	acquiring	business	of	Banca	Civica,	S.A.	("Civica")	from	CaixaBank,	S.A.	("CaixaBank"),	based	in	Spain,	for	€17.5	million	($22.9	million equivalent	as	of	the	acquisition	date).

# Business	Description

Global	Payments	Inc.	is	a	leading	provider	of	electronic	payments	transaction	processing	services	for	consumers,	merchants,	independent	sales	organizations ("ISO"s),	financial	institutions,	government	agencies	and	multi-national	corporations	located	throughout	the	United	States,	Canada,	Brazil,	the	United	Kingdom,	Spain, the	Republic	of	Malta,	the	Czech	Republic,	the	Russian	Federation	and	the	Asia-Pacific	region.	We	serve	as	an	intermediary	to	facilitate	electronic	payment	transactions and	operate	in	two	business	segments,	North	America	Merchant	Services	and	International	Merchant	Services.	We	were	incorporated	in	Georgia	as	Global	Payments Inc.	in	September	2000,	and	we	spun-off	from	our	former	parent	company	on	January	31,	2001.	Including	our	time	as	part	of	our	former	parent	company,	we	have	been in	the	payments	business	since	1967.

Our	North	America	merchant	services	and	International	merchant	services	segments	target	customers	in	many	vertical	industries	including	financial	institutions, gaming,	government,	health	care,	professional	services,	restaurants,	retail,	universities,	nonprofit	organizations	and	utilities.	Please	see	Note	14	-	Segment	Information	in the	notes	to	consolidated	financial	statements	for	additional	segment	information	and	"Item	1A	-	Risk	Factors"	for	a	discussion	of	risks	involved	with	our	operations.

# Merchant	Services	Overview

Our	merchant	acquiring	services	are	similar	around	the	world	in	that	we	accept	a	variety	of	card	and	electronic	based	payments	at	the	point	of	sale.	Our	primary business	model	provides	payment	products	and	services	directly	 to	merchants	as	our	end	customers.	We	also	provide	similar	products	and	services	 to	financial institutions	and	a	limited	number	of	ISOs	that,	in	turn,	resell	our	products	and	services,	in	which	case,	the	financial	institutions	and	select	ISOs	are	our	end	customers. These	particular	services	are	marketed	in	the	United	States,	Canada,	and	parts	of	Eastern	Europe.

We	 provide	 our	 merchant	 customers	 with	 the	 ability	 to	 accept	 check,	 card	 and	 electronic-based	 payments.	The	 term	 "merchant"	 generally	 refers	 to	 any organization	that	accepts	credit	or	debit	cards	for	the	payment	of	goods	and	services.	We	sell	our	services	through	multiple	sales	channels	around	the	world	and	target customers	in	many	vertical	industries.	Card-based	payment	forms	consist	of	credit,	debit,	gift,	stored	value,	and	electronic	benefits	transfer	cards.	Credit	and	debit	card transaction	 processing	 includes	 the	 processing	 of	 the	 world's	 major	 international	 card	 brands,	 including	 American	 Express,	 China	 UnionPay,	 Discover,	 JCB, MasterCard,	Visa	and	non-traditional	payment	methods,	as	well	as	certain	domestic	debit	networks,	such	as	Interac	in	Canada.	Electronic	payment	processing	involves	a consumer	or	cardholder	acquiring	goods	or	services	from	a	merchant	and	using	a	credit	or	debit	card	or	other	electronic	method	as	the	form	of	payment.	We	are	the processing	 intermediary	between	 the	merchant,	 the	credit	and	debit	networks	and	 the	financial	 institutions	 that	 issue	cards.	Our	comprehensive	offerings	 include terminal	sales	and	deployment,	front-end	authorization	processing,	settlement	and	funding	processing,	full	customer	support	and	help-desk	functions,	chargeback resolution,	industry	compliance,	PCI	security,	consolidated	billing	and	statements,	and	on-line	reporting.	Our	value	proposition	is	to	provide	high	quality,	responsive, secure	and	full	end-to-end	service	to	all	of	our	customers.	Currently,	we	focus	on	merchant	customers	in	the	United	States,	Canada,	Brazil,	the	United	Kingdom,	Spain, the	Republic	of	Malta,	the	Czech	Republic,	the	Russian	Federation	and	the	Asia-Pacific	region.

The	majority	of	merchant	services	revenue	is	generated	on	services	priced	as	a	percentage	of	transaction	value	or	a	specified	fee	per	transaction,	depending	on card	type.	We	also	charge	other	fees	based	on	specific	services	that	are	unrelated	to	the	number	of	transactions	or	the	transaction	value.

# Credit	and	Debit	Card	Transaction	Processing

Credit	and	debit	networks	establish	uniform	regulations	that	govern	much	of	the	payment	card	industry.	During	a	typical	card	transaction,	the	merchant	and	the card	issuer	do	not	interface	directly	with	each	other,	but	instead	rely	on	merchant	acquirers.	Merchant	acquirers	are	typically	financial	institutions	or	independent processors	like	Global	Payments.	Global	Payments	performs	a	series	of	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.

In	order	to	provide	credit	and	signature-based	debit	card	transaction	processing	services	for	MasterCard	and	Visa,	we	must	either	be	a	member	of	these	systems	or be	designated	as	a	certified	processor	by	MasterCard	and	Visa	in	addition	to	being	a	Merchant	Service	Provider	by	MasterCard	and	an	Independent	Sales	Organization by	Visa.	Currently,	these	designations	are	dependent	upon	member	clearing	banks	of	either	organization	sponsoring	us	and	our	adherence	to	the	standards	of	the MasterCard	and	Visa	networks.	A	financial	institution	that	is	a	member	of	the	MasterCard	and	Visa	card	networks	(which	we	refer	to	in	this	discussion	as	Member)	must sponsor	an	electronic	transaction	payment	processor	such	as	Global	Payments.	We	have	financial	institution	sponsors	in	the	various	markets	where	we	facilitate	payment transactions	with	whom	we	have	sponsorship	or	depository	and	clearing	agreements.	These	agreements	allow	us	to	route	transactions	under	the	member	banks'	control and	identification	numbers	to	clear	credit	card	transactions	through	MasterCard	and	Visa.	Certain	of	the	member	financial	institutions	of	MasterCard	and	Visa	are	our competitors.	MasterCard	and	Visa	set	the	standards	with	which	we	must	comply.	In	certain	markets,	we	are	members	in	various	payment	networks,	allowing	us	to process	and	fund	transactions	without	third-party	financial	institution	sponsorship.	We	intend	to	pursue	memberships	in	additional	markets	in	the	future.

In	many	markets	we	also	provide	credit	card	transaction	processing	for	Discover	Financial	Services	or	Discover	Card	("Discover")	and	are	designated	as	an acquirer	 by	 Discover.	This	designation	provides	us	with	a	direct	relationship	between	us	and	Discover,	and	therefore	a	Member	sponsorship	is	not	required.	Our agreement	with	Discover	allows	us	to	route	and	clear	transactions	directly	through	Discover's	network.	Otherwise,	we	process	Discover	transactions	similarly	to	the	way we	process	MasterCard	and	Visa	transactions.	Discover	publishes	acquirer	operating	regulations	with	which	we	must	comply.	We	use	our	Members	to	assist	in	funding merchants	for	Discover	transactions.

Additionally,	we	provide	credit	and	debit	card	transaction	processing	for	China	UnionPay	("CUP")	in	selected	markets	and	through	a	variety	of	methods,	and	are either	designated	as	an	acquirer	by	China	UnionPay	or	are	sponsored	by	a	China	UnionPay	member	institution.	China	UnionPay	publishes	acquirer	operating	regulations with	which	we	must	comply.		We	use	our	Members	to	assist	in	funding	merchants	for	China	UnionPay	transactions.

# How	a	Card	Transaction	Works

A	typical	card	transaction	begins	when	a	cardholder	presents	a	card	for	payment	at	a	merchant	location	where	the	card	information	is	captured	by	a	Point	of	Sale ("POS")	terminal	card	reader	or	mobile	phone	card	reader,	which	may	be	sold,	leased,	or	rented,	and	serviced	by	Global	Payments.	Alternatively,	card	and	transaction information	may	be	captured	and	transmitted	to	our	network	through	a	POS	device	by	one	of	a	number	of	products	that	we	offer	directly	or	through	a	value	added reseller	("VAR").	The	terminal	electronically	records	sales	draft	information,	such	as	the	card	identification	number,	transaction	date	and	value	of	the	goods	or	services purchased.

After	the	card	and	transaction	information	is	captured	by	the	POS	device,	the	terminal	automatically	either	dials	a	pre-programmed	phone	number	or	otherwise connects	 to	our	network	 through	 the	 internet	or	other	communication	channels	 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 value	will	cause	the	cardholder	to	exceed	defined	credit	limits.	In	a	debit	card	transaction,	the	company	obtains	authorization	for	the	transaction	from	the	card	issuer through	the	payment	network	verifying	that	the	cardholder	has	sufficient	funds	for	the	transaction.

Timing	differences,	interchange	expense,	merchant	reserves	and	exception	items	cause	differences	between	the	amount	the	Member	receives	from	the	card networks	and	the	amount	funded	to	the	merchants.	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	is	funded.	However,	in	practice	and	in	accordance	with	the	terms	of our	sponsorship	agreements	with	our	Members,	we	generally	follow	a	net	settlement	process	by	region	whereby,	if	the	incoming	amount	from	the	card	networks precedes	the	Member's	funding	obligation	to	the	merchant,	we	temporarily	hold	the	surplus	on	behalf	of	the	Member,	in	an	account	at	the	Member	bank,	and	record	a corresponding	 liability.	Conversely,	if	the	Member's	funding	obligation	to	the	merchant	precedes	the	incoming	amount	from	the	card	networks,	the	amount	of	the Member's	net	receivable	position	is	either	subsequently	advanced	to	the	Member	by	us	or	the	Member	satisfies	this	obligation	with	its	own	funds.	If	the	Member	uses	its own	funds,	the	Member	may	assess	a	funding	cost.	Each	participant	in	the	transaction	process	receives	compensation	for	its	services.

As	an	illustration,	shown	below,	on	a	$100.00	credit	card	transaction,	the	card	issuer	may	fund	the	Member	$98.50	after	retaining	approximately	$1.50	referred	to as	an	interchange	fee	or	interchange	expense.	The	card	issuer	seeks	reimbursement	of	$100.00	from	the	cardholder	in	the	cardholder's	monthly	credit	card	bill.	The Member	would,	in	turn,	pay	the	merchant	$100.00.	The	net	settlement	after	this	transaction	would	require	Global	Payments	to	advance	the	Member	$1.50.	After	the	end of	the	month,	we	would	bill	the	merchant	a	percentage	of	the	transaction,	or	discount,	to	cover	the	full	amount	of	the	interchange	fee	and	our	net	revenue	from	the transaction.	If	our	discount	rate	for	the	merchant	in	the	above	example	was	2.00%,	we	would	bill	the	merchant	$2.00	at	the	end	of	the	month	for	the	transaction, reimburse	ourselves	for	approximately	$1.50	 in	 interchange	fees	and	retain	$0.50	or	0.50%	as	our	net	revenue	for	 the	 transaction.	Discount	rates	vary	based	on negotiations	with	merchants	and	the	economic	characteristics	of	transactions.	Interchange	also	varies	based	on	the	economic	characteristics	of	individual	transactions. Accordingly,	our	net	revenue	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	net	revenue	less	operating	expenses,	including	assessments	and	other	network	fees,	systems	cost	to	process	the	transaction	and commissions	paid	to	our	sales	force	or	ISO.	Assessments	are	fees	charged	by	Visa	and	MasterCard	based	on	the	dollar	value	of	transactions	processed	through	their networks.

# Business	Segments

# North	America	Merchant	Services	Segment

North	America	merchant	services	revenues	represent	71.8%	of	our	total	consolidated	fiscal	2013	revenues	and	includes	operations	in	the	United	States,	Canada and	 Brazil.	In	 the	 United	 States,	 we	 sell	 our	 services	 via	 ISOs,	 a	 direct	 sales	 force,	 trade	 associations,	 integrated	 payment	 technology,	 agent	 and	VAR	 referral arrangements,	as	well	as	proprietary	telesales	groups.

Our	ISO	channel	targets	a	variety	of	merchant	types	with	typical	annual	bankcard	volumes	of	$150,000	or	less.	The	ISOs	contract	with	Global	Payments	to provide	processing	and	other	services	depending	on	the	ISOs'	requirements.	These	contracts	are	multi-year	and	priced	by	service	on	a	per	transaction	basis.	The	ISOs	act as	a	third-party	sales	group	selling	Global	Payments-branded	merchant	acquiring	products	and	services,	with	the	majority	of	Global	Payments	ISOs	marketing	direct merchant	acquiring.	Because	Global	Payments	is	a	primary	party	to	the	merchant	contract	as	a	result	of	our	bank	sponsor	relationship,	the	full	amount	of	fees	collected from	the	merchant,	net	of	interchange,	is	recorded	as	revenue.	The	excess	of	revenue	earned	over	our	cost	to	process	the	transaction	plus	the	ISO	contractual	transaction fee	is	remitted	to	the	ISO	in	the	form	of	a	residual	payment	on	a	monthly	basis	and	is	recorded	in	Sales,	general	and	administrative	expenses.

Our	direct	sales	channel	receives	qualified	leads	from	our	agent	bank,	VAR	and	trade	association	referral	partners	signing	a	variety	of	mid-to-large	sized merchants	with	annual	bankcard	volume	on	average	above	$300,000.	Our	merchant	portfolio	is	also	increased	by	targeted	campaigns	and	other	lead	generating	efforts	by our	direct	sales	force.	Our	sales	force	is	paid	a	combination	of	base	salary	and	commission.	Our	referral	partners	are	paid	various	referral	fees.

Our	integrated	payment	technologies	channel,	or	APT,	sells	integrated	payment	solutions	to	more	than	30	different	vertical	markets	gaining	market	share	by signing	new	enterprise	solution	providers	and	by	signing	new	merchants	within	existing	enterprise	solution	providers	already	supported	by	APT.

Our	 United	 States	 revenue	 also	 includes	 check	 and	 gaming	 services	 and	 indirect	 merchant	 services.	Our	 check	 products	 offer	 merchant	 customers	 risk management	alternatives,	in	the	case	of	our	verification	and	recovery	offerings,	or	risk	elimination,	in	the	case	of	our	guarantee	offerings,	by	leveraging	our	internal	and external	databases	of	checkwriters	to	help	decide	whether

the	merchant	should	accept	a	check	as	the	form	of	payment	from	a	particular	checkwriter.	Our	check	services	products	are	part	of	our	direct	merchant	service	offering.

The	majority	of	check	services	involve	providing	check	guarantee	services	for	checks	received	by	merchants.	Under	the	guarantee	service,	when	a	merchant receives	a	check	in	payment	for	goods	and	services,	the	transaction	is	submitted	and	analyzed	by	the	Company.	The	Company	either	accepts	or	declines	the	check	for warranty	coverage	under	its	guarantee	service.	If	the	Company	approves	the	check	for	warranty	coverage	and	the	merchant	accepts	the	check,	the	merchant	will	either deposit	the	check	in	its	bank	account	or	process	it	for	settlement	through	the	company's	electronic	check	acceptance	service.	If	the	check	is	returned	unpaid	by	the merchant's	bank	and	the	returned	check	meets	the	requirements	for	warranty	coverage,	the	Company	is	required	to	purchase	the	check	from	the	merchant	at	its	face value.	The	Company	then	owns	the	purchased	check	and	pursues	collection	of	the	check	from	the	check	writer.	As	a	result,	the	Company	bears	the	risk	of	loss	if	the Company	is	unable	to	collect	the	returned	check	from	the	check	writer.	We	earn	a	fee	for	each	check	guaranteed,	which	generally	is	determined	as	a	percentage	of	the check	amount.

In	the	specialized	vertical	market	of	gaming,	our	VIP	LightSpeed	proprietary	software	and	VIP	Preferred	Advantage	product	provide	the	gaming	industry	with	the tools	necessary	to	establish	revolving	check	cashing	limits	for	a	casino's	customers.		Our	gaming	products	allow	fast	access	to	cash	with	high	limits	so	that	gaming establishments	can	increase	the	flow	of	money	to	their	gaming	floors	and	reduce	risk.		We	derive	revenue	from	our	gaming	products	primarily	based	on	a	percentage	of the	transaction	value.

In	the	indirect	merchant	services	channel	we	provide	merchant	services	to	financial	institutions	and	a	limited	number	of	ISOs	that,	in	turn,	resell	our	products	and services.

# International	Merchant	Services	Segment

International	merchant	services	revenues	represent	28.2%	of	our	total	consolidated	fiscal	2013	revenues	and	include	operations	in	Europe	and	the	Asia-Pacific region.	Our	business	in	Europe	is	primarily	located	in	the	United	Kingdom,	Spain,	the	Republic	of	Malta,	Czech	Republic,	and	the	Russian	Federation.	Our	Asia-Pacific region	includes	the	following	eleven	countries	and	territories:	Brunei,	China,	Hong	Kong,	India,	Macau,	Malaysia,	Maldives,	the	Philippines,	Singapore,	Sri	Lanka	and Taiwan.	We	have	a	direct	sales	force	in	the	United	Kingdom,	Spain,	the	Republic	of	Malta,	the	Russian	Federation	and	the	Asia-Pacific	region	through	which	we primarily	sell	our	direct	merchant	acquiring	services	while	leveraging	our	bank	referral	relationships.	In	the	Czech	Republic	and	the	Russian	Federation	we	also	provide indirect	merchant	acquiring	services.

Total	revenues	from	our	segments,	by	geography,	are	as	follows	(in	thousands):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |
| United\tStates | $1,394,675 | $1,234,818 | $1,031,997 |
| Canada | 311,000 | 332,434 | 330,872 |
| \t\t\tNorth\tAmerica\tmerchant\tservices | 1,705,675 | 1,567,252 | 1,362,869 |
| Europe | 522,593 | 489,300 | 359,567 |
| Asia-Pacific | 147,655 | 147,295 | 137,366 |
| \t\t\tInternational\tmerchant\tservices | 670,248 | 636,595 | 496,933 |
| Consolidated\trevenues | $2,375,923 | $2,203,847 | $1,859,802 |

# Industry	Overview

Payment	processing	service	providers	offer	electronic	transaction	payment	processing	and	support	services	directly	to	merchants,	multinational	corporations, financial	institutions	and	ISOs.

We	are	a	leading	mid-market	and	small-market	merchant	acquirer	in	the	United	States	and	we	primarily	compete	with	First	Data	Corporation,	Bank	of	America Merchant	Services,	Chase	Paymentech,	Wells	Fargo,	Vantiv,	Heartland	Payment	Systems	and	Elavon.

In	Canada,	we	have	significant	market	share.	We	consider	Moneris	Solutions,	Chase	Paymentech	Solutions	and	TD	Merchant	Services	to	be	major	competitors	in the	Canadian	market.	Moneris	Solutions	is	a	joint	venture	between	the	Royal	Bank	of	Canada	and	the	Bank	of	Montreal.

In	 the	 European	 and	Asia-Pacific	 regions,	 financial	 institutions	 remain	 the	 primary	 providers	 of	 payment	 processing	 services	 to	 merchants,	 although	 the outsourcing	of	merchant	processing	services	 to	 third-party	service	providers	 is	becoming	more	prevalent.	Processing	services	have	become	increasingly	complex, requiring	significant	capital	commitments	to	develop,	maintain	and	update	the	systems	necessary	to	provide	these	advanced	services	at	a	competitive	price.

In	Spain,	we	hold	the	number	one	market	share	position	and	our	primary	competitors	are	Banco	Bilbao	Vizcaya	Argentaria,	S.A,	Caja	Madrid,	Santander,	and Banco	Popular	although	all	banks	offer	some	form	of	card	processing	in	line	with	the	traditional	full	service	model	in	the	market.

In	the	United	Kingdom,	we	believe	we	hold	the	number	three	market	position	compared	to	our	primary	competitors	WorldPay	and	Barclays.	In	Spain,	we	hold	the number	one	market	share	position	and	our	primary	competitors	are	Banco	Bilbao	Vizcaya	Argentaria,	S.A	and	Caja	Madrid,	although	all	banks	offer	some	form	of	card processing	in	line	with	the	traditional	full	service	model	in	the	market.		While	we	have	a	market-leading	position	with	our	partner	CaixaBank,	we	are	expecting	similar models	to	become	more	prevalent	as	further	consolidation	occurs	in	the	banking	sector.	We	believe	we	hold	the	number	one	market	share	position	amongst	non-bank processors	in	the	Russian	Federation	in	a	highly	fragmented	payments	market.	Our	competition	is	made	up	of	various	financial	institutions,	including	Sberbank,	VTB, Raiffeisen	Bank,	and	Russian	Standard	Bank.	In	the	Czech	Republic,	our	primary	competitors	are	First	Data,	SiNSYS,	and	Euronet.	In	the	Asia-Pacific	region,	our primary	competition	is	from	financial	institutions	that	offer	merchant	acquiring	services	in	each	of	our	eleven	markets.

As	a	result	of	continued	growth	in	our	industry,	several	large	merchant	acquirers,	including	us,	have	expanded	operations	both	domestically	and	internationally	in the	form	of	acquisitions	and	 the	creation	of	alliances	and	 joint	ventures.	We	believe	that	the	electronic	payment	transaction	processing	industry	will	continue	to consolidate	as	banks	and	independent	processors	that	do	not	have	the	necessary	infrastructure	may	look	to	exit	the	business.

We	believe	that	electronic	transactions	will	continue	to	grow	in	the	future	and	that	an	increasing	percentage	of	these	transactions	will	be	processed	through emerging	technologies.		To	help	reduce	transaction	costs	and	accelerate	the	transaction	approval	process,	we	have	integrated	new	technologies	into	our	service	offerings such	as	internet	protocol	communications	and	check	truncation	or	conversion	at	the	point	of	sale.		In	order	to	support	and	integrate	payments	into	our	merchants'	various business	solutions	utilized	through	VARs,	we	created	a	developer	portal	simplifying	the	payment	enablement	process	with	multiple	VARs.		We	are	also	able	to	offer	our customers	integrated	e-commerce	solutions.	 	Through	our	VAR	relationships,	we	have	several	products	that	support	radio	frequency	identification	for	contactless payment	cards	as	well	as	near	field	communication	enabled	smartphones	that	contain	mobile	wallet	software,	which	position	Global	Payments	to	participate	in	mobile payments.	We	also	offer	customers	the	ability	to	accept	payments	utilizing	a	mobile	device	as	a	point	of	sale	terminal.	As	mobile	payments	continue	to	evolve	and	are desired	by	merchants	and	consumers,	we	 intend	 to	continue	partnering	and	developing	new	products	and	services	 that	will	 leverage	 the	benefits	 that	 these	new technologies	can	offer	our	customers.	 	We	also	believe	that	new	markets	will	continue	to	develop	in	areas	that	have	been	previously	dominated	by	paper-based transactions.	 	Industries	such	as	e-commerce,	healthcare,	education,	government,	recurring	payments,	and	business-to-business	should	continue	 to	see	 transaction volumes	migrate	to	more	electronic-based	settlement	solutions.		We	believe	that	the	continued	development	of	new	products	and	services	and	the	emergence	of	new vertical	markets	will	be	a	factor	in	the	growth	of	our	business	for	the	foreseeable	future.

# Strategy

We	seek	to	leverage	the	adoption	of,	and	transition	to,	card	and	electronic-based	payments	by	expanding	market	share	in	our	existing	markets	through	our distribution	channels	and	through	acquisitions	and	also	enter	new	markets	through	acquisitions	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.	Our	objectives	include:

•grow	our	direct	merchant	services	market	share	by	concentrating	on	the	small	and	mid-market	merchant	segments,	while	selectively	targeting	national merchants	that	meet	our	profitability	criteria;

•expand	our	direct	merchant	services	distribution	channels,	including	our	existing	sales	force,	ISOs,	original	equipment	manufacturer	("OEMs"),	VARs,	e- commerce,	mobile	wallet	software	and	other	referral	relationships;

•focus	 on	 high	 potential	 markets	 and	 channels	 including emerging technologies;

•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 product enhancements;

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

•drive	efficiencies	throughout	our	technology	infrastructure

•pursue	potential	domestic	and	international	acquisitions	or	investments	in	and	alliances	with	companies	that	have	high	growth	potential	or	significant	market presence

# Safeguarding	Our	Business

Privacy	and	security	are	central	to	our	service.	We	work	with	information	security	and	forensics	firms	and	employ	advanced	technologies	to	investigate	and address	issues	related	to	processing	system	security.	We	also	work	with	industry	third	parties,	regulators	and	law	enforcement	to	resolve	security	incidents	and	assist	in efforts	to	prevent	unauthorized	access	to	our	processing	system.

In	early	March	2012,	we	identified	and	self-reported	unauthorized	access	into	a	limited	portion	of	our	North	America	card	processing	system.	Our	investigation also	revealed	potential	unauthorized	access	to	servers	containing	personal	information	collected	from	merchants	who	applied	for	processing	services.	The	merchants who	could	potentially	be	affected	are	limited	to	those	based	in	the	U.S.	We	cannot	verify	those	potentially	affected	as	it	is	unclear	whether	any	information	was	exported; however,	we	notified	potentially-affected	individuals	and	made	available	credit	monitoring	and	identity	protection	insurance	at	no	cost	to	the	individuals.

As	a	result	of	this	event,	certain	card	networks	removed	us	from	their	list	of	PCI	DSS	compliant	service	providers.	Our	work	to	remediate	our	systems	and processes	is	complete.	We	hired	a	Qualified	Security	Assessor,	or	QSA,	to	conduct	an	independent	review	of	the	PCI	DSS	compliance	of	our	systems.	Our	QSA completed	the	evaluation	of	our	remediation	work.	Global	Payments	Direct,	Inc.,	our	primary	operating	entity,	has	been	returned	to	the	list	of	PCI	DSS	compliant	service providers	and	we	have	received	reports	on	compliance	covering	all	of	our	systems.	To	date,	we	have	not	experienced	a	material	loss	of	revenue	that	we	can	confirm	has been	related	to	this	event.	However,	this	event	and	our	related	remediation	efforts	could	potentially	have	a	negative	impact	on	future	revenues.	Please	see	Note	2	- Processing	System	Intrusion	in	the	notes	to	consolidated	financial	statements	for	additional	processing	system	intrusion	information.

# Employees

As	of	May	31,	2013,	we	had	3,954	employees.	Many	of	our	employees	are	highly	skilled	in	technical	areas	specific	to	electronic	transaction	payment	processing. We	believe	that	our	current	and	future	operations	depend	substantially	on	retaining	our	key	technical	employees.

# Government	Regulation

Various	aspects	of	our	business	are	subject	to	regulation	and	supervision	under	federal,	state	and	local	laws	in	the	United	States,	as	well	as	laws	and	regulations that	affect	the	electronic	payments	industry	in	the	countries	in	which	we	operate.	In	addition,	we	are	subject	to	rules	promulgated	by	the	various	payment	networks, including	Visa,	MasterCard,	Discover,	American	Express,	China	UnionPay	and	Interac;	 the	Payment	Services	Directive	 in	Europe;	as	well	as	a	variety	of	other regulations,	including	escheat	laws	and	applicable	privacy	and	information	security	regulations.	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	(FFIEC).	Set	forth	below	is	a	brief	summary	of some	of	the	significant	laws	and	regulations	that	apply	to	the	Company.	These	descriptions	are	not	exhaustive	and	are	qualified	in	their	entirety	by	reference	to	the particular	statutory	or	regulatory	provision.

# The	Dodd-Frank	Act

On	July	21,	2010,	President	Obama	signed	into	law	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	of	2010	(the	"Dodd-Frank	Act"),	which	has 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	("Board")	to	regulate	the	debit	interchange	transaction	fees	that	a	card	issuer	or	payment	card	network	receives	or	charges	for	an	electronic	debit transaction.	The	Act	requires	that	these	fees	be	"reasonable	and	proportional"	to	the	cost	incurred	by	the	card	issuer	in	authorizing,	clearing	and	settling	the	transaction. On	June	29,	2011,	 the	Board	announced	 the	final	rules	governing	debit	card	 interchange	fees,	and	routing	and	exclusivity	restrictions.	 Under	 these	 rules,	 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.	In	addition,	the	rules	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	 interchange	 fee	 limitations	 and	 prohibition	 on	 merchant	 routing restrictions	took	effect	on	October	1,	2011.	The	prohibition	on	network	exclusivity	arrangements	took	effect	on	October	1,	2011	for	payment	card	networks	and	April	1, 2012	for	most	debit	card	issuers.	In	addition,	the	prohibition	on	network	exclusivity	arrangements	were	effective	for	certain	health	and	benefit	cards	and	general-use prepaid	cards	on	April	1,	2013.

The	Dodd-Frank	Act	also	created	the	Financial	Stability	Oversight	Council	("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	by	the	Federal	Reserve	if	the	FSOC determines	either	that	(i)	material	financial	distress	at	the	nonbank	financial	company	or	(ii)	the	nature,	scope,	size,	scale,	concentration,	interconnectedness,	or	mix	of activities	of	the	nonbank	financial	company	could	pose	a	threat	to	the	financial	stability	of	the	United	States.	Such	companies,	commonly	known	as	"systemically important	financial	institutions"	or	"SIFIs,"	will	be	subject	to	heightened	prudential	standards	such	as	risk-based	capital	requirements,	liquidity	requirements,	and	short- term	debt	limits.	In	June	2013,	the	FSOC	reportedly	voted	on	its	first	set	of	proposed	SIFIs,	though	such	designated	companies	are	not	publicly	disclosed.	The	FSOC has	not	publicly	designated	the	Company	as	a	proposed	SIFI.	Additionally,	the	FSOC	has	the	authority	to	designate	financial	market	utilities	("FMUs")	and	financial institutions	engaged	in	payment,	clearing	and	settlement	("PCS")	activities	as	systemically	important	if	the	FSOC	determines	that	failure	or	disruption	to	the	functioning of	the	FMU	or	conduct	of	the	PCS	activities	could	threaten	the	stability	of	the	U.S.	financial	system.	Such	a	designation	will	subject	the	FMU	or	financial	institution	to oversight	and	risk	management	standards	established	by	the	Federal	Reserve	(in	consultation	with	the	FSOC	and	certain	other	applicable	regulatory	agencies).	Early indications	suggest	that	the	FSOC	is	focused	on	the	regulation	of	financial	services	companies	that	operate	unregulated	wholesale	transfer	systems	or	engage	in	largely unregulated	commodities,	derivatives	and	currency	markets,	and	not	on	entities	such	as	the	Company.

# Payment	Network	Rules

We	are	subject	 to	 the	rules	of	MasterCard,	Visa,	Discover,	China	UnionPay	and	Interac,	and	other	payment	networks.	In	 order	 to	 provide	 our	 transaction processing	 services,	 several	 of	 our	 subsidiaries	 are	 registered	 with	 MasterCard	 and	Visa	 as	 service	 providers	 for	 member	 institutions	 and	 with	 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

Because	we	provide	data	processing	and	technology	services	to	banks	and	other	financial	institutions,	we	are	subject	to	examination	by	the	FFIEC.	The	FFIEC	is an	interagency	body	comprised	of	the	federal	bank	and	credit	union	regulators	(i.e.	the	Board	of	Governors	of	the	Federal	Reserve,	the	Federal	Deposit	Insurance Corporation,	the	National	Credit	Union	Administration,	the	Office	of	the	Comptroller	of	the	Currency,	and	the	Bureau	of	Consumer	Financial	Protection).	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	Directive	2007/64/EC	in	the	European	Union	(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	EU	member nations,	including	the	requirement	that	we	maintain	specified	regulatory	capital.

# Privacy	and	Information	Security	Laws

We	provide	services	that	may	be	subject	to	various	state,	federal	and	foreign	privacy	laws	and	regulations.	These	laws	and	regulations	include	the	federal	Gramm- Leach-Bliley	Act,	which	applies	to	a	broad	range	of	financial	institutions	and	to	companies	that	provide	services	to	financial	institutions.	We	are	also	subject	to	foreign data	protection	and	privacy	laws.	Among	other	things,	these	foreign	and	domestic	laws,	and	their	implementing	regulations,	restrict	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.	These	laws	also	impose	requirements	for	safeguarding	and	removal	or	elimination	of	personal	information.	Certain	state	laws	also	restrict	the ability	of	the	Company	to	collect	and	utilize	certain	types	of	information	such	as	Social	Security	and	driver's	license	numbers.

Anti-money	Laundering	and	Counter	Terrorist	Requirements

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	to	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.

# Debt	Collection	Laws

Our	subsidiaries,	Global	Payments	Check	Services,	Inc.	and	Global	Payments	Check	Recovery	Services,	Inc.,	are	subject	to	the	Fair	Debt	Collection	Practices	Act and	similar	state	laws	in	connection	with	their	check	guarantee	and	recovery	services,	which	guarantee	the	payment	of	checks	or	collection	of	returned	checks	on	behalf of	certain	merchants.	These	laws	are	designed	to	eliminate	abusive,	deceptive,	and	unfair	debt	collection	practices	and	require	licensing	at	the	state	level.	Global Payments	Check	Services,	Inc.	and	Global	Payments	Check	Recovery	Services,	Inc.	have	procedures	in	place	to	comply	with	the	requirements	of	these	laws	and	are licensed	in	a	number	of	states	in	order	to	engage	in	collection	in	those	states.

# Escheat	Laws

We	are	subject	to	unclaimed	or	abandoned	property	laws	in	the	U.S.	and	in	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	regulatory authorities	with	regard	to	our	escheatment	practices.

# Where	to	Find	More	Information

We	file	annual	and	quarterly	reports,	proxy	statements	and	other	information	with	the	U.S.	Securities	and	Exchange	Commission,	or	the	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	report	on	Form	10-K,	our quarterly	reports	on	Form	10-Q,	our	current	reports	on	Form	8-K	and	amendments	to	them	can	be	viewed	and	printed	from	the	investor	information	section	of	our website	at	www.globalpaymentsinc.com	free	of	charge.	Certain	materials	relating	to	our	corporate	governance,	including	our	code	of	ethics	for	senior	financial	officers, are	also	available	in	the	investor	information	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	Form	10-K.	You	may	also	telephone	our	investor	relations	office	directly	at	(770)	829-8234.	We	are	not including	the	information	on	our	website	as	a	part	of,	or	incorporating	it	by	reference	into,	this	report.

Our	SEC	filings	may	also	be	viewed	and	copied	at	the	following	SEC	public	reference	room,	and	at	the	offices	of	the	New	York	Stock	Exchange,	where	our common	stock	is	quoted	under	the	symbol	"GPN."

SEC	Public	Reference	Room

(You	may	call	the	SEC	at	1-800-SEC-0330	for	further	information	on	the	public	reference	room.)

NYSE	Euronext

20	Broad	Street

# 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	and	financial	condition	could	suffer	significantly.	As	a	result,	the	market	price	of	our	common	stock	could	decline	and	you	may	lose	all	or	part	of	the money	you	paid	to	buy	our	common	stock.

# Failure	to	safeguard	our	data	could	affect	our	reputation	among	our	merchant	clients	and	cardholders,	and	may	expose	us	to	penalties,	fines,	liabilities	and	legal claims.

Under	VISA,	MasterCard,	American	Express	and	Discover	card	network	rules,	and	various	state	laws,	we	are	responsible	for	information	provided	to	us	by merchants,	ISO's,	third-party	service	providers,	and	other	agents	(all	of	which	we	refer	to	as	"associated	third	parties"),	which	we	require	in	order	to	process	transactions and	for	fraud	prevention.	This	information	includes	bankcard	numbers,	names,	addresses,	Social	Security	numbers,	driver's	license	numbers,	and	bank	account	numbers. We	process	the	data	and	deliver	our	products	and	services	by	utilizing	computer	systems	and	telecommunications	networks	operated	both	by	us	and	by	third-party service	providers.	We	have	ultimate	liability	to	the	card	networks	and	their	member	financial	institutions	for	our	failure	or	the	failure	of	our	associated	third	parties	to protect	this	information.	Although	plans	and	procedures	are	in	place	to	protect	this	sensitive	data,	we	cannot	be	certain	that	our	measures	will	be	successful	and	will	be sufficient	to	counter	all	current	and	emerging	technology	threats	designed	to	breach	our	systems	in	order	to	gain	access	to	confidential	information.	Our	computer systems	have	been,	and	could	be	in	the	future,	subject	to	penetration	and	our	data	protection	procedures	may	not	prevent	unauthorized	use.	We	could	also	be	subject	to liability	for	claims	relating	to	misuse	of	personal	information,	such	as	unauthorized	marketing	purposes	and	violation	of	data	privacy	laws.

Although	we	generally	require	that	our	agreements	with	service	providers	who	have	access	to	merchant	and	customer	data	include	confidentiality	obligations	that restrict	these	parties	from	using	or	disclosing	any	customer	or	merchant	data	except	in	accordance	with	the	applicable	agreements,	we	cannot	assure	you	that	these contractual	measures	will	prevent	the	unauthorized	use	or	disclosure	of	data.	In	addition,	we	have	agreed	in	certain	agreements	to	take	certain	protective	measures	to ensure	the	confidentiality	of	merchant	and	consumer	data.	The	costs	of	systems	and	procedures	associated	with	such	protective	measures	may	increase	and	could adversely	affect	our	ability	to	compete	effectively.	Any	failure	to	adequately	enforce	or	provide	these	protective	measures	could	result	in	liability	and	protracted	and costly	litigation.

In	early	March	of	2012,	we	identified	and	self-reported	unauthorized	access	into	a	limited	portion	of	our	North	America	card	processing	system.	Our	investigation also	revealed	potential	unauthorized	access	to	servers	containing	personal	information	collected	from	merchants	who	applied	for	processing	services.	The	merchants who	could	potentially	be	affected	are	limited	to	those	based	in	the	U.S.	We	cannot	verify	those	potentially	affected	as	it	is	unclear	whether	any	information	was	exported; however,	we	notified	potentially-affected	individuals	and	made	available	credit	monitoring	and	identity	protection	insurance	at	no	cost	to	the	individuals.

As	a	result	of	this	event,	certain	card	networks	removed	us	from	their	list	of	Payment	Card	Industry	Data	Security	Standards	("PCI	DSS")	compliant	service providers.	Our	work	to	remediate	our	systems	and	processes	is	complete.	We	hired	a	QSA	to	conduct	an	independent	review	of	the	PCI	DSS	compliance	of	our	systems. Global	Payments	Direct,	Inc,	our	primary	operating	entity,	has	been	returned	to	the	list	of	PCI	DSS	compliant	service	providers	and	we	have	received	reports	on compliance	covering	all	of	our	systems	that	process,	store,	transmit	or	otherwise	utilize	card	data.	To	date,	we	have	not	experienced	a	material	loss	of	revenue	that	we can	confirm	has	been	related	to	this	event.	However,	this	event	and	our	related	remediation	efforts	could	potentially	have	a	negative	impact	on	future	revenues.

During	the	fiscal	year	ended	May	31,	2013,	we	recorded	$36.8	million	of	expense	associated	with	this	incident,	bringing	the	life-to-date	total	expense	to	$121.2 million.	Of	this	amount,	$105.5	million	represents	the	costs	we	have	incurred	through	May	31,	2013	for	legal	fees,	fees	of	consultants	and	other	professional	advisors engaged	to	conduct	the	investigation	and	various	other	costs	associated	with	the	investigation	and	remediation.	An	additional	$35.7	million	represents	total	fraud	losses, fines	and	other	charges	that	have	been	imposed	upon	us	by	the	card	networks.	We	also	recorded	$20.0	million	of	insurance	recoveries.	During	fiscal	2013,	we	reduced our	accrual	for	fraud	losses,	fines	and	other	charges	by	$31.8	million.	We	based	our	initial	estimate	of	fraud	losses,	fines	and	other	charges	on	our	understanding	of	the rules	and	operating	regulations	published	by	the	networks	and	preliminary	communications	with	the	networks.	We	have	now	reached	resolution	with	and	made	payments to	the	networks,	resulting	in	charges	that	were	less	than	our	initial	estimates.	The	primary	difference	between	our	initial	estimates	and	the	final	charges	relates	to	lower fraud	related	costs	attributed	to	this	event	than	previously	expected.

A	security	breach	like	the	one	that	recently	occurred,	or	other	misuse	of	data	could	harm	our	reputation	and	deter	existing	and	prospective	customers	from	using our	products	and	services,	increase	our	operating	expenses	in	order	to	contain	and	remediate	the	breach,	expose	us	to	unbudgeted	or	uninsured	liability,	disrupt	our operations	(including	potential	service	interruptions),	increase	our	risk	of	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	and	financial	institution	sponsorship.

We	have	insurance	that	we	believe	would	provide	coverage	of	costs	associated	with	a	security	incident.	However,	there	can	be	no	assurance	that	such	costs	would not	materially	exceed	such	insurance	coverage.

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

In	order	to	provide	our	Visa	and	MasterCard	transaction	processing	services,	we	must	be	either	a	direct	participant	or	be	registered	as	a	merchant	processor	or service	provider	of	Visa	and	MasterCard.	Registration	as	a	merchant	processor	or	service	provider	is	dependent	upon	our	being	sponsored	by	member	banks	of	both organizations.	If	our	sponsor	banks	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	participation,	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	participation,	we	may	no	longer	be	able	to	provide	processing	services	to	affected	customers	which	would	negatively	impact	our	revenues and	earnings.	Furthermore,	some	agreements	with	our	bank	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	bank	sponsors'	discretionary	actions	under these	agreements	could	have	a	material	effect	on	our	business,	financial	condition,	and	results	of	operations.	In	connection	with	direct	participation,	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.

In	Canada,	we	have	filed	an	application	with	the	Canadian	regulatory	authorities	for	the	formation	of	a	wholly	owned	loan	company	in	Canada	which	could	serve as	our	financial	institution	sponsor.	While	such	application	is	pending,	in	March	2011,	we	obtained	temporary	direct	participation	in	the	Visa	Canada	system.	 This temporary	status	currently	expires	on	October	30,	2013.		In	the	event	the	wholly	owned	loan	company	has	not	been	approved	by	such	expiration	date	and	Visa	is unwilling	to	extend	such	temporary	status,	we	have	entered	into	an	agreement	with	a	financial	institution	that	is	willing	to	serve	as	our	sponsor;	however	that	agreement is	not	intended	to	be	a	long-term	solution.

# 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	impact	our	revenue	and	earnings.

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.	If	our	merchants	or ISOs	incur	fines	or	penalties	that	we	cannot	collect	from	them,	we	could	end	up	bearing	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	like	us.	The	termination	of	our	registrations	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,	operating	results	and	financial	condition.	If	a	merchant	or	an	ISO	fails	to	comply	with	the	applicable	requirements	of	the	card	associations	and networks,	it	could	be	subject	to	a	variety	of	fines	or	penalties	that	may	be	levied	by	the	card	associations	or	networks.	If	we	cannot	collect	such	amounts	from	the applicable	merchant	or	ISO,	we	could	end	up	bearing	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.

# 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	renegotiation,	and	account	closures	that	we	initiate	for	various	reasons,	such	as	heightened	credit	risks	or contract	breaches	by	merchants.	Our	ISO	sales	channel	is	a	strong	contributor	to	our	revenue	growth	in	our	North	America	merchant	services	segment.	If	an	ISO	partner switches	to	another	transaction	processor,	terminates	our	services,	shuts	down	or	becomes	insolvent,	we	will	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	an	important	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	and	results	of	operations.

# The	payment	processing	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	in	our	market	with	respect	to	the	pricing	of	our	products	and	services	offered	to	our	customers,	and	our	ability	to	develop	new technologies.

We	operate	in	the	electronic	payments	market,	which	is	highly	competitive.	Our	primary	competitors	in	these	markets	include	other	independent	processors,	as well	as	financial	institutions,	ISOs,	and,	potentially,	card	networks.	Many	of	our	competitors	are	companies	that	are	larger	than	we	are	and	have	greater	financial	and operational	resources	than	we	have.	In	addition,	our	competitors	that	are	financial	institutions	or	subsidiaries	of	financial	institutions	do	not	incur	the	costs	associated with	being	sponsored	by	a	bank	for	registration	with	the	card	networks.	These	factors	may	allow	them	to	offer	better	pricing	terms	to	customers,	which	could	result	in	a loss	of	our	potential	or	current	customers	or	could	force	us	to	lower	our	prices	as	well.	Higher	than	expected	attrition	could	negatively	affect	our	results,	which	could have	a	material	adverse	effect	on	our	business,	financial	condition	and	results	of	operations.

In	addition,	many	of	our	competitors	may	have	the	ability	to	devote	more	financial	and	operational	resources	than	we	can	to	the	development	of	new	technologies and	services,	including	Internet	payment	processing	services	and	mobile	payment	processing	services	that	provide	improved	operating	functionality	and	features	to	their product	and	service	offerings.	If	successful,	their	development	efforts	could	render	our	product	and	services	offerings	less	desirable	to	customers,	again	resulting	in	the loss	of	customers	or	a	reduction	in	the	price	we	could	demand	for	our	offerings.

Additionally,	our	competitors	that	are	financial	institutions	or	subsidiaries	of	financial	institutions	do	not	incur	costs	associated	with	being	sponsored	by	a	direct participant	for	registration	with	the	card	networks	and	can	settle	transactions	more	quickly	for	their	merchants	than	we	can	for	ours.	This	may	allow	our	competitors	to offer	more	attractive	fees	to	our	current	and	prospective	merchants,	or	other	products	or	services	that	we	do	not	offer.	This	could	result	in	a	loss	of	customers,	greater difficulty	attracting	new	customers,	and	a	reduction	in	the	price	we	can	charge	for	our	services.

Furthermore,	we	are	facing	competition	from	non-traditional	competitors,	such	as	Paypal	and	Google,	who	offer	alternative	payment	methods.	These	non- traditional	competitors	have	significant	financial	resources	and	robust	networks	and	are	highly	regarded	by	consumers.	If	these	non-traditional	competitors	gain	a	greater share	of	total	electronic	payments	transactions,	it	could	also	have	a	material	adverse	effect	on	our	business,	financial	condition	and	results	of	operation.

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

The	electronic	payments	markets	in	which	we	compete	are	subject	to	rapid	technological	changes.	These	markets	are	characterized	by	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	front-end	platform	for	electronic	payments	processing,	mobile	payment	applications,	e-commerce	services	and	other	new	offerings emerging	in	the	electronic	payments	industry.	These	projects	carry	the	risks	associated	with	any	development	effort,	including	cost	overruns,	delays	in	delivery	and performance	 problems.	In	the	electronic	payments	markets	these	risks	are	even	more	acute.	Any	delay	in	the	delivery	of	new	products	or	services	or	the	failure	to differentiate	our	products	and	services	could	render	them	less	desirable	to	our	customers,	or	possibly	even	obsolete.	In	addition,	the	products	and	services	we	deliver	to the	electronic	payments	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	increased	costs	that	could	reduce	our	earnings	in	addition	to	a	loss	of	revenue	and	earnings	if	promised	new	products	are	not	timely delivered	to	our	customers	or	do	not	perform	as	anticipated.	We	also	rely	in	part	on	third	parties,	including	some	of	our	competitors	and	potential	competitors,	for	the development	of	and	access	to	new	technologies.	Furthermore,	our	competitors	may	have	the	ability	to	devote	more	financial	and	operational	resources	than	we	can	to	the development	of	new	technologies	and	services,	including	e-commerce	and	mobile	payment	processing	services,	that	provide	improved	operating	functionality	and features	to	their	existing	service	offerings.	If	successful,	their	development	efforts	could	render	our	services	less	desirable	to	clients,	resulting	in	the	loss	of	clients	or	a reduction	in	the	fees	we	could	generate	from	our	offerings.

Our	future	success	will	depend	in	part	on	our	ability	to	develop	or	adapt	to	technological	changes	and	evolving	industry	standards	and	our	failure	to	do	so	could have	a	material	adverse	effect	on	our	business,	operating	results,	and	financial	condition.	For	example,	beginning	in	2013	both	MasterCard	and	Visa	are	requiring processors	in	the	United	States	to	support	Europay,	MasterCard,	and	Visa	("EMV")	credit	and	debit	card	authentication.	Developing	and	implementing	support	for	EMV requires	us	to	invest	significant	resources	and	there	is	no	certainty	as	to	when,	or	even	if,	our	merchants	or	financial	institution	customers	will	use	or	accept	EMV.

# In	order	for	us	to	continue	to	grow	and	increase	our	profitability,	we	must	continue	to	expand	our	share	of	the	existing	electronic	payments	markets	and	also	expand into	new	markets.

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	electronic	transaction	payment	processing,	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	benefits	we	anticipated.	Once	completed,	investments	and	alliances	may	not	realize	the	value that	we	expect.

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	products	and	distribution	channels	that	will satisfy	the	demands	of	these	new	markets.	If	we	fail	to	expand	into	new	and	existing	electronic	payments	markets,	we	may	not	be	able	to	continue	to	grow	our	revenues and	earnings.

# There	may	be	a	decline	in	the	use	of	cards	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	as	a	payment	mechanism	for	their	transactions	or	if	there	is	a	change	in	the	mix	of	payments	between	cash, credit	cards,	and	debit	cards,	which	is	adverse	to	us,	it	could	have	a	material	adverse	effect	on	our	business,	financial	condition,	and	results	of	operations.	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	products	and	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.

# Our	systems	and	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.	In	addition,	we	have	undertaken	the	relocation	of	our	primary	data	center.	We	have	entered	into	agreements	related	to	this	relocation	and	for the	ongoing	management	of	the	data	center.

A	system	outage	or	data	loss	could	have	a	material	adverse	effect	on	our	business,	financial	condition	and	results	of	operations.	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	the	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	products	are	based	on	sophisticated	software	and	computing	systems	that	often	encounter	development	delays	and	the	underlying	software	may	contain undetected	errors,	viruses,	or	defects.	Defects	in	our	software	products	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,	or	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	and	results	of	operations.

# We	incur	chargeback	liability	when	our	merchants	refuse	or	cannot	reimburse	chargebacks	resolved	in	favor	of	their	customers.	We	cannot	accurately	anticipate these	liabilities,	which	may	adversely	affect	our	results	of	operations	and	financial	condition.

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	and	results	of	operations.	We	have	policies	to	manage	merchant-related	credit	risk and	often	mitigate	such	risk	by	establishing	reserve	accounts,	requesting	collateral	and	establishing	caps	for	monthly	processing.	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	operating	results	and	financial	condition.

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 liability	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	operating	results	and	financial	condition.

# 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	impact	our	business,	financial	condition	and	results	of	operations.

The	global	electronic	payments	 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	or	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	revenue	and	profits.	If	our	merchants	make	fewer	sales	of	their	products	and	services	using	electronic	payments	or	people	spend	less	money	per	transaction,	we	will have	fewer	transactions	to	process	at	lower	dollar	amounts,	resulting	in	lower	revenue.

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,	processing	contractual	minimums	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	impact	our	future	revenues	and	profits	and	cause	a	materially	adverse	effect	on	our	business,	financial condition	and	results	of	operations.

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	merchants	are	liable	for	any	charges	properly	reversed	by	the	card	issuer	on	behalf	of	the	cardholder.	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	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 negatively	impacts	our	business,	financial	condition	and	results	of	operations.

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

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

# Any	new	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	impact	to	our	financial	results.

Our	business	is	impacted	by	laws	and	regulations	that	affect	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);	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,	along	with	a	myriad	of	consumer	protection	laws	and	escheat	regulations.	We	are	also	subject	to	examination	by	the	FFIEC	(as	a	result	of	our provision	of	data	processing	services	to	financial	institutions).

Interchange	fees	(which	are	typically	paid	by	the	acquirer	to	the	issuer	in	connection	with	transactions)	are	subject	to	increasingly	intense	legal,	regulatory,	and legislative	scrutiny	worldwide.	For	instance,	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act,	which	was	signed	into	law	in	July	2010,	significantly changes	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	dollar	amounts	for	the	acceptance	of	credit	cards	and	to	offer	discounts	for	different	payment methods.	On	June	29,	2011,	the	Federal	Reserve	Board	adopted	the	final	rules	implementing	the	debit	interchange	fee	and	routing	and	exclusivity	provisions	in	Dodd- Frank.	The	overall	impact	of	Dodd-Frank	on	us	is	difficult	to	estimate	because	it	will	take	some	time	for	the	market	to	react	and	adjust	to	the	new	regulations.	These decisions	and	regulatory	actions,	even	if	not	directed	at	us,	may	require	significant	efforts	to	change	our	systems	and	products	and	may	require	changes	to	how	we	price our	services	to	customers.	Until	final	decisions	around	implementation	are	announced,	we	cannot	predict	the	impact	of	any	of	these	changes	on	our	operations	and financial	condition.

Changes	to	legal	rules	and	regulations,	or	interpretation	or	enforcement	thereof,	could	have	a	negative	financial	effect	on	our	business.	In	addition,	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	operating	results	and financial	condition.

# 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	and	results	of	operations.

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 and	results	of	operations.

# Risks	associated	with	foreign	operations	and	investments	outside	the	United	States	could	adversely	affect	our	business,	financial	position	and	results	of	operations.

We	are	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.	Revenue	and	profit	generated	by	international	operations	will	increase	or	decrease	compared	to	prior	periods	as	a	result	of	changes in	foreign	currency	exchange	rates.	Volatility	in	currency	exchange	rates	has	affected	and	may	continue	to	affect	our	financial	results.	 For	example,	for	fiscal	year	2013, currency	exchange	rate	fluctuations	decreased	our	revenues	by	$20.3	million	and	our	earnings	by	$0.05	per	diluted	share.	We	historically	have	not	used	forward contracts	or	other	derivative	instruments	to	mitigate	the	risks	associated	with	currency	exchange	risk.

We	also	have	indirect	foreign	investments,	which	are	subject	to	country	risk	(such	as	sovereign,	economic,	political,	and	location	risks).	These	investments	are short-term	in	nature	and	with	private	sector	issuers.	Country	risk	could	impact	the	valuation	and	liquidity	of	those	investments.

In	addition,	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	currency	into	United	States	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	impact	on	our	business.

# We	conduct	a	portion	of	our	business	in	various	European	and	Asia-Pacific	countries,	including	the	Russian	Federation,	where	the	risk	of	continued	political, economic	and	regulatory	change	that	could	impact	our	operating	results	is	greater	than	in	the	United	States.

We	expect	to	continue	to	expand	our	operations	into	various	countries	in	Europe	and	the	Asia-Pacific	region.	Some	of	these	countries,	and	other	foreign	countries in	which	we	operate,	such	as	the	Russian	Federation	and	Spain,	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.	In	particular,	changes	in	laws	or	regulations	or	in	the	interpretation	of	existing	laws	or regulations,	whether	caused	by	a	change	in	government	or	otherwise,	could	materially	adversely	affect	our	business,	growth,	financial	condition	or	results	of	operations.

Transmittal	of	data	by	electronic	means	and	telecommunications	is	subject	to	specific	regulation	in	many	countries.	Although	these	regulations	have	not	had	a material	impact	on	us	to	date,	changes	in	these	regulations,	including	taxation	or	limitations	on	transfers	of	data	between	countries,	could	have	a	material	adverse	effect on	our	business,	growth,	financial	condition	or	results	of	operations.

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	both	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	involves	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,	products, 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	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	a	loss	of	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;	and

•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	electronic	payments	markets.

# 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.	Our	efforts	to	retain	and	develop	personnel may	also	result	in	significant	additional	expenses,	which	could	negatively	affect	our	profitability.	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,	and	results	of	operations.

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

As	a	result	of	our	acquisitions,	a	significant	portion	of	our	total	assets	consist	of	intangible	assets	(including	goodwill).	Goodwill	and	intangible	assets,	net	of amortization,	together	accounted	for	approximately	46.2%	and	37.8%	of	the	total	assets	on	our	balance	sheet	as	of	May	31,	2013	and	May	31,	2012,	respectively.	We may	not	realize	the	full	value	of	our	intangible	assets	and	goodwill.	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	write-off	the	impaired	portion	of	goodwill	and	such	intangible	assets,	resulting	in	a charge	to	our	earnings.	An	impairment	of	a	significant	portion	of	goodwill	or	intangible	assets	could	have	a	material	adverse	effect	on	our	business,	financial	condition, and	results	of	operations.

# Unfavorable	resolution	of	tax	contingencies	or	changes	to	enacted	tax	rates	could	adversely	affect	our	tax	expense.

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	impacting	our	results	of	operations.	We	have	established	contingent	liabilities	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	cost	less	than	any	related liability.	An	unfavorable	resolution,	therefore,	could	negatively	impact	our	financial	position,	results	of	operations	and	cash	flows	in	the	current	and/or	future	periods.

We	record	deferred	income	taxes	to	reflect	the	impact	of	temporary	differences	between	the	amounts	of	assets	and	liabilities	for	financial	accounting	and	income tax	purposes.	Deferred	income	taxes	are	determined	using	enacted	tax	rates.	Changes	in	enacted	tax	rates	may	negatively	impact	our	results	of	operations.

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

Payment	processing	companies	like	us	may	be	subject	to	taxation	by	various	jurisdictions	on	our	net	income	or	certain	portions	of	our	fees	charged	to	customers for	our	services.	Application	of	these	taxes	is	an	emerging	issue	in	our	industry	and	the	taxing	authorities	have	not	yet	all	adopted	uniform	regulations	on	this	topic.	If	we are	required	to	pay	such	taxes	and	are	not	able	to	pass	the	tax	expense	through	to	our	merchant	customers,	our	costs	will	increase,	reducing	our	earnings.

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,	the	amount	of	our	cash	flow,	and	have	a	material	adverse	impact	on	our	business.

# 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	controls	over	financial	reporting	as	of	the	end	of	each fiscal	year	and	to	include	a	management	report	assessing	the	effectiveness	of	our	internal	controls	over	financial	reporting	in	our	annual	report.		If	we	fail	to	maintain	the adequacy	of	our	internal	controls,	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.

Further,	this	assessment	may	be	complicated	by	any	acquisitions	we	may	complete.		In	certain	markets	in	the	Asia-Pacific	region,	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	revenue	billed	to	merchants,	to	assist	us	with	compiling	our	accounting	records.		As	such,	our	internal	controls	over	financial	reporting	could	be materially	affected,	or	are	reasonably	likely	to	be	materially	affected,	by	the	internal	controls	and	procedures	of	our	member	sponsors	in	these	markets.		In	order	to mitigate	this	risk,	we	have	implemented	internal	controls	over	financial	reporting	which	monitor	the	accuracy	of	the	financial	data	being	provided	by	our	member sponsors

While	we	continue	to	dedicate	resources	and	management	time	to	ensuring	that	we	have	effective	controls	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	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	of	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	of control	that	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.

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

The	payment	of	dividends	on	our	common	stock	in	the	future	is	at	the	discretion	of	our	Board	of	Directors	and	will	depend	on,	among	other	factors,	our	earnings, shareholders'	equity,	cash	position,	and	financial	condition.	No	assurance	can	be	given	that	we	will	be	able	to	or	will	choose	to	pay	any	dividends	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	we	are	not	always	successful	in	capturing	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 and	results	of	operations.

# Continued	consolidation	in	the	banking	and	retail	industries	could	adversely	affect	our	growth.

Historically,	the	banking	industry	has	been	the	subject	of	consolidation,	regardless	of	overall	economic	conditions,	while	the	retail	industry	has	been	the	subject	of consolidation	due	to	cyclical	economic	events.	Since	2008,	there	have	been	multiple	bank	failures	and	government-encouraged	consolidation.	Larger	banks	and	larger merchants	with	greater	transaction	volumes	may	demand	lower	fees	which	could	result	in	lower	revenues	and	earnings	for	us.	Our	bank	alliances	and	other	strategies could	also	be	negatively	impacted	as	a	result	of	consolidations,	especially	where	the	banks	involved	operate	competing	merchant	processing	businesses.

# The	Company's	debt	agreements	contain	restrictions	that	will	limit	the	Company's	flexibility	in	operating	its	business.

Our	credit	facilities	contain	various	covenants	that	limit	our	ability	to	engage	in	specified	types	of	transactions.	These	covenants	limit	our	and	our	subsidiaries' ability	to,	among	other	things:

•incur	additional	indebtedness	or	issue	certain	preferred	shares;

•pay	dividends	on,	repurchase	or	make	distributions	in	respect	of	capital	stock	or	make	other	restricted	payments;

•sell	certain	assets;

•create	liens;

•consolidate,	merge,	sell	or	otherwise	dispose	of	all	or	substantially	all	of	the	Company's	assets;	and

•enter	into	certain	transactions	with	the	Company's	affiliates.

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,	permit	the	lenders	to	cease	making	loans	to	us.	Upon	the	occurrence	of	an	event	of	default	under	our	credit	facilities,	the	lenders	could elect	to	declare	all	amounts	outstanding	under	our	credit	facilities	to	be	immediately	due	and	payable	and	terminate	all	commitments	to	extend	further	credit.	Such actions	by	those	lenders	could	cause	cross	defaults	under	certain	of	our	other	indebtedness.	If	we	are	unable	to	repay	those	amounts,	the	lenders	under	our	credit facilities	could	accelerate	the	repayment	of	borrowings,	and	we	may	not	have	sufficient	assets	to	repay	our	credit	facilities	as	well	as	the	Company's	other	indebtedness.

# ITEM	2-	PROPERTIES

The	following	summarizes	the	type	of	facilities	we	use	to	operate	our	business	as	of	May	31,	2013:

| Type	of	Facility | Leased | Owned |
| :--- | :--- | :--- |
| Facilities\tin\tthe\tUnited\tStates: |  |  |
| Multi-Purpose\t(Operations,\tSales,\tAdministrative) | 7 | — |
| Operations/Customer\tSupport | 1 | — |
| Sales\tand\tretail\tbranches | 2 | — |
|  | 10 | — |
| International\tFacilities: |  |  |
| Multi-Purpose\t(Operations,\tSales,\tAdministrative) | 8 | 3 |
| Operations/Customer\tSupport | 8 | — |
| Sales\tand\tretail\tbranches | 13 | — |
|  | 29 | 3 |
| Total | 39 | 3 |

Our	principal	facilities	in	the	United	States	are	located	in	Atlanta,	Georgia	and	Owings	Mills,	Maryland.	Our	principal	international	facilities	are	located	in Toronto,	Canada;	Prague,	Czech	Republic;	Leicester,	England;	London,	England;	the	Hong	Kong	Special	Administrative	Region;	Manila,	Philippines;	Moscow,	Russian Federation;	and	Barcelona,	Spain.

We	believe	that	all	of	our	facilities	and	equipment	are	suitable	and	adequate	for	our	business	as	presently	conducted.

# ITEM	3-	LEGAL	PROCEEDINGS

In	addition	to	the	class	action	suit	described	below,	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	impact	on	our	financial position,	liquidity	or	results	of	operations.

A	class	action	arising	out	of	the	processing	system	intrusion	was	filed	against	us	on	April	4,	2012	by	Natalie	Willingham	(individually	and	on	behalf	of	a	putative nationwide	class).		Specifically,	Ms.	Willingham	alleged	that	we	failed	to	maintain	reasonable	and	adequate	procedures	to	protect	her	personally	identifiable	information ("PII")	which	she	claims	resulted	in	two	fraudulent	charges	on	her	credit	card	in	March	2012.		Further,	Ms.	Willingham	asserted	that	we	failed	to	timely	notify	the	public of	the	data	breach.		Based	on	these	allegations,	Ms.	Willingham	asserted	claims	for	negligence,	violation	of	the	Federal	Stored	Communications	Act,	willful	violation	of the	Fair	Credit	Reporting	Act,	negligent	violation	of	the	Fair	Credit	Reporting	Act,	violation	of	Georgia's	Unfair	and	Deceptive	Trade	Practices	Act,	negligence	per	se, breach	of	third-party	beneficiary	contract,	and	breach	of	implied	contract.		The	Plaintiff	sought	an	unspecified	amount	of	damages	and	injunctive	relief.	The	lawsuit	was filed	in	the	United	States	District	Court	for	the	Northern	District	of	Georgia.		On	May	14,	2012,	we	filed	a	motion	to	dismiss.		On	July	11,	2012,	Plaintiff	filed	a	motion for	leave	to	amend	her	complaint,	and	on	July	16,	2012,	the	Court	granted	that	motion.		Plaintiff	filed	an	amended	complaint	on	July	16,	2012.	The	amended	complaint did	not	add	any	new	causes	of	action.		Instead,	it	added	two	new	named	Plaintiffs	(Nadine	and	Robert	Hielscher)	and	dropped	Plaintiff's	claim	for	negligence	per	se.		On August	16,	2012,	we	filed	a	motion	to	dismiss	the	Plaintiffs'	amended	complaint.		The	Plaintiffs'	filed	their	response	in	opposition	to	our	motion	to	dismiss	on	October	5, 2012,	and	we	subsequently	filed	our	reply	brief	on	October	22,	2012.		The	magistrate	judge	issued	a	report	and	recommendation	recommending	dismissal	of	all	of Plaintiffs'	claims	with	prejudice.		The	Plaintiffs'	subsequently	agreed	to	voluntarily	dismiss	the	lawsuit	with	prejudice,	with	each	party	bearing	its	own	fees	and	costs. This	was	the	only	consideration	exchanged	by	the	parties	in	connection	with	Plaintiffs'	voluntary	dismissal	with	prejudice	of	the	lawsuit.		The	lawsuit	was	dismissed	with prejudice	on	March	6,	2013.

# 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."	The	table	set	forth	below	provides	the	intraday	high	and	low	sales prices	and	dividends	paid	per	share	of	our	common	stock	for	the	four	quarters	during	fiscal	2013	and	2012.	We	expect	to	continue	to	pay	our	shareholders	a	dividend	per share,	on	a	quarterly	basis,	in	an	amount	comparable	to	the	dividends	indicated	in	the	table.	However,	any	future	determination	to	pay	cash	dividends	will	be	at	the discretion	of	our	Board	of	Directors	and	will	depend	upon	our	results	of	operations,	financial	condition,	capital	requirements	and	such	other	factors	as	the	Board	of Directors	deems	relevant.

|  | High | Low | Dividend	Per	Share |
| :--- | :--- | :--- | :--- |
| Fiscal\t2013: |  |  |  |
| First\tQuarter | $45.10 | $39.37 | $0.02 |
| Second\tQuarter | 44.43 | 41.01 | 0.02 |
| Third\tQuarter | 51.24 | 42.99 | 0.02 |
| Fourth\tQuarter | 49.90 | 43.37 | 0.02 |
| Fiscal\t2012: |  |  |  |
| First\tQuarter | $52.75 | $41.02 | $0.02 |
| Second\tQuarter | 47.70 | 38.26 | 0.02 |
| Third\tQuarter | 52.55 | 43.69 | 0.02 |
| Fourth\tQuarter | 53.93 | 41.19 | 0.02 |

The	number	of	shareholders	of	record	of	our	common	stock	as	of	July	12,	2013	was	2,206.

# 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	Report.

# Sale	of	Unregistered	Securities

We	have	not	issued	any	unregistered	securities	during	our	fiscal	year	ended	May	31,	2013.

# Stock	Performance	Graph

The	following	line-graph	presentation	compares	our	cumulative	shareholder	returns	with	the	Standard	&	Poor's	Information	Technology	Index	and	the	Standard	& Poor's	500	Index	for	the	past	five	years.	The	line	graph	assumes	the	investment	of	$100	in	our	common	stock,	the	Standard	&	Poor's	Information	Technology	Index,	and the	Standard	&	Poor's	500	Index	on	May	31,	2008	and	assumes	reinvestment	of	all	dividends.

|  |  |  | S&amp;P |
| :--- | :--- | :--- | :--- |
|  | Global | S&amp;P | Information |
|  | Payments | 500 | Technology |
| May\t31,\t2008 | $100.00 | $100.00 | $100.00 |
| May\t31,\t2009 | 76.32 | 67.73 | 71.24 |
| May\t31,\t2010 | 89.70 | 81.58 | 91.52 |
| May\t31,\t2011 | 110.67 | 102.76 | 110.86 |
| May\t31,\t2012 | 90.64 | 102.33 | 119.25 |
| May\t31,\t2013 | 102.51 | 130.24 | 137.29 |

# Issuer	Purchases	of	Equity	Securities

On	July	26,	2012,	our	Board	of	Directors	approved	a	share	repurchase	program	that	authorized	the	purchase	of	up	to	$300.0	million	of	Global	Payments'	stock in	 the	open	market	at	 the	current	market	price,	subject	 to	market	conditions,	business	opportunities,	and	other	factors.	Under	 this	authorization,	we	repurchased 3,674,656	shares	of	our	common	stock	at	a	cost	of	$175.3	million,	or	an	average	of	$47.72	per	share,	including	commissions	during	fiscal	2013.	This	share	repurchase program	has	not	concluded	as	of	May	31,	2013.

# ITEM	6-	SELECTED	FINANCIAL	DATA

You	should	read	the	selected	financial	data	set	forth	below	in	conjunction	with	"Item	7	-	Management's	Discussion	and	Analysis	of	Financial	Condition	and Results	of	Operations"	and	"Item	8	-	Financial	Statements	and	Supplementary	Data"	included	elsewhere	in	this	annual	report.	The	income	statement	data	for	fiscal	years ended	May	31,	2013,	2012,	and	2011	and	the	balance	sheet	data	as	of	May	31,	2013	and	2012	are	derived	from	the	audited	consolidated	financial	statements	included elsewhere	in	this	annual	report.	The	income	statement	data	for	fiscal	years	2010	and	2009	and	the	balance	sheet	data	as	of	May	31,	2011	and	2010	were	derived	from consolidated	financial	statements	included	in	our	Form	10-K	for	the	fiscal	year	ended	May	31,	2011.	The	balance	sheet	data	as	of	May	31,	2009	was	derived	from audited	consolidated	financial	statements	included	in	our	Form	10-K	for	the	fiscal	year	ended	May	31,	2010.	Amounts	related	to	our	discontinued	operations	in	our statements	of	income	for	fiscal	years	2010	and	2009	were	reclassified	in	fiscal	year	2011	to	conform	to	the	current	presentation.

|  | 2013 | 2012 | 2011 | 2010 | 2009 |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (in\tthousands,\texcept\tper\tshare\tdata) | (in\tthousands,\texcept\tper\tshare\tdata) |  |
| Income\tstatement\tdata: |  |  |  |  |  |
| Revenue | $2,375,923 | $2,203,847 | $1,859,802 | $1,642,468 | $1,462,306 |
| Operating\tincome(1) | 357,213 | 307,349 | 331,594 | 323,279 | 292,546 |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax(1) | 238,713 | 217,566 | 229,131 | 223,010 | 207,017 |
| Net\tincome\tattributable\tto\tGlobal\tPayments(1).(2) | 216,125 | 188,161 | 209,238 | 203,317 | 37,217 |
| Per\tshare\tdata: |  |  |  |  |  |
| Basic\tearnings\tper\tshare(1),(2) | $2.78 | $2.39 | $2.62 | $2.51 | $0.46 |
| Diluted\tearnings\tper\tshare(1),(2) | 2.76 | 2.37 | 2.60 | 2.48 | 0.46 |
| Dividends\tper\tshare | 0.08 | 0.08 | 0.08 | 0.08 | 0.08 |
| Balance\tsheet\tdata\t(at\tyear\tend): |  |  |  |  |  |
| Total\tassets | $3,125,056 | $2,688,143 | $3,350,531 | $2,039,326 | $1,676,821 |
| Borrowings\tunder\tlines\tof\tcredit | 187,461 | 215,391 | 270,745 | 79,187 | 10,174 |
| Borrowings\tunder\tlong-term\tdebt\tagreements | 963,469 | 312,985 | 354,019 | 421,134 | 197,003 |
| Total\tequity(3) | 1,286,607 | 1,300,921 | 1,337,817 | 871,517 | 678,243 |

(1) Includes	processing	system	intrusion	charges	of	$36,775	and	$84,438	in	fiscal	2013	and	2012,	respectively.	Also	includes	impairment,	restructuring and	other	charges	of	$2,583	in	fiscal	2010.

(2) Also	includes	a	pre-tax	impairment	charge	of	$147,664	in	fiscal	2009	related	to	our	money	transfer	business	that	has	been	reclassified	to	discontinued operations.

(3) Includes	the	impact	of	the	retrospective	adoption	of	new	accounting	guidance	concerning	noncontrolling	interests	adopted	in	fiscal	year	2010.

# ITEM	7-	MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS	OF	OPERATIONS

The	following	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	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"	of	this	report.	See	also	"Cautionary	Notice	Regarding	Forward-Looking	Statements"	located	above	"Item	1	-	Business."

You	 should	 read	 the	 following	 discussion	 and	 analysis in	 conjunction	 with	"Item	 6 -	 Selected	 Financial	 Data"	 and	 "Item	 8 -	 Financial	 Statements	 and Supplementary	Data"	appearing	elsewhere	in	this	annual	report.

# General

We	are	a	provider	of	electronic	payments	transaction	processing	services	for	consumers,	merchants,	independent	sales	organizations	(ISOs),	financial	institutions, government	agencies	and	multi-national	corporations	located	throughout	the	United	States,	Canada,	Brazil,	the	United	Kingdom,	Spain,	the	Republic	of	Malta,	the Czech	Republic,	 the	Russian	Federation	and	 the	Asia-Pacific	region.	We	serve	as	an	intermediary	 to	facilitate	payment	 transactions	and	operate	 in	 two	business segments,	North	America	merchant	services	and	International	merchant	services.	We	were	incorporated	in	Georgia	as	Global	Payments	Inc.	in	September	2000	and spun-off	from	our	former	parent	company	on	January	31,	2001.	Including	our	time	as	part	of	our	former	parent	company,	we	have	been	in	the	payments	business	since 1967.

Our	North	America	merchant	services	and	International	merchant	services	segments	target	customers	in	many	vertical	industries	including	financial	institutions, gaming,	government,	health	care,	professional	services,	restaurants,	retail,	universities,	nonprofit	organizations	and	utilities.

Our	offerings	provide	merchants,	ISOs	and	financial	institutions	with	credit	and	debit	card	transaction	processing	and	check-related	services.	Our	primary	business model	provides	payment	products	and	services	directly	to	merchants	as	our	end	customers.	We	also	provide	similar	products	and	services	to	financial	institutions	and	a limited	number	of	ISOs	that,	in	turn,	resell	our	products	and	services,	in	which	case,	the	financial	institutions	and	select	ISOs	are	our	end	customers.	These	particular services	are	marketed	in	the	United	States,	Canada,	and	parts	of	Eastern	Europe.

The	majority	of	merchant	services	revenue	is	generated	on	services	priced	as	a	percentage	of	transaction	value	or	a	specified	fee	per	transaction,	depending	on card	type.	We	also	charge	other	fees	based	on	specific	services	that	are	unrelated	to	the	number	of	transactions	or	the	transaction	value.	Revenue	from	credit	cards	and signature	debit	cards	is	generally	based	on	a	percentage	of	transaction	value	along	with	other	related	fees,	while	revenue	from	PIN	debit	cards	is	typically	based	on	a	fee per	transaction.

Our	products	and	services	are	marketed	through	a	variety	of	sales	channels	that	include	a	dedicated	direct	sales	force,	ISOs,	an	internal	telesales	group,	retail outlets,	trade	associations,	alliance	bank	relationships	and	financial	institutions.	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,	the	Asia-Pacific	region	and	Europe,	and	investing	in	and leveraging	technology	and	people,	thereby	maximizing	shareholder	value.	We	also	seek	to	enter	new	markets	through	acquisitions	in	the	Asia-Pacific	region,	Europe, and	Latin	America.

Our	business	does	not	have	pronounced	seasonality	in	which	more	than	30%	of	our	revenues	occur	in	one	quarter.	However,	each	geographic	channel	has somewhat	higher	and	lower	quarters	given	the	nature	of	the	portfolio.	While	there	is	some	variation	in	seasonality	across	markets,	the	first	and	fourth	quarters	are generally	the	strongest,	and	the	third	quarter	tends	to	be	the	weakest	due	to	lower	volumes	processed	in	the	months	of	January	and	February.

# Executive	Overview

In	fiscal	2013,	revenues	increased	7.8%	to	$2,375.9	million	from	$2,203.8	million	in	fiscal	2012.	This	revenue	growth	was	primarily	due	to	growth	driven	by	our U.S.	ISO	channel,	growth	from	our	direct	sales	channels	and	gaming	business,	and	growth	in	Europe;	partially	offset	by	market-based	pricing	compression	in	Canada.

Consolidated	operating	income	was	$357.2	million	for	fiscal	2013,	compared	to	$307.3	million	for	fiscal	2012.	Consolidated	operating	income	for	fiscal	2013	and 2012	includes	processing	system	intrusion	costs	of	$36.8	million	and	$84.4	million,	respectively.	Net	income	attributable	to	Global	Payments	increased	$27.9	million,	or 14.8%,	to	$216.1	million	in	fiscal	2013	from	$188.2	million	in	the	prior	year,	resulting	in	a	$0.39	increase	in	diluted	earnings	per	share	to	$2.76	in	fiscal	2013	from $2.37	in	fiscal	2012.

During	fiscal	2013,	we	completed	three	acquisitions	which	expanded	our	distribution	capabilities	in	the	United	States,	Asia	and	Spain.	In	October	2012,	we acquired	Accelerated	Payment	Technologies	("APT"),	a	U.S.	provider	of	integrated	payment	technology	solutions	for	small	and	medium	sized	merchants	for	a	purchase price	of	$413.0	million,	less	working	capital.	In	December	2012,	we	completed	the	purchase	of	HSBC	Asia's	("HSBC")	44%	interest	in	Global	Payments	Asia-Pacific Limited	 ("GPAP")	 for	$242.0	million.	Also	 in	 December	 2012,	 Comercia	 Global	 Payments	 Entidad	 de	 Pago,	 S.L.	 ("Comercia"),	 based	 in	 Spain,	 completed	 the acquisition	of	the	merchant	acquiring	business	of	Banca	Civica,	S.A.	("Civica")	from	CaixaBank,	S.A.	("CaixaBank")	for	€17.5	million	($22.9	million	equivalent	as	of the	acquisition	date).

As	a	result	of	this	event,	certain	card	networks	removed	us	from	their	list	of	PCI	DSS	compliant	service	providers.	Our	work	to	remediate	our	systems	and processes	is	complete.	We	hired	a	Qualified	Security	Assessor,	or	QSA,	to	conduct	an	independent	review	of	the	PCI	DSS	compliance	of	our	systems.	Global	Payments Direct,	Inc.,	our	primary	operating	entity,	has	been	returned	to	the	list	of	PCI	DSS	compliant	service	providers	and	we	have	received	reports	on	compliance	covering	all of	our	systems	that	process,	store,	transmit	or	otherwise	utilize	card	data.	To	date,	we	have	not	experienced	a	material	loss	of	revenue	that	we	can	confirm	has	been related	to	this	event.	However,	this	event	and	our	related	remediation	efforts	could	potentially	have	a	negative	impact	on	future	revenues.

For	year	ended	May	31,	2013,	we	recorded	$36.8	million	of	expense	associated	with	this	incident,	bringing	our	life-to-date	expense	to	$121.2	million.	Of	this	life to	date	expense	amount,	$105.5	million	represents	costs	incurred	through	May	31,	2013	for	professional	fees	and	other	costs	associated	with	the	investigation	and remediation,	incentive	payments	to	certain	business	partners	and	costs	associated	with	credit	monitoring	and	identity	protection	insurance.	An	additional	$35.7	million represents	total	fraud	losses,	fines	and	other	charges	that	have	been	imposed	upon	us	by	the	card	networks.	We	also	recorded	$20.0	million	of	insurance	recoveries. During	fiscal	2013,	we	reduced	our	accrual	for	fraud	losses,	fines	and	other	charges	by	$31.8	million.	We	based	our	initial	estimate	of	fraud	losses,	fines	and	other charges	on	our	understanding	of	the	rules	and	operating	regulations	published	by	the	networks	and	preliminary	communications	with	the	networks.	We	have	now reached	resolution	with	and	made	payments	to	the	networks,	resulting	in	charges	that	were	less	than	our	initial	estimates.	The	primary	difference	between	our	initial estimates	and	the	final	charges	relates	to	lower	fraud	related	costs	attributed	to	this	event	than	previously	expected.

# Results	of	Operations

The	following	table	shows	key	selected	financial	data	for	the	fiscal	years	ended	May	31,	2013	 and	2012,	this	data	as	a	percentage	of	total	revenues,	and	the changes	between	fiscal	years	in	dollars	and	as	a	percentage	of	fiscal	2012.

| (dollar	amounts	in	thousands) | 2013 | %	of<br>Revenue(1) | 2012 | %	of<br>Revenue(1) | Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |  |  |  |
| United\tStates | $1,394,675 | 58.7% | $1,234,818 | 56.0% | $159,857 | 12.9\t% |
| Canada | 311,000 | 13.1% | 332,434 | 15.1% | (21,434) | (6.4)% |
| \t\t\t\tNorth\tAmerica\tmerchant\tservices | 1,705,675 | 71.8% | 1,567,252 | 71.1% | 138,423 | 8.8\t% |
| Europe | 522,593 | 22.0% | 489,300 | 22.2% | 33,293 | 6.8\t% |
| Asia-Pacific | 147,655 | 6.2% | 147,295 | 6.7% | 360 | 0.2\t% |
| \t\t\t\tInternational\tmerchant\tservices | 670,248 | 28.2% | 636,595 | 28.9% | 33,653 | 5.3\t% |
| \t\t\t\t\t\t\t\t\t\tTotal\trevenues | $2,375,923 | 100% | $2,203,847 | 100% | $172,076 | 7.8\t% |
| Consolidated\toperating\texpenses: |  |  |  |  |  |  |
| Cost\tof\tservice | $862,075 | 36.3% | $784,756 | 35.6% | $77,319 | 9.9\t% |
| Sales,\tgeneral\tand\tadministrative | 1,119,860 | 47.1% | 1,027,304 | 46.6% | 92,556 | 9.0\t% |
| Processing\tsystem\tintrusion | 36,775 | 1.5% | 84,438 | 3.8% | (47,663) | (56.4)% |
| \t\t\t\t\t\t\t\t\t\tOperating\tincome | $357,213 | 15.0% | $307,349 | 13.9% | $49,864 | 16.2\t% |
| Operating\tincome\t(loss)\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | $258,910 |  | $281,305 |  | $(22,395) | (8.0)% |
| International\tmerchant\tservices | 211,242 |  | 196,137 |  | 15,105 | 7.7\t% |
| Corporate(2) | (112,939) |  | (170,093) |  | 57,154 | (33.6)% |
| \t\t\t\t\t\t\t\t\t\tOperating\tincome | $357,213 |  | $307,349 |  | $49,864 | 16.2\t% |
| Operating\tmargin\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | 15.2% |  | 17.9% |  | (2.7)% |  |
| International\tmerchant\tservices | 31.5% |  | 30.8% |  | 0.7\t% |  |

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

(2)	Includes	processing	system	intrusion	costs	of	$36.8	million	and	$84.4	million	in	fiscal	2013	and	fiscal	2012,	respectively.

# Processing	System	Intrusion

As	a	result	of	this	event,	certain	card	networks	removed	us	from	their	list	of	PCI	DSS	compliant	service	providers.	Our	work	to	remediate	our	systems	and processes	is	complete.	We	hired	a	Qualified	Security	Assessor,	or	QSA,	to	conduct	an	independent	review	of	the	PCI	DSS	compliance	of	our	systems.	Our	QSA completed	the	evaluation	of	our	remediation	work.	Global	Payments	Direct,	Inc,	our	primary	operating	entity,	has	been	returned	to	the	list	of	PCI	DSS	compliant	service providers	and	we	have	received	reports	on	compliance	covering	all	of	our	systems	that	process,	store,	transmit	or	otherwise	utilize	card	data.	To	date,	we	have	not experienced	a	material	loss	of	revenue	that	we	can	confirm	has	been	related	to	this	event.	However,	this	event	and	our	related	remediation	efforts	could	potentially	have a	negative	impact	on	future	revenues.

During	the	fiscal	year	ended	May	31,	2013,	we	recorded	$36.8	million	of	expense	associated	with	this	incident,	bringing	the	life-to-date	total	expense	to	$121.2 million.	 Of	 this	 life-to-date	 expense,	 $105.5	 million	 represents	 costs	 incurred	 through	May	 31,	 2013	 for	 professional	 fees	 and	 other	 costs	 associated	 with	 the investigation	 and	 remediation,	 incentive	 payments	 to	 certain	 business	 partners	 and	 costs	 associated	 with	 credit	 monitoring	 and	 identity	 protection	 insurance.	An additional	$35.7	million	represents	total	fraud	losses,	fines	and	other	charges	that	have	been	imposed	upon	us	by	the	card	networks.	We	also	recorded	$20.0	million	of insurance	recoveries	as	discussed	below.	During	fiscal	2013,	we	reduced	our	accrual	for	fraud	losses,	fines	and	other	charges	by	$31.8	million.	We	based	our	initial estimate	of	fraud	losses,	fines	and	other	charges	on	our	understanding	of	the	rules	and	operating	regulations	published	by	the	networks	and	preliminary	communications with	the	networks.	We	have	now	reached	resolution	with	and	made	payments	to	the	networks,	resulting	in	charges	that	were	less	than	our	initial	estimates.	The	primary difference	between	our	initial	estimates	and	the	final	charges	relates	to	lower	fraud	related	costs	attributed	to	this	event	than	previously	expected.

A	class	action	arising	out	of	the	processing	system	intrusion	was	filed	against	us	on	April	4,	2012	by	Natalie	Willingham	(individually	and	on	behalf	of	a	putative nationwide	class)	(the	"Plaintiff").	 	Specifically,	Ms.	Willingham	alleged	that	we	failed	to	maintain	reasonable	and	adequate	procedures	to	protect	her	personally identifiable	information	("PII")	which	she	claims	resulted	in	two	fraudulent	charges	on	her	credit	card	in	March	2012.		Further,	Ms.	Willingham	asserted	that	we	failed to	 timely	 notify	 the	 public	 of	 the	 data	 breach.	 	 Based	 on	 these	 allegations,	 Ms.	 Willingham	 asserted	 claims	 for	 negligence,	 violation	 of	 the	 Federal	 Stored Communications	Act,	willful	violation	of	the	Fair	Credit	Reporting	Act,	negligent	violation	of	the	Fair	Credit	Reporting	Act,	violation	of	Georgia's	Unfair	and	Deceptive Trade	Practices	Act,	negligence	per	se,	breach	of	third-party	beneficiary	contract,	and	breach	of	implied	contract.		Ms.	Willingham	sought	an	unspecified	amount	of damages	and	injunctive	relief.	The	lawsuit	was	filed	in	the	United	States	District	Court	for	the	Northern	District	of	Georgia.		On	May	14,	2012,	we	filed	a	motion	to dismiss.		On	July	11,	2012,	Plaintiff	filed	a	motion	for	leave	to	amend	her	complaint,	and	on	July	16,	2012,	the	Court	granted	that	motion.		She	then	filed	an	amended complaint	on	July	16,	2012.	The	amended	complaint	did	not	add	any	new	causes	of	action.		Instead,	it	added	two	new	named	Plaintiffs	(Nadine	and	Robert	Hielscher) (together	with	Plaintiff,	the	"Plaintiffs")	and	dropped	Plaintiff's	claim	for	negligence	per	se.		On	August	16,	2012,	we	filed	a	motion	to	dismiss	the	Plaintiffs'	amended complaint.		The	Plaintiffs'	filed	their	response	in	opposition	to	our	motion	to	dismiss	on	October	5,	2012,	and	we	subsequently	filed	our	reply	brief	on	October	22,	2012. The	magistrate	judge	issued	a	report	and	recommendation	recommending	dismissal	of	all	of	Plaintiffs'	claims	with	prejudice.		The	Plaintiffs	subsequently	agreed	to voluntarily	dismiss	the	lawsuit	with	prejudice,	with	each	party	bearing	its	own	fees	and	costs.	This	was	the	only	consideration	exchanged	by	the	parties	in	connection with	Plaintiffs'	voluntary	dismissal	with	prejudice	of	the	lawsuit.		The	lawsuit	was	dismissed	with	prejudice	on	March	6,	2013.

This	event	could	result	in	additional	lawsuits	in	the	future.	In	addition,	governmental	entities	have	made	inquiries	and	the	Federal	Trade	Commission	has initiated	an	investigation	related	to	the	event.	We	have	not	recorded	any	loss	accruals	related	to	these	items	or	any	other	claims	(except	as	described	above)	that	have been	or	may	be	asserted	against	us	in	relation	to	this	incident	as	we	have	not	determined	that	losses	associated	with	any	such	claims	or	potential	claims	are	probable. Further,	we	do	not	have	sufficient	information	to	estimate	the	amount	or	range	of	possible	losses	associated	with	such	matters.	As	more	information	becomes	available, if	we	should	determine	that	an	unfavorable	outcome	is	probable	on	such	a	claim	and	that	the	amount	of	such	probable	loss	that	we	will	incur	on	that	claim	is	reasonably estimable,	we	will	accrue	our	estimate	of	such	loss.	If	and	when	we	record	such	an	accrual,	it	could	be	material	and	could	adversely	impact	our	results	of	operations.

We	were	insured	under	policies	that	we	believe	may	provide	coverage	of	certain	costs	associated	with	this	event.	The	policies	provided	a	total	of	$30.0	million	in policy	limits	and	contain	various	sub-limits	of	liability	and	other	terms,	conditions	and	limitations,	including	a	$1.0	million	deductible	per	claim.	As	of	May	31,	2013,	we have	received	$20.0	million	in	insurance	recoveries.	We	will	record	receivables	for	any	additional	recoveries	in	the	periods	in	which	we	determine	such	recovery	is probable	and	the	amount	can	be	reasonably	estimated.

# Revenues

We	derive	our	revenues	from	four	primary	sources:	charges	based	on	volumes	and	fees	for	services,	charges	based	on	transaction	quantity,	service	fees	and equipment	sales	and	rentals.	Revenues	generated	by	these	areas	depend	upon	a	number	of	factors,	such	as	demand	for	and	price	of	our	services,	the	technological competitiveness	of	our	product	offerings,	our	reputation	for	providing	timely	and	reliable	service,	competition	within	our	industry	and	general	economic	conditions.

For	fiscal	2013,	revenues	increased	7.8%	to	$2,375.9	million	compared	to	the	prior	year.	This	growth	is	primarily	due	to	growth	driven	by	our	U.S.	ISO	channel, growth	from	our	direct	sales	channels	and	gaming	business,	and	growth	in	Europe;	partially	offset	by	market-based	pricing	compression	in	Canada.

Our	revenues	have	been	affected	by	fluctuations	in	foreign	currency	exchange	rates.	For	the	year	ended	May	31,	2013,	currency	exchange	rate	fluctuations decreased	our	revenues	by	$20.3	million	compared	to	the	prior	year.	To	calculate	this	we	converted	our	fiscal	2013	actual	revenues	at	fiscal	2012	rates.

For	 fiscal	2013,	revenue	from	our	North	America	merchant	services	segment	increased	8.8%	compared	to	the	prior	year	to	$1,705.7	million.	North	America revenue	growth	was	driven	by	our	U.S.	ISO	channel,	strong	growth	from	our	direct	sales	channels,	gaming	business	and	reduced	interchange	expense	due	to	legislation.

We	grow	our	United	States	revenue	primarily	by	adding	small	and	mid-market	merchants	in	diversified	vertical	markets,	largely	through	our	ISO	channel.	For fiscal	2013,	our	United	States	direct	credit	and	debit	card	processed	transactions	grew	11.2%	compared	to	the	prior	year.	Increased	spreads	have	offset	the	impact	of lower	average	ticket,	which	decreased	by	0.9%	in	fiscal	2013.	This	decline	in	average	ticket	is	primarily	due	to	a	shift	toward	smaller	merchants	added	through	our	ISO channel.	Smaller	merchants	tend	to	have	lower	average	tickets	than	larger	merchants.

For	fiscal	2013,	our	Canadian	revenue	decreased	6.4%	to	$311.0	million	while	our	credit	and	debit	card	processed	transactions	grew	3.2%	compared	to	the	prior year.	The	decrease	in	revenue	was	due	to	ongoing	market-based	pricing	compression.

For	fiscal	2013,	International	merchant	services	revenue	increased	5.3%	to	$670.2	million	compared	to	the	prior	year.	Our	Europe	merchant	services	revenue	for fiscal	2013	increased	6.8%	to	$522.6	million	compared	to	the	prior	year,	driven	primarily	by	strong	transaction	growth	in	all	markets.	Asia-Pacific	merchant	services revenue	of	$147.7	million	was	flat	for	fiscal	2013	compared	to	the	prior	year	resulting	from	a	slight	decrease	of	0.8%	in	the	number	of	credit	and	debit	card	processed transactions.

# Consolidated	Operating	Expenses

Cost	of	service	consists	primarily	of	the	following	costs:	salaries,	wages	and	related	expenses	paid	to	operations	and	technology-related	personnel,	including	those who	monitor	our	transaction	processing	systems	and	settlement	functions;	assessments	and	other	fees	paid	to	card	networks;	transaction	processing	systems,	including third-party	services;	network	telecommunications	capability;	depreciation	and	occupancy	costs	associated	with	the	facilities	performing	these	functions;	amortization	of intangible	assets;	and	provisions	for	operating	losses.	Cost	of	service	increased	9.9%	during	fiscal	2013,	compared	to	the	prior	year	primarily	driven	by	revenue	growth. As	a	percentage	of	revenue,	cost	of	service	increased	to	36.3%	for	fiscal	year	2013	from	35.6%	in	the	prior	year.

Sales,	general	and	administrative	expenses	consist	primarily	of	salaries,	wages	and	related	expenses	paid	to	sales	personnel;	non-revenue	producing	customer support	functions	and	administrative	employees	and	management;	commissions	paid	to	ISOs,	independent	contractors,	and	other	third	parties;	advertising	costs;	other selling	expenses;	share-based	compensation	expense	and	occupancy	of	leased	space	directly	related	to	these	functions.	Sales,	general	and	administrative	expenses increased	9.0%	for	fiscal	2013	compared	to	the	prior	year.	In	addition,	as	a	percentage	of	revenues,	sales,	general	and	administrative	expenses	increased	to	47.1%	for fiscal	2013	from	46.6%	in	the	prior	year.	These	increases	are	primarily	due	to	an	increase	in	commission	payments	to	ISOs	and	costs	associated	with	our	start	up operations	in	Brazil.	These	increases	were	somewhat	offset	by	the	elimination	of	ISO	commission	payments	previously	made	to	APT	as	a	result	of	our	acquisition	of APT	on	October	1,	2012.

# Operating	Income	and	Operating	Margin	for	Segments

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

Operating	income	in	the	North	America	merchant	services	segment	decreased	8.0%	for	fiscal	2013	compared	to	the	prior	year.	The	decrease	in	operating	income was	primarily	due	to	market-based	pricing	compression	in	Canada.	The	operating	margin	was	15.2%	and	17.9%	for	the	fiscal	years	2013	and	2012,	respectively.	The decrease	 in	operating	margin	was	primarily	driven	by	 the	ISO	channel,	 including	 the	 impact	of	 the	Durbin	amendment,	Canadian	spread	compression	and	costs associated	with	our	start	up	operation	in	Brazil.	These	increases	were	somewhat	offset	by	the	elimination	of	ISO	commission	payments	previously	made	to	APT	as	a result	of	our	acquisition	of	APT	on	October	1,	2012.	The	ISO	channel	generally	has	a	dilutive	effect	on	our	operating	margin	compared	to	our	other	channels	due	to	the ongoing	commission	payments	to	the	ISOs.

Effective	October	1,	2011,	the	new	debit	interchange	legislation	capped	the	amount	of	interchange	that	card	issuers	may	charge	on	transactions.	Our	interchange expenses	decreased	as	a	result	of	this.	We	recognize	revenue	net	of	interchange	expense;	therefore,	our	revenues	increased	as	a	result	of	lower	interchange	expense	with a	resulting	increase	in	operating	income	as	well.	Increased	revenues	came	primarily	through	our	ISO	channel,	where	reduced	interchange	fees	led	to	higher	revenues	and a	dollar-for-dollar	increase	in	ISO	commission	expense,	with	an	associated	reduction	in	our	operating	margin.

Operating	income	in	the	International	merchant	services	segment	increased	7.7%	to	$211.2	million	for	fiscal	2013	compared	to	the	prior	year.	The	operating margin	was	31.5%	and	30.8%	for	the	fiscal	years	2013	and	2012,	respectively.	The	increase	in	operating	margin	in	our	International	merchant	services	segment	is	due	to strong	results	in	Europe,	partially	offset	by	last	year's	marketing	fee	true-up	in	Spain,	whereby	CaixaBank	compensated	us	for	favorable	pricing	to	certain	CaixaBank customers	during	the	initial	phase	of	our	marketing	alliance	agreement.

# Corporate

Our	corporate	expenses	include	costs	associated	with	our	Atlanta	headquarters,	expenses	related	to	our	Global	Service	Center	in	Manila,	Philippines	that	have	not been	allocated	to	our	business	segments,	insurance,	employee	incentive	programs,	share-based	compensation	programs,	and	certain	corporate	staff,	including	finance, accounting,	information	technology,	including	data	security,	legal,	human	resources,	marketing	and	executive.	We	also	consider	costs	associated	with	the	processing system	intrusion	to	be	a	corporate	expense.	Our	corporate	costs	decreased	33.6%	to	$112.9	million	for	fiscal	2013	compared	to	the	prior	year.	This	decrease	is	primarily due	to	lower	costs	associated	with	the	processing	system	intrusion	and	charges	related	to	two	contractual	disputes	in	fiscal	2012.

# Consolidated	Operating	Income

During	the	fiscal	year	2013,	our	consolidated	operating	income	increased	$49.9	million	to	$357.2	million	from	$307.3	million	in	the	prior	year.	The	increase	in our	consolidated	operating	income	is	primarily	due	to	solid	financial	results	in	North	America	and	Europe	and	lower	costs	associated	with	the	processing	system intrusion	in	fiscal	compared	to	2012.

# Consolidated	Other	Income/Expense,	Net

Other	expense,	net,	increased	to	$22.9	million	for	fiscal	2013	compared	to	$6.9	million	in	the	prior	year	period.	The	increase	is	due	to	higher	debt	balances	as	well as	an	$8.4	million	distribution	to	HSBC	in	fiscal	2013.	This	distribution	was	characterized	as	interest	expense	in	accordance	with	the	provision	of	ASC	480.	For	further details,	see	Note	4	-	Business	and	Intangible	Asset	Acquisitions	in	the	notes	to	our	consolidated	financial	statements.

# Provision	for	Income	Taxes

Our	effective	tax	rates	were	28.6%	and	27.6%	for	the	years	ended	May	31,	2013	and	2012,	respectively.	The	effective	tax	rates	for	the	years	ended	May	31,	2013 and	2012	reflect	adjustments	to	our	U.K.	deferred	tax	asset	due	to	legislated	enacted	corporate	tax	rate	reductions	in	the	United	Kingdom	of	2%	in	each	year.	Our effective	tax	rates	differ	from	U.S.	statutory	rates	due	to	domestic	and	international	tax	planning	initiatives	and	the	increasing	amount	of	income	being	generated	in lower	tax	jurisdictions	due	to	international	expansion.

# Noncontrolling	Interests,	Net	of	Tax

Noncontrolling	interests,	net	of	tax	decreased	to	$22.6	million	from	$29.4	million	for	the	fiscal	years	2013	and	2012,	respectively.	This	decrease	is	primarily	due to	the	fact	that	we	stopped	attributing	income	to	the	GPAP	redeemable	noncontrolling	interest	subsequent	to	July	26,	2012,	the	date	of	our	agreement	to	purchase HSBC's	interest.

The	following	table	shows	key	selected	financial	data	for	the	fiscal	years	ended	May	31,	2012	and	2011,	this	data	as	a	percentage	of	total	revenues,	and	the changes	between	fiscal	years	in	dollars	and	as	a	percentage	of	fiscal	2011.	Comercia's	results	of	operations	are	included	in	our	consolidated	results	of	operations	and results	of	operations	of	our	International	merchant	services	segment	from	December	20,	2010,	the	date	we	acquired	our	controlling	financial	interest.	Accordingly, results	of	operations	for	the	year	ended	May	31,	2011	reflect	the	results	of	Comercia's	operations	for	five	months,	while	results	of	operations	for	the	year	ended	May	31, 2012	reflect	a	full	year	of	operating	results.

| (dollar	amounts	in	thousands) | 2012 | %	of	Revenue(1) | 2011 | %	of	Revenue(1) | Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |  |  |  |
| United\tStates | $1,234,818 | 56.0% | $1,031,997 | 55.5% | $202,821 | 19.7\t% |
| Canada | 332,434 | 15.1% | 330,872 | 17.8% | 1,562 | 0.5\t% |
| \t\t\t\tNorth\tAmerica\tmerchant\tservices | 1,567,252 | 71.1% | 1,362,869 | 73.3% | 204,383 | 15.0\t% |
| Europe | 489,300 | 22.2% | 359,567 | 19.3% | 129,733 | 36.1\t% |
| Asia-Pacific | 147,295 | 6.7% | 137,366 | 7.4% | 9,929 | 7.2\t% |
| \t\t\t\tInternational\tmerchant\tservices | 636,595 | 28.9% | 496,933 | 26.7% | 139,662 | 28.1\t% |
| \t\t\t\t\t\t\t\t\t\tTotal\trevenues | $2,203,847 | 100.0% | $1,859,802 | 100.0% | $344,045 | 18.5\t% |
| Consolidated\toperating\texpenses: |  |  |  |  |  |  |
| Cost\tof\tservice | $784,756 | 35.6% | $665,017 | 35.8% | $119,739 | 18.0\t% |
| Sales,\tgeneral\tand\tadministrative | 1,027,304 | 46.6% | 863,191 | 46.4% | 164,113 | 19.0\t% |
| Processing\tsystem\tintrusion | 84,438 | 3.8% | — | NM | 84,438 | NM |
| \t\t\t\t\tOperating\tincome | $307,349 | 13.9% | $331,594 | 17.8% | $(24,245) | (7.3)% |
| Operating\tincome\t(loss)\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | $281,305 |  | $268,233 |  | $13,072 | 4.9\t% |
| International\tmerchant\tservices | 196,137 |  | 143,911 |  | 52,226 | 36.3\t% |
| Corporate(2) | (170,093) |  | (80,550) |  | (89,543) | (111.2)% |
| \t\t\t\t\tOperating\tincome | $307,349 |  | $331,594 |  | $(24,245) | (7.3)% |
| Operating\tmargin\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | 17.9% |  | 19.7% |  | (1.8)% |  |
| International\tmerchant\tservices | 30.8% |  | 29.0% |  | 1.8\t% |  |

(2)	Includes	processing	system	intrusion	costs	of	$84.4	million	in	fiscal	2012.

In	early	March	of	2012,	we	identified	and	self-reported	unauthorized	access	into	a	limited	portion	of	our	North	America	card	processing	system.	During	fiscal 2012,	we	recorded	$84.4	million	of	expense	associated	with	this	event.	For	further	details,	see	Note	2	-	Processing	System	Intrusion	in	the	notes	to	our	consolidated financial	statements.

For	fiscal	2012,	revenues	increased	18.5%	to	$2,203.8	million	compared	to	the	prior	year	period	primarily	due	to	strong	performance	across	most	of	our	regions, and	the	impact	of	our	acquisition	of	a	51.0%	controlling	financial	interest	in	Comercia	on	December	20,	2010.

For	fiscal	2012,	revenue	from	our	North	America	merchant	services	segment	increased	15.0%	compared	to	the	prior	year	to	$1,567.3	million.	The	North	America merchant	services	segment	revenue	growth	was	driven	by	our	U.S.	ISO	channel,	reduced	interchange	expense	as	explained	below,	strong	growth	from	our	gaming business	and	solid	performance	from	our	direct	sales	channel.

We	grow	our	United	States	revenue	by	adding	small	and	mid-market	merchants	in	diversified	vertical	markets,	primarily	through	our	ISO	channel.	For	fiscal 2012,	our	United	States	direct	credit	and	debit	card	processed	transactions	grew	13.1%	compared	to	the	prior	year.	Increased	spreads,	primarily	driven	by	lower interchange	expense	due	to	the	Durbin	amendment,	have	offset	the	impact	of	lower	average	ticket,	which	decreased	by	3.2%	in	fiscal	2012.	This	decline	in	average	ticket is	primarily	due	to	a	shift	toward	smaller	merchants	added	through	our	ISO	channel.	Smaller	merchants	tend	to	have	lower	average	tickets	than	larger	merchants.	Based on	our	mix	of	merchants,	slightly	more	than	half	of	our	United	States	transactions	are	comprised	of	a	combination	of	signature-	and	PIN-based	debit	transactions,	with PIN-based	debit	transactions	representing	less	than	10.0%	of	our	total	transactions.

On	June	29,	2011,	the	Federal	Reserve	board	adopted	the	final	rule	implementing	Section	1075	("the	Durbin	amendment")	of	the	Dodd-Frank	Wall	Street	Reform and	Consumer	Protection	Act.	Effective	October	1,	2011,	the	Durbin	amendment	capped	the	amount	of	debit	interchange	that	large	card	issuers	may	charge	on	debit transactions.	Our	interchange	expense	decreased	as	a	result	of	the	Durbin	amendment.	We	recognize	revenue	net	of	interchange	expense;	therefore,	our	revenues increased	for	fiscal	2012,	as	a	result	of	lower	interchange	expense.	We	believe	that	any	future	benefits	resulting	from	the	Durbin	amendment	are	uncertain	due	to	our competitive	marketplace.

For	fiscal	2012,	our	Canadian	revenue	remained	flat	while	our	credit	and	debit	card	processed	transactions	grew	4.5%	compared	to	the	prior	year	period.	Our Canadian	business	experienced	reduced	spreads	due	to	market-driven	pricing	pressure	as	compared	to	the	prior	year.

For	fiscal	2012,	International	merchant	services	revenue	increased	28.1%	to	$636.6	million.

Our	Europe	merchant	services	revenue	for	fiscal	2012	 increased	36.1%	to	$489.3	million	compared	to	the	prior	year.	These	revenue	increases	were	driven primarily	by	the	impact	of	our	acquisition	in	Spain	on	December	20,	2010,	pricing	benefits	in	the	United	Kingdom	and	favorable	foreign	currency	trends	during	fiscal 2012.

Asia-Pacific	 merchant	 services	 revenue	 for	 fiscal	2012	 increased	7.2%	to	$147.3	million	compared	to	the	prior	year.	The	growth	was	due	to	solid	business performance	across	the	region.	Revenues	in	the	prior	year	included	the	roll-out	of	new	products	by	a	major	retailer	with	both	physical	and	e-commerce	transactions	in several	markets	in	the	region,	continued	growth	of	our	installment	payment	plan	and	regional	roll	out	of	our	dynamic	currency	conversion	products.

Cost	of	service	consists	primarily	of	the	following	costs:	operations-	and	technology-related	personnel,	including	those	who	monitor	our	transaction	processing systems	 and	 settlement	 functions;	 assessments	 and	 other	 fees	 paid	 to	 card	 networks;	 transaction	 processing	 systems,	 including	 third-party	 services;	 network telecommunications	capability;	depreciation	and	occupancy	costs

associated	with	the	facilities	performing	these	functions;	amortization	of	intangible	assets;	and	provisions	for	operating	losses.	Cost	of	service	increased	18.0%	during fiscal	2012,	compared	to	the	prior	year	period	primarily	driven	by	revenue	growth.	As	a	percentage	of	revenues,	cost	of	service	decreased	to	35.6%	for	fiscal	2012	from 35.8%	in	the	prior	year.

Sales,	general	and	administrative	expenses	consists	primarily	of	salaries,	wages	and	related	expenses	paid	to	sales	personnel;	non-revenue	producing	customer support	functions	and	administrative	employees	and	management;	commissions	paid	to	ISOs,	independent	contractors,	and	other	third	parties;	advertising	costs;	other selling	expenses;	share-based	compensation	expense	and	occupancy	of	leased	space	directly	related	to	these	functions.	Sales,	general	and	administrative	expenses increased	19.0%	for	fiscal	2012	compared	to	the	prior	year	period.	This	increase	is	primarily	due	to	employee	termination	costs,	charges	for	two	contractual	disputes, and	an	increase	in	commission	payments	to	ISOs.	As	a	percentage	of	revenues,	sales,	general	and	administrative	expenses	increased	to	46.6%	for	fiscal	2012	from 46.4%	in	the	prior	year.

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

Operating	income	in	the	North	America	merchant	services	segment	increased	4.9%	for	fiscal	2012	compared	to	the	prior	year	period.	The	increase	in	operating income	was	driven	by	growth	in	the	U.S.	primarily	driven	by	our	ISO	and	direct	channels	partially	offset	by	market-based	spread	compression	in	Canada	and,	to	a	lesser extent,	increased	investment	in	Brazil.	This	resulted	in	operating	margins	decreasing	during	fiscal	2012.	The	operating	margin	was	17.9%	and	19.7%	for	the	fiscal	years 2012	and	2011,	respectively.	The	decrease	in	operating	margin	was	primarily	driven	by	ISO	channel	dilution,	including	the	impact	of	the	Durbin	amendment,	Canadian spread	compression	and	costs	associated	with	our	start	up	in	Brazil.

Operating	income	in	the	International	merchant	services	segment	increased	36.3%	to	$196.1	million	for	fiscal	2012	compared	 to	 the	prior	year	period.	The operating	margin	was	30.8%	and	29.0%	for	the	fiscal	years	2012	and	2011,	respectively.	The	increase	in	operating	margin	in	our	International	merchant	services segment	is	due	in	part	to	pricing	benefits	in	the	United	Kingdom	arising	from	changes	to	merchant	discount	rates	upon	conversion	of	our	merchant	portfolio	to	our processing	platform,	which	allows	us	to	more	closely	align	pricing	with	underlying	transaction	characteristics.	In	addition,	the	increase	in	operating	margin	is	partially attributable	to	a	marketing	fee	true-up	in	Spain,	whereby	CaixaBank	compensated	us	for	favorable	pricing	terms	extended	to	certain	CaixaBank	customers	during	the initial	phase	of	our	marketing	alliance	agreement.

Our	corporate	expenses	include	costs	associated	with	our	Atlanta	headquarters,	expenses	related	to	our	Global	Service	Center	in	Manila,	Philippines	that	have	not been	allocated	to	our	business	segments,	insurance,	employee	incentive	programs,	share-based	compensation	programs	and	certain	corporate	staff,	including	finance, accounting,	information	technology,	legal,	human	resources,	marketing,	and	executive.	Our	corporate	costs	increased	111.2%	to	$170.1	million	for	fiscal	2012	compared to	the	prior	year.	This	increase	is	primarily	due	to	costs	associated	with	the	processing	system	intrusion,	employee	termination	costs	and	charges	for	two	contractual disputes.	The	prior	year	corporate	costs	included	expenses	related	to	our	Global	Service	Center	in	Manila,	Philippines	and	employee	and	termination	benefits.

During	 the	 fiscal	 year	2012,	our	consolidated	operating	income	decreased	$24.2	million	to	$307.3	million	compared	to	the	prior	year.	The	decrease in	our consolidated	operating	income	is	primarily	due	to	costs	associated	with	the	processing	system	intrusion.

Other	expense,	net,	decreased	to	$6.9	million	for	fiscal	2012	compared	to	$7.4	million	in	the	prior	year	period.	Interest	expense	decreased	during	fiscal	2012	due	to lower	term	loan	borrowings.

Our	effective	tax	rates	were	27.6%	and	29.3%	for	the	years	ended	May	31,	2012	and	2011,	respectively.	The	effective	tax	rates	for	the	years	ended	May	31,	2012 and	2011	reflect	adjustments	to	our	U.K.	deferred	tax	asset	due	to	legislated	enacted	corporate	tax	rate	reductions	in	the	United	Kingdom	of	2.0%	and	1.0%,	respectively. Our	effective	tax	rates	differ	from	U.S.	statutory	rates	due	to	domestic	and	international	tax	planning	initiatives	and	the	increasing	amount	of	income	being	generated	in lower	tax	jurisdictions	due	to	international	expansion.

We	have	net	deferred	tax	assets	associated	with	our	U.K.	business	of	$92.8	million.	The	measurement	of	such	deferred	tax	assets	is	based,	in	part,	on	the	current enacted	corporate	tax	rate	in	the	United	Kingdom.	The	2012	United	Kingdom	budget	includes	a	reduction	in	the	corporate	tax	rate	from	25.0%	to	23.0%.	Upon enactment	of	this	rate,	which	was	expected	during	the	first	half	of	our	fiscal	year	2013,	we	estimated	that	we	will	record	a	reduction	in	our	U.K.	deferred	tax	asset	and	a corresponding	increase	to	our	deferred	income	tax	provision	of	approximately	$5.0	million.

Noncontrolling	interests,	net	of	tax	increased	to	$29.4	million	from	$18.9	million	for	the	fiscal	year	2012	and	2011,	respectively.	This	increase	is	primarily	due	to our	acquisition	of	a	51%	controlling	financial	interest	in	Comercia	on	December	20,	2010.

# Liquidity	and	Capital	Resources

A	significant	portion	of	our	liquidity	comes	from	operating	cash	flows.	Cash	flow	from	operations	is	used	to	make	planned	capital	investments	in	our	business,	to pursue	acquisitions	that	meet	our	corporate	objectives,	to	pay	dividends,	and	to	pay	down	debt	and	repurchase	shares	at	the	discretion	of	our	Board	of	Directors. Accumulated	cash	balances	are	invested	in	high	quality	and	marketable	short-term	instruments.

Our	capital	plan	objectives	are	to	support	the	Company's	operational	needs	and	strategic	plan	for	long-term	growth	while	maintaining	a	low	cost	of	capital.	Lines of	credit	are	used	in	certain	of	our	markets	to	fund	settlement	and	as	a	source	of	working	capital	and,	along	with	other	bank	financing,	to	fund	acquisitions.	We	regularly evaluate	our	liquidity	and	capital	position	relative	to	cash	requirements,	and	we	may	elect	to	raise	additional	funds	in	the	future,	either	through	the	issuance	of	debt, equity	or	otherwise.

At	May	31,	2013,	we	had	cash	and	cash	equivalents	totaling	$680.5	million.	Of	this	amount,	we	consider	$255.0	million	to	be	available	cash.	Our	available	cash balance	includes	$214.1	million	of	cash	held	by	foreign	subsidiaries	whose	earnings	are	considered	permanently	reinvested	for	U.S.	tax	purposes.	These	cash	balances reflect	our	capital	investments	in	these	subsidiaries	and	the	accumulation	of	cash	flows	generated	by	each	subsidiary's	operations,	net	of	cash	flows	used	to	service	debt locally	and	fund	non-U.S.	acquisitions.	We	believe	that	we	are	able	to	maintain	a	sufficient	level	of	liquidity	for	our	domestic	operations	and	commitments	without repatriation	of	the	earnings	of	these	foreign	subsidiaries.	If	we	were	to	repatriate	some	or	all	of	the	cash	held	by	such	foreign	subsidiaries,	we	do	not	believe	that	the associated	income	tax	liabilities	would	have	a	significant	impact	on	our	liquidity.

Available	cash	excludes	settlement	related	and	merchant	reserve	cash	balances.	Settlement	related	cash	balances	represent	funds	that	we	hold	on	behalf	of	our member	sponsors	when	the	incoming	amount	from	the	card	networks	precedes	the	member

sponsors'	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	reserve	cash	balances	represent	funds	collected	from	our	merchants	that	serve	as	collateral	("Merchant	Reserves")	to minimize	contingent	liabilities	associated	with	any	losses	that	may	occur	under	the	merchant	agreement.	At	May	31,	2013,	our	cash	and	cash	equivalents	included $280.7	million	related	to	Merchant	Reserves.	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.	See	Cash	and	cash	equivalents	and Settlement	processing	assets	and	obligations	under	Note	1	and	Note	3	in	the	notes	to	the	consolidated	financial	statements	for	additional	details.

Operating	activities	provided	net	cash	of	$240.5	million	during	fiscal	year	2013	compared	to	using	net	cash	of	$173.5	million	during	the	prior	year.	The	increase	in cash	flow	from	operating	activities	was	primarily	due	to	the	change	in	net	settlement	processing	assets	and	obligations	of	$464.3	million	driven	by	the	timing	of	month end	cut-off.

Net	cash	used	in	investing	activities	increased	from	$150.4	million	to	$528.6	million	for	the	fiscal	year	ended	May	31,	2013	from	the	prior	year,	primarily	due	to our	use	of	$409.3	million	and	$22.9	million	for	the	acquisitions	of	APT	and	Civica,	respectively,	during	the	fiscal	year	ended	May	31,	2013.

For	fiscal	year	2013,	financing	activities	provided	$183.5	million	in	cash	compared	to	using	$218.2	million	in	cash	in	the	prior	year.	The	increase	in	cash	provided by	financing	activities	was	primarily	related	to	proceeds	of	$700.0	million	from	the	term	loan	and	$80.5	million	from	net	long-term	revolver	borrowings.	We	used $242.0	million	of	these	proceeds	to	purchase	the	remaining	44%	of	GPAP	from	HSBC.	We	also	repurchased	3,674,656	shares	of	our	common	stock	with	a	cash	payment of	$175.3	million	during	fiscal	year	ended	May	31,	2013.	In	addition,	we	made	payments	on	term	loans	and	notes	payable	in	the	amount	of	$126.0	million	and	we	made net	payments	in	the	amount	of	$27.9	million	on	our	short-term	revolver.

We	believe	that	our	current	level	of	cash	and	borrowing	capacity	under	our	lines	of	credit	described	below,	together	with	future	cash	flows	from	operations,	are sufficient	to	meet	the	needs	of	our	existing	operations	and	planned	requirements	for	the	foreseeable	future.	During	fiscal	year	2014,	we	expect	capital	expenditures	to approximate	$90.0	million.

# Long-Term	Debt	and	Credit	Facilities

Outstanding	debt	consisted	of	the	following:

|  | May	31,<br>2013 | May	31,<br>2012 |
| :--- | :--- | :--- |
| Lines\tof\tcredit: | (in\tthousands) |  |
| Corporate\tCredit\tFacility\t-\tlong-term | $309,955 | $229,500 |
| Short-term\tlines\tof\tcredit: |  |  |
| United\tKingdom\tCredit\tFacility | 74,146 | 85,102 |
| Hong\tKong\tCredit\tFacility | 38,134 | 54,564 |
| Spain\tCredit\tFacility | 28,041 | 17,241 |
| Malaysia\tCredit\tFacility | 14,025 | 12,844 |
| Taiwan\tCredit\tFacility | 8,359 | — |
| Canada\tCredit\tFacility | 6,866 | 20,033 |
| Singapore\tCredit\tFacility | 6,459 | 10,318 |
| Philippines\tCredit\tFacility | 6,384 | 6,336 |
| Sri\tLanka\tCredit\tFacility | 1,978 | 2,291 |
| Macau\tCredit\tFacility | 1,966 | 2,443 |
| Maldives\tCredit\tFacility | 741 | 4,219 |
| Brunei\tCredit\tFacility | 362 | — |
| Total\tshort-term\tlines\tof\tcredit | $187,461 | $215,391 |
| Total\tlines\tof\tcredit | 497,416 | 444,891 |
| Notes\tpayable | 6,014 | 10,089 |
| Term\tloans | 647,500 | 73,396 |
| Total\tdebt | $1,150,930 | $528,376 |
| Current\tportion | $259,796 | $291,811 |
| Long-term\tdebt | 891,134 | 236,565 |
| Total\tdebt | $1,150,930 | $528,376 |
| Maturity\trequirements\ton\toutstanding\tdebt\tby\tfiscal\tyears\tare\tas\tfollows\t(in\tthousands): |  |  |
| 2014 | 2014 | $259,796 |
| 2015 |  | 71,472 |
| 2016 | 2016 | 381,427 |
| 2017 |  | 70,735 |
| 2018 | 2018 | 367,500 |
| Total |  | $1,150,930 |

      Maturity	requirements	on	outstanding	debt	by	fiscal	years	are	as	follows	(in	thousands):

# Lines	of	Credit

The	Corporate	Credit	Facility	is	available	for	general	corporate	purposes	and	to	fund	future	strategic	acquisitions.	Our	short-term	lines	of	credit	facilities	are primarily	used	to	fund	settlement.	For	certain	of	our	lines	of	credit	facilities,	the	maximum	borrowing	amount	may	exceed	the	stated	credit	limit	by	the	amount	of	cash we	have	on	deposit	in	specific	accounts	with	the	lender.	Accordingly,	the	line	of	credit	balance	may	exceed	the	stated	credit	limit	at	any	given	point	in	time,	when	in	fact the	combined	position	is	less	than	the	credit	limit.	The	total	available	incremental	borrowings	under	our	Corporate	Credit	Facilities	at	May	31,	2013	was	$440.0	million. As	of	May	31,	2013,	we	had	$796.1	million	available	to	fund	settlement	under	our	short-term	lines	of	credit.

During	the	year	ended	May	31,	2013,	the	maximum	and	average	borrowings	under	our	lines	of	credit	were	$871.9	million	and	$464.5	million,	respectively.	The weighted-average	interest	rates	on	these	borrowings	were	1.8%	 and	2.1%,	respectively,	for	the	fiscal	years	ended	May	31,	2013	and	May	31,	2012.	Our	maximum borrowed	amount	was	greater	than	our	average	and	period	end	borrowings	due	to	the	timing	of	settlement	funding.

# Our	line	of	credit	facilities	consist	of	the	following:

•Corporate	-	an	unsecured	five-year,	$750.0	million	revolving	credit	facility,	which	we	refer	to	as	the	Corporate	Credit	Facility	with	a	syndicate	of	financial institutions.	The	multi-currency	facility	expires	in	December	2015	and	has	a	variable	interest	rate	based	on	a	market	short-term	interest	rate	plus	a	leverage based	 margin.	 On	 September	 28,	 2012,	 the	 Corporate	 Credit	 Facility	 was	 expanded	 from	 $600.0	 million	 to	$750.0	 million	 by	 requesting	 additional commitments	 from	 new	 and	 existing	 lenders.	The	Corporate	Credit	Facility	contains	certain	financial	and	non-financial	covenants	and	events	of	default customary	for	financings	of	this	nature.

We	plan	to	use	the	Corporate	Credit	Facility	to	support	strategic	growth	initiatives	and	for	general	corporate	purposes.	As	of	May	31,	2013,	annual	interest	rate on	the	credit	facility	was	2.2%	and	the	aggregate	outstanding	balance	was	$310.0	million.	The	Corporate	Credit	Facility	is	included	in	long-term	debt	in	the accompanying	consolidated	balance	sheets	because	we	are	not	contractually	obligated	to	make	repayments	in	the	next	twelve	months.

•United	Kingdom-	a	revolving	credit	facility	with	HSBC	Bank,	for	up	to	£140.0	million	($212.3	million	USD	as	of	May	31,	2013)	to	fund	settlement.	This	credit facility	has	a	variable	short-term	interest	rate	plus	a	margin.	As	of	May	31,	2013,	the	annual	interest	rate	was	1.9%.	This	facility	is	subject	to	annual	review. During	the	year	ended	May	31,	2013,	this	facility	was	amended	to	facilitate	borrowings	in	multiple	currencies.

•Hong	Kong	-	a	revolving	overdraft	facility	with	HSBC	Limited	Hong	Kong,	for	up	to	1.0	billion	Hong	Kong	dollars	($128.8	million	USD	as	of	May	31,	2013) to	fund	settlement.		In	addition,	the	Hong	Kong	credit	facility	allows	us	to	expand	the	size	of	the	uncommitted	facility	to	1.5	billion	Hong	Kong	dollars.	This facility	has	a	variable	short-term	interest	rate	plus	a	margin.		As	of	May	31,	2013,	the	annual	interest	rate	on	the	facility	was	0.9%.	This	facility	is	subject	to annual	review.

•Canada	-	a	revolving	credit	facility,	which	we	refer	to	as	our	Canada	Credit	Facility,	with	the	Canadian	Imperial	Bank	of	Commerce,	or	CIBC.	The	Canada Credit	Facility	is	a	facility	which	consists	of	a	line	of	credit	of	$25.0	million	Canadian	dollars	($24.8	million	USD	as	of	May	31,	2013).	In	addition,	the	Canada Credit	Facility	allows	us	to	expand	the	size	of	the	uncommitted	facility	to	$30.0	million	Canadian	dollars.	This	credit	facility	carries	no	termination	date,	but can	be	terminated	by	either	party	with	advance	notice.	This	credit	facility	has	card	association	receivables	and	CIBC	settlement	related	bank	accounts	as pledged	collateral.	This	credit	facility	has	a	variable	interest	rate	based	on	the	Canadian	dollar	Interbank	Offered	Rate	or	prime	rate	plus	a	margin.	As	of May	31,	2013,	the	annual	interest	rate	was	1.5%.

•Malaysia	-	a	revolving	overdraft	facility	with	HSBC	Bank	Malaysia	Berhad,	for	up	to	90.0	million	Malaysian	Ringgits	($29.3	million	USD	as	of	May	31,	2013) to	fund	settlement.	This	facility	has	a	variable	short-term	interest	rate	less	a	margin.		As	of	May	31,	2013,	the	annual	interest	rate	on	the	facility	was	3.7%.	This facility	is	subject	to	annual	review.

•Spain	-	a	revolving	credit	facility	with	CaixaBank,	for	up	to	€250.0	million	($324.7	million	USD	as	of	May	31,	2013)	to	fund	settlement.	This	credit	facility also	allows	borrowings	in	British	Pound	Sterling,	Japanese	Yen,	and	United	States	dollars,	and	has	a	variable	short-term	interest	rate	plus	a	margin.	As	of May	31,	2013,	the	annual	interest	rate	was	0.3%.	The	term	of	this	facility	is	through	January	2014.

•Singapore	-	a	revolving	overdraft	facility	with	HSBC	Banking	Corporation	Limited,	for	up	to	25.0	million	Singapore	dollars	($19.8	million	USD	as	of	May	31, 2013)	to	fund	settlement.	This	facility	has	a	variable	short-term	interest	rate	plus	a	margin.		As	of	May	31,	2013,	the	annual	interest	rate	on	the	facility	was 0.9%.	This	facility	is	subject	to	annual	review.

•Philippines	-	a	revolving	facility	with	HSBC	Bank,	Philippines,	for	up	to	450.0	million	Philippine	Pesos	($10.6	million	USD	as	of	May	31,	2013)	and	$2.5 million	United	States	dollars	to	fund	settlement.		The	facility	has	variable	short-term	interest	rates	plus	a	margin.		As	of	May	31,	2013,	the	annual	interest	rates on	the	facility	was	3.8%	for	the	Philippines	Pesos	tranche.	This	facility	is	subject	to	annual	review.

•Maldives	-	a	revolving	overdraft	facility	with	HSBC	Bank,	Maldives,	for	up	to	$6.0	million	to	fund	settlement.	This	facility	is	denominated	in	United	States dollars	and	has	a	variable	short-term	interest	rate	plus	a	margin.		As	of	May	31,	2013,	the	annual	interest	rate	on	the	facility	was	4.7%.	This	facility	is	subject	to annual	review.

•Macau	-	a	revolving	overdraft	facility	with	HSBC	Asia	Pacific,	for	40.0	million	Macau	Pataca	($4.9	million	USD	as	of	May	31,	2013)	to	fund	settlement.	In addition,	the	Macau	Credit	Facility	allows	us	to	expand	the	size	of	the	uncommitted	facility	to	150.0	million	Macau	Pataca.	This	credit	facility	has	a	variable interest	rate	based	on	the	lending	rate	stipulated	by	HSBC	Asia	Pacific,	less	a	margin.	As	of	May	31,	2013,	the	annual	interest	rate	on	the	facility	was	2.5%. This	facility	is	subject	to	annual	review.

•Sri	Lanka	-	a	revolving	overdraft	facility	with	HSBC	Bank,	Sri	Lanka,	for	550.0	million	Sri	Lankan	Rupees	($4.3	million	USD	as	of	May	31,	2013)	in	two tranches:	one	to	fund	settlement	and	the	other	for	general	corporate	purposes.		The	facility	has	a	variable	short-term	interest	rate	plus	a	margin.		As	of	May	31, 2013,	the	annual	interest	rate	on	the	two	tranches	of	the	facility	was	14.0%.	This	facility	is	subject	to	annual	review.

•National	Bank	of	Canada	-	a	revolving	credit	facility	for	up	to	$80.0	million	Canadian	dollars	($77.4	million	USD	as	of	May	31,	2013)	and	$5.0	million	United States	dollars	to	provide	certain	Canadian	merchants	with	same	day	value	for	MasterCard	credit	card	transactions	and	debit	card	transactions.	This	credit facility	has	a	variable	short-term	interest	rate	plus	a	margin.	As	of	May	31,	2013,	the	facility	was	undrawn.

•Taiwan	-	a	revolving	overdraft	facility	for	up	to	1.5	billion	Taiwan	dollars	($50.0	million	USD	as	of	May	31,	2013)	to	fund	settlement.	This	credit	facility	has	a variable	short-term	interest	rate	plus	a	margin.	As	of	May	31,	2013,	the	annual	interest	rate	on	the	facility	was	2.1%.	This	facility	is	subject	to	annual	review.

•Brunei	-	a	revolving	overdraft	facility	for	up	to	4.5	million	Brunei	dollars	($3.5	million	USD	as	of	May	31,	2013)	to	fund	settlement	was	entered	into	in	April 2013.	This	credit	facility	has	a	variable	short-term	interest	rate	plus	a	margin.	As	of	May	31,	2013,	the	annual	interest	rate	on	this	facility	was	2.4%.	This facility	is	subject	to	annual	review.

# Term	Loans

On	September	28,	2012,	we	entered	into	a	five-year	unsecured	$700.0	million	term	loan	agreement	with	a	syndicate	of	banks,	which	we	used	to	partially	fund	our acquisition	of	APT	and	our	purchase	of	HSBC	Asia's	44%	interest	in	GPAP	and	to	repay	the	outstanding	balance	on	the	Corporate	Credit	Facility.	 The	term	loan	expires in	September	2017	and	bears	interest,	at	our	election,	at	the	prime	rate	or	London	Interbank	Offered	Rate	("LIBOR"),	plus	a	leverage-based	margin.	As	of	May	31, 2013,	the	annual	interest	rate	on	the	term	loan	was	2.2%.	The	term	loan	has	scheduled	principal	payments	of	$17.5	million	at	the	end	of	each	fiscal	quarter	through maturity.	As	of	May	31,	2013,	the	outstanding	balance	of	the	term	loan	was	$647.5	million.

On	January	31,	2013,	we	repaid	the	outstanding	balance	of	our	five-year	unsecured	$200.0	million	term	loan	agreement	with	a	syndicate	of	banks	in	the	United States.	The	term	loan	had	a	variable	interest	rate	based	on	LIBOR	plus	a	leverage	based	margin.

On	July	10,	2012,	we	repaid	the	outstanding	balance	of	our	five-year	unsecured	$300.0	million	term	loan	agreement	($230.0	million	and	£43.5	million)	with	a syndicate	of	financial	institutions.	The	term	loan	had	a	variable	interest	rate	based	on	LIBOR	plus	a	leveraged-based	margin.

# Notes	Payable

United	Card	Services,	or	UCS,	our	subsidiary	in	the	Russian	Federation,	has	notes	payable	with	a	total	outstanding	balance	of	approximately	$6.0	million	at May	31,	2013.	These	notes	have	fixed	annual	interest	rates	of	8.5%	with	maturity	dates	ranging	from	June	2013	through	November	2016.

# Compliance	with	Covenants

There	are	certain	financial	and	non-financial	covenants	contained	in	our	various	credit	facilities	and	term	loans.	Our	term	loan	agreements	include	financial covenants	requiring	a	leverage	ratio	no	greater	than	3.25	to	1.00	and	a	fixed	charge	coverage	ratio	no	less	than	2.50	to	1.00.	We	complied	with	these	covenants	as	of	and for	the	year	ended	May	31,	2013.

# Redeemable	Noncontrolling	Interest

As	of	May	31,	2012,	we	had	a	redeemable	noncontrolling	interest	associated	with	our	Asia-Pacific	merchant	services	business.	Global	Payments	Asia-Pacific Limited,	or	GPAP,	is	the	entity	through	which	we	conduct	our	merchant	acquiring	business	in	the	Asia-Pacific	region.		We	owned	56%	of	GPAP	and	HSBC	Asia	owned the	remaining	44%.		The	GPAP	shareholders'	agreement	included	provisions	pursuant	to	which	HSBC	Asia	could	have	compelled	us	to	purchase,	at	the	lesser	of	fair value	or	a	net	revenue	multiple,	additional	GPAP	shares	from	HSBC	Asia	(the	"Put	Option").		Because	the	Put	Option	was	not	solely	within	our	control,	we	classified this	interest	as	a	redeemable	noncontrolling	interest	and	reported	the	maximum	total	redemption	amount	in	the	mezzanine	section	of	the	consolidated	balance	sheet.	In accordance	with	current	accounting	guidance,	we	adjusted	our	redeemable	noncontrolling	interest	to	reflect	the	maximum	redemption	amount	as	of	May	31,	2012	with	a corresponding	adjustment	to	retained	earnings	on	our	consolidated	balance	sheet.

On	July	26,	2012,	outside	the	terms	of	the	Put	Option,	we	agreed	to	purchase	all	of	HSBC	Asia's	interest	in	GPAP	for	$242.0	million.	We	accounted	for	the purchase	of	the	remaining	44%	of	GPAP	as	an	equity	transaction	with	a	reduction	of	redeemable	noncontrolling	interest	of	$146.0	million	and	a	reduction	of	retained earnings	 of	$96	million.	In	accordance	with	Accounting	Standards	Codification	480,	Distinguishing	 Liabilities	 from	 Equity	("ASC	480"),	from	the	agreement	date through	the	close	of	the	transaction,	we	accounted	for	our	commitment	to	purchase	the	remaining	44%	of	GPAP	as	a	freestanding	forward	contract.	Accordingly	as	of July	26,	2012,	we	stopped	attributing	income	to	redeemable	noncontrolling	interest	and	any	subsequent	distributions	to	holders	of	the	redeemable	noncontrolling	interest are	characterized	as	interest	expense.	HSBC	Asia	is	entitled	to	dividends	through	the	closing	of	the	transaction	pursuant	to	the	GPAP	shareholders	agreement	and	the purchase	agreement.	During	fiscal	2013,	we	declared	a	dividend	for	fiscal	year	2012	of	which	$8.4	million	was	paid	to	HSBC	Asia.	Such	dividend	is	reflected	as	interest expense	in	our	consolidated	statements	of	income	in	the	accordance	with	the	provisions	of	ASC	480.	During	fiscal	year	2014,	we	expect	to	declare	an	additional dividend	related	to	GPAP	operations	through	the	closing	date.	We	expect	HSBC	Asia's	share	of	such	dividend	to	be	reflected	in	interest	expense	in	our	fiscal	year	 2014 consolidated	statements	of	income.

# Data	Center	Relocation

We	have	undertaken	the	relocation	and	redesign	of	our	primary	data	center	and	processing	system.	We	have	entered	into	agreements	related	to	this	relocation	and for	the	ongoing	management	of	the	data	center,	and	we	are	contractually	committed	 to	make	payments	for	 the	ongoing	management	of	our	data	center	 through December	31,	2016.	These	obligations	are	included	in	the	operating	leases	and	purchase	obligations	line	of	the	table	presented	below.

# Off-Balance	Sheet	Arrangements

We	 have	 not	 entered	 into	 any	 transactions	 with	 unconsolidated	 entities	 whereby	 we	 have	 financial	 guarantees,	 subordinated	 retained	 interest,	 derivative instruments,	or	other	contingent	arrangements	that	expose	us	to	material	continuing	risks,	contingent	liabilities,	or	other	obligations	under	a	variable	interest	in	an unconsolidated	entity	that	provides	us	with	financing,	liquidity,	market,	or	credit	risk	support	other	than	the	guarantee	products	described	under	"Critical	Accounting Estimates"	below.

# BIN/ICA	Agreements

In	connection	with	our	acquisition	of	merchant	credit	card	operations	of	banks,	we	have	entered	into	sponsorship	or	depository	and	processing	agreements	with certain	of	the	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	May	31,	2013.

# Commitments	and	Contractual	Obligations

The	following	table	summarizes	our	contractual	obligations	and	commitments	as	of	May	31,	2013:

|  | Total | Less	than	1	Year | 1-3	Years | 3-5	Years | 5+	Years |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (in\tthousands) |  |  |
| Operating\tleases\t(Note\t15)\tand\tpurchase\tobligations | $159,606 | $35,935 | $65,153 | $39,182 | $19,336 |
| Total\tdebt,\tincluding\tcurrent\tportion\t(Note\t7) | 1,150,930 | 259,796 | 452,899 | 438,235 | — |
| Interest\ton\tlong-term\tdebt(1) | 49,370 | 14,209 | 23,345 | 11,816 | — |

(1)	Interest	on	variable	rate	debt	is	based	on	rates	effective	and	amounts	borrowed	as	of	May	31,	2013.

Note:	This	table	excludes	other	obligations	that	we	may	have,	such	as	employee	benefit	plan	obligations,	unrecognized	tax	benefits,	and	other	current	and	long- term	liabilities	reflected	in	our	consolidated	balance	sheet.	At	this	time,	we	are	unable	to	make	a	reasonably	reliable	estimate	of	the	timing	of	these	payments;	therefore such	amounts	are	not	included	in	the	above	contractual	obligation	table.	We	do	not	have	any	material	purchase	commitments	as	of	May	31,	2013.

# Critical	Accounting	Policies

In	applying	the	accounting	policies	that	we	use	to	prepare	our	consolidated	financial	statements,	we	necessarily	make	accounting	estimates	that	affect	our	reported amounts	of	assets,	liabilities,	revenues	and	expenses.	Some	of	these	accounting	estimates	require	us	to	make	assumptions	about	matters	that	are	highly	uncertain	at	the time	 we	 make	 the	 accounting	 estimates.	We	base	these	assumptions	and	the	resulting	estimates	on	historical	information	and	other	factors	that	we	believe	to	be reasonable	under	the	circumstances,	and	we	evaluate	these	assumptions	and	estimates	on	an	ongoing	basis.	In	many	instances,	however,	we	reasonably	could	have	used different	accounting	estimates	and,	in	other	instances,	changes	in	our	accounting	estimates	could	occur	from	period	to	period,	with	the	result	in	each	case	being	a material	change	in	the	financial	statement	presentation	of	our	financial	condition	or	results	of	operations.	We	refer	to	accounting	estimates	of	this	type	as	"critical accounting	estimates."	The	critical	accounting	estimates	that	we	discuss	below	are	those	that	we	believe	are	most	important	to	an	understanding	of	our	consolidated financial	statements.

We	have	considered	 the	 impact	of	 the	processing	system	 intrusion	on	our	critical	accounting	estimates	related	 to	goodwill,	 long-lived	asset	and	 internally developed	software	valuations.	We	currently	do	not	believe	this	event	or	associated	business	impacts	represent	an	impairment	indicator	with	respect	to	any	of	our goodwill	reporting	units,	individual	long-lived	assets	or	asset	groups,	or	internally	developed	software,	whether	placed	in	service	or	currently	under	development. Accordingly,	we	have	not	deemed	it	necessary	to	perform	any	interim	goodwill	impairment	testing	or	impairment	testing	of	internally	developed	software	or	other	long- lived	assets.		If	in	future	periods	we	experience	or	project	diminished	cash	flows	due	to	merchant	attrition	or	other	effects	of	the	event,	we	will	reassess	the	assumptions that	underlie	the	estimates	made	in	preparing	our	financial	statements.

Accounting	estimates	necessarily	require	subjective	determinations	about	future	events	and	conditions.	Therefore,	the	following	descriptions	of	critical	accounting estimates	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	of	the	notes	to	consolidated	financial	statements	and	the	risk	factors	contained	in	"Item	1A	-	Risk	Factors"	of	this	annual	report.

# Reserve	for	operating	losses

As	a	part	of	our	direct	merchant	credit	card	and	debit	card	processing	services	and	check	guarantee	services	we	experience	merchant	losses	and	check	guarantee losses,	which	we	collectively	refer	to	as	"operating	losses."	Merchant	losses	occur	when	we	are	unable	to	collect	amounts	from	merchant	customers	for	any	charges properly	reversed	by	the	cardholder.	Check	guarantee	losses	occur	when	we	are	unable	to	collect	the	full	amount	of	a	guaranteed	check	from	the	checkwriter.	Please	refer to	the	notes	to	consolidated	financial	statements	for	a	further	explanation	of	these	operating	losses.

We	process	credit	card	transactions	for	direct	merchants	and	recognize	revenue	based	on	a	percentage	of	the	gross	amount	charged.	Our	direct	merchant	customers have	the	liability	for	any	charges	properly	reversed	by	the	cardholder.	In	the	event,	however,	that	we	are	not	able	to	collect	such	amount	from	the	merchants,	due	to merchant	fraud,	insolvency,	bankruptcy	or	any	other	reason,

we	may	be	liable	for	any	such	reversed	charges.	We	require	cash	deposits,	guarantees,	letters	of	credit	and	other	types	of	collateral	by	certain	merchants	to	minimize	any such	contingent	liability,	and	we	also	utilize	a	number	of	systems	and	procedures	to	manage	merchant	risk.	We	have,	however,	historically	experienced	losses	due	to merchant	defaults.

We	account	for	our	potential	liability	for	the	full	amount	of	the	operating	losses	discussed	above	as	guarantees.	We	estimate	the	fair	value	of	these	guarantees	by adding	a	fair	value	margin	to	our	estimate	of	losses.	This	estimate	of	losses	is	comprised	of	estimated	known	losses	and	estimated	incurred	but	not	reported	losses. Estimated	known	losses	arise	from	specific	instances	of,	for	example,	merchant	bankruptcies,	closures	or	fraud	of	which	we	are	aware	at	the	balance	sheet	date,	but	for which	the	ultimate	amount	of	associated	loss	will	not	be	determined	until	after	the	balance	sheet	date.	Estimated	known	loss	accruals	are	recorded	when	it	is	probable that	we	have	incurred	a	loss	and	the	loss	is	reasonably	estimable.	Estimated	known	losses	are	calculated	at	the	merchant	level	based	on	chargebacks	received	to	date, processed	 volume,	 and	 historical	 chargeback	 ratios.	The	 estimate	 is	 reduced	 for	 any	 collateral	 that	 we	 hold.	Accruals	 for	 estimated	 known	 losses	 are	 evaluated periodically	and	adjusted	as	appropriate	based	on	actual	loss	experience.	Incurred	but	not	reported	losses	result	from	transactions	that	we	process	before	the	balance sheet	date	for	which	we	have	not	yet	received	chargeback	notification.	We	estimate	incurred	but	not	reported	losses	by	applying	historical	loss	ratios	to	our	direct merchant	credit	card	and	signature	debit	card	sales	volumes	processed,	or	processed	volume.	Historically,	this	estimation	process	has	been	materially	accurate.

For	the	years	ended	May	31,	2013,	2012,	and	2011,	our	processed	volume	was	$192.8	billion,	$180.7	billion,	and	$167.3	billion,	respectively.	For	these	same periods,	we	recorded	provisions	for	merchant	losses	of	$9.5	million,	$8.8	million,	and	$6.0	million,	respectively.	As	a	percentage	of	processed	volume,	these	charges were	0.0049%,	0.0049%,	and	0.0036%,	respectively,	during	the	above	periods.	For	these	same	years,	we	experienced	actual	losses	of	$9.9	million,	$9.6	million,	and	$8.7 million,	respectively.	We	believe	that	our	estimation	process	has	been	materially	accurate	on	a	historical	basis.	A	10%	increase	or	decrease	in	our	provision	for	merchant losses	as	a	percentage	of	processed	volume	for	the	year	ended	May	31,	2013	would	have	resulted	in	a	decrease	or	increase	in	net	income	of	$0.6	million.	As	of	May	31, 2013	and	2012,	$2.3	million	has	been	recorded	for	guarantees	associated	with	merchant	card	processing	and	are	included	in	settlement	processing	obligations	in	the accompanying	consolidated	balance	sheets.

In	our	check	guarantee	service	offering,	we	charge	our	merchants	a	percentage	of	the	gross	amount	of	the	check	and	guarantee	payment	of	the	check	to	the merchant	in	the	event	the	check	is	not	honored	by	the	checkwriter's	bank.	We	have	the	right	to	collect	the	full	amount	of	the	check	from	the	checkwriter	but	have	not historically	recovered	100%	of	the	guaranteed	checks.	Our	check	guarantee	loss	reserve	is	comprised	of	estimated	losses	on	returned	checks	and	estimated	incurred	but not	reported	losses.		We	estimate	the	loss	on	returned	checks	by	applying	historical	collection	rates	to	our	claims	receivable	balance.		We	estimate	incurred	but	not reported	losses	by	applying	historical	loss	ratios	to	the	face	value	of	our	guaranteed	checks.		For	each	of	the	years	ended	May	31,	2013,	2012,	and	2011,	we	guaranteed total	check	face	values	of	$2.6	billion.	For	those	same	periods,	we	recorded	provisions	for	check	guarantee	losses	of	$11.7	million,	$13.4	million,	and	$14.2	million, respectively.	As	a	percentage	of	the	total	guaranteed	check	face	value,	these	charges	were	0.44%,	0.51%,	and	0.55%,	respectively.	For	these	same	years,	we	experienced actual	losses	of	$12.0	million,	$13.8	million,	and	$14.5	million,	respectively.	We	believe	that	our	estimation	process	has	been	materially	accurate	on	a	historical	basis.	A 10%	increase	or	decrease	in	our	percentage	assumption	for	the	year	ended	May	31,	2013	would	have	resulted	in	a	decrease	or	increase	in	net	income	of	$0.8	million. Further,	if	our	guarantee	loss	as	a	percentage	of	guarantee	volume	for	our	fiscal	2013	had	equaled	our	guarantee	loss	as	a	percentage	of	guarantee	volume	of	0.51%	for the	same	prior	year	period,	our	net	income	would	have	decreased	by	$1.1	million.	As	of	May	31,	2013	and	2012,	we	had	a	check	guarantee	reserve	of	$3.1	million	and $3.4	million,	respectively,	which	is	included	in	claims	receivable,	net,	in	the	accompanying	consolidated	balance	sheets.

We	derive	our	projected	loss	rate	assumptions	primarily	based	on	a	rolling	six	to	twelve	month	analysis	of	historic	loss	activity.	These	assumptions,	however,	bear the	risk	of	change,	which	may	occur	as	a	result	of	several	qualitative	factors.	For	merchant	losses,	these	factors	include	the	following:	a	change	in	the	creditworthiness	of our	merchant	customers;	a	change	in	the	levels	of	credit	card	fraud	affecting	our	merchant	customers;	and	a	change	in	the	effectiveness	of	our	internal	credit,	risk management,	and	collection	departments.	For	check	guarantee	losses,	these	factors	include	a	change	in	the	levels	of	dishonored	consumer	checks	presented	to	our guarantee	service	merchant	customers	and	a	change	in	the	effectiveness	of	our	internal	check	guarantee	procedures,	customer	acceptance	and	retention	policies,	or collection	protocols.	Application	of	our	percentage	assumptions	involve	uncertainty	regarding	changes	in	any	of	the	factors	above,	especially	those	that	are	outside	of our	control,	such	as	the	financial	health	of	the	economies	in	the	United	States,	Canada,	the	United	Kingdom,	Spain,	the	Asia-Pacific	region,	and	the	Russian	Federation at	a	regional	or	national	level	and	the	related	impact	on	our	customers.

# Goodwill	and	long-lived	asset	valuations

We	regularly	evaluate	whether	events	and	circumstances	have	occurred	that	indicate	the	carrying	amounts	of	goodwill,	property	and	equipment,	and	other intangible	assets	may	warrant	revision	or	may	not	be	recoverable.	Goodwill	is	evaluated	for	impairment	annually	by	applying	a	fair	value	based	test.	Property	and equipment	and	finite-lived	intangible	assets	are	evaluated	for	impairment	when	facts	and	circumstances	indicate	the	carrying	values	of	such	assets	may	exceed	their	fair values.	When	factors	indicate	that	these	assets	should	be	evaluated	for	possible	impairment,	we	assess	the	potential	impairment	of	their	carrying	values	by	determining whether	the	carrying	value	of	such	long-lived	assets	will	be	recovered	through	the	future	undiscounted	cash	flows	expected	from	use	of	the	asset	and	its	eventual disposition.

We	completed	our	most	recent	annual	goodwill	and	indefinite-life	intangible	asset	impairment	test	as	of	January	1,	2013.	Goodwill	is	tested	for	impairment	at	the reporting	unit	level,	and	the	impairment	test	consists	of	two	steps.	In	the	first	step	the	reporting	unit's	carrying	amount,	including	goodwill,	is	compared	to	its	fair	value which	is	measured	based	upon,	among	other	factors,	a	discounted	cash	flow	analysis	as	well	as	market	multiples	for	comparable	companies.	If	the	carrying	amount	of the	reporting	unit	is	greater	than	its	fair	value,	goodwill	is	considered	impaired	and	step	two	must	be	performed.	Step	two	measures	the	impairment	loss	by	comparing the	implied	fair	value	of	reporting	unit	goodwill	with	the	carrying	amount	of	that	goodwill.	The	implied	fair	value	of	goodwill	is	determined	by	allocating	the	fair	value of	the	reporting	unit	to	all	the	assets	and	liabilities	of	that	unit	(including	unrecognized	intangibles)	as	if	the	reporting	unit	had	been	acquired	in	a	business	combination. The	excess	of	fair	value	over	the	amounts	allocated	to	the	assets	and	liabilities	of	the	reporting	unit	is	the	implied	fair	value	of	goodwill.	The	excess	of	the	carrying amount	over	the	implied	fair	value	is	the	impairment	loss.

We	have	six	reporting	units:	North	America	Merchant	Services,	U.K.	Merchant	Services,	Asia-Pacific	Merchant	Services,	Central	and	Eastern	Europe	Merchant Services,	Russia	Merchant	Services	and	Spain	Merchant	Services.	We	estimate	the	fair	value	of	our	reporting	units	using	a	combination	of	the	income	approach	and	the market	 approach.	The	 income	 approach	 utilizes	 a	 discounted	 cash	 flow	 model	 incorporating	 management's	 expectations	 for	 future	 revenue,	 operating	 expenses, EBITDA,	capital	expenditures	and	an	anticipated	tax	rate.	We	discount	the	related	cash	flow	forecasts	using	our	estimated	weighted-average	cost	of	capital	for	each reporting	unit	at	the	date	of	valuation.	The	market	approach	utilizes	comparative	market	multiples	in	the	valuation	estimate.	Multiples	are	derived	by	relating	the	value	of guideline	companies,	based	on	either	the	market	price	of	publicly	traded	shares	or	the	prices	of	companies	being	acquired	in	the	marketplace,	to	various	measures	of their	earnings	and	cash	flow.	Such	multiples	are	then	applied	to	the	historical	and	projected	earnings	and	cash	flow	of	the	reporting	unit	in	developing	the	valuation estimate.

Preparation	of	forecasts	and	the	selection	of	the	discount	rates	involve	significant	judgments	about	expected	future	business	performance	and	general	market conditions.	Significant	changes	in	our	forecasts,	the	discount	rates	selected	or	the	weighting	of	the	income	and	market	approach	could	affect	the	estimated	fair	value	of one	or	more	of	our	reporting	units	and	could	result	in	a	goodwill	impairment	charge	in	a	future	period.

At	May	31,	2013,	we	had	goodwill	of	$1,044.2	million	recorded	on	our	consolidated	balance	sheet.	We	completed	our	most	recent	annual	goodwill	impairment test	on	January	1,	2013	and	determined	that	the	fair	value	of	each	of	our	reporting	units	is	substantially	in	excess	of	the	carrying	value.	No	events	or	changes	in circumstances	have	occurred	since	the	date	of	our	most	recent	annual	impairment	test	that	would	more	likely	than	not	reduce	the	fair	value	of	a	reporting	unit	below	its carrying	amount.

Other	intangible	assets	primarily	represent	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),	and	trademarks	associated	with	acquisitions.	Customer-related	intangible	assets,	contract- based	intangible	assets	and	certain	trademarks	are	amortized	over	their	estimated	useful	lives	of	up	to	30	years.	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	are	based	on	our	plans	to	phase	out	the trademarks	in	the	applicable	markets.

We	use	the	accelerated	method	of	amortization	for	most	our	customer-related	intangible	assets.	In	determining	amortization	expense	under	our	accelerated	method for	any	given	period,	we	calculate	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	value	of	the	asset	to	arrive	at	the	amortization	expense for	that	period.		In	addition,	if	the	cash	flow	patterns	that	we	experience	differ	significantly	than	our	initial	estimates,	we	will	adjust	the	amortization

schedule	accordingly.	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.	During	fiscal	2013,	we	did	not	adjust	the	amortization	schedules.

We	believe	that	our	accelerated	method	better	approximates	the	distribution	of	cash	flows	generated	by	our	acquired	customer	relationships.	We	use	the	straight- line	method	of	amortization	for	our	contract-based	intangibles	and	amortizable	trademarks.

# Capitalization	of	Internally	Developed	Software

We	 develop	 software	 that	 is	 used	 in	 providing	 processing	 services	 to	 customers.	Capitalization	of	 internally	developed	 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	prior	to	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.	Such	impairment	would	result	in	a	charge	to	income. Total	software	capitalized	at	May	31,	2013	was	$167.1	million.	Costs	capitalized	during	fiscal	2013,	2012	and	2011	totaled	$29.2	million,	$31.3	million,	and	$26.3 million,	respectively.	Internally	developed	software	has	an	amortization	period	of	5	to	10	years.	Internally	developed	software	assets	are	placed	into	service	when	they are	ready	for	their	intended	use.

As	of	May	31,	2013,	we	have	placed	into	service	$92.2	million	of	hardware	and	software	associated	with	our	technology	processing	platform,	referred	to	as	G2; $5.7	million	of	which	was	placed	in	service	during	fiscal	2013.	The	vision	for	this	platform	is	to	serve	as	a	front-end	operating	environment	for	merchant	processing	and is	intended	to	replace	a	number	of	legacy	platforms	that	have	higher	cost	structures.	Depreciation	and	amortization	associated	with	these	costs	is	calculated	based	on transactions	expected	to	be	processed	over	the	life	of	the	platform.	We	believe	that	this	method	is	more	representative	of	the	platform's	use	than	the	straight-line	method. We	are	currently	processing	transactions	on	our	G2	platform	in	eight	markets	in	our	Asia-Pacific	region	and	for	a	limited	number	of	U.S.	merchants.	As	these	markets represent	a	small	percentage	of	our	overall	transactions,	depreciation	and	amortization	related	to	our	G2	platform	for	fiscal	2013	was	not	significant.	Depreciation	and amortization	expense	will	increase	as	we	complete	migrations	of	other	merchants	to	the	G2	platform.

# Income	Taxes

The	determination	of	our	provision	for	income	taxes	requires	management's	judgment	in	the	use	of	estimates	and	the	interpretation	and	application	of	complex	tax laws.	Judgment	is	also	required	in	assessing	the	timing	and	amounts	of	deductible	and	taxable	items.	We	believe	our	tax	return	positions	are	fully	supportable;	however, we	establish	liabilities	for	material	tax	exposures	relating	to	deductions,	transactions	and	other	matters	involving	some	uncertainty	as	to	the	proper	tax	treatment	of	the item.	Issues	raised	by	a	tax	authority	may	be	finally	resolved	at	an	amount	different	than	the	related	liability.	When	facts	and	circumstances	change	(including	a resolution	of	an	issue	or	statute	of	limitations	expiration),	these	liabilities	are	adjusted	through	the	provision	for	income	taxes	in	the	period	of	change.

Judgment	will	be	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	will	be	adjusted	through	our	provision	for	income	taxes	in	the	period	in which	this	determination	is	made.	At	May	31,	2013,	our	consolidated	balance	sheet	includes	net	deferred	tax	assets	associated	with	our	United	Kingdom	business	of $90.7	 million.	Our	assessment	of	the	recoverability	of	these	deferred	tax	assets	is	based,	in	part,	on	our	projections	of	future	business	performance	and	viable	tax planning	strategies.	If	future	business	performance	fails	to	meet	projections,	we	may	determine	that	some	or	all	of	these	deferred	tax	assets	will	not	be	realized.	In	the event	of	such	a	determination,	we	would	record	a	valuation	allowance	for	the	amount	deemed	unrecoverable	with	a	corresponding	charge	to	the	provision	for	income taxes.

# New	Accounting	Pronouncements

From	time-to-time,	new	accounting	pronouncements	are	issued	by	the	Financial	Accounting	Standards	Board	("FASB")	or	other	standards	setting	bodies	that	are adopted	by	us	as	of	the	specified	effective	date.	Unless	otherwise	discussed,	our	management

believes	that	the	impact	of	recently	issued	standards	that	are	not	yet	effective	will	not	have	a	material	impact	on	our	consolidated	financial	statements	upon	adoption.

In	March	2013,	the	FASB	issued	Accounting	Standards	Update	("ASU")	2013-05,	"Foreign	Currency	Matters"	("ASU	2013-05").	The	amendments	in	ASU	2013- 05	resolve	the	diversity	in	practice	about	whether	current	literature	applies	to	the	release	of	the	cumulative	translation	adjustment	into	net	income	when	a	parent	either sells	a	part	or	all	of	its	investment	in	a	foreign	entity	or	no	longer	holds	a	controlling	financial	interest	in	a	subsidiary	or	group	of	assets	that	is	a	nonprofit	activity	or	a business	within	a	foreign	entity.	In	addition,	the	amendments	in	ASU	2013-05	resolve	the	diversity	in	practice	for	the	treatment	of	business	combinations	achieved	in stages	(sometimes	also	referred	to	as	step	acquisitions)	involving	a	foreign	entity.	ASU	2013-05	is	effective	prospectively	for	fiscal	years,	and	interim	reporting	periods within	those	years,	beginning	after	December	15,	2013	.	This	standard	is	effective	for	us	beginning	June	1,	2014	.	We	are	currently	evaluating	the	impact	of	ASU	2013- 05	on	our	consolidated	financial	statements.

In	December	2011,	the	FASB	issued	ASU	2011-11,	"Disclosures	About	Offsetting	Assets	and	Liabilities"	("ASU	2011-11").	The	amendments	in	ASU	2011-11 require	entities	to	disclose	information	about	offsetting	and	related	arrangements	to	enable	users	of	financial	statements	to	understand	the	effect	of	those	arrangements	on an	entity's	financial	position.	The	amendments	require	enhanced	disclosures	by	requiring	improved	information	about	financial	instruments	and	derivative	instruments that	are	either	(i)	offset	in	accordance	with	current	literature	or	(ii)	subject	to	an	enforceable	master	netting	arrangement	or	similar	agreement,	irrespective	of	whether they	are	offset	in	accordance	with	current	literature.	ASU	2011-11	is	effective	for	fiscal	years,	and	interim	periods	within	those	years,	beginning	on	or	after	January	1, 2013.	This	standard	will	become	effective	for	us	beginning	June	2013.	The	disclosures	required	by	ASU	2011-11	will	be	applied	retrospectively	for	all	comparative periods	presented.

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

# Foreign	Currency	Risk

A	significant	amount	of	our	operations	are	conducted	in	foreign	currencies.	Consequently,	our	revenues	and	income	generated	in	currencies	other	than	the	United States	dollar	are	affected	by	fluctuations	in	foreign	currency	exchange	rates.	For	fiscal	2013,	currency	rate	fluctuations	decreased	our	revenues	by	$19.1	million	and	our diluted	earnings	per	share	by	$0.04	as	compared	to	the	prior	year.	To	calculate	this	we	converted	our	fiscal	2013	actual	revenues	and	expenses	at	fiscal	2012	rates.

Generally,	the	functional	currency	of	our	various	subsidiaries	is	their	local	currency.		As	a	result,	we	are	exposed	to	currency	fluctuations	on	transactions	which 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	May	31,	2013,	2012	 and	2011,	 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 which	are	not	denominated	in	the	currency	of	the	underlying	credit	or	debit	card	transaction.	Gains	and	losses	on	these	transactions	are	included	in	revenue	for	the period.

We	are	also	impacted	by	fluctuations	in	exchange	rates	on	our	investment	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.	Translation	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	cash	investments	and	debt.	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	various	term	loans	and	lines	of	credit	that	we	use	to	fund	settlement	in	certain	of	our	markets	and	for	general	corporate	purposes	and	acquisitions.	Interest rates	on	these	term	loans	and	lines	of	credit	are	based	on	market	rates	and	fluctuate	accordingly.	As	of	May	31,	2013,	there	was	$1,150.9	million	outstanding	on	these term	loans	and	lines	of	credit.

In	certain	of	our	credit	card	transaction	processing	markets,	the	Member	uses	its	own	funds	to	fund	merchant	settlement	and	charges	us	cost	of	funds.	Cost	of funds	are	charged	at	prevailing	market	rates	and	fluctuate	accordingly.

Our	cash	investments	and	debt	are	floating	rate,	and	therefore	do	not	carry	material	risk	of	change	in	fair	value.	Our	interest	rate	exposure	related	to	a	change	in interest	rates	on	net	income	is	mitigated	as	an	increase	in	rates	increases	both	interest	income	and	interest	expense,	and	a	reduction	in	rates	reduces	both	interest	income and	interest	expense.

Under	our	current	policies,	we	do	not	use	interest	rate	derivative	instruments	to	manage	exposure	to	interest	rate	changes	and	believe	the	market	risk	arising	from cash	investments	and	debt	is	not	material.

A	1%	increase	in	interest	rates	as	of	May	31,	2013	would	not	have	had	a	material	adverse	impact	on	our	current	or	future	consolidated	net	income	or	cash	flows.

# Derivative	Financial	Instruments

Historically,	we	have	not	entered	into	derivative	financial	instruments	to	mitigate	interest	rate	fluctuation	risk	or	foreign	currency	exchange	rate	risk.	We	may	use derivative	financial	instruments	in	the	future	if	we	deem	it	useful	in	mitigating	our	exposure	to	interest	rate	or	foreign	currency	exchange	rate	fluctuations.

# ITEM	8-	FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# To	the	Board	of	Directors	and	Stockholders	of

# Atlanta,	Georgia

We	have	audited	 the	 internal	control	over	financial	reporting	of	Global	Payments	Inc.	and	subsidiaries	(the	"Company")	as	of	May	31,	2013,	based	on	criteria established	in	Internal	Control	-	Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	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	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	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	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.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	by,	or	under	the	supervision	of,	the	company's	principal	executive	and	principal	financial officers,	or	persons	performing	similar	functions,	and	effected	by	the	company's	board	of	directors,	management,	and	other	personnel	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	the	inherent	limitations	of	internal	control	over	financial	reporting,	including	the	possibility	of	collusion	or	improper	management	override	of	controls, material	misstatements	due	to	error	or	fraud	may	not	be	prevented	or	detected	on	a	timely	basis.	Also,	projections	of	any	evaluation	of	the	effectiveness	of	the	internal control	over	financial	reporting	to	future	periods	are	subject	to	the	risk	that	the	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of compliance	with	the	policies	or	procedures	may	deteriorate.

In	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	May	31,	2013,	based	on	the	criteria	established in	Internal	Control	-	Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	financial	statements	and financial	statement	schedule	as	of	and	for	the	year	ended	May	31,	2013	of	the	Company	and	our	report	dated	July	25,	2013	expressed	an	unqualified	opinion	on	those consolidated	financial	statements	and	financial	statement	schedule	and	included	an	explanatory	paragraph	regarding	the	Company's	identification	and	self-reporting	of unauthorized	access	into	its	processing	system.

/s/	DELOITTE	&	TOUCHE	LLP

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Global	Payments	Inc.	and	subsidiaries	(the	"Company")	as	of	May	31,	2013	and	2012,	and	the related	consolidated	statements	of	income,	comprehensive	income,	changes	in	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	May	31,	2013.	Our audits	also	included	the	financial	statement	schedule	listed	in	the	Index	at	Item	15.	These	financial	statements	and	financial	statement	schedule	are	the	responsibility	of the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	the	financial	statements	and	financial	statement	schedule	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test	basis, evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant	estimates made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	such	consolidated	financial	statements	present	fairly,	in	all	material	respects,	the	financial	position	of	Global	Payments	Inc.	and	subsidiaries	as	of	May 31,	2013	and	2012,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	May	31,	2013,	in	conformity	with	accounting principles	generally	accepted	 in	 the	United	States	of	America.	Also,	 in	our	opinion,	such	financial	statement	schedule,	when	considered	 in	relation	 to	 the	basic consolidated	financial	statements	taken	as	a	whole,	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein.

As	discussed	in	Note	2	to	the	consolidated	financial	statements,	in	March	2012,	the	Company	identified	and	self-reported	unauthorized	access	into	its	processing	system.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	Company's	internal	control	over financial	reporting	as	of	May	31,	2013,	based	on	the	criteria	established	in	Internal	Control-Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	and	our	report	dated	July	25,	2013	expressed	an	unqualified	opinion	on	the	Company's	internal	control	over	financial reporting.

# CONSOLIDATED	STATEMENTS	OF	INCOME

(in	thousands,	except	per	share	data)

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Revenues | $2,375,923 | $2,203,847 | $1,859,802 |
| Operating\texpenses: |  |  |  |
| Cost\tof\tservice | 862,075 | 784,756 | 665,017 |
| Sales,\tgeneral\tand\tadministrative | 1,119,860 | 1,027,304 | 863,191 |
| Processing\tsystem\tintrusion | 36,775 | 84,438 | — |
|  | 2,018,710 | 1,896,498 | 1,528,208 |
| Operating\tincome | 357,213 | 307,349 | 331,594 |
| Other\tincome\t(expense): |  |  |  |
| Interest\tand\tother\tincome | 10,353 | 9,946 | 10,774 |
| Interest\tand\tother\texpense | (33,282) | (16,848) | (18,161) |
|  | (22,929) | (6,902) | (7,387) |
| Income\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes | 334,284 | 300,447 | 324,207 |
| Provision\tfor\tincome\ttaxes | (95,571) | (82,881) | (95,076) |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax | 238,713 | 217,566 | 229,131 |
| Loss\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | — | — | (975) |
| Net\tincome | 238,713 | 217,566 | 228,156 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterests | (22,588) | (29,405) | (18,918) |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $216,125 | $188,161 | $209,238 |
| Amounts\tattributable\tto\tGlobal\tPayments: |  |  |  |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax | $216,125 | $188,161 | $210,213 |
| Loss\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | — | — | (975) |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $216,125 | $188,161 | $209,238 |
| Basic\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $2.78 | $2.39 | $2.63 |
| Loss\tfrom\tdiscontinued\toperations | — | — | (0.01) |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $2.78 | $2.39 | $2.62 |
| Diluted\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $2.76 | $2.37 | $2.61 |
| Loss\tfrom\tdiscontinued\toperations | — | — | (0.01) |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $2.76 | $2.37 | $2.60 |

See	Notes	to	Consolidated	Financial	Statements.

# CONSOLIDATED	STATEMENTS	OF	COMPREHENSIVE	INCOME

(in	thousands)

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $238,713 | $217,566 | $228,156 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |
| \t\t\tForeign\tcurrency\ttranslation\tadjustments | 20,629 | (139,722) | 127,722 |
| \t\t\tIncome\ttax\tbenefit\t(expense)\trelated\tto\tforeign\tcurrency\ttranslation\tadjustments | 582 | 6,879 | (5,366) |
| \t\t\tChanges\tin\tunrecognized\tpension\tbenefit\tcosts | 2,302 | (3,470) | 198 |
| \t\t\tIncome\ttax\t(expense)\tbenefit\trelated\tto\tchanges\tin\tunrecognized\tpension\tbenefit\tcosts | (785) | 1,260 | (88) |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | 22,728 | (135,053) | 122,466 |
| Comprehensive\tincome | 261,441 | 82,513 | 350,622 |
| \t\t\tLess:\tcomprehensive\tincome\tattributable\tto\tnoncontrolling\tinterests | (30,378) | (3,673) | (17,809) |
| Comprehensive\tincome\tattributable\tto\tGlobal\tPayments | $231,063 | $78,840 | $332,813 |

# CONSOLIDATED	BALANCE	SHEETS

(in	thousands,	except	share	data)

|  | May	31,	2013 | May	31,	2012 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $680,470 | $781,275 |
| Accounts\treceivable,\tnet\tof\tallowances\tfor\tdoubtful\taccounts\tof\t$509\tand\t$532,\trespectively | 189,435 | 182,962 |
| Claims\treceivable,\tnet\tof\tallowances\tfor\tlosses\tof\t$3,144\tand\t$3,435,\trespectively | 1,156 | 1,029 |
| Settlement\tprocessing\tassets | 259,204 | 217,994 |
| Inventory | 11,057 | 9,864 |
| Deferred\tincome\ttaxes | 6,485 | 21,969 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 66,685 | 33,646 |
| Total\tcurrent\tassets | 1,214,492 | 1,248,739 |
| Goodwill | 1,044,222 | 724,687 |
| Other\tintangible\tassets | 400,848 | 290,188 |
| Property\tand\tequipment,\tnet | 348,064 | 305,848 |
| Deferred\tincome\ttaxes | 95,178 | 97,235 |
| Other | 22,252 | 21,446 |
| Total\tassets | $3,125,056 | $2,688,143 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Lines\tof\tcredit | $187,461 | $215,391 |
| Current\tportion\tof\tlong-term\tdebt | 72,335 | 76,420 |
| Accounts\tpayable\tand\taccrued\tliabilities | 262,890 | 316,313 |
| Settlement\tprocessing\tobligations | 162,558 | 216,878 |
| Income\ttaxes\tpayable | 18,870 | 12,283 |
| Total\tcurrent\tliabilities | 704,114 | 837,285 |
| Long-term\tdebt | 891,134 | 236,565 |
| Deferred\tincome\ttaxes | 170,723 | 106,644 |
| Other\tlong-term\tliabilities | 72,478 | 62,306 |
| Total\tliabilities | 1,838,449 | 1,242,800 |
| Commitments\tand\tcontingencies\t(See\tNote\t15) |  |  |
| Redeemable\tnoncontrolling\tinterest | — | 144,422 |
| Equity: |  |  |
| Preferred\tstock,\tno\tpar\tvalue;\t5,000,000\tshares\tauthorized\tand\tnone\tissued | — | — |
| Common\tstock,\tno\tpar\tvalue;\t200,000,000\tshares\tauthorized;\t75,426,099\tand\t78,551,297\tissued\tand\toutstanding\tat\tMay\t31,\t2013\tand\n2012,\trespectively | — | — |
| Paid-in\tcapital | 202,396 | 358,728 |
| Retained\tearnings | 958,751 | 843,456 |
| Accumulated\tother\tcomprehensive\tloss | (15,062) | (30,000) |
| Total\tGlobal\tPayments\tshareholders'\tequity | 1,146,085 | 1,172,184 |
| Noncontrolling\tinterest | 140,522 | 128,737 |
| Total\tequity | 1,286,607 | 1,300,921 |
| Total\tliabilities\tand\tequity | $3,125,056 | $2,688,143 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome | $238,713 | $217,566 | $228,156 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\t(used\tin)\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization\tof\tproperty\tand\tequipment | 55,023 | 48,403 | 40,545 |
| Amortization\tof\tacquired\tintangibles | 56,765 | 50,696 | 41,692 |
| Share-based\tcompensation\texpense | 18,427 | 16,391 | 15,885 |
| Provision\tfor\toperating\tlosses\tand\tbad\tdebts | 21,659 | 22,417 | 20,577 |
| Deferred\tincome\ttaxes | 33,112 | (19,498) | 19,154 |
| Loss\ton\tdisposal\tof\tdiscontinued\toperations,\tnon-cash | — | — | 602 |
| Other,\tnet | (4,878) | (2,775) | (3,576) |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\tthe\teffects\tof\tacquisitions: |  |  |  |
| Accounts\treceivable | (5,458) | (16,422) | (34,723) |
| Claims\treceivable | (11,858) | (13,519) | (14,425) |
| Settlement\tprocessing\tassets\tand\tobligations,\tnet | (104,007) | (568,335) | 299,895 |
| Inventory | (1,187) | (2,394) | 1,979 |
| Prepaid\texpenses\tand\tother\tassets | (22,978) | 3,511 | 3,537 |
| Accounts\tpayable\tand\tother\taccrued\tliabilities | (39,374) | 85,875 | 89,230 |
| Income\ttaxes\tpayable | 6,587 | 4,609 | 1,244 |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\tactivities | 240,546 | (173,475) | 709,772 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Business,\tintangible\tand\tother\tasset\tacquisitions,\tnet\tof\tcash\tacquired | (434,016) | (44,274) | (167,968) |
| Capital\texpenditures | (98,590) | (109,876) | (98,537) |
|  | — | — | (2,577) |
| Disposition\tof\tbusiness,\tnet\tof\tcash |  |  |  |
| Net\tdecrease\tin\tfinancing\treceivables | 2,812 | 2,565 | 2,062 |
| Proceeds\tfrom\tsale\tof\tinvestment | 1,227 | 1,152 | — |
| Net\tcash\tused\tin\tinvesting\tactivities | (528,567) | (150,433) | (267,020) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Net\t(payments)\tborrowings\ton\tshort-term\tlines\tof\tcredit | (27,930) | (55,354) | 191,558 |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 1,135,327 | 146,374 | 205,298 |
| Principal\tpayments\tunder\tlong-term\tdebt | (482,349) | (184,235) | (280,198) |
| Acquisition\tof\tredeemable\tnoncontrolling\tinterest | (242,000) | — | — |
| Payment\tof\tdebt\tissuance\tcosts | (3,987) | — | — |
| Proceeds\tfrom\tstock\tissued\tunder\temployee\tstock\tplans | 10,543 | 11,446 | 18,364 |
| Common\tstock\trepurchased\t-\tshare\tbased\tcompensation\tplans | (10,244) | (4,861) | — |
| Repurchase\tof\tcommon\tstock | (175,297) | (99,604) | (14,900) |
| Tax\tbenefit\tfrom\temployee\tshare-based\tcompensation | 1,863 | 1,441 | 9,141 |
| Distributions\tto\tnoncontrolling\tinterest | (16,206) | (27,082) | (8,752) |
| Dividends\tpaid | (6,198) | (6,311) | (6,388) |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | 183,522 | (218,186) | 114,123 |
| Effect\tof\texchange\trate\tchanges\ton\tcash | 3,694 | (30,916) | 27,464 |
| (Decrease)\tincrease\tin\tcash\tand\tcash\tequivalents | (100,805) | (573,010) | 584,339 |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tthe\tperiod | 781,275 | 1,354,285 | 769,946 |
| Cash\tand\tcash\tequivalents,\tend\tof\tthe\tperiod | $680,470 | $781,275 | $1,354,285 |

# CONSOLIDATED	STATEMENTS	OF	CHANGES	IN	EQUITY

|  | Number		of<br>Shares | Paid-in<br>Capital | Retained	Earnings | Accumulated	Other<br>Comprehensive	Income<br>(Loss) | Total	Global<br>Payments<br>Shareholders'<br>Equity | Noncontrolling<br>Interest | Total	Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tMay\t31,\t2012 | 78,551 | $358,728 | $843,456 | $(30,000) | $1,172,184 | $128,737 | $1,300,921 |
| Net\tincome |  |  | 216,125 |  | 216,125 | 20,774 | 236,899 |
| Changes\tin\tunrecognized\tpension\tbenefit\tcosts,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |
| ($785) |  |  |  | 1,517 | 1,517 |  | 1,517 |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttax\tof\t$582 |  |  |  | 13,421 | 13,421 | 7,217 | 20,638 |
| Stock\tissued\tunder\temployee\tstock\tplans | 885 | 10,543 |  |  | 10,543 |  | 10,543 |
| Common\tstock\trepurchased\t-\tshare\tbased\tcompensation\nplans | (335) | (10,244) |  |  | (10,244) |  | (10,244) |
| Tax\tbenefit\tfrom\temployee\tshare-based\tcompensation,\tnet |  | 850 |  |  | 850 |  | 850 |
| Share-based\tcompensation\texpense |  | 18,427 |  |  | 18,427 |  | 18,427 |
| Distributions\tto\tnoncontrolling\tinterest |  |  |  |  |  | (16,206) | (16,206) |
| Redeemable\tnoncontrolling\tinterest\tvaluation\tadjustment |  |  | 817 |  | 817 |  | 817 |
| Repurchase\tof\tcommon\tstock | (3,675) | (79,900) | (95,449) |  | (175,349) |  | (175,349) |
| Purchase\tof\tredeemable\tnoncontrolling\tinterest |  | (96,008) |  |  | (96,008) |  | (96,008) |
| Dividends\tpaid\t($0.08\tper\tshare) |  |  | (6,198) |  | (6,198) |  | (6,198) |
| Balance\tat\tMay\t31,\t2013 | 75,426 | $202,396 | $958,751 | $(15,062) | $1,146,085 | $140,522 | $1,286,607 |

|  | Number		of<br>Shares | Paid-in<br>Capital | Retained	Earnings | Accumulated	Other<br>Comprehensive<br>Income	(Loss) | Total	Global<br>Payments<br>Shareholders'<br>Equity | Noncontrolling<br>Interest | Total	Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tMay\t31,\t2011 | 80,335 | $419,591 | $685,624 | $79,320 | $1,184,535 | $153,282 | $1,337,817 |
| Net\tincome |  |  | 188,161 |  | 188,161 | 17,804 | 205,965 |
| Changes\tin\tunrecognized\tpension\tbenefit\tcosts,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |
| $1,260 |  |  |  | (2,210) | (2,210) |  | (2,210) |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |
| $6,879 |  |  |  | (107,110) | (107,110) | (22,991) | (130,101) |
| Stock\tissued\tunder\temployee\tstock\tplans | 833 | 11,446 |  |  | 11,446 |  | 11,446 |
| Common\tstock\trepurchased\t-\tshare\tbased\tcompensation\nplans | (327) | (4,861) |  |  | (4,861) |  | (4,861) |
| Tax\tbenefit\tfrom\temployee\tshare-based\tcompensation,\tnet |  | 1,176 |  |  | 1,176 |  | 1,176 |
| Share-based\tcompensation\texpense |  | 16,391 |  |  | 16,391 |  | 16,391 |
| Distributions\tto\tnoncontrolling\tinterest |  |  |  |  |  | (19,358) | (19,358) |
| Redeemable\tnoncontrolling\tinterest\tvaluation\tadjustment |  |  | (9,429) |  | (9,429) |  | (9,429) |
| Repurchase\tof\tcommon\tstock | (2,290) | (85,015) | (14,589) |  | (99,604) |  | (99,604) |
| Dividends\tpaid\t($0.08\tper\tshare) |  |  | (6,311) |  | (6,311) |  | (6,311) |
| Balance\tat\tMay\t31,\t2012 | 78,551 | $358,728 | $843,456 | $(30,000) | $1,172,184 | $128,737 | $1,300,921 |

|  | Number		of<br>Shares | Paid-in	Capital | Retained<br>Earnings | Accumulated	Other<br>Comprehensive<br>Income	(Loss) | Total	Global<br>Payments<br>Shareholders'<br>Equity | Noncontrolling<br>Interest | Total	Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tMay\t31,\t2010 | 79,646 | $390,325 | $515,194 | $(44,255) | $861,264 | $10,253 | $871,517 |
| Net\tincome |  |  | 209,238 |  | 209,238 | 9,326 | 218,564 |
| Changes\tin\tunrecognized\tpension\tbenefit\tcosts,\tnet\tof\ntax\tof\t($88) |  |  |  | 110 | 110 |  | 110 |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |
| $(5,366) |  |  |  | 123,465 | 123,465 | 9,717 | 133,182 |
| Stock\tissued\tunder\temployee\tstock\tplans | 1,361 | 21,954 |  |  | 21,954 |  | 21,954 |
| Common\tstock\trepurchased\t-\tshare\tbased\tcompensation\nplans | (327) | (3,590) |  |  | (3,590) |  | (3,590) |
| Tax\tbenefit\tfrom\temployee\tshare-based\tcompensation |  | 7,997 |  |  | 7,997 |  | 7,997 |
| Share-based\tcompensation\texpense |  | 15,885 |  |  | 15,885 |  | 15,885 |
| Noncontrolling\tinterest\tin\tbusiness\tacquisitions |  |  |  |  |  | 132,738 | 132,738 |
| Distributions\tto\tnoncontrolling\tinterest |  |  |  |  |  | (8,752) | (8,752) |
| Redeemable\tnoncontrolling\tinterest\tvaluation\nadjustment |  |  | (32,420) |  | (32,420) |  | (32,420) |
| Repurchase\tof\tcommon\tstock\t(see\tNote\t1) | (345) | (12,980) |  |  | (12,980) |  | (12,980) |
| Dividends\tpaid\t($0.08\tper\tshare) |  |  | (6,388) |  | (6,388) |  | (6,388) |
| Balance\tat\tMay\t31,\t2011 | 80,335 | $419,591 | $685,624 | $79,320 | $1,184,535 | $153,282 | $1,337,817 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# NOTE	1—SUMMARY	OF	SIGNIFICANT	ACCOUNTING	POLICIES

Business,	Consolidation	and	Presentation—	Global	Payments	Inc.	is	a	high-volume	processor	of	electronic	transactions	for	merchants,	multinational	corporations, financial	institutions,	consumers,	government	agencies	and	other	business	and	non-profit	business	enterprises	to	facilitate	payments	to	purchase	goods	and	services	or further	other	economic	goals.	Our	role	is	to	serve	as	an	intermediary	in	the	exchange	of	information	and	funds	that	must	occur	between	parties	so	that	a	transaction	can be	completed.	We	were	incorporated	in	Georgia	as	Global	Payments	Inc.	in	September	2000	and	we	spun-off	from	our	former	parent	company	on	January	31,	2001. Including	our	time	as	part	of	our	former	parent	company,	we	have	been	in	the	payments	business	since	1967.	Our	fiscal	year	ends	on	May	31,	thus	we	refer	to	the	years ended	May	31,	2013,	2012,	and	2011	as	fiscal	years	2013,	2012,	and	2011,	respectively.

These	consolidated	financial	statements	include	our	accounts	and	those	of	our	majority-owned	subsidiaries	and	all	intercompany	balances	and	transactions	have been	eliminated.	These	consolidated	financial	statements	have	been	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	("GAAP") and	present	our	financial	position,	results	of	operations,	and	cash	flows.

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	from	those	estimates.

Revenue	recognition—	Our	two	merchant	services	segments	primarily	include	processing	solutions	for	credit	cards,	debit	cards,	electronic	payments	and	check- related	services.	Revenue	is	recognized	as	such	services	are	performed.	Revenue	for	processing	services	provided	directly	to	merchants	is	recorded	net	of	interchange fees	charged	by	card	issuing	banks.	Our	primary	business	model	provides	payment	products	and	services	directly	to	merchants	as	our	end	customers.	We	also	provide similar	products	and	services	to	financial	institutions	and	a	limited	number	of	independent	sales	organizations	("ISOs")	that,	in	turn,	resell	our	products	and	services,	in which	case,	the	financial	institutions	and	select	ISOs	are	our	end	customers.	The	majority	of	merchant	services	revenue	is	generated	on	services	priced	as	a	percentage	of transaction	value	or	a	specified	fee	per	transaction,	depending	on	card	type.	We	also	charge	other	fees	based	on	specific	services	that	are	unrelated	to	the	number	of transactions	or	the	transaction	value.	Revenue	from	credit	cards	and	signature	debit	cards	is	generally	based	on	a	percentage	of	transaction	value	along	with	other	related fees,	while	revenue	from	PIN-based	debit	cards	is	typically	based	on	a	fee	per	transaction.

Cash	and	cash	equivalents—	Cash	and	cash	equivalents	include	cash	on	hand	and	all	liquid	investments	with	an	initial	maturity	of	three	months	or	less	when purchased.	Cash	and	cash	equivalents	include	reserve	funds	collected	from	our	merchants	that	serve	as	collateral	to	minimize	contingent	liabilities	associated	with	any losses	 that	 may	 occur	 under	 the	 merchant	 agreement	 ("Merchant	 Reserves").	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	to	collateralize	Merchant Reserves	strengthens	our	fiduciary	standing	with	our	member	sponsors	and	is	in	accordance	with	guidelines	set	by	the	card	networks.	As	of	May	31,	2013	and	2012,	our cash	and	cash	equivalents	included	$280.7	million	and	$328.2	million,	respectively,	related	to	Merchant	Reserves.

Our	cash	and	cash	equivalents	include	settlement	related	cash	balances.	Settlement	related	cash	balances	represent	surplus	funds	that	we	hold	on	behalf	of	our member	sponsors	when	the	incoming	amount	from	the	card	networks	precedes	the	member	sponsors'	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.	Please	see	Note	3	- Settlement	processing	assets	and	obligations	and	discussion	below	for	further	information.

Inventory—	Inventory,	which	includes	electronic	point	of	sale	terminals,	automated	teller	machines,	and	related	peripheral	equipment,	is	stated	at	the	lower	of	cost or	fair	value.	Cost	is	determined	by	using	the	average	cost	method.

Settlement	processing	assets	and	obligations—	Settlement	processing	assets	and	obligations	represent	intermediary	balances	arising	in	our	settlement	process	for direct	merchants.	In	accordance	with	Accounting	Standards	Codification	("ASC")	210-20,

Offsetting,	we	apply	offsetting	to	our	settlement	processing	assets	and	obligations	where	legal	right	of	set	off	exists.	Please	see	Note	3	-	Settlement	Processing	Assets and	Obligations	for	further	information.

Reserve	for	operating	losses—	As	a	part	of	our	merchant	credit	and	debit	card	processing	and	check	guarantee	services,	we	experience	merchant	losses	and	check guarantee	losses,	which	are	collectively	referred	to	as	"operating	losses."

Our	credit	card	processing	merchant	customers	are	liable	for	any	charges	or	losses	that	occur	under	the	merchant	agreement.	In	the	event,	however,	that	we	are	not able	to	collect	such	amount	from	the	merchants,	due	to	merchant	fraud,	insolvency,	bankruptcy	or	any	other	merchant-related	reason,	we	may	be	liable	for	any	such losses	based	on	our	merchant	agreement.	We	require	cash	deposits	(Merchant	Reserves),	guarantees,	letters	of	credit,	and	other	types	of	collateral	by	certain	merchants to	minimize	any	such	contingent	liability.	We	also	utilize	a	number	of	systems	and	procedures	to	manage	merchant	risk.	We	have,	however,	historically	experienced losses	due	to	merchant	defaults.

As	of	May	31,	2013	and	2012,	$2.3	million	has	been	recorded	to	reflect	the	fair	value	of	guarantees	associated	with	merchant	card	processing.	These	amounts	are included	in	settlement	processing	obligations	in	the	accompanying	consolidated	balance	sheets.	The	expense	associated	with	the	fair	value	of	the	guarantees	of	customer chargebacks	is	included	in	cost	of	service	in	the	accompanying	consolidated	statements	of	income.	For	the	years	ended	May	31,	2013,	2012	and	2011,	we	recorded	such expenses	in	the	amounts	of	$9.5	million,	$8.8	million	and	$6.0	million,	respectively.

In	our	check	guarantee	service	offering,	we	charge	our	merchants	a	percentage	of	the	gross	amount	of	the	check	and	guarantee	payment	of	the	check	to	the merchant	in	the	event	the	check	is	not	honored	by	the	checkwriter's	bank	in	accordance	with	the	merchant's	agreement	with	us.	The	fair	value	of	the	check	guarantee approximates	cost	and	is	equal	to	the	fee	charged	for	the	guarantee	service,	and	we	defer	this	fee	revenue	until	the	guarantee	is	satisfied.	We	have	the	right	to	collect	the full	amount	of	the	check	from	the	checkwriter	but	have	not	historically	recovered	100%	of	the	guaranteed	checks.	Our	check	guarantee	loss	reserve	is	comprised	of estimated	losses	on	returned	checks	and	estimated	incurred	but	not	reported	losses.		We	estimate	the	loss	on	returned	checks	by	applying	historical	collection	rates	to our	claims	receivable	balance.		We	estimate	incurred	but	not	reported	losses	by	applying	historical	loss	ratios	to	the	face	value	of	our	guaranteed	checks.		As	of	May	31, 2013	and	2012,	we	have	a	check	guarantee	loss	reserve	of	$3.1	million	and	$3.4	million,	respectively,	which	is	included	in	net	claims	receivable	in	the	accompanying consolidated	balance	sheets.	For	the	years	ended	May	31,	2013,	2012	and	2011,	we	recorded	expenses	of	$11.7	million,	$13.4	million	and	$14.2	million,	respectively, which	are	included	in	cost	of	service	in	the	accompanying	consolidated	statements	of	income.	The	estimated	check	returns	and	recovery	amounts	are	subject	to	the	risk that	actual	amounts	returned	and	recovered	in	the	future	may	differ	significantly	from	estimates	used	in	calculating	the	receivable	valuation	allowance.

As	the	potential	for	merchants'	failure	to	settle	individual	reversed	charges	from	consumers	in	our	merchant	credit	card	processing	offering	and	the	timing	of individual	checks	clearing	the	checkwriters'	banks	in	our	check	guarantee	offering	are	not	predictable,	it	is	not	practicable	to	calculate	the	maximum	amounts	for	which we	could	be	liable	under	the	guarantees	issued	under	the	merchant	card	processing	and	check	guarantee	service	offerings.	It	is	not	practicable	to	estimate	the	extent	to which	merchant	collateral	or	subsequent	collections	of	dishonored	checks,	respectively,	would	offset	these	exposures	due	to	these	same	uncertainties.

Property	and	equipment—	Property	and	equipment	are	stated	at	amortized	cost.	Depreciation	and	amortization	are	calculated	using	the	straight-line	method, except	for	certain	technology	assets	discussed	below.	Leasehold	improvements	are	amortized	over

the	lesser	of	the	remaining	term	of	the	lease	or	the	useful	life	of	the	asset.	Maintenance	and	repairs	are	charged	to	operations	as	incurred.

We	 develop	 software	 that	 is	 used	 in	 providing	 processing	 services	 to	 customers.	Capitalization	of	 internally	developed	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	prior	to	the completion	of	the	preliminary	project	stage	are	expensed	as	incurred.

As	of	May	31,	2013,	we	have	placed	into	service	$92.2	million	of	hardware	and	software	associated	with	our	technology	processing	platform,	referred	to	as	G2; $5.7	million	of	which	was	placed	in	service	during	fiscal	2013.	G2	serves	as	a	front-end	operating	environment	for	merchant	processing,	and	is	intended	to	replace	a number	of	legacy	platforms.	Depreciation	and	amortization	associated	with	these	costs	is	calculated	based	on	transactions	expected	to	be	processed	over	the	life	of	the platform.	We	believe	that	this	method	is	more	representative	of	the	platform's	use	than	the	straight-line	method.	We	are	currently	processing	transactions	on	our	G2 platform	 in	eight	 markets	 in	 our	Asia-Pacific	 region	 and	 for	 a	 limited	 number	 of	 U.S.	 merchants.	As	 these	markets	represent	a	small	percentage	of	our	overall transactions,	depreciation	and	amortization	related	to	our	G2	platform	for	fiscal	2013,	2012	and	2011	was	not	significant.	Depreciation	and	amortization	expense	will increase	as	we	complete	migrations	of	other	merchants	to	the	G2	platform.

Goodwill	and	other	intangible	assets—	We	completed	our	most	recent	annual	goodwill	impairment	test	as	of	January	1,	2013	and	determined	that	the	fair	value	of each	of	our	reporting	units	was	substantially	in	excess	of	the	carrying	value.	No	events	or	changes	in	circumstances	have	occurred	since	the	date	of	our	most	recent annual	impairment	test	that	would	more	likely	than	not	reduce	the	fair	value	of	a	reporting	unit	below	its	carrying	amount.

Goodwill	is	tested	for	impairment	at	the	reporting	unit	level,	and	the	impairment	test	consists	of	two	steps.	In	the	first	step	the	reporting	unit's	carrying	amount, including	goodwill,	is	compared	to	its	fair	value.	If	the	carrying	amount	of	the	reporting	unit	is	greater	than	its	fair	value,	goodwill	is	considered	impaired	and	step	two must	be	performed.	Step	two	measures	the	impairment	loss	by	comparing	the	implied	fair	value	of	reporting	unit	goodwill	with	the	carrying	amount	of	that	goodwill. The	implied	fair	value	of	goodwill	is	determined	by	allocating	the	fair	value	of	the	reporting	unit	to	all	the	assets	and	liabilities	of	that	unit	(including	unrecognized intangibles)	as	if	the	reporting	unit	had	been	acquired	in	a	business	combination.	The	excess	of	fair	value	over	the	amounts	allocated	to	the	assets	and	liabilities	of	the reporting	unit	is	the	implied	fair	value	of	goodwill.	The	excess	of	the	carrying	amount	over	the	implied	fair	value	is	the	impairment	loss.

Preparation	of	forecasts	and	the	selection	of	the	discount	rates	involve	significant	judgments	about	expected	future	business	performance	and	general	market conditions.	Significant	changes	in	our	forecasts	and	the	discount	rates	selected	or	the	weighting	of	the	income	and	market	approach	could	affect	the	estimated	fair	value of	one	or	more	of	our	reporting	units	and	could	result	in	a	goodwill	impairment	charge	in	a	future	period.

Other	intangible	assets	primarily	represent	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),	and	trademarks	associated	with	acquisitions.	Customer-related	intangible	assets,	contract- based	intangible	assets	and	certain	trademarks	are	amortized	over	their	estimated	useful	lives	of	from	5	to	30	years.	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	are	based	on	our	plans	to phase	out	the	trademarks	in	the	applicable	markets.

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	value	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	will	adjust	the	amortization	schedule accordingly.	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.

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-lived	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	value	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	analyses	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.	In	our	opinion,	the	carrying	values	of	our	long- lived	assets,	including	property	and	equipment	and	finite-life	intangible	assets,	were	not	impaired	at	May	31,	2013	and	2012.

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.

At	May	31,	2013	and	2012,	our	consolidated	balance	sheet	includes	net	deferred	tax	assets	associated	with	our	United	Kingdom	business	of	$90.7	million	and $92.8	million,	respectively.

Our	effective	tax	rates	were	28.6%,	27.6%,	29.3%	for	the	years	ended	May	31,	2013,	2012	 and	2011,	 respectively.	The	effective	tax	rates	for	the	years	ended May	31,	2013	and	2012	reflect	adjustments	to	our	U.K.	deferred	tax	asset	due	to	legislated	enacted	corporate	tax	rate	reductions	in	the	United	Kingdom	of	2%.	Please	see Note	9–	Income	Tax	for	further	information.

Fair	value	of	financial	instruments—	We	consider	that	the	carrying	amounts	of	our	financial	instruments,	including	cash	and	cash	equivalents,	receivables,	lines of	credit,	accounts	payable	and	accrued	liabilities,	approximate	their	fair	value	given	the	short-term	nature	of	these	items.	Our	term	loans	include	variable	interest	rates based	on	the	prime	rate	or	London	Interbank	Offered	Rate	plus	a	margin	based	on	our	leverage	position.	At	May	31,	2013,	the	carrying	amount	of	our	term	loans approximates	fair	value,	which	is	calculated	using	Level	2	inputs.	Our	subsidiary	in	the	Russian	Federation	has	notes	payable	with	a	fixed	interest	rate	of	8.5%	and maturity	dates	ranging	from	June	2013	through	November	2016.	At	May	31,	2013,	we	believe	the	carrying	amount	of	these	notes	approximates	fair	value,	which	is calculated	using	Level	3	inputs.	Please	see	Note	7	–	Long-Term	Debt	and	Credit	Facilities	for	further	information.

Financing	receivables—	Our	subsidiary	in	the	Russian	Federation	purchases	Automated	Teller	Machines	("ATMs")	and	leases	those	ATMs	to	our	sponsor	bank. We	have	determined	these	arrangements	to	be	direct	financing	leases.	Accordingly,	we	have	$6.3	million	 and	$9.1	million	of	financing	receivables	included	in	our May	31,	2013	and	2012	consolidated	balance	sheets,	respectively.

There	is	an	inherent	risk	that	our	customer	may	not	pay	the	contractual	balances	due.	We	periodically	review	the	financing	receivables	for	credit	losses	and	past due	balances	 to	determine	whether	an	allowance	should	be	recorded.	Historically	we	have	not	had	any	credit	 losses	or	past	due	balances	associated	with	 these receivables,	and	therefore	we	do	not	have	an	allowance	recorded.	We	have	had	no	financing	receivables	modified	as	troubled	debt	restructurings	nor	have	we	had	any purchases	or	sales	of	financing	receivables.

Fair	value	measurements—	GAAP	requires	disclosures	about	assets	and	liabilities	that	are	measured	at	fair	value.	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.	The	reporting	standard	establishes consistency	and	comparability	by	providing	a	fair	value	hierarchy	that	prioritizes	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.

Foreign	currencies—	We	have	significant	operations	in	a	number	of	foreign	subsidiaries	whose	functional	currency	is	their	local	currency.		Gains	and	losses	on transactions	denominated	in	currencies	other	than	the	functional	currencies	are	included	in	determining	net	income	for	the	period.		For	the	years	ended	May	31,	2013	and 2012,	our	transaction	gains	and	losses	were	insignificant.

The	assets	and	liabilities	of	subsidiaries	whose	functional	currency	is	a	foreign	currency	are	translated	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	 equity.	Translation	 gains	 and	 losses	 on	 intercompany	 balances	 of	 a	 long-term	 investment	 nature	 are	 also	 recorded	 as	 a	 component	 of	 other comprehensive	income.

Retirement	Benefits-	We	have	a	noncontributory	defined	benefit	pension	plan	covering	certain	of	our	United	States	employees	who	met	the	eligibility	provisions at	the	time	the	plan	was	closed	on	June	1,	1998.		Benefits	are	based	on	years	of	service	and	the	employee's	compensation	during	the	highest	five	consecutive	years	of earnings	out	of	the	last	ten	years	of	service.		Plan	provisions	and	funding	meet	the	requirements	of	the	Employee	Retirement	Income	Security	Act	of	1974,	as	amended ("ERISA").		Effective	May	31,	2004,	we	modified	the	pension	plan	to	cease	benefit	accruals	for	increases	in	compensation	levels.

We	also	have	a	noncontributory	defined	benefit	supplemental	executive	retirement	plan	("SERP")	covering	one	participant,	whose	employment	ceased	in	fiscal 2002.	This	plan	was	initially	formed	by	our	former	parent	company	and	was	transferred	to	us	in	the	spin-off	transaction	that	occurred	on	January	31,	2001.	Benefits	are based	on	years	of	service	and	the	employee's	compensation	during	the	highest	three	consecutive	years	of	earnings	out	of	the	last	ten	years	of	service.	The	SERP	is	a nonqualified,	unfunded	deferred	compensation	plan	under	ERISA.

The	measurement	date	for	the	pension	plans	is	May	31,	which	coincides	with	the	plans'	fiscal	year.	Our	plan	expenses	for	fiscal	2013,	2012	 and	2011	were actuarially	determined.	Due	to	the	limited	participation	by	employees	in	these	plans	and	the	related	subsequent	modifications,	the	total	benefit	obligation	and	funded status	of	the	plans	is	not	material	and	we	have	not	provided	full	disclosure	of	such	amounts.

Earnings	per	share—	Basic	 earnings	per	share	is	computed	by	dividing	reported	earnings	available	to	common	shareholders	by	the	weighted	average	shares outstanding	during	the	period.	Earnings	available	to	common	shareholders	are	the	same	as	reported	net	income	attributable	to	Global	Payments	for	all	periods	presented.

Diluted	earnings	per	share	is	computed	by	dividing	reported	earnings	available	to	common	shareholders	by	the	weighted	average	shares	outstanding	during	the period	and	the	impact	of	securities	that	would	have	a	dilutive	effect	on	earnings	per	share.	All	options	with	an	exercise	price	less	than	the	average	market	share	price	for the	period	are	assumed	to	have	a	dilutive	effect	on	earnings	per	share.	The	diluted	share	base	for	the	years	ended	May	31,	2013,	2012	and	2011	excludes	shares	of	0.3 million,	0.2	million	and	0.7	million	respectively,	related	to	stock	options.	These	shares	were	not	considered	in	computing	diluted	earnings	per	share	because	including them	would	have	had	an	antidilutive	effect.	No	additional	securities	were	outstanding	that	could	potentially	dilute	basic	earnings	per	share.

The	following	table	sets	forth	the	computation	of	diluted	weighted	average	shares	outstanding	for	the	years	ended	May	31,	2013,	2012	and	2011:

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Basic\tweighted\taverage\tshares\toutstanding | 77,767 | 78,829 | 79,837 |
| Plus:\tdilutive\teffect\tof\tstock\toptions\tand\tother\tshare-based\tawards | 460 | 602 | 641 |
| Diluted\tweighted\taverage\tshares\toutstanding | 78,227 | 79,431 | 80,478 |

Repurchased	shares	-	We	account	for	the	retirement	of	repurchased	shares	using	the	par	value	method.	Effective	June	1,	2011,	we	elected	to	change	our	method	of accounting	under	the	par	value	method.	We	previously	accounted	for	the	retirement	of	repurchased	shares	by	charging	the	entire	cost	to	paid-in	capital.	Our	new	method of	accounting	allocates	the	cost	of	repurchased	and	retired	shares	between	paid-in	capital	and	retained	earnings	by	comparing	the	price	of	shares	repurchased	to	the original	issue	proceeds	of	those	shares.	When	the	repurchase	price	of	the	shares	repurchased	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	to	the	cost	of	the	shares	repurchased.	We	believe	that	this	allocation method	is	preferable	because	it	more	accurately	reflects	our	paid-in	capital	balances	by	allocating	the	cost	of	the	shares	repurchased	and	retired	to	paid-in	capital	in proportion	to	paid-in	capital	associated	with	the	original	issuance	of	said	shares.

New	accounting	pronouncements—	From	time-to-time,	new	accounting	pronouncements	are	issued	by	the	Financial	Accounting	Standards	Board	("FASB")	or other	standards	setting	bodies	that	are	adopted	by	us	as	of	the	specified	effective	date.	Unless	otherwise	discussed,	our	management	believes	that	the	impact	of	recently issued	standards	that	are	not	yet	effective	will	not	have	a	material	impact	on	our	consolidated	financial	statements	upon	adoption.

In	December	2011,	the	FASB	issued	ASU	2011-11,	"Disclosures	About	Offsetting	Assets	and	Liabilities"	("ASU	2011-11").	The	amendments	in	ASU	2011-11 require	entities	to	disclose	information	about	offsetting	and	related	arrangements	to	enable	users	of	financial	statements	to	understand	the	effect	of	those	arrangements	on an	entity's	financial	position.	The	amendments	require	enhanced	disclosures	by	requiring	improved	information	about	financial	instruments	and	derivative	instruments that	are	either	(i)	offset	in	accordance	with	current	literature	or	(ii)	subject	to	an	enforceable	master	netting	arrangement	or	similar	agreement,	irrespective	of	whether they	are	offset	in	accordance	with	current	literature.	ASU	2011-11	is	effective	for	fiscal	years,	and	interim	periods	within	those	years,	beginning	on	or	after	January	1, 2013.	This	standard	will	become	effective	for	us	beginning	June	1,	2013.	The	adoption	of	ASU	2011-11	will	affect	our	disclosures	of	settlement	processing	assets	and obligations.	The	disclosures	required	by	ASU	2011-11	will	be	applied	retrospectively	for	all	comparative	periods	presented.

# NOTE	2—PROCESSING	SYSTEM	INTRUSION

As	a	result	of	this	event,	certain	card	networks	removed	us	from	their	list	of	Payment	Card	Industry	Data	Security	Standards	("PCI	DSS")	compliant	service providers.	Our	work	to	remediate	our	systems	and	processes	is	complete.	We	hired	a	Qualified	Security	Assessor,	or	QSA,	to	conduct	an	independent	review	of	the	PCI DSS	compliance	of	our	systems.	Global	Payments	Direct,	Inc.	our	primary	operating	entity,	has	been	returned	to	the	list	of	PCI	DSS	compliant	service	providers	and	we have	received	reports	on	compliance	covering	all	of	our	systems	that	process,	store,	transmit	or	otherwise	utilize	card	data.	To	date,	we	have	not	experienced	a	material loss	of	revenue	that	we	can	confirm	has	been	related	to	this	event.	However,	this	event	and	our	related	remediation	efforts	could	potentially	have	a	negative	impact	on future	revenues.

During	2013,	we	recorded	$36.8	million	of	expense	associated	with	this	incident,	bringing	the	life-to-date	total	expense	to	$121.2	million.	Of	this	life-to-date expense,	$105.5	million	represents	costs	incurred	through	May	31,	2013	for	professional	fees	and	other	costs	associated	with	the	investigation	and	remediation,	incentive payments	to	certain	business	partners	and	costs	associated	with	credit	monitoring	and	identity	protection	insurance.	An	additional	$35.7	million	represents	total	fraud losses,	fines	and	other

charges	that	have	been	imposed	upon	us	by	the	card	networks.	We	have	also	received	$20.0	million	($2.0	million	in	fiscal	2012	and	$18.0	million	in	fiscal	2013)	of insurance	recoveries,	which	are	netted	with	related	expenses,	as	discussed	below.	During	fiscal	2013,	we	reduced	our	accrual	for	fraud	losses,	fines	and	other	charges	by $31.8	million.	We	based	our	initial	estimate	of	fraud	losses,	fines	and	other	charges	on	our	understanding	of	the	rules	and	operating	regulations	published	by	the networks	and	preliminary	communications	with	the	networks.	We	have	now	reached	resolution	with	and	made	payments	to	the	networks,	resulting	in	charges	that	were less	than	our	initial	estimates.	The	primary	difference	between	our	initial	estimates	and	the	final	charges	relates	to	lower	fraud	related	costs	attributed	to	this	event	than previously	expected.	The	following	table	reflects	the	activity	in	our	accrual	for	fraud	losses,	fines	and	other	charges	for	the	twelve	months	ended	May	31,	2013	(in thousands):

We	were	insured	under	policies	that	provided	coverage	of	certain	costs	associated	with	this	event.	The	policies	provided	a	total	of	$30.0	million	in	policy	limits and	contained	various	sub-limits	of	liability	and	other	terms,	conditions	and	limitations,	including	a	$1.0	million	 deductible	 per	 claim.	As	of	fiscal	year	2013,	we received	assessments	from	certain	networks	and	submitted	additional	claims	to	the	insurers	and	recorded	$20.0	million	in	additional	insurance	recoveries	based	on	our negotiations	with	our	insurers.	We	will	record	receivables	for	any	additional	recoveries	in	the	periods	in	which	we	determine	such	recovery	is	probable	and	the	amount can	be	reasonably	estimated.

# NOTE	3—SETTLEMENT	PROCESSING	ASSETS	AND	OBLIGATIONS

We	are	designated	as	a	Merchant	Service	Provider	by	MasterCard	and	an	Independent	Sales	Organization	by	Visa.	 These	designations	are	dependent	upon member	clearing	banks	("Member")	sponsoring	us	and	our	adherence	to	the	standards	of	the	networks.	We	have	primary	financial	institution	sponsors	in	the	various markets	 where	 we	 facilitate	 payment	 transactions	 with	 whom	 we	 have	 sponsorship	 or	 depository	 and	 clearing	 agreements.	These	 agreements	 allow	 us	 to	 route transactions	under	the	member	banks'	control	and	identification	numbers	to	clear	credit	card	transactions	through	MasterCard	and	Visa.	In	certain	markets,	we	are members	in	various	payment	networks,	allowing	us	to	process	and	fund	transactions	without	third-party	sponsorship.

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	telecommunication	infrastructure	to	provide	funding	instructions	to	the	Members	who	in	turn	fund	the	merchants.	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

is	funded.	However,	in	practice	and	in	accordance	with	the	terms	of	our	sponsorship	agreements	with	our	Members,	we	generally	follow	a	net	settlement	process whereby,	if	the	incoming	amount	from	the	card	networks	precedes	the	Member's	funding	obligation	to	the	merchant,	we	temporarily	hold	the	surplus	on	behalf	of	the Member	in	our	account	at	the	Member	bank	and	record	a	corresponding	liability.	Conversely,	if	the	Member's	funding	obligation	to	the	merchant	precedes	the	incoming amount	from	the	card	networks,	the	amount	of	the	Member's	net	receivable	position	is	either	subsequently	advanced	to	the	Member	by	us	or	the	Member	satisfies	this obligation	 with	 its	 own	 funds.	If	 the	Member	uses	 its	own	funds,	 the	Member	may	assess	funding	cost,	which	 is	 included	 in	 interest	and	other	expense	on	 the accompanying	consolidated	statements	of	income.	Each	participant	in	the	transaction	process	receives	compensation	for	its	services.

Timing	differences,	interchange	expense,	Merchant	Reserves	and	exception	items	cause	differences	between	the	amount	the	Member	receives	from	the	card 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	statement	of	financial	position.	Settlement	processing	assets	and	obligations	consist	of	the	components	outlined	below:

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

•Receivable	from	Members	-	our	receivable	from	the	Members	for	transactions	we	have	funded	merchants	on	behalf	of	the	Members	in	advance	of	receipt	of card	association	funding.

•Receivable	from	networks	-	our	receivable	from	the	card	networks	for	transactions	processed	on	behalf	of	merchants	where	we	are	a	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	we	have	received	funding	from	the	Members	but	have	not	funded	merchants	on behalf	of	the	Members.	Also	cases	in	which	the	Member	uses	its	own	funds	to	satisfy	a	funding	obligation	to	merchants	that	precedes	the	incoming	amount from	the	card	network.

•Liability	to	merchants	-	our	liability	to	merchants	for	transactions	that	have	been	processed	but	not	yet	funded	where	we	are	a	Member	of	that	particular network.

•Reserve for operating losses - see	 Note 1 -	Summary	 of	 Significant	 Accounting Policies.

•Reserve	for	sales	allowances.

In	accordance	with	ASC	210-20,	Offsetting,	we	apply	offsetting	to	our	settlement	processing	assets	and	obligations	where	legal	right	of	setoff	exists.	We	apply this	offsetting	by	Member	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	and	do	not	have	a	direct	obligation	or	any	ability	to	satisfy	the	payable	that	funds	the	merchant.	In	these	situations,	we	apply	offsetting	to determine	a	net	position	with	each	member	sponsor.	If	that	net	position	is	an	asset,	we	reflect	the	net	amount	in	settlement	processing	assets	on	our	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	markets	where	we	have direct	membership,	offsetting	is	not	applied,	and	the	individual	components	are	presented	as	an	asset	or	obligation	based	on	the	nature	of	that	component.

|  | May	31,<br>2013 | May	31,<br>2012 |
| :--- | :--- | :--- |
| Settlement\tprocessing\tassets: |  |  |
| Interchange\treimbursement | $70,348 | $28,699 |
| Receivable\tfrom\tMembers | 117,404 | 77,073 |
| Receivable\tfrom\tnetworks | 126,136 | 118,942 |
| Exception\titems | 2,725 | 1,345 |
| Merchant\tReserves | (57,409) | (8,065) |
| Total | $259,204 | $217,994 |
| Settlement\tprocessing\tobligations: |  |  |
| Interchange\treimbursement | $200,319 | $223,008 |
| (Liability\tto)\treceivable\tfrom\tMembers | (27,717) | 589 |
| Liability\tto\tmerchants | (120,875) | (128,663) |
| Exception\titems | 12,308 | 11,554 |
| Merchant\tReserves | (223,314) | (320,168) |
| Reserve\tfor\toperating\tlosses | (2,318) | (2,325) |
| Reserves\tfor\tsales\tallowances | (961) | (873) |
| Total | $(162,558) | $(216,878) |

# NOTE	4—BUSINESS	AND	INTANGIBLE	ASSET	ACQUISITIONS

In	the	years	ended	May	31,	2013,	2012,	and	2011,	we	acquired	the	following	businesses	and	intangible	assets:

|  | Date	Acquired | Percentage<br>Ownership |
| :--- | :--- | :--- |
| Fiscal\t2013 |  |  |
| Accelerated\tPayment\tTechnologies | October\t1,\t2012 | 100% |
| Banca\tCivica | December\t12,\t2012 | 100% |
| Fiscal\t2012 |  |  |
| Alfa-Bank | December\t5,\t2011 | 100% |
| HSBC\tMalta | December\t30,\t2011 | 100% |
| CyberSource\tPortfolio | January\t31,\t2012 | 100% |
| Fiscal\t2011 |  |  |
| Comercia\tGlobal\tPayments\tEntidad\tde\tPago,\tS.L. | December\t20,\t2010 | 51% |
| Various\tcontract-based\tand\tcustomer\trelated\tintangible\tassets | Various | 100% |

The	business	acquisitions	have	been	recorded	using	the	purchase	method	of	accounting,	and	accordingly,	the	purchase	price	has	been	allocated	to	the	assets acquired	 and liabilities	 assumed	 based	 on their	 estimated fair	 value	 as	 of the	 date	 of	 acquisition.	The	 operating results	 of	 each	 acquisition	 are included in	 our consolidated	statements	of	income	from	the	dates	of	each	acquisition.

# Accelerated	Payment	Technologies

On	October	1,	2012,	we	completed	the	acquisition	of	100%	of	the	common	stock	of	Accelerated	Payment	Technologies	("APT")	for	$413.0	million	less	working capital.	We	funded	the	acquisition	using	proceeds	from	a	term	loan.	We	acquired	APT,	a	provider	of	fully-integrated	payment	technology	solutions	for	small	and medium	sized	merchants,	to	expand	our	direct	distribution	capabilities	in	the	United	States.	This	acquisition	has	been	recorded	as	a	business	combination,	and	the purchase	price	was	allocated	to	the	assets	acquired	and	liabilities	assumed	based	on	their	estimated	fair	values.	The	purchase	price	of	APT	was	determined	by	analyzing the	historical	and	prospective	financial	statements.	Acquisition	costs	associated	with	this	purchase	were	not	material.

     The	following	table	summarizes	the	purchase	price	allocation	(in	thousands):

The	goodwill	associated	with	the	acquisition	is	not	deductible	for	tax	purposes.	The	customer-related	intangible	assets	have	estimated	amortization	periods	of	12 years.	The	contract-based	intangible	assets	have	amortization	periods	of	1.5	to	10	years.	The	acquired	technology	has	an	amortization	period	of	8	years.

Prior	to	the	acquisition,	we	processed	transactions	for	the	majority	of	APT's	merchants	via	an	ISO	relationship.	As	a	result,	our	revenue	will	not	materially	change with	this	acquisition	and	the	amount	of	incremental	revenue	and	earnings	of	APT	since	the	acquisition	date	included	in	the	consolidated	statement	of	income	for	fiscal 2013	is	not	material.	With	the	acquisition,	we	will	no	longer	pay	a	monthly	residual	to	APT.	The	following	pro	forma	information	shows	the	results	of	our	operations	for fiscal	year	ended	May	31,	2013	and	May	31,	2012	as	if	the	APT	acquisition	had	occurred	June	1,	2011.	The	pro	forma	information	is	presented	for	information	purposes only	and	is	not	necessarily	indicative	of	what	would	have	occurred	if	the	acquisition	had	been	made	as	of	that	date.	The	pro	forma	information	is	also	not	intended	to	be a	projection	of	future	results	due	to	the	integration	of	the	acquired	business.

|  | 2013 | 2013 | 2012 | 2012 |
| :--- | :--- | :--- | :--- | :--- |
|  | (Actual) | (Pro\tforma) | (Actual) | (Pro\tforma) |
|  |  | (in\tthousands,\texcept\tper\tshare\tdata) | (in\tthousands,\texcept\tper\tshare\tdata) |  |
| Total\trevenues | $2,375,923 | $2,380,098 | $2,203,847 | $2,212,066 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $216,125 | $217,122 | $188,161 | $183,387 |
| Net\tincome\tper\tshare\tattributable\tto\tGlobal\tPayments,\tbasic | $2.78 | $2.79 | $2.39 | $2.33 |
| Net\tincome\tper\tshare\tattributable\tto\tGlobal\tPayments,\tdiluted | $2.76 | $2.78 | $2.37 | $2.31 |

# Redeemable	Noncontrolling	Interest	Acquisition

On	July	26,	2012,	we	entered	into	an	agreement	to	purchase	HSBC	Asia's	("HSBC")	44%	interest	in	Global	Payments	Asia-Pacific	Limited	("GPAP")	for	fair	value of	$242.0	million.	Effective	December	1,	2012,	we	completed	the	purchase.	We	used	a	combination	of	excess	cash	and	existing	borrowings	to	complete	the	transaction.

The	purchase	was	treated	as	an	equity	transaction	and	reflected	as	a	financing	cash	outflow	in	our	statement	of	cash	flows.	Accordingly,	no	additional	value	was ascribed	to	the	assets	of	GPAP.	The	difference	between	the	maximum	redemption	amount	of	the	redeemable	noncontrolling	interest	at	 July	26,	2012	and	our	purchase price	was	recorded	as	a	reduction	of	paid-in	capital	of	$96.0	million.	In	accordance	with	Accounting	Standards	Codification	480,	Distinguishing	Liabilities	from	Equity ("ASC	480"),	from	the	agreement	date	through	the	close	of	the	transaction,	we	accounted	for	our	commitment	to	purchase	the	remaining	44%	of	GPAP	as	a	freestanding forward	contract.	Accordingly	as	of	July	26,	2012,	we	stopped	attributing	income	to	redeemable	noncontrolling	interest	and	any	subsequent	distributions	to	holders	of	the redeemable	noncontrolling	interest	are	characterized	as	interest	expense.	HSBC	is	entitled	to	dividends	through	the	closing	of	the	transaction	pursuant	to	the	GPAP shareholders	agreement	and	the	purchase	agreement.	During	fiscal	2013,	we	declared	a	dividend	for	fiscal	year	2012	of	which	$8.4	million	was	paid	to	HSBC.	Such dividend	is	reflected	as	interest	expense	in	our	consolidated	statements	of	income	in	the	accordance	with	the	provisions	of	ASC	480.	During	fiscal	year	2014,	we	expect to	declare	an	additional	dividend	related	to	GPAP	operations	through	the	closing	date.	We	expect	HSBC's	share	of	such	dividend	to	be	reflected	in	interest	expense	in our	fiscal	year	2014	consolidated	statements	of	income.

# Banca	Civica

On	December	12,	2012,	Comercia	Global	Payments	Entidad	de	Pago,	S.L.	("Comercia")	completed	the	acquisition	of	the	merchant	acquiring	business	of	Banca Civica,	S.A.	("Civica")	from	CaixaBank,	S.A.	("CaixaBank")	for	€17.5	million	($22.9	million	equivalent	as	of	the	acquisition	date).	This	transaction	has	been	recorded as	a	business	combination,	and	the	purchase	price	is	allocated	to	the	assets	acquired	and	liabilities	assumed	based	on	their	estimated	fair	values.	The	purchase	price	of Civica	was	determined	by	analyzing	the	historical	and	prospective	financial	statements.	The	results	of	operations	of	this	business	were	not	significant	to	our	consolidated results	of	operations	and	accordingly,	we	have	not	provided	pro	forma	information	relating	to	this	acquisition.	Acquisition	costs	associated	with	this	purchase	were	not material.

The	 goodwill	 associated	 with	 the	 acquisition is	 not	 deductible for tax	 purposes.	The	 customer-related	 and	 contract-based intangible	 assets	 have	 estimated amortization	periods	of	10	and	18	years,	respectively.

On	December	5,	2011,	we	acquired	the	merchant	acquiring	business	of	Alfa-Bank	("Alfa"),	the	largest	privately	owned	bank	in	Russia,	for	$14.1	million	in	cash. This	acquisition	has	been	recorded	as	a	business	combination,	and	the	purchase	price	is	allocated	to	the	assets	acquired	and	liabilities	assumed	based	on	their	estimated fair	values.	The	purchase	price	of	Alfa	was	determined	by	analyzing	the	historical	and	prospective	financial	statements.	The	results	of	operations	of	this	business	were not	significant	to	our	consolidated	results	of	operations	and	accordingly,	we	have	not	provided	pro	forma	information	relating	to	this	acquisition.

The	customer-related	intangible	assets	have	estimated	amortization	periods	of	10	years.

# HSBC	Malta

On	December	30,	2011,	we	acquired	a	merchant	acquiring	business	in	Malta	from	HSBC	Malta	for	$14.5	million	in	cash.	This	acquisition	has	been	recorded	as	a business	combination,	and	the	purchase	price	is	allocated	to	the	assets	acquired	and	liabilities	assumed	based	on	their	estimated	fair	values.	In	conjunction	with	the acquisition,	HSBC	Malta	agreed	to	a	10	year	marketing	alliance	agreement	in	which	HSBC	Malta	will	refer	customers	to	us	for	payment	processing	services	in	Malta and	provide	sponsorship	 into	 the	card	networks.	The	purchase	price	of	our	merchant	acquiring	business	in	Malta	was	determined	by	analyzing	the	historical	and prospective	financial	statements.	The	results	of	operations	of	this	business	were	not	significant	to	our	consolidated	results	of	operations	and	accordingly,	we	have	not provided	pro	forma	information	relating	to	this	acquisition.

The	goodwill	associated	with	the	acquisition	is	not	deductible	for	tax	purposes.	The	customer-related	intangible	assets	have	estimated	amortization	periods	of	16 years.	The	contract-based	intangible	assets	have	estimated	amortization	periods	of	10	years.

# CyberSource	Portfolio

On	January	31,	2012,	we	acquired	 the	U.S.	merchant	portfolio	of	CyberSource	from	Visa	for	$14.9	million.	The	merchant	portfolio	has	been	classified	as customer-related	intangible	assets	with	estimated	amortization	periods	of	10	years.

# Comercia	Global	Payments	Entidad	de	Pago,	S.L.

On	December	20,	2010,	we	acquired	a	51%	controlling	financial	interest	in	Comercia,	a	newly	formed	company	into	which	CaixaBank	contributed	its	merchant acquiring	business	in	Spain.	CaixaBank	owns	the	remaining	49%	of	Comercia.	We	formed	Comercia	with	CaixaBank,	one	of	the	largest	retail	banks	in	Spain,	to	provide merchant	acquiring	services	to	merchants	in	Spain.	We	purchased	our	share	of	Comercia	for	€125	million.	The	shareholders	contributed	a	total	of	€6.4	million	as	initial capital	to	form	Comercia.	Our	total	investment	in	Comercia,	including	our	51%	share	of	the	initial	capital	was	€128.3	million	($173.5	million	as	of	the	closing	date).	We manage	the	day-to-day	operations	of	the	corporation,	control	all	major	decisions	and,	accordingly,	consolidate	the	corporation's	financial	results	for	accounting	purposes effective	with	the	closing	date.	In	conjunction	with	the	acquisition,	CaixaBank	agreed	to	a	twenty	year	marketing	alliance	agreement	in	which	CaixaBank	will	refer customers	to	Comercia	for	payment	processing	services	in	Spain	and	provide	sponsorship	into	the	card	networks.	We	funded	the	purchase	with	a	combination	of	existing cash	resources	in	Europe	and	borrowings	on	our	Corporate	Credit	Facility.	During	fiscal	2011,	we	expensed	acquisition	costs	of	$1.0	million	associated	with	this transaction.	These	costs	were	recorded	in	selling,	general	and	administrative	expenses	in	the	accompanying	consolidated	statements	of	income.	The	results	of	operations of	Comercia	from	the	date	of	acquisition	through	the	end	of	fiscal	2011	were	not	significant	to	our	fiscal	2011	consolidated	results	of	operations.

The	purchase	price	of	Comercia	was	determined	by	analyzing	the	historical	and	prospective	financial	statements.	The	results	of	operations	of	this	business	were not	significant	to	our	consolidated	results	of	operations	and	accordingly,	we	have	not	provided	pro	forma	information	relating	to	this	acquisition.

| Goodwill | $147,535 |
| :--- | :--- |
| Customer-related\tintangible\tassets | 96,100 |
| Contract-based\tintangible\tassets | 54,141 |
| Working\tcapital,\tnet | 8,476 |
| Total\tassets\tacquired | 306,252 |
| Non-controlling\tinterest | (132,738) |
| \t\t\t\t\tNet\tassets\tacquired | $173,514 |

The	goodwill	associated	with	the	acquisition	is	deductible	for	tax	purposes.	The	customer-related	intangible	assets	have	estimated	amortization	periods	of	10	years. The	contract-based	intangible	assets	have	estimated	amortization	periods	of	20	years.

# Other

During	fiscal	year	2011,	we	acquired	contract-based	and	customer	related	intangible	assets	in	our	United	States	merchant	services	channel	for	$3.5	million.	These intangible	assets	are	being	amortized	on	a	straight-line	basis	over	their	estimated	useful	lives	of	5	to	7	years.

# NOTE	5—PROPERTY	AND	EQUIPMENT

As	of	May	31,	2013	and	2012,	property	and	equipment	consisted	of	the	following:

|  | Lives	in	Years | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Land | N/A | $1,983 | $1,892 |
| Buildings | 25-30 | 35,216 | 33,753 |
| Equipment | 2-5 | 181,316 | 185,742 |
| Software | 5-10 | 167,084 | 162,065 |
| Leasehold\timprovements | 5-15 | 12,278 | 11,965 |
| Furniture\tand\tfixtures | 5-7 | 5,796 | 5,307 |
| Work\tin\tprogress | N/A | 101,339 | 67,035 |
|  |  | 505,012 | 467,759 |
| Less\taccumulated\tdepreciation\tand\tamortization\tof\tproperty\tand\tequipment |  | 156,948 | 161,911 |
|  |  | $348,064 | $305,848 |

# NOTE	6—GOODWILL	AND	INTANGIBLE	ASSETS

As	of	May	31,	2013	and	2012,	goodwill	and	intangible	assets	consisted	of	the	following:

|  | 2013 | 2012 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Goodwill | $1,044,222 | $724,687 |
| Other\tintangible\tassets: |  |  |
| Customer-related\tintangible\tassets | $559,884 | $451,095 |
| Trademarks | 6,390 | 7,996 |
| Acquired\ttechnology | 15,000 | — |
| Contract-based\tintangible\tassets | 110,234 | 66,393 |
|  | 691,508 | 525,484 |
| Less\taccumulated\tamortization: |  |  |
| Customer-related\tintangible\tassets | 262,649 | 214,285 |
| Trademarks | 3,967 | 4,868 |
| Acquired\ttechnology | 1,248 | — |
| Contract-based\tintangible\tassets | 22,796 | 16,143 |
|  | 290,660 | 235,296 |
|  | $400,848 | $290,188 |

The	following	table	discloses	the	changes	in	the	carrying	amount	of	goodwill	for	the	years	ended	May	31,	2013	and	2012:

| Balance	at	May	31,	2011: | $217,422 | $562,215 | $779,637 |
| :--- | :--- | :--- | :--- |
| Accumulated\timpairment\tlosses | — | — | — |
|  | 217,422 | 562,215 | 779,637 |
| Goodwill\tacquired | — | 9,362 | 9,362 |
| Effect\tof\tforeign\tcurrency\ttranslation | (6,320) | (57,992) | (64,312) |
| Balance\tat\tMay\t31,\t2012 | 211,102 | 513,585 | 724,687 |
| Accumulated\timpairment\tlosses | — | — | — |
| Balance\tat\tMay\t31,\t2012 | 211,102 | 513,585 | 724,687 |
| Goodwill\tacquired | 308,518 | 4,445 | 312,963 |
| Effect\tof\tforeign\tcurrency\ttranslation | (445) | 7,017 | 6,572 |
| Balance\tat\tMay\t31,\t2013 | 519,175 | 525,047 | 1,044,222 |
| Accumulated\timpairment\tlosses | — | — | — |
| Balance\tat\tMay\t31,\t2013 | $519,175 | $525,047 | $1,044,222 |

Customer-related	intangible	assets,	contract-based	intangible	assets	and	acquired	technology	acquired	during	the	year	ended	May	31,	2013	have	weighted	average amortization	periods	of	11.9	years,	12.3	years	and	8.0	years,	respectively.	Customer-related	intangible	assets	and	contract-based	intangible	assets	acquired	during	the year	ended	May	31,	2012	have	weighted	average	amortization	periods	of	13.5	years	and	10.0	years,	respectively.	Amortization	expense	of	acquired	intangibles	was $56.8	million,	$50.7	million,	and	$41.7	million	for	fiscal	2013,	2012	and	2011,	respectively.

The	estimated	amortization	expense	of	acquired	intangibles	as	of	May	31,	2013	for	the	next	five	fiscal	years,	calculated	using	the	exchange	rate	at	the	date	of acquisition,	is	as	follows	(in	thousands):

| 2014 | $58,455 |
| :--- | :--- |
| 2015 | 52,558 |
| 2016 | 47,469 |
| 2017 | 43,303 |
| 2018 | 38,978 |

# NOTE	7—LONG-TERM	DEBT	AND	CREDIT	FACILITIES

|  | May	31,<br>2013 | May	31,<br>2012 |
| :--- | :--- | :--- |
| Lines\tof\tcredit: | (in\tthousands) |  |
| Corporate\tCredit\tFacility\t-\tlong-term | $309,955 | $229,500 |
| Short-term\tlines\tof\tcredit: |  |  |
| United\tKingdom\tCredit\tFacility | 74,146 | 85,102 |
| Hong\tKong\tCredit\tFacility | 38,134 | 54,564 |
| Spain\tCredit\tFacility | 28,041 | 17,241 |
| Malaysia\tCredit\tFacility | 14,025 | 12,844 |
| Taiwan\tCredit\tFacility | 8,359 | — |
| Canada\tCredit\tFacility | 6,866 | 20,033 |
| Singapore\tCredit\tFacility | 6,459 | 10,318 |
| Philippines\tCredit\tFacility | 6,384 | 6,336 |
| Sri\tLanka\tCredit\tFacility | 1,978 | 2,291 |
| Macau\tCredit\tFacility | 1,966 | 2,443 |
| Maldives\tCredit\tFacility | 741 | 4,219 |
| Brunei\tCredit\tFacility | 362 | — |
| Total\tshort-term\tlines\tof\tcredit | $187,461 | $215,391 |
| Total\tlines\tof\tcredit | 497,416 | 444,891 |
| Notes\tpayable | 6,014 | 10,089 |
| Term\tloans | 647,500 | 73,396 |
| Total\tdebt | $1,150,930 | $528,376 |
| Current\tportion | $259,796 | $291,811 |
| Long-term\tdebt | 891,134 | 236,565 |
| Total\tdebt | $1,150,930 | $528,376 |
| Maturity\trequirements\ton\toutstanding\tdebt\tby\tfiscal\tyear\tare\tas\tfollows\t(in\tthousands): |  |  |
| 2014 |  | $259,796 |
| 2015 | 2015 | 71,472 |
| 2016 |  | 381,427 |
| 2017 | 2017 | 70,735 |
| 2018 |  | 367,500 |
| Total |  | $1,150,930 |

We	plan	to	use	the	Corporate	Credit	Facility	to	support	strategic	growth	initiatives	and	for	general	corporate	purposes.	As	of	May	31,	2013,	interest	rate	on	the credit	 facility	 was	2.2%	 and	 the	 aggregate	 outstanding	 balance	 was	$310	 million.	 The	 Corporate	 Credit	 Facility	 is	 included	 in	 long-term	 debt	 in	 the accompanying	consolidated	balance	sheets	because	we	are	not	contractually	obligated	to	make	repayments	in	the	next	twelve	months.

•United	Kingdom-	a	revolving	credit	facility	with	HSBC	Bank,	for	up	to	£140.0	million	($212.3	million	USD	as	of	May	31,	2013)	to	fund	settlement.	This	credit facility	has	a	variable	short-term	interest	rate	plus	a	margin.	As	of	May	31,	2013	the	interest	rate	was	1.9%.	This	facility	is	subject	to	annual	review.	During	the year,	the	facility	was	amended	to	facilitate	borrowings	in	multiple	currencies.

•Hong	Kong	-	a	revolving	overdraft	facility	with	HSBC	Limited	Hong	Kong,	for	up	to	1.0	billion	Hong	Kong	dollars	($128.8	million	USD	as	of	May	31,	2013) to	fund	settlement.		In	addition,	the	Hong	Kong	credit	facility	allows	us	to	expand	the	size	of	the	uncommitted	facility	to	1.5	billion	Hong	Kong	dollars.	This facility	has	a	variable	short	term	interest	rate	plus	a	margin.		As	of	May	31,	2013	the	interest	rate	on	the	facility	was	0.9%.	This	facility	is	subject	to	annual review.

•Canada	-	a	revolving	credit	facility,	which	we	refer	to	as	our	Canada	Credit	Facility,	with	the	Canadian	Imperial	Bank	of	Commerce,	or	CIBC.	The	Canada Credit	Facility	is	a	facility	which	consists	of	a	line	of	credit	of	$25.0	million	Canadian	dollars	($24.8	million	USD	as	of	May	31,	2013).	In	addition,	the	Canada Credit	Facility	allows	us	to	expand	the	size	of	the	uncommitted	facility	to	$30.0	million	Canadian	dollars.	This	credit	facility	carries	no	termination	date,	but can	be	terminated	by	either	party	with	advance	notice.	This	credit	facility	has	card	association	receivables	and	CIBC	settlement	related	bank	accounts	as pledged	collateral.	This	credit	facility	has	a	variable	interest	rate	based	on	the	Canadian	dollar	Interbank	Offered	Rate	or	prime	rate	plus	a	margin.	As	of May	31,	2013	the	interest	rate	was	1.5%.

•Malaysia	-	a	revolving	overdraft	facility	with	HSBC	Bank	Malaysia	Berhad,	for	up	to	90.0	million	Malaysian	Ringgits	($29.3	million	USD	as	of	May	31,	2013) to	fund	settlement.	This	facility	has	a	variable	short	term	interest	rate	less	a	margin.		As	of	May	31,	2013	the	interest	rate	on	the	facility	was	3.7%.	This	facility is	subject	to	annual	review.

•Spain	-	a	revolving	credit	facility	with	CaixaBank,	for	up	to	€250.0	million	($324.7	million	USD	as	of	May	31,	2013)	to	fund	settlement.	This	credit	facility also	allows	borrowings	in	British	Pound	Sterling,	Japanese	Yen,	and	United	States	dollars,	and	has	a	variable	short	term	interest	rate	plus	a	margin.	As	of May	31,	2013	the	weighted	interest	rate	was	0.3%.	The	term	of	the	facility	is	through	January	2014.

•Singapore	-	a	revolving	overdraft	facility	with	HSBC	Banking	Corporation	Limited,	for	up	to	25.0	million	Singapore	dollars	($19.8	million	USD	as	of	May	31, 2013)	to	fund	settlement.	This	facility	has	a	variable	short	term	interest	rate	plus	a	margin.		As	of	May	31,	2013	the	interest	rate	on	the	facility	was	0.9%.	This facility	is	subject	to	annual	review.

•Philippines	-	a	revolving	facility	with	HSBC	Bank,	Philippines,	for	up	to	450.0	million	Philippine	Pesos	($10.6	million	USD	as	of	May	31,	2013)	and	$2.5 million	United	States	dollars	to	fund	settlement.		The	facility	has	variable	short	term	interest	rates	plus	a	margin.		As	of	May	31,	2013	the	interest	rates	on	the facility	was	3.8%	for	the	Philippines	Pesos	tranche.	This	facility	is	subject	to	annual	review.

•Maldives	-	a	revolving	overdraft	facility	with	HSBC	Bank,	Maldives,	for	up	to	$6.0	million	to	fund	settlement.	This	facility	is	denominated	in	United	States dollars	and	has	a	variable	short	term	interest	rate	plus	a	margin.		As	of	May	31,	2013	the	interest	rate	on	the	facility	was	4.7%.	This	facility	is	subject	to	annual review.

•Macau	-	a	revolving	overdraft	facility	with	HSBC	Asia	Pacific,	for	40.0	million	Macau	Pataca	($4.9	million	USD	as	of	May	31,	2013)	to	fund	settlement.	In addition,	the	Macau	Credit	Facility	allows	us	to	expand	the	size	of	the	uncommitted	facility	to	150.0	million	Macau	Pataca.	This	credit	facility	has	a	variable interest	rate	based	on	the	lending	rate	stipulated	by	HSBC	Asia	Pacific,	less	a	margin.	As	of	May	31,	2013	the	interest	rate	on	the	facility	was	2.5%.	This	facility is	subject	to	annual	review.

•Sri	Lanka	-	a	revolving	overdraft	facility	with	HSBC	Bank,	Sri	Lanka,	for	550.0	million	Sri	Lankan	Rupees	($4.3	million	USD	as	of	May	31,	2013)	in	two tranches:	one	to	fund	settlement	and	the	other	for	general	corporate	purposes.		The	facility	has	a	variable	short	term	interest	rate	plus	a	margin.		As	of	May	31, 2013	the	interest	rate	on	the	two	tranches	of	the	facility	was	14.0%.	This	facility	is	subject	to	annual	review.

•Taiwan	-	a	revolving	overdraft	facility	for	up	to	1.5	billion	Taiwan	dollars	($50.0	million	USD	as	of	May	31,	2013)	to	fund	settlement.	This	credit	facility	has	a variable	short	term	interest	rate	plus	a	margin.	As	of	May	31,	2013	the	interest	rate	on	the	facility	was	2.1%.	This	facility	is	subject	to	an	annual	review.

•Brunei	-	a	revolving	overdraft	facility	for	up	to	4.5	million	Brunei	dollars	($3.5	million	USD	as	of	May	31,	2013)	to	fund	settlement	was	entered	into	in	April 2013.	This	credit	facility	has	a	variable	short-term	interest	rate	plus	a	margin.	As	of	May	31,	2013,	the	interest	rate	on	this	facility	was	2.4%.	This	facility	is subject	to	annual	review.

On	September	28,	2012	we	entered	into	a	five	year	unsecured	$700.0	million	term	loan	agreement,	with	a	syndicate	of	banks,	which	we	used	to	partially	fund	our acquisition	of	APT	and	our	purchase	of	HSBC	Asia's	44%	interest	in	GPAP	and	to	repay	the	outstanding	balance	on	the	Corporate	Credit	Facility.	The	term	loan	expires in	September	2017	and	bears	interest,	at	our	election,	at	the	prime	rate	or	LIBOR,	plus	a	leverage	based	margin.	As	of	May	31,	2013	the	interest	rate	on	the	term	loan was	2.2%.	The	term	loan	has	scheduled	quarterly	principal	payments	of	$17.5	million	at	the	end	of	each	fiscal	quarter	through	maturity.	As	 of	May	31,	2013,	the outstanding	balance	of	the	term	loan	was	$647.5	million.

UCS,	our	subsidiary	in	the	Russian	Federation,	has	notes	payable	with	a	total	outstanding	balance	of	approximately	$6.0	million	 at	May	31,	2013.	These	notes have	a	fixed	interest	rate	of	8.5%	with	maturity	dates	ranging	from	June	2013	through	November	2016.

# NOTE	8—ACCOUNTS	PAYABLE	AND	ACCRUED	LIABILITIES

As	of	May	31,	2013	and	2012,	accounts	payable	and	accrued	liabilities	consisted	of	the	following:

|  | 2013 | 2012 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Trade\taccounts\tpayable | $18,497 | $11,817 |
| Compensation\tand\tbenefits | 39,623 | 36,116 |
| Third-party\tprocessing\texpenses | 10,340 | 10,578 |
| Commissions\tto\tthird\tparties | 61,279 | 64,581 |
| Accrued\tfees\tand\tassessment\texpenses | 30,490 | 27,149 |
| Transition\tservices\tpayable\tto\tHSBC\tUK,\tHSBC\tAsia\tand\tCaixaBank | 16,528 | 17,920 |
| Accrued\tprocessing\tsystem\tintrusion\tcosts | 9,021 | 79,666 |
| Other | 77,112 | 68,486 |
|  | $262,890 | $316,313 |

# NOTE	9—INCOME	TAX

The	provisions	for	income	taxes	for	the	fiscal	years	ended	May	31	include:

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Current\ttax\texpense: |  |  |  |
| Federal | $16,326 | $52,875 | $42,034 |
| State | 987 | 2,989 | 2,597 |
| Foreign | 36,020 | 35,029 | 18,358 |
|  | 53,333 | 90,893 | 62,989 |
| Deferred\ttax\texpense\t(benefit): |  |  |  |
| Federal | 26,302 | (21,088) | 17,849 |
| State | 3,568 | (813) | (1,045) |
| Foreign | 12,368 | 13,889 | 15,283 |
|  | 42,238 | (8,012) | 32,087 |
| Provision\tfor\tincome\ttaxes | 95,571 | 82,881 | 95,076 |
| Tax\tallocated\tto\tnoncontrolling\tinterest\tin\ta\ttaxable\tentity | (4,178) | (6,604) | (3,027) |
| Net\tincome\ttax\texpense\tattributable\tto\tGlobal\tPayments | $91,393 | $76,277 | $92,049 |

The	following	presents	our	income	from	continuing	operations	before	income	taxes	for	the	fiscal	years	ended	May	31:

| Income	before	income	taxes	and	noncontrolling	interest	-	U.S. | $137,501 | $103,163 | $177,345 |
| :--- | :--- | :--- | :--- |
| Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterest\t-\tForeign | 196,783 | 197,284 | 146,862 |
| Income\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes | $334,284 | $300,447 | $324,207 |

Our	effective	tax	rates,	as	applied	to	income	from	continuing	operations	before	income	taxes	for	the	years	ended	May	31,	2013,	2012,	 and	2011,	respectively, differ	from	federal	statutory	rates	as	follows:

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Federal\tstatutory\trate | 35.0\t% | 35.0\t% | 35.0\t% |
| State\tincome\ttaxes,\tnet\tof\tfederal\tincome\ttax\tbenefit | 0.9 | 0.5 | 0.3 |
| Foreign\tincome\ttaxes | (7.0) | (6.3) | (3.8) |
| Foreign\tinterest\tincome\tnot\tsubject\tto\ttax | (2.8) | (2.2) | (2.7) |
| Tax\tcredits\tand\tother | 3.7 | 1.8 | 1.4 |
| Effective\ttax\trate\tattributable\tto\tGlobal\tPayments | 29.8\t% | 28.8\t% | 30.2\t% |
| Noncontrolling\tinterest | (1.2) | (1.2) | (0.9) |
| Effective\ttax\trate | 28.6\t% | 27.6\t% | 29.3\t% |

Deferred	income	taxes	are	determined	based	on	the	difference	between	the	financial	statement	values	and	tax	bases	of	assets	and	liabilities	using	enacted	tax	laws and	rates.	Deferred	income	taxes	as	of	May	31,	2013	and	2012	reflect	the	impact	of	temporary	differences	between	the	amounts	of	assets	and	liabilities	for	financial accounting	and	income	tax	purposes.	As	of	May	31,	2013	and	2012,	principal	components	of	deferred	tax	items	were	as	follows:

| Share-based	compensation | $12,266 | $11,888 |
| :--- | :--- | :--- |
| Bad\tdebt\texpense | 2,292 | 2,415 |
| Foreign\tnet\toperating\tloss\t("NOL")\tcarryforward | 8,221 | 4,639 |
| U.S.\tNOL\tcarryforward | 243 | 1,083 |
| U.S.\tcapital\tloss\tcarryforward | 20,176 | 19,905 |
| Basis\tdifference\t-\tU.K.\tbusiness | 90,678 | 92,802 |
| Foreign\ttax\tcredit | 14,413 | 12,468 |
| Processing\tsystem\tintrusion | — | 24,361 |
| Other\ttax\tcredits | 1,733 | 1,731 |
|  | 150,022 | 171,292 |
| Less:\tvaluation\tallowance | (28,464) | (26,090) |
| Net\tdeferred\ttax\tasset | 121,558 | 145,202 |
| Deferred\ttax\tliabilities: |  |  |
| Taxes\ton\tunremitted\tearnings\tand\tother | 13,729 | 9,744 |
| Foreign\tcurrency\ttranslation | 30,163 | 30,745 |
| Acquired\tintangibles | 90,205 | 41,333 |
| Prepaid\texpenses | 2,523 | 2,632 |
| Property\tand\tequipment | 53,998 | 48,188 |
|  | 190,618 | 132,642 |
| Net\tdeferred\ttax\t(liability)\tasset | (69,060) | 12,560 |
| Less:\tcurrent\tnet\tdeferred\ttax\tasset | 6,485 | 21,969 |
| Net\tnoncurrent\tdeferred\ttax\tliability | $(75,545) | $(9,409) |

The	net	deferred	tax	liability	and	asset	is	reflected	on	our	consolidated	balance	sheets	as	follows:

|  | 2013 | 2012 |
| :--- | :--- | :--- |
|  | (in\tthousands) | (in\tthousands) |
| Non-current\tdeferred\tincome\ttax\tasset\tper\tbalance\tsheet | $95,178 | $97,235 |
| Non-current\tdeferred\tincome\ttax\tliability\tper\tbalance\tsheet | (170,723) | (106,644) |
| Net\tnon-current\tdeferred\ttax\tliability | $(75,545) | $(9,409) |

Undistributed	earnings	of	$407.4	million	from	certain	foreign	subsidiaries	are	permanently	invested	abroad	and	will	not	be	repatriated	to	the	United	States	in	the foreseeable	future.	In	accordance	with	FASB	guidance,	because	those	earnings	are	considered	to	be	indefinitely	reinvested,	no	domestic	federal	or	state	deferred	income taxes	have	been	provided	thereon.	Upon	distribution	of	those	earnings,	in	the	form	of	dividends	or	otherwise,	we	would	be	subject	to	both	U.S.	income	taxes	(subject	to an	adjustment	for	foreign	tax	credits)	and	withholding	taxes	payable	to	the	various	foreign	countries.	Because	of	the	availability	of	United	States	foreign	tax	credits,	it	is not	practicable	to	determine	the	domestic	federal	income	tax	liability	that	would	be	payable	if	such	earnings	were	not	reinvested	indefinitely.

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.	Changes	to	our	valuation allowance	during	the	fiscal	year	ended	May	31,	2013	and	2012	are	summarized	below	(in	thousands):

| Valuation	allowance	at	May	31,	2011 | $(28,629) |
| :--- | :--- |
| Allowance\tfor\tnet\toperating\tlosses\tof\tforeign\tsubsidiaries | (1,012) |
| Allowance\tfor\tforeign\ttax\tcredit\tcarryforward | 3,686 |
| Other | (135) |
| Valuation\tallowance\tat\tMay\t31,\t2012 | $(26,090) |
| Allowance\tfor\tnet\toperating\tlosses\tof\tforeign\tsubsidiaries | (3,415) |
| Release\tof\tallowance\tfor\tforeign\ttax\tcredit\tcarryforward | 15 |
| Other | 1,026 |
| Valuation\tallowance\tat\tMay\t31,\t2013 | $(28,464) |

Net	operating	loss	carryforwards	of	foreign	subsidiaries	totaling	$37.1	million	and	U.S.	net	operating	loss	carryforwards	previously	acquired	totaling	$0.5	million at	May	31,	2013	will	expire	if	not	utilized	between	May	31,	2017	and	May	31,	2029.	Capital	loss	carryforwards	of	U.S.	subsidiaries	totaling	$56.2	million	will	expire	if not	utilized	by	May	31,	2017.	Tax	credit	carryforwards	totaling	$8.3	million	at	May	31,	2013	will	expire	if	not	utilized	between	May	31,	2017	and	May	31,	2021.

Due	to	the	June	12,	2009	acquisition	of	the	remaining	49%	interest	in	our	U.K.	merchant	acquiring	business	from	HSBC	Merchant	Services,	LLP,	our	tax	basis	in the	LLP	exceeds	our	book	basis	and	we	recorded	a	deferred	tax	asset,	currently	valued	at	$90.7	million.

As	of	May	31,	2013,	other	long-term	liabilities	included	liabilities	for	unrecognized	income	tax	benefits	of	$53.8	million.

A	reconciliation	of	the	beginning	and	ending	amounts	of	unrecognized	tax	benefits	for	the	years	ended	May	31,	2013,	2012,	and	2011	is	as	follows:

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Balance\tat\tthe\tbeginning\tof\tthe\tyear | $45,595 | $37,197 | $20,750 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 8,778 | 10,684 | 13,608 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 142 | 118 | 287 |
| Foreign\tcurrency\timpact\tfor\ttax\tpositions | (601) | (2,340) | 2,741 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (151) | (64) | (56) |
| Settlements\twith\ttaxing\tauthorities | — | — | (133) |
| Balance\tat\tthe\tend\tof\tthe\tyear | $53,763 | $45,595 | $37,197 |

As	of	May	31,	2013,	the	total	amount	of	gross	unrecognized	tax	benefits	that,	if	recognized,	would	affect	the	effective	tax	rate	is	$2.0	million.	The	amount	of unrecognized	tax	benefits	that	will	impact	income	tax	during	the	upcoming	fiscal	year	is	insignificant.

We	recognize	accrued	interest	related	to	unrecognized	income	tax	benefits	in	interest	expense	and	accrued	penalty	expense	related	to	unrecognized	tax	benefits	in sales,	general	and	administrative	expenses.	Interest	and	penalties	recognized	in	the	income	statement	were	insignificant	in	fiscal	years	2013,	2012	and	2011.

We	conduct	business	globally	and	file	income	tax	returns	in	the	United	States	federal	jurisdiction	and	various	state	and	foreign	jurisdictions.	In	the	normal	course of	business,	we	are	subject	to	examination	by	taxing	authorities	throughout	the	world,	including	such	major	jurisdictions	as	the	United	States	and	the	United	Kingdom. We	are	currently	under	examination	for	fiscal	years	ended	May	31,	2011	and	May	31,	2010	with	taxing	authorities	in	the	United	States	and	the	United	Kingdom.	We	are no	longer	subject	to	income	tax	examinations	for	years	ended	May	31,	2006	and	prior.

# NOTE	10—SHAREHOLDERS'	EQUITY

On	July	26,	2012,	our	Board	of	Directors	approved	a	share	repurchase	program	that	authorized	the	purchase	of	up	to	$150.0	million	of	Global	Payments'	stock in	the	open	market	at	the	current	market	price,	subject	to	market	conditions,	business	opportunities,	and	other	factors.	On	January	8,	2013,	our	Board	of	Directors approved	an	additional	share	repurchase	program	of	up	to	$150.0	million,	bringing	the	total	share	repurchase	authorization	to	$300.0	million.

On	January	14,	2013,	pursuant	to	the	authorization	described	above,	we	entered	into	an	Accelerated	Share	Repurchase	program	(''ASR'')	with	a	financial institution	 to	 repurchase	 an	 aggregate	 of	$125.0	million	 of	 the	 Company's	 common	 stock.	 In	 exchange	 for	 an	 up-front	 payment	 of	$125.0	million,	 the	 financial institution	committed	to	deliver	a	number	of	shares	during	the	ASR's	purchase	period,	which	ended	on	March	30,	2013.	The	total	number	of	shares	delivered	under	this ASR	 was	2,544,455	at	an	average	price	of	$49.13	per	share.	These	shares	were	retired	and	accounted	for	as	a	reduction	of	shareholders'	equity	in	the	consolidated balance	sheet.	We	accounted	for	the	initial	delivery	of	shares	component	of	the	ASR	as	a	repurchase	of	common	stock	for	purposes	of	calculating	earnings	per	share.	We accounted	for	the	variable	component	of	shares	to	be	delivered	under	the	ASR	as	a	forward	contract	indexed	to	our	stock	which	met	all	of	the	applicable	criteria	for equity	classification,	and,	therefore,	was	not	accounted	for	as	a	derivative	instrument,	but	instead	was	also	accounted	for	as	a	component	of	equity.

In	addition	to	the	shares	repurchased	under	the	ASR,	we	repurchased	1,130,201	shares	of	our	common	stock	at	a	cost	of	$50.3	million,	or	an	average	of	$44.55 per	share,	including	commissions,	during	fiscal	2013.

On	August	8,	2011,	our	Board	of	Directors	approved	a	share	repurchase	program	that	authorized	the	purchase	of	up	to	$100.0	million	of	Global	Payments' stock	in	the	open	market	at	the	current	market	price,	subject	to	market	conditions,	business	opportunities,	and	other	factors.	Under	this	authorization,	we	repurchased 2,290,059	shares	of	our	common	stock	at	a	cost	of	$99.6	million,	or	an	average	of	$43.49	per	share,	including	commissions,	during	fiscal	2012.	This	share	repurchase program	has	concluded.

# NOTE	11—SHARE-BASED	AWARDS	AND	OPTIONS

As	of	May	31,	2013,	we	have	awards	outstanding	under	four	share-based	employee	compensation	plans.	The	fair	value	of	share-based	awards	is	amortized	as compensation	expense	on	a	straight-line	basis	over	the	vesting	period.

Non-qualified	stock	options	and	restricted	stock	have	been	granted	to	officers,	key	employees	and	directors	under	the	Global	Payments	Inc.	2000	Long-Term Incentive	Plan,	as	amended	and	restated	(the	"2000	Plan"),	the	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan	(the	"2005	Plan"),	an	Amended	and Restated	2000	Non-Employee	Director	Stock	Option	Plan	(the	"Director	Plan"),	and	the	Global	Payments	Inc.	2011	Incentive	Plan	(the	"2011	Plan")	(collectively,	the "Plans").	There	were	no	further	grants	made	under	the	2000	Plan	after	the	2005	Plan	was	effective	and	the	Director	Plan	expired	by	its	terms	on	February	1,	2011	so	no further	grants	will	be	granted	thereunder.

On	September	27,	2011,	we	held	our	2011	Annual	Meeting	of	Shareholders	(the	"Annual	Meeting").	At	the	Annual	Meeting,	our	shareholders	approved	the	2011 Plan,	a	plan	that	permits	grants	of	equity	to	employees,	officers,	directors	and	consultants.	A	total	of	7.0	million	shares	of	our	common	stock	was	reserved	and	made available	for	issuance	pursuant	to	awards	granted	under	the	2011	Plan.	Effective	with	the	adoption	of	the	2011	Plan,	there	will	be	no	future	grants	under	the	2005	Plan.

The	 following	 table	 summarizes	 the	 share-based	 compensation	 cost	 charged	 to	 income	 for	 (i)	 all	 stock	 options	 granted,	 (ii)	 our	 restricted	 stock	 program (including	PRSUs	and	TSRs),	and	(iii)	our	employee	stock	purchase	plan.	The	total	income	tax	benefit	recognized	for	share-based	compensation	in	the	accompanying statements	of	income	is	also	presented.

| Share-based	compensation	expense | $18.4 | $16.4 | $15.9 |
| :--- | :--- | :--- | :--- |
| Income\ttax\tbenefit | $(5.6) | $(6.0) | $(5.5) |

# Restricted	Stock

Shares	and	performance	units	awarded	under	 the	restricted	stock	program	of	 the	Plans	are	held	 in	escrow	and	released	 to	 the	grantee	upon	 the	grantee's satisfaction	of	conditions	of	the	grantee's	restricted	stock	agreement.	The	grant	date	fair	value	of	restricted	stock	awards	is	based	on	the	quoted	fair	market	value	of	our common	stock	at	the	award	date.

Certain	executives	are	granted	two	different	types	of	performance	units	under	our	restricted	stock	program.	A	portion	of	those	performance	units	represent	the right	to	earn	0%	to	200%	of	a	target	number	of	shares	of	Global	Payments	common	stock	depending	upon	the	achievement	level	of	certain	performance	measures	during the	grant	year	("PRSUs").	The	target	number	of	PRSUs	and	the	performance	measures	(at	threshold,	target,	and	maximum)	are	set	by	the	Compensation	Committee	of our	Board	of	Directors.	PRSUs	are	converted	to	a	time-based	restricted	stock	grant	only	if	the	Company's	performance	during	the	fiscal	year	exceeds	pre-established goals.	The	other	portion	of	these	performance	units	represent	the	right	to	earn	0%	to	200%	of	target	shares	of	Global	Payments	stock	based	on	Global	Payments'	relative total	shareholder	return	compared	to	peer	companies	over	a	three	year	performance	period	("TSRs").	The	target	number	of	TSRs	for	each	executive	is	set	by	the Compensation	Committee	of	our	Board	of	Directors	and	a	monte	carlo	simulation	is	used	to	calculate	the	estimated	share	payout.

Grants	of	restricted	awards	are	subject	to	forfeiture	if	a	grantee,	among	other	conditions,	leaves	our	employment	prior	to	expiration	of	the	restricted	period.	New grants	of	restricted	awards	generally	vest	one	year	after	the	date	of	grant	in	25%	increments	over	a	four	year	period,	with	the	exception	of	TSRs	which	vest	after	a	three year	period.

The	following	table	summarizes	the	changes	in	non-vested	restricted	stock	awards	for	the	years	ended	May	31,	2013	and	2012	(share	awards	in	thousands):

|  | Shares | Weighted	Average<br>Grant-Date<br>Fair	Value |
| :--- | :--- | :--- |
| Non-vested\tat\tMay\t31,\t2011 | 869 | $40 |
| Granted | 472 | 48 |
| Vested | (321) | 40 |
| Forfeited | (79) | 43 |
| Non-vested\tat\tMay\t31,\t2012 | 941 | 44 |
| Granted | 561 | 44 |
| Vested | (315) | 43 |
| Forfeited | (91) | 44 |
| Non-vested\tat\tMay\t31,\t2013 | 1,096 | $44 |

We	recognized	compensation	expense	for	restricted	stock	of	$16.2	million,	$13.6	million,	and	$12.5	million	in	the	years	ended	May	31,	2013,	2012	 and	2011, respectively.	As	of	May	31,	2013,	there	was	$33.5	million	of	total	unrecognized	compensation	cost	related	to	unvested	restricted	stock	awards	that	is	expected	to	be recognized	over	a	weighted	average	period	of	2.5	years.

# Employee	Stock	Purchase	Plan

We	have	an	Employee	Stock	Purchase	Plan	under	which	the	sale	of	2.4	million	shares	of	our	common	stock	has	been	authorized.	Employees	may	designate	up	to the	lesser	of	$25,000	or	20%	of	their	annual	compensation	for	the	purchase	of	stock.	The	price	for	shares	purchased	under	the	plan	is	85%	of	the	market	value	on	the	last day	of	the	quarterly	purchase	period.	As	of	May	31,	2013,

1.0	million	shares	had	been	issued	under	this	plan,	with	1.4	million	shares	reserved	for	future	issuance.	We	recognized	compensation	expense	for	the	plan	of	$0.5	million in	the	years	ended	May	31,	2013,	2012	and	2011.

The	weighted	average	grant-date	fair	value	of	each	designated	share	purchased	under	this	plan	during	the	years	ended	May	31,	2013	,	2012	and	2011	was	$6,	$7 and	$6,	respectively,	which	represents	the	fair	value	of	the	15%	discount.

# Stock	Options

Stock	options	are	granted	at	100%	of	fair	market	value	on	the	date	of	grant	and	have	10-year	terms.	Stock	options	granted	vest	one	year	after	the	date	of	grant	in 25%	increments	over	a	four	year	period.	The	Plans	provide	for	accelerated	vesting	under	certain	conditions.	There	were	no	options	granted	under	the	Plans	during	the years	ended	May	31,	2013	and	May	31,	2012.

The	following	is	a	summary	of	our	stock	option	activity	as	of	and	for	the	years	ended	May	31,	2013	and	2012:

|  | Options<br>(in	thousands) | Weighted<br>Average<br>Exercise<br>Price | Weighted<br>Average<br>Remaining<br>Contractual<br>Term<br>(years) | Aggregate<br>Intrinsic<br>Value<br>(in	millions) |
| :--- | :--- | :--- | :--- | :--- |
| Outstanding\tat\tMay\t31,\t2011 | 2,471 | $32 | 5.1 | $45.9 |
| Granted | — | — |  |  |
| Forfeited | (72) | 28 |  |  |
| Exercised | (254) | 32 |  |  |
| Outstanding\tat\tMay\t31,\t2012 | 2,145 | 34 | 4.1 | 20.7 |
| Granted | — | — |  |  |
| Forfeited | (72) | 39 |  |  |
| Exercised | (308) | 23 |  |  |
| Outstanding\tat\tMay\t31,\t2013 | 1,765 | $35 | 3.5 | $23.9 |
| Options\tvested\tand\texercisable\tat\tMay\t31,\t2013 | 1,586 | $34 | 3.1 | $22.3 |
| Options\tvested\tand\texercisable\tat\tMay\t31,\t2012 | 1,770 | $32 | 3.4 | $19.7 |

The	aggregate	intrinsic	value	of	stock	options	exercised	during	the	fiscal	years	ended	2013,	2012	and	2011	was	$6.3	million,	$4.4	million	 and	$14.8	million, respectively.	We	recognized	compensation	expense	for	stock	options	of	$1.7	million,	$2.4	million,	and	$2.9	million	in	the	years	ended	May	31,	2013,	2012	and	2011, respectively.	As	of	May	31,	2013,	we	had	$1.1	million	of	total	unrecognized	compensation	cost	related	to	unvested	options	which	we	expect	to	recognize	over	a weighted	average	period	of	0.65	years.

The	weighted	average	grant-date	fair	values	of	each	option	granted	in	fiscal	2013,	2012,	and	2011	under	each	plan	are	as	follows:

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| 2005\tPlan | $— | $— | $11 |
| Director\tPlan | $— | $— | $12 |

The	 fair	 value	 of	 each	 option	 granted	 was	 estimated	 on the	 date	 of	 grant	 using the	 Black-Scholes	 valuation	 model	 with the	 following	 weighted	 average assumptions	for	grants	during	fiscal	2011:

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	current	quarterly	dividend.	We	based	our	assumptions	on	the	expected	lives	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	12—SUPPLEMENTAL	CASH	FLOW	INFORMATION

Supplemental	cash	flow	disclosures	and	non-cash	investing	and	financing	activities	for	the	years	ended	May	31,	2013,	2012,	and	2011	are	as	follows:

| Income	taxes	paid,	net	of	refunds | $55,218 | $74,199 | $44,254 |
| :--- | :--- | :--- | :--- |
| Interest\tpaid\t(1) | $29,677 | $13,631 | $15,537 |
| Financing\treceivables: |  |  |  |
| \t\t\t\tInvestment\tin\tequipment\tfor\tfinancing\tleases | $— | $— | $(54) |
| \t\t\t\tPrincipal\tcollections\tfrom\tcustomers\t-\tfinancing\tleases | 2,812 | 2,565 | 2,116 |
| \t\t\t\tNet\tdecrease\tin\tfinancing\treceivables | $2,812 | $2,565 | $2,062 |

(1)	Includes	an	$8.4	million	distribution	to	HSBC	in	fiscal	2013	characterized	as	interest	expense	pursuant	to	ASC	480.	See	Note	4	-	Business	and	Intangible	Asset	Acquisitions.

# NOTE	13—NONCONTROLLING	INTERESTS

The	following	table	details	the	components	of	redeemable	noncontrolling	interests	for	the	fiscal	years	ended	May	31,	2013	and	2012:

|  | 2013 | 2012 |
| :--- | :--- | :--- |
|  | (in\tthousands) | (in\tthousands) |
| Beginning\tbalance | $144,422 | $133,858 |
| Net\tincome\tattributable\tto\tredeemable\tnoncontrolling\tinterest | 1,814 | 11,601 |
| Distributions\tto\tredeemable\tnoncontrolling\tinterest | — | (7,725) |
| Foreign\tcurrency\ttranslation\tadjustment | 573 | (2,741) |
| (Decrease)\tincrease\tin\tthe\tmaximum\tredemption\tamount\tof\tredeemable\tnoncontrolling\tinterest | (817) | 9,429 |
| Purchase\tof\tredeemable\tnoncontrolling\tinterest | (145,992) | — |
| Ending\tbalance | $— | $144,422 |

For	the	fiscal	years	ended	May	31,	2013,	2012	and	2011,	net	income	included	in	the	consolidated	statements	of	changes	in	equity	is	reconciled	to	net	income presented	in	the	consolidated	statements	of	income	as	follows:

| Net	income	attributable	to	Global	Payments | $216,125 | $188,161 | $209,238 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tattributable\tto\tnonredeemable\tnoncontrolling\tinterests | 20,774 | 17,804 | 9,326 |
| Subtotal\tper\tstatement\tof\tchanges\tin\tequity | 236,899 | 205,965 | 218,564 |
| Net\tincome\tattributable\tto\tredeemable\tnoncontrolling\tinterest | 1,814 | 11,601 | 9,592 |
| Net\tincome | $238,713 | $217,566 | $228,156 |

The	following	table	is	the	reconciliation	of	net	income	attributable	to	noncontrolling	interest	to	comprehensive	income	attributable	to	noncontrolling	interest	for the	fiscal	years	ended	May	31,	2013	and	May	31,	2012:

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Net\tincome\tattributable\tto\tnoncontrolling\tinterest,\tnet\tof\ttax | $22,588 | $29,405 | $18,918 |
| Foreign\tcurrency\ttranslation\tattributable\tto\tnonredeemable\tnoncontrolling\tinterests | 7,217 | (22,991) | 9,717 |
| Foreign\tcurrency\ttranslation\tattributable\tto\tredeemable\tnoncontrolling\tinterests | 573 | (2,741) | (10,826) |
| Comprehensive\tincome\tattributable\tto\tnoncontrolling\tinterests,\tnet\tof\ttax | $30,378 | $3,673 | $17,809 |

# NOTE	14—SEGMENT	INFORMATION

# General	information

We	operate	in	two	reportable	segments,	North	America	merchant	services	and	International	merchant	services.	The	merchant	services	segments	primarily	offer processing	solutions	for	credit	cards,	debit	cards,	and	check-related	services.

# Information	about	profit	and	assets

We	evaluate	performance	and	allocate	resources	based	on	the	operating	income	of	each	segment.	The	operating	income	of	each	segment	includes	the	revenues	of the	segment	less	those	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	expense	or	income	and	income	tax	expense	are	not	allocated	to	the individual	segments.	Lastly,	we	do	not	evaluate	performance	or	allocate	resources	using	segment	asset	data.	The	accounting	policies	of	the	reportable	segments	are	the same	as	those	described	in	the	summary	of	significant	accounting	policies	in	Note	1.

Information	on	segments,	including	revenue	by	geographic	distribution	within	segments,	and	reconciliations	to	consolidated	revenues	and	consolidated	operating income	are	as	follows	for	the	years	ended	May	31,	2013,	2012,	and	2011:

| United	States | $1,394,675 | $1,234,818 | $1,031,997 |
| :--- | :--- | :--- | :--- |
| Canada | 311,000 | 332,434 | 330,872 |
| \t\t\tNorth\tAmerica\tmerchant\tservices | 1,705,675 | 1,567,252 | 1,362,869 |
| Europe | 522,593 | 489,300 | 359,567 |
| Asia-Pacific | 147,655 | 147,295 | 137,366 |
| \t\t\tInternational\tmerchant\tservices | 670,248 | 636,595 | 496,933 |
| \tConsolidated\trevenues | $2,375,923 | $2,203,847 | $1,859,802 |
| Operating\tincome\t(loss)\tfor\tsegments: |  |  |  |
| North\tAmerica\tmerchant\tservices | $258,910 | $281,305 | $268,233 |
| International\tmerchant\tservices | 211,242 | 196,137 | 143,911 |
| Corporate\t(1) | (112,939) | (170,093) | (80,550) |
| \t\t\t\t\tConsolidated\toperating\tincome | $357,213 | $307,349 | $331,594 |
| Depreciation\tand\tamortization: |  |  |  |
| North\tAmerica\tmerchant\tservices | $48,882 | $35,479 | $32,605 |
| International\tmerchant\tservices | 57,520 | 60,462 | 48,104 |
| Corporate | 5,386 | 3,158 | 1,528 |
| Consolidated\tdepreciation\tand\tamortization | $111,788 | $99,099 | $82,237 |

Our	results	of	operations	and	our	financial	condition	are	not	significantly	reliant	upon	any	single	customer.

The	following	is	a	breakdown	of	long-lived	assets	by	geographic	regions	as	of	May	31,	2013	and	2012:

|  | 2013 | 2012 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| United\tStates | $826,972 | $352,419 |
| Canada | 162,374 | 167,024 |
| Europe | 719,991 | 715,512 |
| Asia-Pacific | 82,538 | 85,592 |
| Latin\tAmerica | 1,259 | 176 |
|  | $1,793,134 | $1,320,723 |

# NOTE	15—COMMITMENTS	AND	CONTINGENCIES

# Leases

We	conduct	a	major	part	of	our	operations	using	leased	facilities	and	equipment.	Many	of	these	leases	have	renewal	and	purchase	options	and	provide	that	we	pay the	cost	of	property	taxes,	insurance	and	maintenance.	Rent	expense	on	all	operating	leases	for	fiscal	2013,	2012	and	2011	was	$16.5	million,	$16.0	million,	and	$14.0 million,	respectively.

Future	minimum	lease	payments	for	all	non-cancelable	operating	leases	at	May	31,	2013	were	as	follows:

| Fiscal	years	ending	May	31: |  |
| :--- | :--- |
| 2014 | $11,057 |
| 2015 | 8,985 |
| 2016 | 7,378 |
| 2017 | 6,700 |
| 2018 | 6,164 |
| Thereafter | 16,812 |
| \t\t\tTotal\tfuture\tminimum\tlease\tpayments | $57,096 |

# Legal

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	impact	on	our	financial	position,	liquidity	or	results	of	operations.

# Operating	Taxes

We	define	operating	taxes	as	taxes	that	are	unrelated	to	income	taxes,	such	as	sales,	property,	value-add	and	other	business	taxes.	During	the	course	of	operations, we	must	interpret	the	meaning	of	various	operating	tax	matters	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	as	they	relate	to	such	operating	tax	matters,	which	could	result	in	the payment	of	additional	taxes	in	those	jurisdictions.		As	of	May	31,	2013	and	2012,	we	did	not	have	liabilities	for	contingencies	related	to	operating	tax	items	based	on management's	best	estimate	given	our	history	with	similar	matters	and	interpretations	of	current	laws	and	regulations.

	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 May	31,	2013.

Our	Canadian	Visa	sponsorship,	which	was	originally	obtained	through	a	Canadian	financial	institution,	expired	in	March	2011.	We	have	filed	an	application with	the	Office	of	the	Superintendent	of	Financial	Institutions	Canada	("OSFI")	for	the	formation	of	a	wholly	owned	loan	company	in	Canada	which	would	serve	as	our financial	institution	sponsor.	On	December	12,	2012,	the	loan	company	received	a	restricted	Order	to	Commence	and	Carry	on	Business	from	OSFI	which	will	enable the	loan	company	to	become	a	direct	Visa	member	at	such	time	that	Global	Payments	concludes	the	appropriate	BIN	transfer	process	with	Visa.	In	March	2011,	we obtained	temporary	direct	participation	in	the	Visa	Canada	system,	while	the	loan	company	application	was	pending.	We	anticipate	that	the	BIN	transfer	process	with Visa	will	be	completed	by	September	30,	2013.

# NOTE	16—QUARTERLY	CONSOLIDATED	FINANCIAL	INFORMATION	(UNAUDITED)

Summarized	quarterly	results	for	the	years	ended	May	31,	2013	and	2012	(in	thousands,	except	per	share	data)	are	as	follows:

|  | August	31 | November	30 | February	28 | May	31 |
| :--- | :--- | :--- | :--- | :--- |
| 2013: |  |  |  |  |
| Revenues | $590,287 | $588,538 | $578,746 | $618,352 |
| Operating\tincome(1) | 80,488 | 116,582 | 90,774 | 69,369 |
| Net\tincome | 54,162 | 75,371 | 62,814 | 46,366 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | 46,675 | 70,183 | 58,462 | 40,805 |
| Basic\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.59 | 0.89 | 0.75 | 0.54 |
| Diluted\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.59 | 0.89 | 0.75 | 0.53 |

|  | August	31 | November	30 | February	29 | May	31 |
| :--- | :--- | :--- | :--- | :--- |
| 2012: |  |  |  |  |
| Revenues | $542,771 | $530,505 | $533,539 | $597,032 |
| Operating\tincome(1) | 108,610 | 96,580 | 92,348 | 9,811 |
| Net\tincome | 72,081 | 68,149 | 65,690 | 11,646 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | 63,974 | 61,181 | 57,920 | 5,086 |
| Basic\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.80 | 0.78 | 0.74 | 0.06 |
| Diluted\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.79 | 0.78 | 0.73 | 0.06 |

# SCHEDULE	II

# Valuation	&	Qualifying	Accounts

| Description | Balance	at	Beginning<br>of	Year | Charged	to	Costs<br>and	Expenses | Acquired	Balances | Uncollectible	Accounts	Write-<br>Off | Balance	at	End	of<br>Year |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (in\tthousands) |  |  |
| Allowance\tfor\tdoubtful\taccounts |  |  |  |  |  |
| May\t31,\t2011 | 269 | 848 | — | 645 | 472 |
| May\t31,\t2012 | 472 | 165 | — | 105 | 532 |
| May\t31,\t2013 | 532 | 444 | — | 467 | 509 |
| Reserve\tfor\toperating\tlosses-Merchant\tcard\tprocessing |  |  |  |  |  |
| (1) |  |  |  |  |  |
| May\t31,\t2011 | 5,810 | 6,010 | — | 8,718 | 3,102 |
| May\t31,\t2012 | 3,102 | 8,848 | — | 9,625 | 2,325 |
| May\t31,\t2013 | 2,325 | 9,484 | — | 9,491 | 2,318 |
| Reserve\tfor\tsales\tallowances-Merchant\tcard\tprocessing |  |  |  |  |  |
| (1) |  |  |  |  |  |
| May\t31,\t2011 | 871 | 8,888 | — | 6,484 | 3,275 |
| May\t31,\t2012 | 3,275 | 3,913 | — | 6,315 | 873 |
| May\t31,\t2013 | 873 | 2,074 | — | 1,986 | 961 |
| Reserve\tfor\toperating\tlosses-Check\tguarantee\nprocessing |  |  |  |  |  |
| May\t31,\t2011 | 4,208 | 14,175 | — | 14,513 | 3,870 |
| May\t31,\t2012 | 3,870 | 13,404 | — | 13,839 | 3,435 |
| May\t31,\t2013 | 3,435 | 11,731 | — | 12,022 | 3,144 |
| Deferred\ttax\tasset\tvaluation\tallowance |  |  |  |  |  |
| May\t31,\t2011 | 22,406 | 6,223 | — | — | 28,629 |
| May\t31,\t2012 | 28,629 | (2,539) | — | — | 26,090 |
| May\t31,\t2013 | 26,090 | 2,374 | — | — | 28,464 |

(1)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	May	31,	2013,	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	May	31,	2013,	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	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	May	31,	2013.		In making	this	assessment,	our	management	used	the	criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO)	in	Internal Control-Integrated	 Framework.	As	 of	May	31,	2013,	management	believes	that	the	Company's	internal	control	over	financial	reporting	is	effective	based	on	those criteria.	Our	independent	registered	public	accounting	firm	has	issued	an	audit	report	on	our	internal	control	over	financial	reporting,	which	is	included	in	this	annual report.

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.

# Changes	in	Internal	Control	over	Financial	Reporting

There	were	no	changes	in	our	internal	control	over	financial	reporting	or	in	other	factors	that	occurred	during	the	quarter	ended	May	31,	2013	that	have	materially affected,	or	are	reasonably	likely	to	materially	affect,	our	internal	control	over	financial	reporting.

# ITEM	9B-	OTHER	INFORMATION

# PART	III

# ITEM	10-	DIRECTORS,	EXECUTIVE	OFFICERS	OF	THE	REGISTRANT	AND	CORPORATE	GOVERNANCE

We	incorporate	by	reference	in	this	Item	10	information	about	our	directors	and	our	corporate	governance	contained	under	the	headings	"Certain	Information Concerning	the	Nominees	and	Directors,"	"Other	Information	About	the	Board	and	its	Committees"	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	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	from	our proxy	statement	to	be	delivered	in	connection	with	our	2013	Annual	Meeting	of	Shareholders	to	be	held	on	November	20,	2013.

Set	forth	below	is	information	relating	to	our	executive	officers.	There	is	no	family	relationship	between	any	of	our	executive	officers	or	directors	and	there	are	no arrangements	or	understandings	between	any	of	our	executive	officers	or	directors	and	any	other	person	pursuant	to	which	any	of	them	was	elected	an	officer	or	director, other	than	arrangements	or	understandings	with	our	directors	or	officers	acting	solely	in	their	capacities	as	such.	Our	executive	officers	serve	at	the	pleasure	of	our Board	of	Directors.

We	have	adopted	a	code	of	ethics	that	applies	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	information	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	on	Form	10-K.

# ITEM	11-	EXECUTIVE	COMPENSATION

We	incorporate	by	reference	in	this	Item	11	the	information	relating	to	executive	and	director	compensation	contained	under	the	headings	"Other	Information about	the	Board	and	its	Committees,"	"Compensation	and	Other	Benefits"	and	"Report	of	the	Compensation	Committee"	from	our	proxy	statement	to	be	delivered	in connection	with	our	2013	Annual	Meeting	of	Shareholders	to	be	held	on	November	20,	2013.

# 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	of	Management"	and	"Common	Stock	Ownership	by	Certain	Other	Persons"	from	our	proxy	statement	to	be	delivered	in	connection	with	our	2013 Annual	Meeting	of	Shareholders	to	be	held	on	November	20,	2013.

The	following	table	provides	certain	information	as	of	May	31,	2013	concerning	the	shares	of	the	Company's	common	stock	that	may	be	issued	under	existing equity	compensation	plans.	For	more	information	on	these	plans,	see	Note	11	to	notes	to	consolidated	financial	statements.

| Plan	category | Number	of	securities	to	be<br>issued	upon	exercise	of<br>outstanding	options,	warrants<br>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	(excluding<br>securities	reflected	in	column	(a))<br>(c) |  |
| :--- | :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders: | 1,765,510 | $34.92 | 7,927,210 | (1) |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tsecurity\tholders: | — | — | — |  |
| Total | 1,765,510 | $34.92 | 7,927,210 | (1) |

(1)	Also	includes	shares	of	common	stock	available	for	issuance	other	than	upon	the	exercise	of	an	option,	warrant	or	right	under	the	Global	Payments	Inc.	2000	Long- Term	Incentive	Plan,	as	amended	and	restated,	the	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan,	Amended	and	Restated	2000	Non-Employee Director	Stock	Option	Plan,	Global	Payments	Employee	Stock	Purchase	Plan	and	the	Global	Payments	Inc.	2011	Incentive	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	some	of	our	affiliates	and	the independence	of	our	Board	of	Directors	contained	under	the	headings	"Certain	Relationships	and	Related	Transactions"	and	"Other	Information	about	the	Board	and	its Committees"	from	our	proxy	statement	to	be	delivered	in	connection	with	our	2013	Annual	Meeting	of	Shareholders	to	be	held	on	November	20,	2013.

# 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	section	Ratification	of	the Reappointment	of	Auditors	from	our	proxy	statement	to	be	delivered	in	connection	with	our	2013	Annual	Meeting	of	Shareholders	to	be	held	on	November	20,	2013.

# PART	IV

# ITEM	15-	EXHIBITS,	FINANCIAL	STATEMENT	SCHEDULES

# (a)			1.	Consolidated	Financial	Statements

Our	consolidated	financial	statements	listed	below	are	set	forth	in	"Item	8-Financial	Statements	and	Supplementary	Data"	of	this	report:

|  | Page	Number |
| :--- | :--- |
| Reports\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 48 |
| Consolidated\tStatements\tof\tIncome\tfor\tthe\tyears\tended\tMay\t31,\t2013,\t2012\tand\t2011 | 50 |
| Consolidated\tStatements\tof\tComprehensive\tIncome\tfor\tthe\tyears\tended\tMay\t31,\t2013,\t2012\tand\t2011 | 50 |
| Consolidated\tBalance\tSheets\tas\tof\tMay\t31,\t2013\tand\t2012 | 52 |
| Consolidated\tStatements\tof\tCash\tFlows\tfor\tthe\tyears\tended\tMay\t31,\t2013,\t2012\tand\t2011 | 53 |
| Consolidated\tStatements\tof\tChanges\tin\tEquity\tfor\tthe\tyears\tended\tMay\t31,\t2013,\t2012,\tand\t2011 | 54 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 57 |
| (a)\t\t\t2.\tFinancial\tStatement\tSchedules |  |
| Schedule\tII,\tValuation\tand\tQualifying\tAccounts | 86 |

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.

The	following	exhibits	either	(i)	are	filed	with	this	report	or	(ii)	have	previously	been	filed	with	the	SEC	and	are	incorporated	in	this	Item	15	by	reference	to	those prior	filings.

10.9* Third	Amended	and	Restated	2000	Non-Employee	Director	Stock	Option	Plan,	dated	June	1,	2004,	filed	as	Exhibit	10.20	to	the	Registrant's Annual	Report	on	Form	10-K	dated	May	31,	2007,	File	No.	001-16111,	and	incorporated	herein	by	reference.

10.15* Form	of	Performance	Unit	Award	(Non-U.S.	Officers)	pursuant	to	the	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan	filed	as Exhibit	10.4	to	the	Registrant's	Quarterly	Report	on	Form	10-Q,	dated	November	30,	2006,	File	No.	001-16111	and	incorporated	herein	by reference.

10.16* Form	of	Non-Statutory	Stock	Option	Award	pursuant	to	the	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan	filed	as	Exhibit 10.5	to	the	Registrant's	Quarterly	Report	on	Form	10-Q,	dated	November	30,	2006,	File	No.	001-16111	and	incorporated	herein	by	reference.

*				Compensatory	management	agreement

**				Filed	with	this	report

# (b)	Exhibits

See	the	"Index	to	Exhibits"	on	page

# (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	July	25,	2013.

# Paul	R.	Garcia

# Chairman	of	the	Board	of	Directors	and	Chief	Executive	Officer

(Principal	Executive	Officer)

# /s/		David	E.	Mangum

# David	E.	Mangum

# Senior	Executive	Vice	President	and	Chief	Financial	Officer

(Principal	Financial	Officer)

# Daniel	C.	O'Keefe

# 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.

# INDEX	TO	EXHIBITS

# LIST	OF	SUBSIDIARIES

Global	Payments	Inc.	has	the	following	subsidiaries	and	ownership	interests.

# JURISDICTION	OF

# ORGANIZATION

(1)	Comercia	Global	Payments	Entidad	de	Pago,	S.L.	has	a	shareholder	unrelated	to	Global	Payments	Inc.	which	owns	a	49%	noncontrolling	interest.

(2)	Global	Payments	Comerica	Alliance,	LLC	has	members	unrelated	to	Global	Payments	Inc.	which	collectively	own	a	49%	noncontrolling	interest.



Question: what is the net change of the total fair value balance of non-vested shares during 2013?
Calculation:    non_vested_shares_2012 = 941
 non_vested_shares_2013 = 1096
 fair_value_2012 = 44
 fair_value_2013 = 44
 total_fair_value_2012 = non_vested_shares_2012 * fair_value_2012
 total_fair_value_2013 = non_vested_shares_2013 * fair_value_2013
 total_fair_value_change = total_fair_value_2013 - total_fair_value_2012
 answer = total_fair_value_change
Answer: 6820