# Table	of	Contents

# Index	to	Financial	Statements

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

x	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)

# Registrant's	telephone	number,	including	area	code:	770-829-8000

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		¨

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	15(d)	of	the	Act.				Yes		¨				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		¨

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		¨				No		¨

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.		¨

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

Non-accelerated	filer		¨

Accelerated	filer		¨

Smaller	reporting	company		¨

(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		¨				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 $4,144,679,893.

The	number	of	shares	of	the	registrant's	common	stock	outstanding	at	July	26,	2010	was	79,262,662	shares.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Specifically	identified	portions	of	the	registrant's	proxy	statement	for	the	2010	annual	meeting	of	shareholders	are	incorporated	by	reference	in	Part	III.

|  | GLOBAL	PAYMENTS	INC.<br>2010	FORM	10-K	ANNUAL	REPORT<br>TABLE	OF	CONTENTS | Page |
| :--- | :--- | :--- |
|  | PART\tI |  |
| ITEM\t1. | BUSINESS | 2 |
| ITEM\t1A. | RISK\tFACTORS | 11 |
| ITEM\t1B. | UNRESOLVED\tSTAFF\tCOMMENTS | 19 |
| ITEM\t2. | PROPERTIES | 19 |
| ITEM\t3. | LEGAL\tPROCEEDINGS | 20 |
| ITEM\t4. | SUBMISSION\tOF\tMATTERS\tTO\tA\tVOTE\tOF\tSECURITY\tHOLDERS | 20 |
|  | PART\tII |  |
| ITEM\t5. | MARKET\tFOR\tREGISTRANT'S\tCOMMON\tEQUITY,\tRELATED\tSTOCKHOLDER\tMATTERS\tAND\tISSUER\tPURCHASES\tOF |  |
|  | EQUITY\tSECURITIES | 21 |
| ITEM\t6. | SELECTED\tFINANCIAL\tDATA | 24 |
| ITEM\t7. | MANAGEMENT'S\tDISCUSSION\tAND\tANALYSIS\tOF\tFINANCIAL\tCONDITION\tAND\tRESULTS\tOF\tOPERATIONS | 25 |
| ITEM\t7A. | QUANTITATIVE\tAND\tQUALITATIVE\tDISCLOSURES\tABOUT\tMARKET\tRISK | 45 |
| ITEM\t8. | FINANCIAL\tSTATEMENTS\tAND\tSUPPLEMENTARY\tDATA | 47 |
| ITEM\t9. | CHANGES\tIN\tAND\tDISAGREEMENTS\tWITH\tACCOUNTANTS\tON\tACCOUNTING\tAND\tFINANCIAL\tDISCLOSURE | 89 |
| ITEM\t9A. | CONTROLS\tAND\tPROCEDURES | 89 |
| ITEM\t9B. | OTHER\tINFORMATION | 90 |
|  | PART\tIII |  |
| ITEM\t10. | DIRECTORS,\tEXECUTIVE\tOFFICERS\tAND\tCORPORATE\tGOVERNANCE | 91 |
| ITEM\t11. | EXECUTIVE\tCOMPENSATION | 92 |
| ITEM\t12. | SECURITY\tOWNERSHIP\tOF\tCERTAIN\tBENEFICIAL\tOWNERS\tAND\tMANAGEMENT\tAND\tRELATED\tSTOCKHOLDER\tMATTERS | 93 |
| ITEM\t13. | CERTAIN\tRELATIONSHIPS\tAND\tRELATED\tTRANSACTIONS,\tAND\tDIRECTOR\tINDEPENDENCE | 93 |
| ITEM\t14. | PRINCIPAL\tACCOUNTING\tFEES\tAND\tSERVICES | 93 |
|  | PART\tIV |  |
| ITEM\t15. | EXHIBITS,\tFINANCIAL\tSTATEMENT\tSCHEDULES | 94 |
| SIGNATURES |  | 98 |

# 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,	2010,	or	fiscal	2010,	revenue	increased	12%	to	$1,642.5	million	from	$1,462.3	million	in	the	year	ended	May	31,	2009,	or	fiscal	2009. This	revenue	growth	was	primarily	due	to	growth	in	most	of	our	direct	merchant	acquiring	markets	around	the	world.

Consolidated	operating	income	was	$323.3	million	for	fiscal	2010,	compared	to	$292.5	million	for	fiscal	2009.	Income	from	continuing	operations	attributable	to Global	Payments	increased	$37.2	million	or	22%	to	$207.2	million	($2.52	per	diluted	share)	in	fiscal	2010	from	$170.0	million	($2.10	per	diluted	share)	in	fiscal	2009, and	our	operation	margin	moved	from	20%	in	fiscal	2009	to	19.7%	in	fiscal	2010.	Net	income	attributable	to	Global	Payments	increased	$166.1	million,	or	446%,	to $203.3	million	in	fiscal	2010	from	$37.2	million	in	the	prior	year,	resulting	in	a	$2.02	increase	in	diluted	earnings	per	share	to	$2.48	in	fiscal	2010	from	$0.46	in	fiscal 2009.	Fiscal	2009	net	income	attributable	to	Global	Payments	includes	an	impairment	charge	of	$147.7	million	related	to	our	recently	disposed	money	transfer	business.

North	America	merchant	services	segment	revenue	increased	$113.3	million	or	10%	to	$1,220.1	million	in	fiscal	2010	from	$1,106.9	million	in	fiscal	2009.	North America	merchant	services	segment	operating	income	increased	slightly	to	$275.4	million	in	fiscal	2010	from	$273.0	million	in	fiscal	2009,	with	operating	margins	of 22.6%	and	24.7%	for	fiscal	2010	and	2009,	respectively.

International	merchant	services	segment	revenue	increased	$66.9	million	or	19%	to	$422.4	million	in	fiscal	2010	from	$355.5	million	in	fiscal	2009.	International merchant	services	operating	income	also	increased	to	$113.7	million	in	fiscal	2010	from	$82.8	million	in	fiscal	2009,	with	operating	margins	of	26.9%	and	23.3%	for fiscal	2010	and	2009,	respectively.

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

# Fiscal	2010	Disposition

On	May	26,	2010,	we	completed	the	disposition	of	our	DolEx	and	Europhil-branded	money	transfer	businesses	to	an	affiliate	of	Palladium	Equity	Partners,	LLC for	$85.0	million.	We	recognized	an	estimated	pre-tax	loss	on	disposal	of	$24.6	million.	We	also	recognized	$15.7	million	of	tax	benefits	associated	with	the	disposition. As	a	result	of	our	decision	to	dispose	of	the	money	transfer	businesses,	this	segment	has	been	accounted	for	as	a	discontinued	operation.	Amounts	related	to	our discontinued	operations	in	our	prior	fiscal	years	statements	of	income	have	been	reclassified	to	conform	with	the	presentation	in	the	current	fiscal	year.	Please	see	Note	3 —Discontinued	Operations	in	the	notes	to	the	consolidated	financial	statements	for	further	information.

# Fiscal	2010	Acquisitions

# HSBC	Merchant	Services	LLP

On	June	12,	2009,	we	purchased	the	remaining	49%	of	HSBC	Merchant	Services	LLP	from	HSBC	Bank	plc	for	$307.7	million	in	cash.	We	used	then	existing lines	of	credit	to	complete	the	transaction.	These	line	of	credit	borrowings	were	subsequently	repaid	on	July	10,	2009,	with	proceeds	from	a	$300.0	million	term	loan agreement.	In	addition,	HSBC	extended	our	current	ten-year	exclusive	marketing	alliance	agreement	under	which	the	bank	provides	us	with	merchant	referrals	and	bank sponsorship	in	the	United	Kingdom	until	June	2019.

# Auctionpay,	Inc.

On	September	28,	2009,	we	completed	the	acquisition	of	Auctionpay,	Inc.,	a	provider	of	fully	integrated	payment	processing	and	software	solutions	for fundraising	activities	for	$22.0	million	in	cash.	The	purpose	of	this	acquisition	was	to	expand	our	direct	acquiring	business	into	a	vertical	market	that,	to	date,	is	still heavily	dependent	on	cash	and	check	as	the	primary	means	of	payment.	Auctionpay,	Inc.	is	currently	known	as	Greater	Giving.

# 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,	the	United	Kingdom,	the	Asia- Pacific	region,	the	Czech	Republic	and	the	Russian	Federation.	We	serve	as	an	intermediary	to	facilitate	payments	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	13	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	payments	at	the	point	of	sale.	We	conduct	our	merchant	acquiring business	using	two	different	business	models—direct	and	indirect.	In	the	direct	model,	merchants	are	our	end	customers.	We	provide	our	merchant	customers	with	the ability	to	accept	card-based	and	check	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	Union	Pay,	Discover,	JCB,	MasterCard,	and	Visa,	as	well	as	certain	domestic	debit	networks,	such	as Interac	in	Canada.	Credit	and	debit	card	processing	involves	a	consumer	or	cardholder	acquiring	goods	or	services	from	a	merchant	and	using	a	credit	or	debit	card	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	market	direct	merchant	services	in	the	United	States,	Canada,	the United	Kingdom,	the	Asia-Pacific	region	and	the	Russian	Federation.

Indirect	merchant	services	provides	the	same	basic	products	and	services	as	our	direct	merchant	services	model,	primarily	to	financial	institutions	and	a	limited number	of	ISOs	on	an	unbundled	basis,	that	in	turn	resell	our	products	and	services	to	merchants.	These	services	are	marketed	in	the	United	States,	Canada	and	parts	of Eastern	Europe,	primarily	in	the	Czech	Republic	and	the	Russian	Federation.	We	also	offer	sales,	installation	and	servicing	of	ATM	and	point	of	sale	("POS")	terminals, and	selected	card	issuing	services	such	as	card	management	and	personalization,	and	provide	payment	processing	for	ATM	providers	and	Card	Issuers,	through	Global Payments	Europe	and	ZAO	United	Card	Service	(	"UCS"),	which	are	also	components	of	indirect	merchant	services.

Direct	merchant	services	revenue	is	generated	on	services	primarily	priced	as	a	percentage	of	transaction	value,	whereas	indirect	merchant	services	revenue	is generated	on	services	primarily	priced	as	a	specified	fee	per	transaction.	In	both	merchant	services	models,	we	also	charge	other	fees	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	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	the	funds	settlement	and certain	exception-based,	back	office	support	services	such	as	chargeback	and	retrieval	resolution.

Electronic	draft	capture	is	the	process	of	transferring	sales	draft	data	into	an	electronic	format	so	that	it	may	be	sent	through	networks	for	clearing	and	settlement. The	card	networks,	primarily	Visa,	MasterCard,	and	Discover,	use	a	system	known	as	interchange	in	the	case	of	credit	and	signature	debit	cards	for	this	purpose. Financial	institutions	use	the	debit	networks	for	PIN-based	debit	cards	to	transfer	the	information	and	funds	between	the	card	issuers	and	merchant	acquirers	to	complete the	link	between	merchants	and	card	issuers.	Debit	card	payments	differ	slightly	from	traditional	credit	card	transactions	in	that	the	cardholder	is	required	to	have sufficient	funds	available	in	a	deposit	account	at	the	time	of	the	transaction,	or	the	debit	card	transaction	will	not	be	authorized.	PIN-based	debit	transactions	are	sent through	a	debit	network	while	signature-based	debit	or	check	card	transactions,	which	are	offered	exclusively	in	the	United	States,	are	sent	through	Visa	and	MasterCard and	require	a	signature	at	the	time	of	purchase.	Also,	PIN-based	debit	transactions	typically	deduct	the	purchase	amount	from	the	cardholder's	deposit	account	within	a day	of	the	purchase,	depending	on	the	time	of	the	purchase.	Signature-based	debit,	or	check	card	transactions	typically	debit	the	cardholder's	deposit	account	two	to three	days	after	the	purchase,	although	the	funds	are	"held"	with	a	memo	posted	to	the	cardholder's	bank	account.	A	credit	card	transaction	posts	to	a	cardholder's account,	reducing	the	available	credit	limit	in	a	similar	manner.

In	order	to	provide	credit	and	signature-based	debit	card	transaction	processing	services,	we	must	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	Visa	and	MasterCard	networks.	A	financial	institution	that	is	a member	of	the	Visa	and/or	MasterCard	card	networks	(which	we	refer	to	in	this	discussion	as	Member)	must	sponsor	an	electronic	transaction	payment	processor	such as	Global	Payments.	We	have	five	primary	financial	institution	sponsors	in	the	United	States,	Canada,	the	United	Kingdom,	the	Asia-Pacific	region	and	the	Russian Federation	with	whom	we	have	sponsorship	or	depository	and	processing	agreements.	These	agreements	allow	us	to	route	Visa	and	MasterCard	transactions	under	the member	banks'	control	and	identification	numbers	to	clear	credit	card	transactions	through	Visa	and	MasterCard.	Visa	and	MasterCard	set	the	standards	with	which	we must	comply.

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.

# How	a	Card	Transaction	Works

A	card	transaction	begins	when	a	cardholder	presents	a	card	for	payment	at	a	merchant	location	where	the	card	information	is	captured	by	a	POS	terminal	card reader,	which	may	be	provided	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.	The	terminal	electronically	records	sales	draft	information,	such	as	the	credit	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	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.	We	route	the	request	to	the	applicable	credit	or	debit	network.	The	credit	or	debit	network	forwards	the	authorization request	to	the	card	issuer,	who	determines	a	response	based	on	the	status	of	the	cardholder's	account.	The	response	is	returned	to	the	merchant's	terminal	via	the	same communication	network.	This	entire	authorization	and	response	process	occurs	within	seconds.

Timing	differences,	interchange	expenses,	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	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	a	joint	deposit	account	or	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	assesses	a	funding	cost.	Each	participant	in	the	transaction	process	receives	compensation	for	its	services.

As	an	illustration,	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	net	revenue	from	the	merchant	in	the	above	example	was	0.5%,	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	as	our	net	revenue	for	the	transaction.	Our	gross	profit	on	the	transaction	reflects	the	net	revenue	less operating	expenses,	including	the	network	and	systems	cost	to	process	the	transaction	(including	assessments)	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.

# North	America	Merchant	Services	Segment

North	America	merchant	services	revenues	represent	74%	of	our	total	consolidated	fiscal	2010	revenues	and	include	operations	in	the	United	States	and	Canada. In	the	United	States,	we	sell	our	services	via	ISOs,	a	direct	sales	force,	trade	associations,	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's	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	is	recorded	as	revenue.	The	excess	of	revenue earned	over	the	ISO	contractual	transaction	fee	(plus	assessments)	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,	value	added	reseller	and	trade	association	referral	partners	signing	a	variety	of	mid-to-large sized	merchants	with	annual	bankcard	volume	on	average	above	$300,000.	Our	sales	force	is	paid	a	combination	of	base	salary	and	commission.

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.

Check	guarantee	services	include	comprehensive	check	verification	and	guarantee	services	designed	for	a	merchant's	specific	needs	and	risk	adversity.	This service	guarantees	payment	of	all	checks	that	are	electronically	verified.	If	a	verified	check	is	dishonored,	our	service	generally	provides	the	merchant	with reimbursement	of	the	check's	face	value,	and	then	we	pursue	collection	of	the	check	through	our	internal	collection	services.	While	we	have	the	right	to	collect	the	full amount	of	the	check	from	the	checkwriter,	we	have	historically	recovered	less	than	100%	of	the	guaranteed	checks.	We	derive	revenue	for	these	services	primarily	by charging	the	merchant	a	percentage	of	the	face	value	of	each	guaranteed	check.	Check	verification	and	recovery	services	are	similar	to	those	provided	in	the	check guarantee	service,	except	that	these	services	do	not	guarantee	payment	of	the	verified	checks.	We	derive	revenues	for	these	services	primarily	from	the	service	fees collected	from	delinquent	check	writers,	fees	charged	to	merchants	based	on	a	transaction	rate	per	verified	check	and	fees	charged	to	merchants	for	specialized	services such	as	electronic	re-deposits	of	dishonored	checks.

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	Canada	we	sell	our	services	primarily	through	our	direct	sales	force	leveraging	our	bank	referral	relationships.	Unlike	the	United	States,	approximately	60%	of payment	transactions	in	Canada	are	PIN-based	debit	transactions,	primarily	through	Interac.

# International	Merchant	Services	Segment

International	merchant	services	revenues	represent	26%	of	our	total	consolidated	fiscal	2010	revenues	and	include	operations	in	Europe	and	the	Asia-Pacific region.	Our	business	in	Europe	is	primarily	located	in	the	United	Kingdom,	the	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,	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	(amounts	in	thousands):

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |
| United\tStates | $902,844 | $805,557 | $731,214 |
| Canada | 317,272 | 301,294 | 267,249 |
| North\tAmerica\tmerchant\tservices | 1,220,116 | 1,106,851 | 998,463 |
| Europe | 315,023 | 265,121 | 59,778 |
| Asia-Pacific | 107,329 | 90,334 | 72,367 |
| International\tmerchant\tservices | 422,352 | 355,455 | 132,145 |
| Consolidated\trevenues | $1,642,468 | $1,462,306 | $1,130,608 |

# Industry	Overview	and	Target	Markets

# Industry	Overview

Payment	processing	service	providers	offer	high-volume	electronic	transaction	payment	processing	and	support	services	directly	to	financial	institutions, merchants,	multinational	corporations,	and	ISOs.	Generally,	the	payment	processing	market	in	the	United	States	and	Canada	continues	to	transition	from	traditional financial	institution	providers	to	independent	merchant	acquirers	such	as	Global	Payments.	We	believe	merchants	seek	more	efficient	distribution	channels,	as	well	as increased	technological	capabilities	required	for	the	rapid	and	efficient	creation,	processing,	handling,	storage	and	retrieval	of	information.

Based	on	The	Nilson	Report,	dated	March	2010,	we	are	a	leading	mid-market	and	small-market	merchant	acquirer	in	the	United	States	and	we	compete	with	First Data	Corporation,	Bank	of	America	Merchant	Services,	Chase	Paymentech	and	Elavon.

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

In	the	European	and	Asia-Pacific	regions,	financial	institutions	remain	the	dominant	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.

Our	primary	competitors	in	the	United	Kingdom	are	the	Royal	Bank	of	Scotland	and	Barclays.	The	Russian	Federation	payments	market	is	highly	fragmented	and our	competition	is	made	up	of	various	financial	institutions,	including	Sberbank,	Alfa	Bank,	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	as	well	as	Merchant	Solutions,	which	is	a	joint	venture	between	First	Data	and	Standard	Chartered	PLC.

As	a	result	of	continued	growth	in	our	industry,	several	large	merchant	acquirers,	including	us,	have	expanded	operations	both	domestically	and	internationally. This	expansion	has	come	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	to	participate	in	a	highly	competitive	environment look	to	exit	the	business.

In	the	Canadian	market,	Visa,	MasterCard	and	Interac	are	planning	to	migrate	to	cards	containing	chip	technology	over	the	coming	years.	Chip	card	technology	is already	prevalent	in	the	European	and	Asia-Pacific	markets.	Chip	technology	provides	the	ability	to	process	payment	transactions	securely	by	protecting	the	cardholder information	in	an	encrypted	and	confidential	manner.	The	chip	is	difficult	to	copy	and	has	the	additional	capacity	to	be	personalized	by	a	card	issuer,	including	the ability	to	be	programmed	with	spending	and	usage	limits,	making	it	possible	to	authorize	some	transactions	off-line.	Chip	technology	can	also	help	enable	a	variety	of additional	card	features	including	applications	such	as	loyalty,	access	control,	rewards	and	public	transit	passes.	We	expect	that	it	will	take	multiple	years	for	all participants	to	implement	the	equipment	necessary	to	accept	and	process	the	chip	card	compliant	transactions	in	the	Canadian	marketplace.	We	have	a	plan	to	ensure	our merchants	will	benefit	from	the	migration	to	chip	technology	in	the	Canadian	market.	We	are	well	into	the	enablement	of	chip	card	technology	for	company-owned terminals	in	the	Canadian	market.

We	believe	the	number	of	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	our	customers	reduce	their	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.	If	new	technologies	like	radio frequency	identification	or	contactless	payment	cards	continue	to	evolve	and	are	desired	by	merchants	and	consumers,	we	plan	to	continue	developing	new	products	and services	that	will	exploit	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	quick	service	restaurants,	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.

# Target	Markets

We	believe	that	significant	global	opportunities	exist	for	growth	in	the	application	of	electronic	transaction	payment	processing	services.	Although	the	United States	accounts	for	the	largest	payment	processing	volume	in	the	world,	global	expansion	by	financial	institutions	into	new	geographies	and	the	increased	recognition	by governments	of	the	role	of	payment	cards	in	facilitating	economic	growth	are	rapidly	transforming	the	electronic	commerce	market	into	a	global	opportunity.

The	growth	of	retail	credit	card	transactions,	as	well	as	the	rapid	growth	in	the	utilization	of	debit	cards,	correlates	with	the	historic	growth	of	our	business. According	to	The	Nilson	Report	dated	April	2010,	worldwide	annual	general	purpose	card	purchase	volume	increased	8%	to	$7.6	trillion	in	2009.	General	purpose	cards include	the	major	card	networks	brands	such	as	Visa,	MasterCard,	American	Express,	Discover,	China	Union	Pay,	JCB,	and	Diners	Club.	In	Canada,	general	purpose cards	also	include	Interac	debit	cards.

The	Nilson	Report	dated	February	2010	estimates	that	more	than	$3.0	trillion	of	annual	consumer	spending	was	charged	in	2009	using	general	purpose	cards	in	the United	States,	a	3%	decrease	from	2008.	Based	on	The	Nilson	Report	dated	February	2010,	the	United	States	industry	mix	of	Visa	and	MasterCard	debit	and	credit purchase	transactions	are	approximately	67%	and	33%,	respectively.	The	Nilson	Report	dated	March	2010	reported	that	$410.3	billion	(U.S.)	of	annual	Canadian consumer	spending	uses	general	purpose	cards	as	the	form	of	payment,	representing	a	decrease	of	1%	from	2008.	Also	based	on	The	Nilson	Report	dated	March	2010, Canadian	Visa	and	MasterCard	debit	card	purchase	transactions	are	approximately	42%	while	Interac	debit	cards	purchase	transactions	are	58%.	The	Nilson	Report	dated May	2010	estimates	that	$1.9	trillion	of	annual	consumer	spending	was	charged	in	2009	using	general	purpose	cards	in	Europe,	a	4.8%	increase	from	2008.	The	industry mix	in	the	United	Kingdom	based	on	the	United	Kingdom	purchase	Transaction	Payments	Authority	for	Visa	and	MasterCard	debit	and	credit	cards	are	approximately 76%	and	24%,	respectively.

We	process	in	eleven	countries	and	territories	in	the	Asia-Pacific	region.	These	markets	include	almost	40%	of	the	world's	population	and	71%	of	the	total	Asia- Pacific	population	according	to	the	CIA	World	Factbook.	These	markets	are	largely	cash	based.	We	believe	there	are	significant,	long-term	growth	opportunities	for payment	processing	in	this	region.

# Strategy

We	seek	to	leverage	the	rapid	adoption	of,	and	transition	to,	card	based	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	the	Americas.	We	intend	to	accomplish	this	overall strategy	as	follows:

# Existing	offerings

We	intend	to	increase	our	penetration	of	existing	markets	and	to	further	leverage	our	infrastructure.	Our	objectives	include:

•expand	our	direct	merchant	services	distribution	channels,	primarily	our	existing	sales	force,	ISOs,	OEMs,	value	added	resellers	and	other	referral relationships;

•	 provide	the	best	possible	customer	service	at	levels	that	exceed	our	competitors	by	investing	in	technology,	training	and	product	enhancements;

•	 grow	our	direct	merchant	services	market	share	in	the	United	States,	Canada,	the	United	Kingdom,	the	Asia-Pacific	region	and	the	Russian	Federation	by concentrating	on	the	small	and	mid-market	merchant	segments,	while	selectively	targeting	national	merchants	that	meet	our	profitability	criteria;

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

•	 pursue	potential	domestic	and	international	acquisitions	or	investments	in	and	alliances	with	companies	that	have	high	growth	potential	or	significant	market presence	and	operate	in	profitable	sectors	of	payments-related	industries	through	compatible	products	and	services,	and	development	and	distribution capabilities.

# International	markets

We	intend	to	focus	on	further	diversification	in	international	markets	with	high	payments	industry	growth	or	targets	with	significant	market	presence,	such	as Europe,	the	Asia-Pacific	region	and	South	America.	We	are	evaluating	these	markets	based	on	the	following	attractive	characteristics:

•currently	low	but	growing	credit	and	debit	card	utilization;

•the	absence	of	a	dominant	merchant	acquirer	or	processor.

# Infrastructure

Our	focus	on	our	existing	infrastructure	will	center	on	attracting,	developing	and	retaining	talent	to	execute	our	strategy	and	migrate	our	systems	to	leading	edge technology.	We	intend	to	continue	systems	integrations,	primarily	the	consolidation	of	our	front-end	operating	platforms	and	the	migration/conversion	of	our	back-end operating	platforms.

We	continue	to	make	progress	on	our	next	generation	technology	processing	platform,	referred	to	as	G2.	This	platform	is	planned	to	be	a	new	front-end	operating environment	for	our	merchant	processing	in	the	United	States,

Asia-Pacific,	the	United	Kingdom,	and	Canada	and	is	intended	to	replace	several	legacy	platforms	that	have	higher	cost	structures.	Aside	from	cost	advantages,	there	are other	benefits	to	this	new	platform,	such	as	increased	speed	to	market	of	new	products,	ease	of	scalability,	enhanced	reporting	options,	hardware	environment	flexibility and	enhanced	compliance	with	standards	and	regulations.	In	addition,	the	platform	is	designed	as	a	potential	integration	platform	for	future	acquisitions.	We	are	currently processing	transactions	on	our	G2	platform	in	seven	markets	in	our	Asia-Pacific	region	and	we	have	begun	the	process	of	supporting	the	United	States.

# Employees

As	of	May	31,	2010,	we	had	3,592	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.

# 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	senior	financial	officers'	code	of	ethics,	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

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.

In	order	to	provide	our	Visa	and	MasterCard	transaction	processing	services,	we	must	be	registered	as	a	merchant	processor	of	MasterCard	and	Visa.	These designations	are	dependent	upon	our	being	sponsored	by	member	clearing	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	establish	our	own	wholly	owned	financial	institution	in	such	region that	could	serve	as	a	sponsor,	either	of	which	could	prove	to	be	difficult	and/or	more	expensive.	If	we	are	unable	to	find	a	replacement	financial	institution	to	provide sponsorship	(whether	through	a	third	party	or	through	the	establishment	of	our	own	wholly	owned	financial	institution)	we	may	no	longer	be	able	to	provide	processing services	to	the	affected	customers	which	would	negatively	impact	our	revenues	and	earnings.

In	June	2010,	Canadian	Imperial	Bank	of	Commerce,	CIBC,	provided	us	with	notice	that	it	would	not	renew	our	agreement	with	them,	under	which	CIBC provides	sponsorship	for	Visa	in	Canada,	after	the	expiration	of	the	initial	ten	year	term.	As	a	result,	our	Canadian	Visa	sponsorship	will	expire	in	March	2011.	We	are pursuing	alternatives	to	CIBC's	sponsorship,	including	filing	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	and	negotiating	with	other	financial	institutions.	The	failure	to	establish	a	wholly	owned	loan	company that	can	serve	as	our	Visa	sponsor	in	Canada	or	to	secure	a	new	sponsorship	relationship	with	another	financial	institution	that	would	replace	the	arrangement	that	we currently	have	with	CIBC	would	likely	result	in	the	loss	of	Visa	merchant	customers	in	Canada	and	lead	to	a	material	reduction	in	our	revenues	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,	we	could	end	up	bearing	them.

In	order	to	provide	our	transaction	processing	services,	several	of	our	subsidiaries	are	registered	with	Visa	and	MasterCard	as	service	providers	for	member institutions	and	with	other	networks.	As	such,	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	banks	that	own	their	stock and,	in	the	case	of	Discover	by	the	card	issuers,	and	some	of	those	banks	and	issuers	are	our	competitors	with	respect	to	these	processing	services.	The	termination	of our	registrations	or	our	status	as	a	service	provider,	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.

# Security	breaches	could	harm	our	reputation	and	adversely	affect	future	earnings

We	collect	and	store	sensitive	data	about	merchants,	including	names,	addresses,	social	security	numbers,	drivers'	license	numbers,	and	checking	account numbers.	In	addition,	we	maintain	a	database	of	cardholder	data	relating	to	specific	transactions,	including	bankcard	numbers,	in	order	to	process	the	transactions	and	for fraud	prevention.	We	process	that	data	and	deliver	our	products	and	services	by	utilizing	computer	systems	and	telecommunications	networks	operated	both	by	us	and	by third	party	service	providers.	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	or	our	intellectual property.

A	security	breach	or	other	misuse	of	such	data	could	harm	our	reputation	and	deter	customers	from	using	our	products	and	services,	increase	our	operating expenses	in	order	to	correct	the	breaches	or	failures,	expose	us	to	unbudgeted	or	uninsured	liability,	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.

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	network	systems,	software,	data	center	and	telecommunications	networks,	as	well	as	the systems	and	services	of	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.	Our property	and	business	interruption	insurance	may	not	be	applicable	or	adequate	to	compensate	us	for	all	losses	or	failures	that	may	occur.	Defects	in	our	systems	or	those of	third	parties,	errors	or	delays	in	the	processing	of	payment	transactions,	telecommunications	failures	or	other	difficulties	could	result	in	loss	of	revenue,	loss	of merchants,	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,	and/or	diversion	of	technical	and	other	resources.	We	perform	the	vast	majority	of	disaster	recovery	operations	ourselves,	though	we	utilize select	third	parties	for	some	aspects	of	recovery.	To	the	extent	we	outsource	our	disaster	recovery,	we	are	at	risk	of	the	vendor's	unresponsiveness	in	the	event	of breakdowns	in	our	systems.

# Utility	and	system	interruptions	could	adversely	affect	our	operations.

In	order	to	process	transactions	promptly,	our	computer	equipment	and	network	servers	must	be	functional	on	a	24-hour	basis,	which	requires	access	to telecommunications	facilities	and	the	availability	of	electricity,	which	are	susceptible	to	disruption.	Any	resulting	disruptions	in	our	processing	services	could	cause	us to	incur	substantial	additional	expense	and	the	loss	of	customers,	which	could	have	an	adverse	affect	on	our	operations	and	financial	condition.

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	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	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.

# Loss	of	key	Independent	Sales	Organizations	could	reduce	our	revenue	growth.

Our	ISO	sales	channel,	which	purchases	and	resells	our	end-to-end	services	to	its	own	portfolio	of	merchant	customers,	is	a	strong	contributor	to	our	revenue growth	in	our	North	America	merchant	services	segment.	If	an	ISO	switches	to	another	transaction	processor,	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,	all	of	which	could	negatively	affect	our revenues	and	earnings.

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

We	have	a	number	of	foreign	subsidiaries	whose	functional	currency	is	their	local	currency.	We	are	subject	to	the	risk	that	currency	exchange	rates	between	these regions	and	the	United	States	will	fluctuate,	potentially	resulting	in	a	loss	of	some	of	our	revenue	and	earnings	when	such	amounts	are	exchanged	into	United	States dollars.	Volatility	in	currency	exchange	rates	has	affected	and	may	continue	to	affect	our	financial	results.	For	example,	for	fiscal	year	2010,	currency	exchange	rate fluctuations	increased	our	revenues	by	$16.5	million	and	our	earnings	by	$0.10	per	diluted	share.	We	do	not	use	forward	contracts	or	other	derivative	instruments	to mitigate	the	risks	associated	with	currency	exchange	risk.

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.

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,	our	ability	to	develop	new	technologies,	and	our	ability	to	complete	acquisitions.

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,	independent	sales	organizations,	and,	potentially,	card	networks.	Many	of	our	competitors	are	companies	who	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.	Either	of	these	actions	could	have	a	significant effect	on	our	revenues	and	earnings.

In	addition,	our	competitors	may	have	the	ability	to	devote	more	financial	and	operational	resources	than	we	can	to	the	development	of	new	technologies, including	internet	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.	Lastly,	our	competitors	may	be	willing	or	able	to	pay	more	than	us	for	acquisitions,	which	may	cause	us	to	lose	certain	acquisitions	that we	would	otherwise	desire	to	complete.

We	are	subject	to	the	business	cycles	and	credit	risk	of	our	merchant	customers	and	our	independent	sales	organizations.

The	current	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	merchants	and	ISOs	are	also	liable	for	any	fines,	or penalties,	that	may	be	assessed	by	any	card	networks.	In	the	event,	however,	that	we	are	not	able	to	collect	such	amounts	from	the	merchants	or	ISOs,	due	to	merchant fraud,	breach	of	contract,	insolvency,	bankruptcy	or	any	other	reason,	we	may	be	liable	for	any	such	charges,	resulting	in	lower	earnings	for	us.

# Risks	associated	with	reduced	levels	of	consumer	spending	could	adversely	affect	our	revenues	and	earnings.

Significant	portions	of	our	revenue	and	earnings	are	derived	from	fees	from	processing	consumer	credit	card	and	debit	card	transactions.	We	are	exposed	to general	economic	conditions	that	affect	consumer	confidence,	consumer	spending,	consumer	discretionary	income	or	changes	in	consumer	purchasing	habits.	A	general

reduction	in	consumer	spending	in	the	United	States	or	any	other	country	where	we	do	business	could	adversely	affect	our	revenues	and	earnings.	For	example,	in	fiscal year	2010	compared	to	the	prior	year,	our	United	States	direct	credit	card	average	dollar	value	of	transaction,	or	average	ticket,	decreased	by	approximately	8%.	We believe	this	decline,	while	partially	due	to	a	shift	toward	smaller	merchants	added	through	our	ISOs,	was	in	part	driven	by	lower	consumer	spending	as	a	result	of	a weakened	economy.	A	further	weakening	in	the	economy	could	also	force	retailers	to	close	resulting	in	exposure	to	potential	credit	losses	and	future	transaction declines.	Additionally,	credit	card	issuers	have	been	reducing	credit	limits,	closing	accounts,	and	are	more	selective	with	respect	to	whom	they	issue	credit	cards.

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	billing	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	may	adversely	affect	our	financial	condition	and	results	of	operations.

# Fraud	by	merchants	or	others	could	have	an	adverse	effect	on	our	operating	results	and	financial	condition.

We	have	potential	liability	for	fraudulent	bankcard	transactions	or	credits	initiated	by	merchants	or	others.	Examples	of	merchant	fraud	include	when	a	merchant knowingly	uses	a	stolen	or	counterfeit	bankcard	or	card	number	to	record	a	false	sales	transaction,	processes	an	invalid	bankcard,	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	counterfeit and	fraud.	While	we	have	systems	and	procedures	designed	to	detect	and	reduce	the	impact	of	fraud,	we	cannot	assure	the	effectiveness	of	these	measures.	It	is	possible that	incidents	of	fraud	could	increase	in	the	future.	Failure	to	effectively	manage	risk	and	prevent	fraud	would	increase	our	chargeback	liability	or	other	liability. Increases	in	chargebacks	or	other	liability	could	have	an	adverse	effect	on	our	operating	results	and	financial	condition.

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	research	and	development	costs	in	excess	of	historical	levels	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	market	in	which	we	compete	is	subject	to	rapid	and	significant	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	research	and	development	projects	including	the	development	of	a	new	front-end	platform	for	electronic	payments	processing.	These	projects	carry	the	risks associated	with	any	research	and	development	effort,	including	cost	overruns,	delays	in	delivery	and	performance	problems.	In	the	electronic	payments	markets	these risks	are	even	more	acute.	Our	markets	are	constantly	experiencing	rapid	technological	change.	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 14

significant	processing	or	reporting	errors	or	other	losses.	As	a	result	of	these	factors,	our	research	and	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	and	access	to	new	technologies.	Our	future success	will	depend	in	part	on	our	ability	to	develop	or	adapt	to	technological	changes	and	evolving	industry	standards.

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	are	continually	looking	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.

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.

We	are	subject	to	regulations	that	affect	the	electronic	payments	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	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	which	could	have	an	adverse	effect	on	our financial	condition.	For	example,	we	are	subject	to	(1)	the	card	network	rules	of	Visa,	MasterCard,	and	other	card	networks,	Interac,	and	of	various	debit	networks, (2)	applicable	privacy	and	information	security	regulations	in	the	regions	where	we	operate	and	of	the	card	networks,	(3)	the	Payment	Services	Directive	in	Europe, (3)	The	Code	of	Conduct	for	the	Credit	and	Debit	Card	Industry	in	Canada	(issued	by	Canada's	Department	of	Finance)	(4)	Housing	Assistance	Tax	Act	of	2008,	which requires	information	returns	to	be	made	for	each	calendar	year	by	merchant	acquiring	entities	starting	in	2011,	to	name	a	few.	We	are	also	subject	to	examination	by	the FFEIC	(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,	in	the	United	States,	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	has	recently	been	signed	into	law	to regulate	the	fees	charged	or	received	by	issuers	for	processing	debit	transactions.	Regulatory	actions	such	as	these,	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.	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.

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	(interchange	and	assessment	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	increasing	our	operating	costs	and	reducing	our	earnings.

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,	amongst	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.

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

If	consumers	do	not	continue	to	use	credit	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	financial	position	and	results	of	operations.	We	believe	future	growth	in	the use	of	credit	cards	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	credit	cards.	Moreover,	if	there	is	an	adverse	development	in	the	credit	card	industry	in general,	such	as	new	legislation	or	regulation	that	makes	it	more	difficult	for	our	customers	to	do	business,	our	financial	position	and	results	of	operations	may	be adversely	affected.

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

The	current	recessionary	environment	has	resulted	in	multiple	bank	failures	and	government-encouraged	consolidation.	As	banks	continue	to	consolidate,	our ability	to	offer	our	services	through	indirect	channels	successfully	will	depend	in	part	on	whether	the	institutions	that	survive	are	willing	to	outsource	their	credit	and debit	card	processing	to	third	party	vendors	and	whether	those	institutions	have	pre-existing	relationships	with	any	of	our	competitors.	Larger	banks	and	larger merchants	with	greater	transaction	volumes	may	demand	lower	fees	which	could	result	in	lower	revenues	and	earnings	for	us.

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

We	are	dependent	upon	the	ability	and	experience	of	a	number	of	our	key	personnel	who	have	substantial	experience	with	our	operations,	the	rapidly	changing transaction	processing	industry,	and	the	selected	markets	in	which	we	offer	our	services.	It	is	possible	that	the	loss	of	the	services	of	one	or	a	combination	of	our	key personnel,	would	have	an	adverse	effect	on	our	operations.	Our	success	also	depends	on	our	ability	to	continue	to	attract,	manage,	and	retain	additional	qualified management	and	technical	personnel	as	we	grow.	We	cannot	guarantee	that	we	will	continue	to	attract	or	retain	such	personnel.

# Our	financial	results	may	be	adversely	affected	if	we	have	to	impair	our	intangible	assets	or	goodwill.

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	38%	and	53%	of	the	total	assets	on	our	balance	sheet	as	of	May	31,	2010	and	May	31,	2009,	respectively.	We	may not	realize	the	full	fair	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.	For	example,	during	fiscal	year	2009	we	recorded	a	pre-tax	charge	of	$147.7	million	for	the	impairment	of	goodwill	and	intangible	assets	of	our money	transfer	business,	which	we	sold	during	fiscal	year	2010.	Additional	impairment	charges	could	adversely	affect	our	financial	condition	and	results	of	operations.

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

We	have	established	contingent	liabilities	for	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	results	of	operations.

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.	For	example, we	have	net	deferred	tax	assets	associated	with	our	UK	business	of	$87.5	million.	The	measurement	of	such	deferred	tax	assets	is	based,	in	part,	on	the	current	enacted corporate	tax	in	the	UK	of	28%.	The	2010	UK	budget	announced	June	22,	2010	includes	a	reduction	in	the	corporate	tax	rate	from	28%	to	24%	over	the	course	of	four financial	years	from	April	2011.	Upon	enactment	of	these	tax	rates,	which	is	expected	during	the	first	half	of	our	fiscal	year	2011,	we	estimate	that	we	will	record	a reduction	of	our	UK	deferred	tax	asset	and	a	corresponding	increase	to	our	deferred	income	tax	provision	of	approximately	$9	million.

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	the	United	Kingdom	and	certain	markets	in	the	Asia-Pacific	region,	HSBC performs	payment	processing	operations	and	related	support	services	pursuant	to	transition	services	agreements.	We	expect	that	HSBC	will	continue	to	provide	these services	until	we	integrate	these	functions	into	our	operations.	Until	we	can	integrate	the	acquisitions'	financial	reporting	functions	into	our	own,	we	will	rely	on	HSBC to	provide	financial	data,	such	as	revenue	billed	to	merchants,	to	assist	us	with	compiling	our	accounting	records.	Accordingly,	our	internal	controls	over	financial reporting	could	be	materially	affected,	or	are	reasonably	likely	to	be	materially	affected,	by	HSBC	internal	controls	and	procedures.	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	HSBC.

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,	our	rights	agreement	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,	our	rights	agreement	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	on	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, stockholder's	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.

We	conduct	a	portion	of	our	business	in	various	Eastern	European	and	Asia-Pacific	countries,	and	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	Eastern	Europe,	and	the	Asia-Pacific	region.	Some	of	these	countries,	and	other	foreign countries	in	which	we	operate,	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.

# ITEM	1B—UNRESOLVED	STAFF	COMMENTS

None.

# ITEM	2—PROPERTIES

The	following	summarizes	the	type	of	facilities	we	use	to	operate	our	business	as	of	May	31,	2010:

| Type	of	Facility | Leased | Owned |
| :--- | :--- | :--- |
| Facilities\tin\tthe\tUnited\tStates: |  |  |
| Multi-Purpose\t(Operations,\tSales,\tAdministrative) | 4 | — |
| Operations/Customer\tSupport | 2 | — |
| Sales\tand\tretail\tbranches | 2 | — |
|  | 8 | — |
| International\tFacilities: |  |  |
| Multi-Purpose\t(Operations,\tSales,\tAdministrative) | 3 | 3 |
| Operations/Customer\tSupport | 12 | — |
| Sales\tand\tretail\tbranches | 16 | — |
|  | 31 |  |
| 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;	and	Moscow,	Russian	Federation.

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

# ITEM	3—LEGAL	PROCEEDINGS

We	are	party	to	a	number	of	claims	and	lawsuits	incidental	to	the	normal	course	of	our	business.	In	our	opinion,	the	ultimate	outcome	of	such	matters,	in	the aggregate,	will	not	have	a	material	adverse	impact	on	our	financial	position,	liquidity	or	results	of	operations.

# ITEM	4—SUBMISSION	OF	MATTERS	TO	A	VOTE	OF	SECURITY	HOLDERS

No	matters	were	submitted	to	a	vote	of	our	shareholders	during	our	fourth	quarter	ended	May	31,	2010.

# 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	2010	and	2009.	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 | Per	Share |
| :--- | :--- | :--- | :--- |
| Fiscal\t2010: |  |  |  |
| First\tQuarter | $44.09 | $35.59 | $0.02 |
| Second\tQuarter | \t 54.34 | \t 41.96 | 0.02 |
| Third\tQuarter | \t 54.52 | \t 42.50 | 0.02 |
| Fourth\tQuarter | \t 48.96 | \t 40.18 | 0.02 |
| Fiscal\t2009: |  |  |  |
| First\tQuarter | $49.87 | $41.51 | $0.02 |
| Second\tQuarter | \t 49.39 | \t 29.67 | 0.02 |
| Third\tQuarter | \t 36.68 | \t 30.08 | 0.02 |
| Fourth\tQuarter | \t 35.96 | \t 27.48 | 0.02 |

The	number	of	shareholders	of	record	of	our	common	stock	as	of	July	26,	2010	was	2,476.

# 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,	2010.

# 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	Stock	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	Stock	Index	on	May	31,	2005	and	assumes	reinvestment	of	all	dividends.

|  | Global | S&amp;P | Information |
| :--- | :--- | :--- | :--- |
|  | Payments | 500 | Technology |
| May\t31,\t2005 | $100.00 | $100.00 | $100.00 |
| May\t31,\t2006 | \t 134.68 | \t 108.64 | 100.73 |
| May\t31,\t2007 | \t 116.00 | \t 133.40 | 123.93 |
| May\t31,\t2008 | \t 137.07 | \t 124.47 | 127.10 |
| May\t31,\t2009 | \t 104.61 | 83.93 | 90.54 |
| May\t31,\t2010 | \t 122.95 | \t 101.54 | 116.32 |

# Issuer	Purchases	of	Equity	Securities

On	April	23,	2010,	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	or	as	otherwise	may	be	determined	by	us,	subject	to	market	conditions,	business	opportunities,	and	other	factors.	Under	this	authorization,	as	of May	31,	2010,	we	have	repurchased	2,382,890	shares	of	our	common	stock	at	a	cost	of	$100.0	million,	or	an	average	of	$41.97	per	share,	including	commissions. Repurchased	shares	are	held	as	treasury	stock.

The	shares	repurchased	in	the	fourth	quarter	of	fiscal	2010,	the	average	price	paid,	including	commissions,	and	the	dollar	value	remaining	available	for	purchase are	as	follows:

| Period | Total	Number	of<br>Shares	(or		Units)<br>Purchased<br>(a) | Average<br>Price	Paid	per<br>Share	(or	Unit)<br>(b) | Total	Number	of<br>Shares	(or	Units)<br>Purchased	as	Part	of<br>Publicly	Announced<br>Plans	or	Programs<br>(c) | Shares	(or	Units)<br>that	May	Yet	Be<br>Purchased	Under<br>the	Plans	or<br>Programs<br>(d) |
| :--- | :--- | :--- | :--- | :--- |
| March\t1,\t2010\t–\tMarch\t31,\t2010 | — | $— | — | — |
| April\t1,\t2010\t–\tApril\t30,\t2010 | — | — | — | — |
| May\t1,\t2010\t–\tMay\t31,\t2010 | 2,382,890 | $41.97 | 2,382,890 | — |
| Total | 2,382,890 | $41.97 | 2,382,890 | — |

In	addition,	we	have	$13	million	remaining	under	the	authorization	from	our	original	share	repurchase	program	initiated	during	fiscal	2007.	Repurchased	shares were	retired	and	are	available	for	future	issuance.	We	did	not	repurchase	shares	under	this	plan	in	fiscal	2010.	This	authorization	has	no	expiration	date	and	may	be suspended	or	terminated	at	any	time.

# 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.	As	a	result	of	our	disposition	of	the money	transfer	business,	this	segment	has	been	accounted	for	as	a	discontinued	operation.	Amounts	related	to	our	discontinued	operations	in	our	statements	of	income for	fiscal	years	2009,	2008,	2007	and	2006	have	been	reclassified	to	conform	to	the	presentation	in	the	current	fiscal	year.	The	income	statement	data	for	fiscal	years ended	May	31,	2010,	2009,	and	2008	are	derived	from	the	audited	consolidated	financial	statements	included	elsewhere	in	this	annual	report.	The	balance	sheet	data	as of	May	31,	2010	and	2009	were	derived	from	the	audited	consolidated	financial	statements	included	elsewhere	in	this	annual	report.	The	income	statement	data	for	fiscal years	2007	and	2006	and	the	balance	sheet	data	as	of	May	31,	2008	and	2007	were	derived	from	consolidated	financial	statements	included	in	our	Form	10-K	for	the fiscal	year	ended	May	31,	2008.	The	balance	sheet	data	as	of	May	31,	2006	was	derived	from	audited	consolidated	financial	statements	included	in	our	Form	10-K	for the	fiscal	year	ended	May	31,	2007

|  | 2010 | 2009 | 2008 | 2007 | 2006 |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | (in\tthousands,\texcept\tper\tshare\tdata) | (in\tthousands,\texcept\tper\tshare\tdata) |  |  |
| Income\tstatement\tdata: |  |  |  |  |  |
| Revenue | $1,642,468 | $1,462,306 | $1,130,608 | $929,142 | $788,040 |
| Operating\tincome\t(1) | 323,279 | 292,546 | 237,723 | 203,613 | 182,347 |
| Income\tfrom\tcontinuing\toperations\t(1) | 223,010 | 207,017 | 161,198 | 142,735 | 122,972 |
| Net\tincome\tattributable\tto\tGlobal\tPayments\t(1)(2) | 203,317 | 37,217 | 162,754 | 142,985 | 125,524 |
| Per\tshare\tdata: |  |  |  |  |  |
| Basic\tearnings\tper\tshare | $2.51 | $0.46 | $2.04 | $1.78 | $1.59 |
| Diluted\tearnings\tper\tshare | 2.48 | 0.46 | 2.01 | 1.75 | 1.53 |
| Dividends\tper\tshare | 0.08 | 0.08 | 0.08 | 0.08 | 0.08 |
| Balance\tsheet\tdata\t(at\tyear\tend): |  |  |  |  |  |
| Total\tassets | $2,039,326 | $1,676,821 | $1,445,907 | $1,200,629 | $1,018,678 |
| Borrowings\tunder\tlines\tof\tcredit | 79,187 | 10,174 | 1,527 | — | — |
| Notes\tpayable | 421,134 | 197,003 | — | — | — |
| Total\tequity\t(3) | 871,517 | 678,243 | 1,054,152 | 918,811 | 757,227 |

(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.	See	Note	1	of	the	notes	to	consolidated financial	statements	for	a	more	detailed	discussion	of	new	accounting	pronouncements.

# 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	leading	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,	the	United	Kingdom,	the	Asia-Pacific	region,	the	Czech Republic	and	the	Russian	Federation.	We	serve	as	an	intermediary	to	facilitate	payments	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	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.	We	use	two	basic business	models	to	market	our	merchant	services	offerings.	One	model,	referred	to	as	"direct,"	features	a	salaried	and	commissioned	sales	force,	ISOs	and	independent sales	representatives,	all	of	whom	sell	our	end-to-end	services	directly	to	merchants.	Our	other	model,	referred	to	as	"indirect,"	provides	similar	basic	products	and services	to	financial	institutions	and	a	limited	number	of	ISOs	on	an	unbundled	basis,	who	in	turn	resell	our	products	and	services	to	clients.	Both	our	North	America and	International	merchant	services	segments	utilize	a	combination	of	the	direct	and	indirect	models.

Direct	merchant	services	revenue	is	generated	on	services	generally	priced	as	a	percentage	of	transaction	value,	whereas	indirect	merchant	services	revenue	is generated	on	services	primarily	priced	on	a	specified	amount	per	transaction	or	per	service	rendered.	In	both	merchant	services	models,	we	also	charge	other	fees unrelated	to	the	number	of	transactions	or	the	transaction	value.

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	rapid	adoption	of,	and	transition	to,	card	based	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	South	America.

# Executive	Overview

On	May	26,	2010,	we	completed	the	disposition	of	our	DolEx	and	Europhil-branded	money	transfer	businesses	to	an	affiliate	of	Palladium	Equity	Partners,	LLC for	$85.0	million.	We	recognized	an	estimated

pre-tax	loss	on	disposal	of	$24.6	million.	We	also	recognized	$15.7	million	of	tax	benefits	associated	with	the	disposition.	As	a	result	of	our	decision	to	dispose	of	the money	transfer	businesses,	this	segment	has	been	accounted	for	as	a	discontinued	operation.	Amounts	related	to	our	discontinued	operations	in	our	prior	fiscal	years statements	of	income	have	been	reclassified	to	conform	with	the	presentation	in	the	current	fiscal	year.	Please	see	Note	3—Discontinued	Operations	in	the	notes	to	the consolidated	financial	statements	for	further	information.

On	September	28,	2009,	we	completed	the	acquisition	of	Auctionpay,	Inc.,	a	provider	of	fully	integrated	payment	processing	and	software	solutions	for fundraising	activities.	We	paid	a	total	of	$22.0	million	in	cash	to	acquire	Auctionpay,	Inc.	The	purpose	of	this	acquisition	was	to	expand	our	direct	acquiring	business into	a	vertical	market	that,	to	date,	is	still	heavily	dependent	on	cash	and	check	as	the	primary	means	of	payment.	Auctionpay,	Inc.	is	currently	known	as	Greater	Giving.

On	June	12,	2009,	we	completed	the	purchase	of	the	remaining	49%	of	HSBC	Merchant	Services	LLP	from	HSBC	Bank	plc.	Total	consideration	for	such remaining	interest	was	$307.7	million	in	cash.	We	used	the	existing	lines	of	credit	to	complete	the	transaction.	We	acquired	our	initial	majority	ownership	interest	in	the LLP	on	June	30,	2008.

On	July	10,	2009,	we	entered	into	a	new	$300.0	million	term	loan	agreement	($230.0	million	and	£43.5	million)	with	a	syndicate	of	financial	institutions.	We used	the	proceeds	of	this	term	loan	to	pay	down	our	existing	credit	facility	which	was	used	to	fund	the	purchase	of	our	remaining	49%	interest	in	the	LLP.	The	term	loan expires	in	2012	and	has	a	variable	interest	rate	based	on	London	Interbank	Offered	Rate	plus	a	margin	based	on	our	leverage	position.

Revenues	increased	$180.2	million	during	fiscal	2010	compared	to	the	prior	year.	Macroeconomic	conditions	have	caused	our	average	dollar	per	transaction (average	ticket)	amounts	to	decline	across	our	geographic	regions	compared	to	the	prior	year.	However,	we	continue	to	grow	revenue	in	most	of	our	direct	merchant acquiring	markets	around	the	world.	Our	North	America	merchant	services	segment	reported	growth	primarily	driven	by	our	direct	ISO	channel	which	continues	to drive	expanding	market	share	in	the	United	States	as	evidenced	by	our	18%	transaction	growth	compared	to	the	prior	year.	While	our	revenues	in	Canada	were	affected positively	by	favorable	foreign	currency	trends,	our	Canadian	business	continues	to	be	affected	by	challenging	macroeconomic	conditions	resulting	in	reduced	spreads due	to	market-driven	pricing	pressure	as	compared	to	the	prior	year.	Revenues	increased	19%	in	our	International	merchant	services	segment	compared	to	the	prior	year. This	growth	reflects	the	impact	of	our	April	30,	2009	acquisition	of	UCS	in	the	Russian	Federation,	favorable	currency	trends	in	the	United	Kingdom	and	business performance	in	the	United	Kingdom	and	in	the	Asia-Pacific	region.

For	the	fiscal	year	2010	currency	exchange	rate	fluctuations	increased	our	revenues	by	$16.5	million	and	our	earnings	by	$0.10	per	diluted	share.	To	calculate	this impact,	we	converted	our	fiscal	2010	actual	revenues	and	expenses	from	continuing	operations	at	fiscal	2009	currency	exchange	rates.	Further	fluctuations	in	currency exchange	rates	or	decreases	in	consumer	spending	could	cause	our	results	to	differ	from	our	current	expectations.

# Results	of	Operations

The	following	table	shows	key	selected	financial	data	for	the	fiscal	years	ended	May	31,	2010	and	2009,	this	data	as	a	percentage	of	total	revenues,	and	the changes	between	fiscal	years	in	dollars	and	as	a	percentage	of	fiscal	2009.

|  |  | %	of |  | %	of |  | % |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2010 | Revenue\t(1) | 2009 | Revenue\t(1) | Change | Change |
|  |  |  | (dollar\tamounts\tin\tthousands) |  |  |  |
| Revenues: |  |  |  |  |  |  |
| United\tStates | $902,844 | 55% | $805,557 | 55% | $97,287 | 12% |
| Canada | 317,272 | 19 | 301,294 | 21 | 15,978 | 5 |
| North\tAmerica\tmerchant\tservices | \t 1,220,116 | 74 | \t 1,106,851 | 76 | \t 113,265 | 10 |
| Europe | 315,023 | 19 | 265,121 | 18 | 49,902 | 19 |
| Asia-Pacific | 107,329 | 7 | 90,334 | 6 | 16,995 | 19 |
| International\tmerchant\tservices | 422,352 | 26 | 355,455 | 24 | 66,897 | 19 |
| Total\trevenues | $1,642,468 | 100% | $1,462,306 | 100% | $180,162 | 12% |
| Consolidated\toperating\texpenses: |  |  |  |  |  |  |
| Cost\tof\tservice | $584,609 | 35.6% | $504,855 | 34.5% | $79,754 | 16% |
| Sales,\tgeneral\tand\tadministrative | 734,580 | 44.7 | 664,905 | 45.5 | 69,675 | 10 |
| Operating\tincome | $323,279 | 19.7% | $292,546 | 20.0% | $30,733 | 10% |
| Operating\tincome\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | $275,386 |  | $272,972 |  | $2,414 | 1% |
| International\tmerchant\tservices | 113,699 |  | 82,763 |  | 30,936 | 37 |
| Corporate | (65,806) |  | (63,189) |  | (2,617) | (4) |
| Operating\tincome | $323,279 |  | $292,546 |  | $30,733 | 10% |
| Operating\tmargin\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | 22.6% |  | 24.7% |  | (2.1)% |  |
| International\tmerchant\tservices | 26.9% |  | 23.3% |  | 3.6% |  |

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

# Revenues

We	derive	our	revenues	from	three	primary	sources:	charges	based	on	volumes	and	fees	for	services,	charges	based	on	transaction	quantity	and	equipment	sales, leases	and	service	fees.	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.	In fiscal	2010,	revenues	increased	12%	to	$1,642.5	million	compared	to	the	prior	year.

In	fiscal	2010,	revenue	from	our	North	America	merchant	services	segment	increased	10%	to	$1,220.1	million	compared	to	the	prior	year.

We	have	grown	our	United	States	revenue	by	adding	small	and	mid-market	merchants	in	diversified	vertical	markets,	primarily	through	our	ISO	channel.	For fiscal	2010,	our	United	States	direct	credit	and	debit	card	processed	transactions	grew	18%,	and	our	total	United	States	revenue	grew	12%	compared	to	the	prior	year.	In

fiscal	2010	compared	to	the	prior	year,	our	United	States	direct	credit	and	debit	card	average	dollar	value	of	transaction,	or	average	ticket,	decreased	approximately	8%. We	believe	this	decline	is	due	to	a	combination	of	lower	consumer	spending	as	a	result	of	a	weakened	economy,	the	industry	shift	of	increasing	debit	transactions	and	a shift	toward	smaller	merchants	added	through	our	ISO	channel.	Smaller	merchants	tend	to	have	lower	average	tickets	than	larger	merchants.	The	effect	of	consumers replacing	cash-based	payments	with	debit	card	transactions	and	the	increasing	acceptance	of	credit	cards	for	small	dollar	transactions	also	lowers	our	overall	average ticket	amounts.	Based	on	our	mix	of	merchants,	approximately	60%	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%	of	our	total	transactions.	Aside	from	the	impact	of	changes	in	our	average	ticket,	the remaining	differences	between	our	transaction	growth	and	revenue	growth	are	due	to	our	service	fees,	equipment	fees,	check-related	services	and	our	domestic	indirect revenue.	Revenue	from	these	services	grew	at	a	lesser	rate	than	our	credit	and	debit	card	transaction	growth.

For	fiscal	2010,	our	Canadian	revenue	increased	5%	compared	to	the	prior	year.	This	growth	was	due	to	favorable	foreign	currency	trends,	offset	by	challenging macroeconomic	conditions	which	resulted	in	reduced	spreads	due	to	market-driven	pricing	pressure	as	compared	to	the	prior	year.

For	fiscal	2010,	International	merchant	services	revenue	increased	19%	to	$422.4	million	compared	to	the	prior	year.	Our	Europe	merchant	services	revenue	for fiscal	2010	increased	19%	to	$315.0	million	compared	to	the	prior	year.	This	growth	was	primarily	due	to	our	April	30,	2009	acquisition	of	UCS	in	the	Russian Federation,	in	addition	to	solid	business	performance	in	the	United	Kingdom.

Asia-Pacific	merchant	services	revenue	for	fiscal	2010	increased	19%	to	$107.3	million	compared	to	the	prior	year	period.	The	growth	was	primarily	due	to business	performance	in	the	Asia	Pacific	region	driven	in	part	by	the	increasing	penetration	of	dynamic	currency	conversion	products	in	the	region.	The	growth	for	the fiscal	2010	also	reflects	our	acquisition	of	Global	Payments	Asia-Pacific	Philippines	Incorporated	on	September	4,	2008.

# Consolidated	Operating	Expenses

Cost	of	service	consists	primarily	of	the	following	costs:	operations-related	personnel,	including	those	who	monitor	our	transaction	processing	systems	and settlement	functions;	assessment	fees	paid	to	card	networks;	transaction	processing	systems,	including	third-party	services	such	as	the	costs	of	settlement	channels	for transition	services	paid	to	HSBC	in	the	Asia-Pacific	market	and	the	United	Kingdom;	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	16%	to	$584.6	million	for	fiscal	2010	compared	to	the	prior	year's	comparable	period.	As	a	percentage	of	revenue,	cost	of	service increased	to	35.6%	of	revenue	for	the	fiscal	2010	from	34.5%	for	the	prior	year.	The	growth	in	cost	of	service	expenses	was	due	to	our	UCS	acquisition,	increases	in variable	processing	expenses	such	as	card	network	assessments	and	fees	associated	with	our	revenue	growth	and	the	impact	of	our	June	30,	2008	acquisition	of	51%	of HSBC	Merchant	Services	LLP.

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	to	independent	contractors	and	ISOs,	advertising	costs,	other	selling	expenses,	share- based	compensation	expenses	and	occupancy	of	leased	space	directly	related	to	these	functions.

Sales,	general	and	administrative	expenses	increased	10%	to	$734.6	million	for	fiscal	2010	compared	to	the	prior	year's	comparable	period.	As	a	percentage	of revenue,	these	expenses	decreased	to	44.7%	for	fiscal	2010	compared	to	45.5%	in	the	prior	year's	comparable	period.

# 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	costs,	are	not	allocated	to	the	segments'	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	1%	to	$275.4	million	for	fiscal	2010	compared	to	the	prior	year's	comparable period.	The	operating	margin	was	22.6%	and	24.7%	for	the	fiscal	years	ended,	2010	and	2009,	respectively.	Growth	in	the	United	States	ISO	channel	reduced	margins for	fiscal	2010.	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.

Operating	income	in	the	International	merchant	services	segment	increased	37%	to	$113.7	million	for	fiscal	2010	compared	to	the	prior	year's	comparable	period. The	operating	margin	was	26.9%	and	23.3%	for	the	fiscal	years	ended,	2010	and	2009,	respectively.	The	increase	in	operating	margin	is	due	to	the	acquisition	of	HSBC Merchant	Services	LLP	and	the	higher	operating	margins	in	the	United	Kingdom	and	expanding	margins	in	the	Asia-Pacific	region.

# Corporate

Our	corporate	expenses	primarily	include	costs	associated	with	our	Atlanta	headquarters,	insurance,	employee	incentive	programs,	and	certain	corporate	staffing areas,	including	finance,	accounting,	legal,	human	resources,	marketing,	and	executive.	Our	corporate	costs	increased	4%	to	$65.8	million	for	fiscal	2010	compared	to the	prior	year's	comparable	period.

# Consolidated	Operating	Income

During	fiscal	2010,	our	consolidated	operating	income	increased	$30.7	million	to	$323.3	million	compared	to	the	prior	year's	comparable	period.	This	increase was	primarily	due	to	the	impact	of	growth	in	our	International	merchant	services	segment.

# Consolidated	Other	Income/Expense,	Net

Other	income	and	expense	consists	primarily	of	interest	income	and	interest	expense.	Other	expense,	net	increased	to	$12.9	million	for	fiscal	2010	compared	to $0.3	million	in	the	prior	year's	comparable	period.	This	increase	in	other	expense,	net	was	primarily	due	to	higher	debt	balances	and,	to	a	lesser	extent,	lower	interest income.	Interest	rates	decreased	during	fiscal	2010	when	compared	to	the	prior	year.	This	decline	in	interest	rates	partially	offset	the	impact	of	increased	debt	balances on	interest	expense	and	contributed	to	lower	interest	income.

# Provision	for	Income	Taxes

Our	effective	tax	rates	were	29.6%	and	33.0%	for	fiscal	years,	2010	and	2009,	respectively.	The	reductions	of	our	effective	tax	rates	are	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	UK	business	of	$87.5	million.	The	measurement	of	such	deferred	tax	assets	is	based,	in	part,	on	the	current enacted	corporate	tax	in	the	UK	of	28%.	The	2010	UK	budget	announced	June	22,	2010	includes	a	reduction	in	the	corporate	tax	rate	from	28%	to	24%	over	the	course of	four	financial	years	from	April	2011.	Upon	enactment	of	these	tax	rates,	which	is	expected	during	the	first	half	of	our	fiscal	year	2011,	we	estimate	that	we	will record	a	reduction	of	our	UK	deferred	tax	asset	and	a	corresponding	increase	to	our	deferred	income	tax	provision	of	approximately	$9	million.

# Loss	from	Discontinued	Operations,	Net	of	Tax

During	fiscal	2010,	we	reported	a	net	loss	from	discontinued	operations	of	$3.9	million	($0.04	diluted	loss	per	share)	compared	to	a	net	loss	of	$132.8	million ($1.64	diluted	loss	per	share)	in	the	prior	year.	The	prior	year	results	reflect	our	pre-tax	impairment	charge	of	$147.7	million	in	our	money	transfer	business	during	the three	months	ended	February	28,	2009.	During	fiscal	2010,	loss	from	discontinued	operations,	net	of	tax	includes	an	estimated	pre-tax	loss	on	disposal	of	$24.6	million and	an	income	tax	benefit	associated	with	the	disposal	of	$15.7	million.

# Net	Income	Attributable	to	Noncontrolling	Interests,	Net	of	Tax

Noncontrolling	interests,	net	of	tax	decreased	to	$15.8	million	from	$37.0	million	for	the	fiscal	years	2010	and	2009,	respectively.	The	decrease	was	due	to	our June	2009	acquisition	of	the	remaining	49%	of	HSBC	Merchant	Services	LLP.

# Net	Income	Attributable	to	Global	Payments	and	Diluted	Earnings	Per	Share

During	fiscal	2010	we	reported	net	income	of	$203.3	million	($2.48	diluted	earnings	per	share).

# New	Accounting	Pronouncements

In	December	2009,	the	Financial	Accounting	Standards	Board	("FASB")	issued	ASU	2009-17,	"Improvements	to	Financial	Reporting	by	Enterprises	Involved with	Variable	Interest	Entities"	(ASU	2009-17).	ASU	2009-17	amends	prior	accounting	for	variable	interests	and	requires	a	company	to	perform	an	analysis	to determine	whether	its	interests	give	it	a	controlling	financial	interest	in	a	variable	interest	entity.	A	company	must	also	assess	whether	it	has	the	power	to	direct	the activities	of	the	variable	interest	entity	and	whether	it	has	the	obligation	to	absorb	losses	or	the	right	to	receive	benefits	that	could	potentially	be	significant	to	the variable	interest	entity.	ASU	2009-17	requires	an	ongoing	reassessment	of	whether	a	company	is	the	primary	beneficiary	of	a	variable	interest	entity,	eliminates	the quantitative	approach	previously	required	for	determining	the	primary	beneficiary	of	a	variable	interest	entity	and	expands	required	disclosures.	ASU	2009-17	is effective	for	our	fiscal	year	beginning	June	1,	2010	and	is	not	expected	to	have	an	impact	on	our	consolidated	financial	statements.

On	June	1,	2009	we	adopted	FASB	guidance	that	establishes	principles	and	requirements	for	how	we	recognize	and	measure	in	our	financial	statements	the identifiable	assets	acquired,	the	liabilities	assumed,	and	any	noncontrolling	interest	acquired	in	a	business	combination.	In	addition,	this	guidance	establishes	principles and	requirements	for	how	we	recognize	and	measure	the	goodwill	acquired	in	the	business	combination	or	gain	from	a	bargain	purchase,	and	how	we	determine	what information	to	disclose	to	enable	financial	statement	users	to	evaluate	the	nature	and	financial	effects	of	the	business	combination.

On	June	1,	2009,	we	adopted	FASB	guidance	that	applies	to	the	accounting	for	noncontrolling	interests	(formerly	referred	to	as	minority	interest)	in	a	subsidiary and	for	the	deconsolidation	of	a	subsidiary.	With	the	adoption	of	this	guidance,	noncontrolling	interests	that	are	not	redeemable	were	reclassified	from	the	"mezzanine" section	of	the	consolidated	balance	sheet	to	permanent	equity	but	separate	from	Global	Payments	shareholders'	equity.	Income	or	loss	associated	with	noncontrolling interests	is	required	to	be	presented	separately,	net	of	tax,	below	net	income	including	noncontrolling	interests	on	the	consolidated	statement	of	income.	The	presentation and	disclosure	requirements	of	the	guidance	have	been	applied	retrospectively.

We	have	a	noncontrolling	interest	that	includes	redemption	provisions	that	are	not	solely	within	our	control,	commonly	referred	to	as	a	redeemable	noncontrolling interest.	This	redeemable	noncontrolling	interest	remains	in	the	mezzanine	section	of	the	consolidated	balance	sheet.	The	guidance	allows	for	a	choice	of	either	accreting redeemable	noncontrolling	interest	to	its	redemption	value	over	the	redemption	period	or	recognizing	changes	in	the	redemption	value	immediately	as	they	occur.	We have	elected	to	recognize	the	changes	in	the	redemption	value	immediately.	The	presentation	and	disclosure	requirements	of	the	guidance	have	been	applied retrospectively.	The	retrospective	adoption	of	the	guidance	resulted	in	recording	the	maximum	redemption	amount	of	our	redeemable	noncontrolling	interests	with	a corresponding	decrease	in	retained	earnings	for	all	periods	presented.	Please	see	Note	12—Noncontrolling	Interests	in	the	notes	to	consolidated	financial	statements	for further	information.

On	June	1,	2009,	we	adopted	FASB	guidance	that	requires	unvested	share-based	payment	awards	that	contain	non-forfeitable	rights	to	dividends	or	dividend equivalents	(whether	paid	or	unpaid)	to	be	accounted	for	as	participating	securities	and	therefore	included	in	the	computation	of	earnings	per	share	("EPS").	Pursuant	to the	adoption	of	the	guidance,	prior	period	EPS	data	presented	has	been	adjusted	retrospectively.	The	adoption	of	the	guidance	resulted	in	an	immaterial	change	to	our weighted-average	shares	outstanding	but	did	not	affect	our	earnings	per	share.

In	June	2009,	the	FASB	issued	a	statement	which	establishes	the	FASB	Accounting	Standards	Codification	("ASC").	The	ASC	establishes	two	levels	of	GAAP —authoritative	and	non-authoritative.	The	ASC	is	the	source	of	authoritative,	nongovernmental	GAAP,	except	for	rules	and	interpretive	releases	of	the	Securities	and Exchange	Commission.	Effective	for	financial	statements	issued	for	interim	and	annual	periods	ending	after	September	15,	2009,	we	adopted	the	ASC	in	the	second quarter	of	fiscal	2010.	The	adoption	of	the	ASC	did	not	impact	our	consolidated	financial	statements.

|  |  | %	of |  | %	of |  | % |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2009 | Revenue\t(1) | 2008 | Revenue\t(1) | Change | Change |
|  |  |  | (dollar\tamounts\tin\tthousands) |  |  |  |
| Revenues: |  |  |  |  |  |  |
| United\tStates | $805,557 | 55% | $731,214 | 65% | $74,343 | 10% |
| Canada | 301,294 | 21 | 267,249 | 24 | 34,045 | 13 |
| North\tAmerica\tmerchant\tservices | \t 1,106,851 | 76 | 998,463 | 88 | \t 108,388 | 11 |
| Europe | 265,121 | 18 | 59,778 | 5 | \t 205,343 | 344 |
| Asia-Pacific | 90,334 | 6 | 72,367 | 6 | 17,967 | 25 |
| International\tmerchant\tservices | 355,455 | 24 | 132,145 | 12 | \t 223,310 | 169 |
| Total\trevenues | $1,462,306 | 100% | $1,130,608 | 100% | $331,698 | 29% |
| Consolidated\toperating\texpenses: |  |  |  |  |  |  |
| Cost\tof\tservice | $504,855 | 34.5% | $375,817 | 33.2% | $129,038 | 34% |
| Sales,\tgeneral\tand\tadministrative | 664,905 | 45.5 | 515,751 | 45.6 | \t 149,154 | 29 |
| Impairment,\trestructuring\tand\tother | — | — | 1,317 | 0.1 | (1,317) | NM |
| Operating\tincome | $292,546 | 20.0% | $237,723 | 21.0% | $54,823 | 23% |
| Operating\tincome\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | $272,972 |  | $275,355 |  | $(2,383) | (1)% |
| International\tmerchant\tservices | 82,763 |  | 17,674 |  | 65,089 | 368 |
| Corporate | (63,189) |  | (53,989) |  | (9,200) | (17) |
| Impairment,\trestructuring\tand\tother | — |  | (1,317) |  | 1,317 | NM |
| Operating\tincome | $292,546 |  | $237,723 |  | $54,823 | 23% |
| Operating\tmargin\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | 24.7% |  | 27.6% |  | (2.9)% |  |
| International\tmerchant\tservices | 23.3% |  | 13.4% |  | 9.9% |  |

# NM—Not	Meaningful

In	fiscal	2009,	revenues	increased	29%	to	$1,462.3	million	compared	to	the	prior	year.	We	attribute	this	revenue	growth	primarily	to	our	acquisition	of	51%	of HSBC	Merchant	Services	LLP	in	our	International	merchant	services	segment	and	to	growth	in	our	North	America	merchant	services	segment.	This	growth	was partially	offset	by	fluctuations	in	foreign	currency	exchange	rates.	For	fiscal	2009,	currency	exchange	rate	fluctuations	reduced	our	revenues	by	$86.9	million.

In	fiscal	2009,	revenue	from	our	North	America	merchant	services	segment	increased	11%	to	$1,106.9	million	compared	to	the	prior	year.	We	have	continued	to grow	our	United	States	channel	by	adding	small	and	mid-market	merchants	in	diversified	vertical	markets,	primarily	through	our	ISOs.	For	fiscal	2009,	our	United States	direct	credit	and	debit	card	processed	transactions	grew	17%	and	our	total	United	States	revenue	grew

10%	compared	to	the	prior	year.	In	fiscal	2009	compared	to	the	prior	year,	our	United	States	direct	credit	and	debit	card	average	dollar	value	of	transaction,	or	average ticket,	decreased	in	the	high	single-digit	percentage	range.	We	believe	this	decline	was	due	to	a	combination	of	lower	consumer	spending	as	a	result	of	a	weakened economy,	the	industry	shift	to	increasing	debit	transactions.	as	well	as	the	shift	toward	smaller	merchants	added	through	our	ISO	channel.	Smaller	merchants	tend	to have	lower	average	tickets	than	larger	merchants.	The	effect	of	consumers	replacing	cash-based	payments	with	debit	card	transactions	also	lowers	our	overall	United States	average	ticket	amounts.	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.	Aside	from	the	impact	of	changes	in	our	average	ticket,	the	remaining	difference	between	our	transaction	growth	and	revenue	growth	is due	to	our	service	fees,	equipment	fees,	check-related	services,	and	our	domestic	indirect	revenue.	Revenue	from	these	services	grew	at	a	lower	rate	than	our	United States	direct	credit	and	debit	card	transaction	growth.

For	fiscal	2009,	our	Canadian	revenue	grew	13%	compared	to	the	prior	year	period.	This	growth	was	primarily	due	to	successful	pricing	initiatives	and,	to	a	lesser extent,	transaction	growth	of	4%,	partially	offset	by	an	unfavorable	Canadian	currency	exchange	rate.	In	addition,	our	average	ticket	in	Canada	declined	in	the	low single-digit	range,	which	we	believe	may	be	partially	due	to	lower	consumer	spending	as	a	result	of	a	weakened	economy.

For	fiscal	2009,	our	International	merchant	services	revenue	increased	169%	to	$355.5	million	compared	to	the	prior	year.	In	Europe,	this	growth	was	primarily due	to	our	acquisition	of	51%	of	HSBC	Merchant	Services	LLP.	Revenues	attributed	to	this	acquisition	were	$203.5	million	during	fiscal	2009.	Our	Asia-Pacific merchant	services	revenue	for	fiscal	2009	increased	25%	to	$90.3	million	compared	to	the	prior	year	period.	Our	Asia-Pacific	merchant	services	revenue	has	grown	due to	the	favorable	impact	of	our	acquisition	in	the	Philippines	on	September	4,	2008,	expansion	of	our	customer	base,	the	introduction	of	new	product	offerings,	and strategic	pricing	initiatives.

Cost	of	service	increased	34%	to	$504.9	million	for	fiscal	2009	compared	to	the	prior	year.	The	growth	in	cost	of	service	expenses	is	primarily	due	to	the acquisition	of	51%	of	HSBC	Merchant	Services	LLP	and	increases	in	variable	processing	expenses,	such	as	card	network	assessments	and	fees,	associated	with	our revenue	growth.

Sales,	general	and	administrative	expenses	increased	29%	to	$664.9	million	in	fiscal	2009	compared	to	the	prior	year.	As	a	percentage	of	revenue,	these	expenses increased	to	45.5%	for	fiscal	2009	compared	to	45.6%	in	the	prior	year.	The	increase	in	sales,	general	and	administrative	expenses	is	due	to	growth	in	commission payments	to	ISOs	resulting	from	the	increased	revenue	in	this	sales	channel	and	the	acquisition	of	51%	of	HSBC	Merchant	Services	LLP.	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.	In	addition,	during	fiscal	2008	we recorded	a	favorable	impact	from	a	non-recurring,	non-cash	operating	tax	item	of	$7.0	million.

Operating	income	in	the	North	America	merchant	services	segment	decreased	1%	to	$273.0	million	for	fiscal	2009	compared	to	the	prior	year.	The	operating margin	was	24.7%	and	27.6%	for	fiscal	2009	and	fiscal	2008,	respectively.	The	decrease	in	operating	income	in	fiscal	2009	was	primarily	due	to	the	negative	impact	of the	Canadian	Dollar	exchange	rate.	In	addition,	fiscal	2008	reflects	a	favorable	impact	of	a	non-recurring,

non-cash	operating	tax	item	of	$7.0	million.	Growth	in	the	ISO	channel	also	negatively	impacted	fiscal	2009	margins.	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.

Operating	income	in	the	International	merchant	services	segment	increased	368%	to	$82.8	million	for	fiscal	2009	compared	to	the	prior	year.	The	operating margin	was	23.3%	and	13.4%	for	fiscal	2009	and	fiscal	2008,	respectively.	This	growth	in	operating	margin	and	operating	income	was	primarily	due	to	the	acquisition	of 51%	of	HSBC	Merchant	Services	LLP	in	the	United	Kingdom.

Our	corporate	expenses	primarily	include	costs	associated	with	our	Atlanta	headquarters,	insurance,	employee	incentive	programs,	and	certain	corporate	staffing areas,	including	finance,	accounting,	legal,	human	resources,	marketing,	and	executive.	Corporate	also	includes	expenses	associated	with	our	share-based	compensation programs.	Our	corporate	costs	increased	17%	to	$63.2	million	for	fiscal	2009	compared	to	the	prior	year.

Consolidated	operating	income	increased	23%	to	$292.5	million	for	fiscal	2009	compared	to	the	prior	year.	This	change	resulted	in	an	operating	margin	of	20.0% for	fiscal	2009	compared	to	21.0%	in	the	prior	year.	This	decrease	was	primarily	due	to	the	unfavorable	impact	of	foreign	currency	exchange	rates	somewhat	offset	by the	favorable	impact	of	the	HSBC	UK	acquisition.

Other	income	and	expense	consists	primarily	of	interest	income	and	interest	expense.	Other	income,	net	decreased	$9.3	million	for	fiscal	2009	compared	to	the prior	year.	This	decrease	was	largely	due	to	lower	investment	balances	and	rates	of	return.	Interest	rates	decreased	during	fiscal	year	2009	when	compared	to	the	prior year.	This	decline	in	interest	rates	resulted	in	lower	interest	income	but	also	resulted	in	a	decline	in	interest	expense	on	increased	debt	balances.

Our	effective	tax	rates,	reflected	as	the	provision	for	income	taxes	divided	by	income	from	continuing	operations	before	income	tax,	including	the	effect	of noncontrolling	interest,	were	33.0%	and	35.6%	for	fiscal	2009	and	fiscal	2008,	respectively.

# (Loss)	income	from	Discontinued	Operations,	Net	of	Tax

During	the	fiscal	2009,	we	reported	a	net	loss	from	discontinued	operations	of	$132.8	million	($1.64	diluted	loss	per	share)	compared	to	a	net	income	of	$9.6 million	($0.12	diluted	earnings	per	share)	in	the	prior	year.	Fiscal	2009	results	reflect	our	pre-tax	impairment	charge	of	$147.7	million	in	our	money	transfer	business.

The	downturn	in	the	United	States	construction	market,	immigrant	labor	trends,	and	overall	decrease	in	economic	growth	in	the	United	States	and	Spain contributed	to	decreased	projected	future	cash	flows	for	our	United	States	and	Europe	money	transfer	business.	This	decrease	in	projected	cash	flows	resulted	in	the carrying	amounts	of	these	reporting	units	being	greater	than	the	fair	values;	therefore,	goodwill	was	deemed	impaired.	Our	DolEx	trademark	in	our	United	States	money transfer	business	was	also	deemed	to	be	impaired.	In	addition,	we	reviewed	the	long-lived	assets	of	these	reporting	units	for	impairment	pursuant	to	the	FASB	guidance and	recorded	an	impairment	charge	for	certain	of	our	long-lived	assets.

The	following	details	the	impairment	charge	resulting	from	our	review	(in	thousands):

|  | Year	Ended	May	31,	2009 |
| :--- | :--- |
| Goodwill | $136,800 |
| Trademark | 10,000 |
| Other\tlong-lived\tassets | 864 |
| Total | $147,664 |

Noncontrolling	interest,	net	of	tax	increased	$28.9	million	from	$8.1	million	fiscal	2008.	The	increase	was	primarily	related	to	our	acquisition	of	a	51%	majority interest	in	HSBC	Merchant	Services,	LLP	on	June	30,	2008.

During	fiscal	2009	we	reported	net	income	of	$37.2	million	($0.46	diluted	earnings	per	share).

# Liquidity	and	Capital	Resources

A	significant	portion	of	our	liquidity	comes	from	operating	cash	flows,	which	are	generally	sufficient	to	fund	operations,	planned	capital	expenditures,	debt service	and	various	strategic	investments	in	our	business.	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	off	debt	and	repurchase	our	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,	2010,	we	had	cash	and	cash	equivalents	totaling	$769.9	million.	Of	this	amount,	we	consider	$268.1	million	to	be	available	cash,	which	generally excludes	settlement	related	and	merchant	reserve	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.	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,	2010,	our	cash	and	cash	equivalents	included	$199.4	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	in	the	notes	to	the	consolidated financial	statements	for	additional	details.

Net	cash	provided	by	operating	activities	increased	$82.8	million	to	$465.8	million	for	fiscal	2010	from	the	prior	year.	Income	from	continuing	operations increased	$16.0	million	and	we	had	cash	provided	by	changes	in	working	capital	of	$60.2	million.

The	working	capital	change	was	primarily	due	to	the	change	in	net	settlement	processing	assets	and	obligations	of	$80.3	million	and	the	change	in	accounts receivable	of	$13.4	million,	partially	offset	by	the	change

in	prepaid	expenses	and	other	assets	of	$18.1	million.	The	change	in	net	settlement	processing	assets	and	obligations	is	primarily	due	to	timing	differences,	processed volume	changes,	exchange	rate	fluctuations	and	the	reclassification	of	our	Hong	Kong	settlement	funding	obligations	as	further	described	in	Long-Term	Debt	and	Credit Facilities	below.	The	change	in	accounts	receivable	is	primarily	due	the	impact	of	our	June	30,	2008	acquisition	of	51%	of	HSBC	Merchant	Services	LLP	and	increased revenues	in	the	United	States.	The	change	in	prepaid	expenses	and	other	assets	is	primarily	due	to	prepaid	income	taxes.

Net	cash	used	in	investing	activities	decreased	$534.1	million	to	$25.2	million	for	fiscal	2010	from	the	prior	year.,	During	fiscal	year	2009	we	invested	$438.6 million	in	a	partnership	with	HSBC	UK	and	acquired	UCS	and	GPAP	Phillipines	for	$75	million	and	$10.8	million,	respectively.	During	fiscal	year	2010	we	had	$29.5 million	of	cash	investments	in	Auctionpay	and	other	asset	purchases.	We	also	received	net	proceeds	from	the	disposition	of	our	money	transfer	business	of	$60.2	million (sales	proceeds	of	$85.0	million	less	$24.8	million	remaining	in	the	business	at	closing)	during	fiscal	year	2010.	Capital	expenditures	increased	to	$56.1	million	in	fiscal 2010	from	$40.9	million	in	fiscal	2009.	These	expenditures	primarily	relate	to	software	and	infrastructure.

In	fiscal	2010,	we	used	$95.8	million	in	cash	for	financing	activities.	We	used	proceeds	from	our	$300.0	million	term	loan	to	finance	our	$307.7	million acquisition	of	the	remaining	49%	interests	in	HSBC	Merchant	Services	LLP	which	is	reflected	as	a	financing	cash	outflow	because	it	has	been	recorded	as	an	equity transaction,	and	therefore,	as	a	reduction	of	redeemable	noncontrolling	interest.	We	also	repaid	$75.2	million	in	scheduled	principal	payment	on	notes	payable	and generated	$69.0	million	of	cash	from	net	borrowings	on	lines	of	credit.	The	fiscal	2010	net	borrowings	on	lines	of	credit	include	the	new	facility	with	HSBC	Hong	Kong discussed	above.	Additionally,	in	fiscal	2010,	we	repurchased	2,382,890	shares	of	our	common	stock	at	a	cost	of	$100.0	million.	As	of	May	31,	2010,	we	paid	$98.1 million	in	cash	for	such	shares	with	the	remaining	$1.9	million	paid	in	June	2010,	and	recorded	in	accounts	payable	and	accrued	liabilities.	In	fiscal	2009,	we	generated $161.5	million	cash	provided	by	financing	activities	due	to	proceeds	from	our	$200	million	term	loan	agreement.	See	Long-Term	Debt	and	Credit	Facilities	below	for	a more	detailed	discussion	of	our	borrowing	activities.

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	2011	we	expect	capital	expenditures	to approximate	$85	million.	We	anticipate	spending	approximately	$55	million	in	ongoing	capital	expenditures	primarily	for	our	global	terminal	replacement	program	and infrastructure	investments,	$12	million	in	start-up	expenses	related	to	a	new	Global	Service	Center	in	Manila,	Philippines	which	will	support	customer	and	operational functions	and	$17	million	for	a	new	data	center.

# Long-Term	Debt	and	Credit	Facilities

Outstanding	debt	consisted	of	the	following:

# Lines	of	Credit

Our	line	of	credit	facilities	are	used	to	provide	a	source	of	working	capital	and	for	general	corporate	purposes,	while	the	United	States	Credit	Facility	is additionally	available	to	fund	future	strategic	acquisitions.	Certain	of	our	line	of	credit	facilities	allow	us	to	fund	merchants	for	credit	and	debit	card	transactions	prior	to receipt	of	corresponding	settlement	funds	from	Visa,	MasterCard,	and	various	other	credit	and	debit	card	associations.	Our	line	of	credit	facilities	consist	of	the following:

•	 United	States—a	five	year,	$350	million	unsecured	revolving	credit	facility	agreement	with	a	syndicate	of	banks	based	in	the	United	States,	which	we	refer	to as	our	United	States	Credit	Facility.	The	facility	expires	in	November	2011,	and	borrowings	bear	a	variable	short	term	interest	rate	based	on	prime	rate	or London	Interbank	Offered	Rate	("LIBOR")	plus	a	margin	based	on	our	leverage	position.	In	addition,	the	United	States	Credit	Facility	allows	us	to	expand the	facility	size	to	$700	million	by	requesting	additional	commitments	from	existing	or	new	lenders.	We	plan	to	use	the	United	States	Credit	Facility	to	fund future	strategic	acquisitions,	to	provide	a	source	of	working	capital,	and	for	general	corporate	purposes.	As	of	May	31,	2010,	the	facility	was	undrawn.

•	 China—a	revolving	credit	facility	with	the	People's	Bank	of	China	for	17.5	million	Chinese	Renminbi	to	provide	a	source	of	working	capital.	This	credit facility	has	a	variable	interest	rate	based	on	the	lending	rate	stipulated	by	People's	Bank	of	China.	As	of	May	31,	2010,	the	facility	was	undrawn.	During	the course	of	the	annual	review	of	this	facility	in	June,	2010,	we	did	not	renew	the	facility.

•	 Canada—a	credit	facility,	which	we	refer	to	as	our	Canada	Credit	Facility,	with	the	Canadian	Imperial	Bank	of	Commerce,	or	CIBC,	as	administrative	agent and	lender.	The	Canada	Credit	Facility	is	a	facility	which	consists	of	a	line	of	credit	of	$25	million	Canadian	dollars.	In	addition,	the	Canada	Credit	Facility allows	us	to	expand	the	size	of	the	uncommitted	facility	to	$50	million	Canadian	dollars	and	does	not	have	a	fixed	term.	This	credit	facility	carries	no termination	date,	but	can	be	terminated	by	either	party	with	advance	notice.	This	credit	facility	has	various	card	association	receivables	and	CIBC	settlement related	bank	accounts	as	pledged	collateral	in	the	case	of	default,	This	credit	facility	has	a	variable	interest	rate	based	on	the	Canadian	dollar	London Interbank	Offered	Rate	plus	a	margin.	As	of	May	31,	2010	the	facility	was	undrawn.

•	 National	Bank	of	Canada—a	credit	facility	for	up	to	$80	million	Canadian	dollars	and	$5	million	United	States	dollars	to	provide	certain	Canadian merchants	with	same	day	value	for	their	Canadian	and	United	States	dollar	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,	2010	the	facility	was	undrawn.

•	 Macau—a	revolving	overdraft	facility	with	HSBC	Asia	Pacific,	for	40.0	million	Macau	Pataca	to	fund	merchants	prior	to	receipt	of	corresponding	settlement funds	from	the	card	associations.	This	has	a	variable	interest	rate	based	on	the	lending	rate	stipulated	by	HSBC	Asia	Pacific,	less	a	margin.	As	of	May	31, 2010	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	650.0	million	Sri	Lankan	Rupees	in	two	tranches:	one	to	fund	merchants	prior	to receipt	of	corresponding	settlement	funds	from	the	card	associations	and	the	other	for	general	corporate	purposes.	The	facility	has	a	variable	short	term interest	rate	plus	a	margin.	As	of	May	31,	2010	the	interest	rates	on	the	two	tranches	of	the	facility	was	11.4%	and	12.4%.	This	facility	is	subject	to	annual review.

•	 Philippines—a	revolving	facility	with	HSBC	Bank,	Philippines,	for	up	to	350	million	Pesos	and	$1.5	million	United	States	dollars	to	fund	merchants	prior	to receipt	of	corresponding	settlement	funds	from	the	card	associations.	The	facility	has	variable	short	term	interest	rates	plus	a	margin.	As	of	May	31,	2010	the interest	rates	on	the	facility	was	4.5%	and	0.8%,	respectively.	This	facility	is	subject	to	annual	review.

•	 Maldives—a	revolving	overdraft	facility	with	HSBC	Bank,	Maldives,	for	up	to	$4.0	million	to	fund	merchants	prior	to	receipt	of	corresponding	settlement funds	from	the	card	associations.	This	facility	is	denominated	in	United	States	dollars	and	has	a	variable	short	term	interest	rate	plus	a	margin.	As	of	May	31, 2010	the	interest	rate	on	the	facility	was	4.9%.	This	facility	is	subject	to	annual	review.

•	 Hong	Kong—a	revolving	overdraft	facility	entered	into	with	HSBC	Limited	Hong	Kong	effective	April	1,	2010,	for	up	to	HKD	800	million	to	fund merchants	prior	to	receipt	of	corresponding	settlement	funds	from	the	card	associations.	This	facility	is	denominated	in	Hong	Kong	dollars	and	has	a	variable short	term	interest	rate	plus	a	margin.	As	of	May	31,	2010	the	interest	rate	on	the	facility	was	0.7%.	This	facility	is	subject	to	annual	review.

Prior	to	entering	into	this	facility	HSBC	funded	all	Hong	Kong	merchant	payments	pursuant	to	our	marketing	alliance	agreement.	Accordingly,	the associated	funding	obligation	was	included	in	settlement	processing	obligations	on	our	consolidated	balance	sheets.	From	the	effective	date	of	this	facility, this	funding	obligation	is	included	in	lines	of	credit	on	our	consolidated	balance	sheets.

# Term	Loans

On	June	23,	2008,	we	entered	into	a	five	year	unsecured	$200.0	million	term	loan	agreement	with	a	syndicate	of	banks	in	the	United	States	to	partially	fund	our HSBC	Merchant	Services	LLP	acquisition.	The	term

loan	bears	interest,	at	our	election,	at	the	prime	rate	or	LIBOR,	plus	a	margin	based	on	our	leverage	position.	As	of	May	31,	2010	and	2009,	the	interest	rate	on	the	term loan	was	1.4%.	The	term	loan	calls	for	quarterly	principal	payments	of	$5.0	million	beginning	with	the	quarter	ended	August	31,	2008	and	increasing	to	$10.0	million beginning	with	the	quarter	ending	August	31,	2010	and	$15.0	million	beginning	with	the	quarter	ending	August	31,	2011.	As	of	May	31,	2010,	the	outstanding	balance of	the	term	loan	was	$165.0	million.	The	$5.0	million	quarterly	principal	payment	scheduled	for	May	31,	2010	was	paid	on	June	1,	2010,	as	the	contractual	payment	due date	fell	on	a	holiday.

On	July	10,	2009,	we	entered	into	a	$300.0	million	term	loan	agreement	($230.0	million	and	£43.5	million)	with	a	syndicate	of	financial	institutions.	We	used	the proceeds	of	this	term	loan	to	pay	down	our	then	existing	credit	facility	which	had	been	used	to	initially	fund	the	purchase	of	the	remaining	49%	interest	in	the	LLP.	This term	loan	matures	in	2012	and	has	a	variable	interest	rate	based	on	the	LIBOR	plus	a	margin	based	on	our	leverage	position.	As	of	May	31,	2010	the	interest	rates	on	the term	loan	tranches	were	3.3%	and	3.7%,	respectively.	The	term	loan	calls	for	quarterly	principal	payments	of	5%	beginning	with	the	quarter	ended	August	31,	2009	and increasing	to	7.5%	beginning	with	the	quarter	ending	August	31,	2010.	As	of	May	31,	2010,	the	outstanding	balance	of	the	term	loan	was	$246.1	million.	The	$11.5 million	quarterly	principal	payment	on	the	United	States	tranche	scheduled	for	May	31,	2010	was	paid	on	June	1,	2010,	as	the	contractual	payment	due	date	fell	on	a holiday.

# Notes	Payable

In	connection	with	our	acquisition	of	UCS,	we	assumed	notes	payable	with	a	total	outstanding	balance	of	approximately	$10.1	million	at	May	31,	2010.	These notes	are	used	to	fund	the	purchase	of	ATMs	and	have	interest	rates	ranging	from	8%	to	10.5%	with	maturity	dates	ranging	from	March	2011	through	July	2015.

# Redeemable	Noncontrolling	Interest

We	have	a	redeemable	noncontrolling	interest	associated	with	our	Asia-Pacific	merchant	services	business	channel.	Global	Payments	Asia-Pacific,	Limited,	or GPAP,	is	the	entity	through	which	we	conduct	our	merchant	acquiring	business	in	the	Asia-Pacific	region.	We	own	56%	of	GPAP	and	HSBC	Asia	Pacific	owns	the remaining	44%.	The	GPAP	shareholders	agreement	includes	provisions	pursuant	to	which	HSBC	Asia	Pacific	may	compel	us	to	purchase,	at	the	lesser	of	fair	value	or	a net	revenue	multiple,	additional	GPAP	shares	from	HSBC	Asia	Pacific	(the	"Put	Option").	HSBC	Asia	Pacific	may	exercise	the	Put	Option	on	the	fifth	anniversary	of the	closing	of	the	acquisition	(July	2011)	and	on	each	anniversary	thereafter.	By	exercising	the	Put	Option,	HSBC	Asia	Pacific	can	require	us	to	purchase,	on	an	annual basis,	up	to	15%	of	the	total	issued	shares	of	GPAP.	We	estimate	the	maximum	total	redemption	amount	of	the	redeemable	noncontrolling	interest	under	the	Put	Option would	be	$102.7	million	as	of	May	31,	2010.	We	have	adjusted	our	redeemable	noncontrolling	interest	to	reflect	the	maximum	redemption	amount	as	of	May	31,	2010 on	our	consolidated	balance	sheet.

# 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	for	Visa	transactions	and	Interbank	Card	Association	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,	2010.

On	June	18,	2010,	CIBC	provided	notice	that	they	will	not	renew	the	sponsorship	for	Visa	in	Canada	after	the	initial	ten	year	term.	As	a	result,	our	Canadian	Visa sponsorship	will	expire	in	March	2011.	We	are	pursuing	alternatives	to	CIBC's	sponsorship,	including	filing	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	and	negotiating	with	other	financial	institutions.	The failure	to	establish	a	wholly	owned	loan	company	that	can	serve	as	our	Visa	sponsor	in	Canada	or	to	secure	a	new	sponsorship	relationship	with	another	financial institution	that	would	replace	the	arrangement	that	we	currently	have	with	CIBC	would	likely	result	in	the	loss	of	merchant	customers	and	lead	to	a	material	reduction	in our	revenues	and	earnings.

# Commitments	and	Contractual	Obligations

The	following	table	summarizes	our	contractual	obligations	and	commitments	as	of	May	31,	2010:

|  |  | Less	than |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Total | 1\tYear | 1-3\tYears | 3-5\tYears | 5+\tYears |
|  |  |  | (in\tthousands) |  |  |
| Operating\tleases\t(Note\t14) | $20,133 | $9,856 | $6,341 | $2,508 | $1,428 |
| Long-term\tdebt\tincluding\tcurrent\tportion\t(Note\t6) | \t 421,134 | \t 148,169 | \t 271,063 | 1,902 | — |
| Interest\ton\tlong-term\tdebt\t(1) | 18,383 | 10,782 | 7,411 | 189 | — |

(1) Interest	on	variable	rate	debt	is	based	on	rates	effective	as	of	May	31,	2010.

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	and	the	redeemable	noncontrolling	interest	put	option	rights	described	above.	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,	2010.

# Critical	Accounting	Estimates

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.

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	in	the	United	States,	Canada,	the	United	Kingdom, Asia-Pacific,	and	the	Russian	Federation	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	relating	to	merchant	losses	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	known	losses	and	a	projection	of	future	losses	based	on	an	assumed	percentage	of	our	United	States, Canadian,	the	United	Kingdom,	Asia-Pacific,	and	the	Russian	Federation	direct	merchant	credit	card	and	signature	debit	card	sales	volumes	processed,	or	processed volume.	For	the	years	ended	May	31,	2010,	2009,	and	2008,	our	processed	volume	was	$237.5	billion,	$231.9	billion,	and	$134.7	billion,	respectively.	For	these	same periods,	we	recorded	provisions	for	merchant	losses	of	$9.6	million,	$7.1	million,	and	$5.7	million,	respectively.	As	a	percentage	of	processed	volume,	these	charges were	0.0040%,	0.0031%,	and	0.0043%,	respectively,	during	the	above	periods.	For	these	same	years,	we	experienced	actual	losses	of	$7.3	million,	$6.9	million,	and	$5.2 million,	respectively.	Since	actual	losses	were	similar	to	the	merchant	loss	provisions	provided	above,	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,	2010 would	have	resulted	in	a	decrease	or	increase	in	net	income	of	$0.7	million.	Further,	if	our	provision	for	merchant	losses	as	a	percentage	of	processed	volume	for	our fiscal	2010	had	equaled	our	provision	for	merchant	losses	as	a	percentage	of	processed	volume	of	0.0031%	for	the	same	prior	year	period,	our	net	income	would	have increased	by	$1.7	million.	As	of	May	31,	2010	and	2009,	$5.8	million	and	$3.5	million,	respectively,	have	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	also	comprised	of	known	losses	and	a	projection	of	future	losses	based	on	an	assumed	percentage	of	the	face	value	of	our guaranteed	checks.	For	the	years	ended	May	31,	2010,	2009,	and	2008,	we	guaranteed	total	check	face	values	of	$2.5	billion,	$2.5	billion,	and	$2.7	billion,	respectively. For	those	same	periods,	we	recorded	provisions	for	check	guarantee	losses	of	$14.9	million,	$17.9	million,	and	$23.9	million,	respectively.	As	a	percentage	of	the	total guaranteed	check	face	value,	these	charges	were	0.61%,	0.73%,	and	0.90%,	respectively,	during	the	years	mentioned	above.	For	these	same	years,	we	experienced	actual losses	of	$14.8	million,	$17.9	million,	and	$23.0	million,	respectively.	Since	actual	losses	were	similar	to	the	check	guarantee	loss	provisions	provided	above,	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,	2010 would	have	resulted	in	a	decrease	or	increase	in	net	income	of	$1.1	million.	Further,	if	our	guarantee	loss	as	a	percentage	of	guarantee	volume	for	our	fiscal	2010	had equaled	our	guarantee	loss	as	a	percentage	of	guarantee

volume	of	0.73%	for	the	same	prior	year	period,	our	net	income	would	have	decrease	by	$2.2	million.	As	of	May	31,	2010	and	2009,	we	had	a	check	guarantee	reserve of	$4.2	million	and	$4.0	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	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	United	States,	Canadian,	the	United	Kingdom,	Asia-Pacific,	and	the	Russian	Federation	regional	economies	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	and	other	indefinite-life	intangible	assets	are	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	value 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,	2010.	Recoverability	of	goodwill	is	measured at	the	reporting	unit	level	and	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.

At	May	31,	2010	we	had	goodwill	of	$569.1	million	recorded	in	our	consolidated	balance	sheet.	We	completed	our	most	recent	annual	goodwill	and	indefinite- life	intangible	asset	impairment	test	on	January	1,	2010	and	determined	that	no	impairment	charges	were	required	as	of	that	date.

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	our	customer	related	intangible	assets.	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.	In	addition,	if	the	cash	flow	patterns	that	we	experience	are	less	favorable	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	2010,	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	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.	Costs	capitalized	during	fiscal	2010,	2009	and 2008	totaled	$17.6	million,	$11.8	million	and	$10.2	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.

During	fiscal	2010,	we	placed	into	service	$54.9	million	of	hardware	and	software	costs	associated	with	our	next	generation	technology	processing	platform, referred	to	as	G2.	This	platform	is	planned	to	be	a	new	front-end	operating	environment	for	our	merchant	processing	in	the	United	States,	Asia-Pacific,	the	United Kingdom,	and	Canada,	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	seven	markets	in	our	Asia-Pacific	region	and	we	have	begun	the	process	of supporting	the	United	States.	As	these	markets	represent	a	small	percentage	of	our	overall	transactions,	depreciation	and	amortization	related	to	our	G2	platform	for fiscal	2010	was	not	significant.	Depreciation	and	amortization	expense	will	increase	as	we	complete	migrations	of	other	markets	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,	2010	our	consolidated	balance	sheet	includes	net	deferred	tax	assets	associated	with	our	UK	business	of	$87.5	million. Our	assessment	of	the	recoverability	of	these	deferred	tax	assets	is	based,	in	part,	on	our	projections	of	future	business	performance.	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.

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

# Foreign	Currency	Risk

Although	the	majority	of	our	operations	are	conducted	in	United	States	dollars,	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	2010,	currency	rate	fluctuations	increased	our	revenues	by	$16.5	million	and	our	diluted	earnings	per	share	by	$0.10.	To	calculate	this	we	converted	our	fiscal 2010	actual	revenues	at	fiscal	2009	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,	2010,	2009	and	2008	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,	as	well	as	assets	and	liabilities	denominated	in	a	currency	other than	the	functional	currency	of	the	subsidiary.	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.	Our	assets	and	liabilities	denominated	in	a	non-functional	currency	are	translated	at	the	period-end	rate	of	exchange,	with	the	resulting	impact included	in	net	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	lines	of	credit	and	term	loans	that	we	use	to	fund	settlement	in	certain	of	our	markets	and	for	general	corporate	purposes	and	acquisitions. Interest	rates	on	these	lines	of	credit	are	based	on	market	rates	and	fluctuate	accordingly.	As	of	May	31,	2010	there	was	$500.3	million	outstanding	on	these	lines	of credit	and	term	loans.

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	to	be	minimal.

A	1%	increase	in	interest	rates	as	of	May	31,	2010	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,	as	it	has	not been	cost	effective.	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

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Global	Payments	Inc.	and	subsidiaries	(the	"Company")	as	of	May	31,	2010	and	2009,	and	the related	consolidated	statements	of	income,	changes	in	shareholders'	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	May	31,	2010.	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	consolidated	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,	2010	and	2009,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	May	31,	2010,	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	whole,	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein.

As	discussed	in	Note	1	to	the	consolidated	financial	statements,	the	Company	adopted	new	accounting	provisions	regarding	noncontrolling	interests	effective June	1,	2009	and	retrospectively	adjusted	the	consolidated	financial	statements	for	the	years	ended	May	31,	2009	and	2008.

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,	2010,	based	on	the	criteria	established	in	Internal	Control—Integrated	Framework	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	and	our	report	dated	July	28,	2010	expressed	an	unqualified	opinion	on	the	Company's	internal	control	over	financial reporting.

/s/	DELOITTE	&	TOUCHE	LLP

Atlanta,	Georgia

We	have	audited	the	internal	control	over	financial	reporting	of	Global	Payments	Inc.	and	subsidiaries	(the	"Company")	as	of	May	31,	2010,	based	on	criteria established	in	Internal	Control—Integrated	Framework	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,	2010,	based	on	the	criteria established	in	Internal	Control—Integrated	Framework	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,	2010	of	the	Company	and	our	report	dated	July	28,	2010	expressed	an	unqualified	opinion	on those	consolidated	financial	statements	and	financial	statement	schedule	and	includes	an	explanatory	paragraph	regarding	the	adoption	of	new	accounting	provisions regarding	noncontrolling	interests.

# CONSOLIDATED	STATEMENTS	OF	INCOME

(in	thousands,	except	per	share	data)

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Revenues | $ 1,642,468 | $ 1,462,306 | $1,130,608 |
| Operating\texpenses: |  |  |  |
| Cost\tof\tservice | 584,609 | 504,855 | 375,817 |
| Sales,\tgeneral\tand\tadministrative | 734,580 | 664,905 | 515,751 |
| Impairment,\trestructuring\tand\tother | — | — | 1,317 |
|  | 1,319,189 | 1,169,760 | 892,885 |
| Operating\tincome | 323,279 | 292,546 | 237,723 |
| Other\tincome\t(expense): |  |  |  |
| Interest\tand\tother\tincome | 4,629 | 7,005 | 17,580 |
| Interest\tand\tother\texpense | (17,519) | (7,282) | (8,544) |
|  | (12,890) | (277) | 9,036 |
| Income\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes | 310,389 | 292,269 | 246,759 |
| Provision\tfor\tincome\ttaxes | (87,379) | (85,252) | (85,561) |
| Income\tfrom\tcontinuing\toperations | 223,010 | 207,017 | 161,198 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | (3,901) | (132,839) | 9,617 |
| Net\tincome\tincluding\tnoncontrolling\tinterests | 219,109 | 74,178 | 170,815 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterests,\tnet\tof\ttax | (15,792) | (36,961) | (8,061) |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $203,317 | $37,217 | $162,754 |
| Amounts\tattributable\tto\tGlobal\tPayments: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $207,218 | $170,056 | $153,137 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | (3,901) | (132,839) | 9,617 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $203,317 | $37,217 | $162,754 |
| Basic\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $2.56 | $2.12 | $1.92 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations | (0.05) | (1.66) | 0.12 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $2.51 | $0.46 | $2.04 |
| Diluted\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $2.52 | $2.10 | $1.89 |
| (Loss)\tincome\tfrom\tdiscontinued\toperations | (0.04) | (1.64) | 0.12 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $2.48 | $0.46 | $2.01 |
| Dividends\tper\tshare | $0.08 | $0.08 | $0.08 |

See	Notes	to	Consolidated	Financial	Statements.

# CONSOLIDATED	BALANCE	SHEETS

(in	thousands,	except	share	data)

|  | May	31,<br>2010 | May	31,<br>2009 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $769,946 | $426,935 |
| Accounts\treceivable,\tnet\tof\tallowances\tfor\tdoubtful\taccounts\tof\t$269\tand\t$553,\trespectively | 131,817 | 122,831 |
| Claims\treceivable,\tnet\tof\tallowances\tfor\tlosses\tof\t$4,208\tand\t$4,026,\trespectively | 664 | 607 |
| Settlement\tprocessing\tassets | 13,741 | 6,675 |
| Inventory,\tnet\tof\tobsolescence\treserves\tof\t$908\tand\t$653,\trespectively | 9,740 | 5,914 |
| Deferred\tincome\ttaxes | 2,752 | 3,789 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 39,604 | 28,437 |
| Total\tcurrent\tassets | 968,264 | 595,188 |
| Goodwill | 569,090 | 625,120 |
| Other\tintangible\tassets | 205,110 | 258,094 |
| Property\tand\tequipment | 183,938 | 176,226 |
| Deferred\tincome\ttaxes | 90,470 | — |
| Other | 22,454 | 22,193 |
| Total\tassets | $ 2,039,326 | $1,676,821 |
| LIABILITIES\tAND\tSHAREHOLDERS'\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Lines\tof\tcredit | $79,187 | $10,174 |
| Notes\tpayable—current\tportion | 148,169 | 29,393 |
| Payables\tto\tmoney\ttransfer\tbeneficiaries | — | 12,343 |
| Accounts\tpayable\tand\taccrued\tliabilities | 173,575 | 167,700 |
| Settlement\tprocessing\tobligations | 265,110 | 106,934 |
| Income\ttaxes\tpayable | 6,430 | 9,633 |
| Total\tcurrent\tliabilities | 672,471 | 336,177 |
| Notes\tpayable | 272,965 | 167,610 |
| Deferred\tincome\ttaxes | 88,265 | 76,405 |
| Other\tlong-term\tliabilities | 31,436 | 19,009 |
| Total\tliabilities | 1,065,137 | 599,201 |
| Commitments\tand\tcontingencies\t(See\tNote\t14) |  |  |
| Redeemable\tnoncontrolling\tinterest | 102,672 | 399,377 |
| Shareholders'\tequity: |  |  |
| Preferred\tstock,\tno\tpar\tvalue;\t5,000,000\tshares\tauthorized\tand\tnone\tissued | — | — |
| Common\tstock,\tno\tpar\tvalue;\t200,000,000\tshares\tauthorized;\t82,028,945\tissued\tand\t79,646,055\toutstanding\tat\tMay\t31,\t2010 |  |  |
| and\t80,445,009\tissued\tand\toutstanding\tat\tMay\t31,\t2009 | — | — |
| Paid-in\tcapital | 460,747 | 405,241 |
| Retained\tearnings | 544,772 | 273,090 |
| Treasury\tstock;\t2,382,890\tshares\tat\tMay\t31,\t2010 | (100,000) | — |
| Accumulated\tother\tcomprehensive\tloss | (44,255) | (10,901) |
| Total\tGlobal\tPayments\tshareholders'\tequity | 861,264 | 667,430 |
| Noncontrolling\tinterest | 10,253 | 10,813 |
| Total\tequity | 871,517 | 678,243 |
| Total\tliabilities\tand\tshareholders'\tequity | $ 2,039,326 | $1,676,821 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

(in	thousands)

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome | $219,109 | $74,178 | $170,815 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization\tof\tproperty\tand\tequipment | 35,864 | 35,434 | 28,894 |
| Amortization\tof\tacquired\tintangibles | 32,803 | 30,854 | 15,140 |
| Provision\tfor\toperating\tlosses\tand\tbad\tdebts | 25,025 | 25,595 | 30,228 |
| Share-based\tcompensation\texpense | 18,072 | 14,570 | 13,826 |
| Estimated\tloss\ton\tdisposal\tof\tdiscontinued\toperations,\tnon-cash | 24,310 | — | — |
| Impairment,\trestructuring\tand\tother\tcharges,\tnon-cash | — | 147,664 | — |
| Deferred\tincome\ttaxes | 2,722 | 5,457 | (1,151) |
| Other,\tnet | 2,443 | 4,036 | (3,644) |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\tthe\teffects\tof\tacquisitions: |  |  |  |
| Accounts\treceivable | (11,689) | (25,077) | (23,957) |
| Claims\treceivable | (14,936) | (17,201) | (23,073) |
| Settlement\tprocessing\tassets\tand\tobligations,\tnet | 140,962 | 60,700 | 38,311 |
| Inventory | (4,727) | (1,653) | (623) |
| Prepaid\texpenses\tand\tother\tassets | (13,710) | 4,438 | (3,775) |
| Accounts\tpayable\tand\tother\taccrued\tliabilities | 18,803 | 23,251 | 15,304 |
| Payables\tto\tmoney\ttransfer\tbeneficiaries | (6,107) | 3,067 | 2,687 |
| Income\ttaxes\tpayable | (3,183) | (2,342) | 13,432 |
| Net\tcash\tprovided\tby\toperating\tactivities | 465,761 | 382,971 | \t 272,414 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Business\tand\tintangible\tasset\tacquisitions,\tnet\tof\tcash\tacquired | (29,513) | (525,205) | (18,247) |
| Disposition\tof\tbusiness,\tnet\tof\tcash | 60,231 | — | — |
| Capital\texpenditures | (56,054) | (40,940) | (44,974) |
| Net\tincrease\tin\tfinancing\treceivables | (179) | — | — |
| Proceeds\tfrom\tsale\tof\tinvestment\tand\tcontractual\trights,\tnet | 311 | 6,888 | — |
| Net\tcash\tused\tin\tinvesting\tactivities | (25,204) | (559,257) | (63,221) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Net\tborrowings\ton\tlines\tof\tcredit | 69,013 | 8,647 | 1,527 |
| Proceeds\tfrom\tnotes\tpayable | 305,744 | 200,000 | — |
| Principal\tpayments\tunder\tnotes\tpayable | (75,205) | (16,734) | — |
| Acquisition\tof\tredeemable\tnoncontrolling\tinterest | (307,675) | — | — |
| Proceeds\tfrom\tstock\tissued\tunder\temployee\tstock\tplans | 30,248 | 9,050 | 17,385 |
| Repurchase\tof\tcommon\tstock | (98,080) | — | (87,020) |
| Tax\tbenefit\tfrom\temployee\tshare-based\tcompensation | 7,186 | 880 | 7,571 |
| Contribution\tfrom\tnoncontrolling\tinterest\tholder | — | 358 | — |
| Distributions\tto\tnoncontrolling\tinterest | (20,484) | (34,299) | (9,459) |
| Dividends\tpaid | (6,497) | (6,417) | (6,377) |
| Net\tcash\t(used\tin)\tprovided\tby\tfinancing\tactivities | (95,750) | 161,485 | (76,373) |
| Effect\tof\texchange\trate\tchanges\ton\tcash | (1,796) | (14,324) | 14,368 |
| Increase\t(decrease)\tin\tcash\tand\tcash\tequivalents | 343,011 | (29,125) | \t 147,188 |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tyear | 426,935 | 456,060 | \t 308,872 |
| Cash\tand\tcash\tequivalents,\tend\tof\tyear | $769,946 | $426,935 | $456,060 |

# CONSOLIDATED	STATEMENTS	OF	CHANGES	IN	SHAREHOLDERS'	EQUITY

|  | Number |  |  |  | Currency | Minimum | Payments |  | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | of | Paid-in | Treasury | Retained | Translation | Pension | Shareholders' | Noncontrolling | Shareholders' |
|  | Shares | Capital | Stock | Earnings | Adjustments | Liability | Equity | Interest | Equity |
| Balance\tat\tMay\t31,\t2009 | 80,445 | $405,241 |  | $273,090 | $(8,987) | $(1,914) | $667,430 | $10,813 | $678,243 |
| Comprehensive\tincome\t(loss): |  |  |  |  |  |  |  |  |  |
| Net\tincome\tincluding\tnoncontrolling\tinterests |  |  |  | 203,317 |  |  | 203,317 | 8,029 | 211,346 |
| Minimum\tpension\tliability\tadjustment,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |  |  |
| $(584) |  |  |  |  |  | (1,035) | (1,035) |  | (1,035) |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |  |  |
| $555 |  |  |  |  | (32,319) |  | (32,319) |  | (32,319) |
| Total\tcomprehensive\tincome |  |  |  |  |  |  | 169,963 | 8,029 | 177,992 |
| Stock\tissued\tunder\temployee\tstock\tplans | 1,574 | 30,248 |  |  |  |  | 30,248 |  | 30,248 |
| Tax\tbenefit\tfrom\temployee\tshare-based\tcompensation |  | 7,186 |  |  |  |  | 7,186 |  | 7,186 |
| Share-based\tcompensation\texpense |  | 18,072 |  |  |  |  | 18,072 |  | 18,072 |
| Distributions\tto\tnoncontrolling\tinterest |  |  |  |  |  |  |  | (8,589) | (8,589) |
| Deferred\ttax\tasset\tarising\tfrom\tacquisition\tof\tnoncontrolling |  |  |  |  |  |  |  |  |  |
| interest |  |  |  | 89,965 |  |  | 89,965 |  | 89,965 |
| Redeemable\tnoncontrolling\tinterests\tvaluation\tadjustment |  |  |  | (15,103) |  |  | (15,103) |  | (15,103) |
| Repurchase\tof\tcommon\tstock | (2,383) |  | (100,000) |  |  |  | (100,000) |  | (100,000) |
| Dividends\tpaid\t($0.08\tper\tshare) |  |  |  | (6,497) |  |  | (6,497) |  | (6,497) |
| Balance\tat\tMay\t31,\t2010 | 79,646 | $460,747 | (100,000) | $544,772 | $(41,306) | $(2,949) | $861,264 | $10,253 | $871,517 |

# CONSOLIDATED	STATEMENTS	OF	CHANGES	IN	SHAREHOLDERS'	EQUITY—(Continued)

|  | Number |  |  | Currency | Minimum | Payments |  | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | of\nShares | Paid-in\nCapital | Retained\nEarnings | Translation\nAdjustments | Pension\nLiability | Shareholders'\nEquity | Noncontrolling\nInterest | Shareholders'\nEquity |
| Balance\tat\tMay\t31,\t2008 | 79,637 | $380,741 | $ 537,357 | $124,673 | $(471) | $1,042,300 | $11,852 | $1,054,152 |
| Comprehensive\tincome\t(loss): |  |  |  |  |  |  |  |  |
| Net\tincome\tincluding\tnoncontrolling\tinterests |  |  | 37,217 |  |  | 37,217 | 7,471 | 44,688 |
| Minimum\tpension\tliability\tadjustment,\tnet\tof\ttax\tof\t$(832) |  |  |  |  | (1,443) | (1,443) |  | (1,443) |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttax\tof\t$2,428 |  |  |  | (133,660) |  | (133,660) |  | (133,660) |
| Total\tcomprehensive\t(loss)\tincome |  |  |  |  |  | (97,886) | 7,471 | (90,415) |
| Stock\tissued\tunder\temployee\tstock\tplans | 808 | 9,050 |  |  |  | 9,050 |  | 9,050 |
| Tax\tbenefit\tfrom\temployee\tshare-based\tcompensation |  | 880 |  |  |  | 880 |  | 880 |
| Share-based\tcompensation\texpense |  | 14,570 |  |  |  | 14,570 |  | 14,570 |
| Distributions\tto\tnoncontrolling\tinterest |  |  |  |  |  |  | (8,353) | (8,353) |
| Divestiture\tof\tnoncontrolling\tinterest |  |  |  |  |  |  | (157) | (157) |
| Application\tof\tnoncontrolling\tinterest\taccounting\tguidance\trelated\tto |  |  |  |  |  |  |  |  |
| acquisitions |  |  | (417,006) |  |  | (417,006) |  | (417,006) |
| Redeemable\tnoncontrolling\tinterests\tvaluation\tadjustment |  |  | 121,939 |  |  | 121,939 |  | 121,939 |
| Dividends\tpaid\t($0.08\tper\tshare) |  |  | (6,417) |  |  | (6,417) |  | (6,417) |
| Balance\tat\tMay\t31,\t2009 | 80,445 | $405,241 | $ 273,090 | $(8,987) | $(1,914) | $667,430 | $10,813 | $678,243 |

|  | Number |  |  | Currency | Minimum | Payments |  | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | of\nShares | Paid-in\nCapital | Retained\nEarnings | Translation\nAdjustments | Pension\nLiability | Shareholders'\nEquity | Noncontrolling\nInterest | Shareholders'\nEquity |
| Balance\tat\tMay\t31,\t2007 | 80,878 | $430,166 | $415,489 | $62,140 | $(947) | $906,848 | $11,963 | $918,811 |
| Comprehensive\tincome\t(loss): |  |  |  |  |  |  |  |  |
| Net\tincome\tincluding\tnoncontrolling\tinterests |  |  | 162,754 |  |  | 162,754 | 8,860 | 171,614 |
| Minimum\tpension\tliability\tadjustment,\tnet\tof\ttax\tof\t$267 |  |  |  |  | 476 | 476 |  | 476 |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttax\tof\t$5,570 |  |  |  | 62,533 |  | 62,533 | 2 | 62,535 |
| Total\tcomprehensive\tincome |  |  |  |  |  | 225,763 | 8,862 | 234,625 |
| Stock\tissued\tunder\temployee\tstock\tplans | 1,058 | 17,385 |  |  |  | 17,385 |  | 17,385 |
| Tax\tbenefit\tfrom\temployee\tshare-based\tcompensation |  | 6,927 |  |  |  | 6,927 |  | 6,927 |
| Share-based\tcompensation\texpense |  | 13,826 |  |  |  | 13,826 |  | 13,826 |
| Distributions\tto\tnoncontrolling\tinterest |  |  |  |  |  |  | (9,075) | (9,075) |
| Investment\tin\tnoncontrolling\tinterest |  |  |  |  |  |  | 102 | 102 |
| Redeemable\tnoncontrolling\tinterests\tvaluation\tadjustment |  |  | (33,590) |  |  | (33,590) |  | (33,590) |
| Adjustment\tfor\tthe\tadoption\tof\taccounting\tguidance\ton\tuncertain\ttax |  |  |  |  |  |  |  |  |
| positions |  | (543) | (919) |  |  | (1,462) |  | (1,462) |
| Repurchase\tof\tcommon\tstock | (2,299) | (87,020) |  |  |  | (87,020) |  | (87,020) |
| Dividends\tpaid\t($0.08\tper\tshare) |  |  | (6,377) |  |  | (6,377) |  | (6,377) |
| Balance\tat\tMay\t31,\t2008 | 79,637 | $380,741 | $537,357 | $124,673 | $(471) | $1,042,300 | $11,852 | $1,054,152 |

# 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	business	since	1967.	Our	fiscal	year	ends	on	May	31,	thus	we	refer	to	the	years	ended	May	31, 2010,	2009	and	2008	as	fiscal	years	2010,	2009,	and	2008,	respectively.

These	consolidated	financial	statements	include	our	accounts	and	those	of	our	majority-owned	subsidiaries.	These	consolidated	financial	statements	have	been prepared	on	the	historical	cost	basis	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	and	present	our	financial	position,	results	of operations,	and	cash	flows.	Intercompany	transactions	have	been	eliminated	in	consolidation.

As	a	result	of	our	disposition	of	our	money	transfer	businesses	in	fiscal	year	2010,	this	segment	has	been	accounted	for	as	a	discontinued	operation.	Please	see Note	3—Discontinued	Operations	for	further	information.

Reclassifications—Amounts	related	to	our	discontinued	operations	in	our	prior	fiscal	years	statement	of	income	have	been	reclassified	to	conform	with	the presentation	in	the	current	fiscal	year.

Use	of	estimates—The	preparation	of	financial	statements	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	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,	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.	We	use	two	basic	business	models	to	market	our	merchant	services	offerings.	One	model,	referred	to	as	"direct"	merchant	services,	features	a salaried	and	commissioned	sales	force,	independent	sales	organizations	("ISOs"),	and	independent	sales	representatives,	all	of	whom	sell	our	end-to-end	services	directly to	merchants.	The	other	model,	referred	to	as	"indirect"	merchant	services,	provides	similar	basic	products	and	services	as	our	direct	model,	primarily	to	financial institutions	and	a	limited	number	of	ISOs	on	an	unbundled	basis,	that	in	turn	resell	our	products	and	services	to	their	clients.	The	primary	difference	between	the	models is	under	the	"indirect"	we	do	not	provide	bank	partner	BIN	sponsorship	services	for	acquired	transactions;	that	service	is	provided	by	other	providers.	Direct	merchant services	revenue	is	generated	on	services	generally	priced	as	a	percentage	of	transaction	value,	whereas	indirect	merchant	services	revenue	is	generated	on	services primarily	priced	on	a	specified	amount	per	transaction	or	per	service	rendered.	In	both	merchant	services	models,	we	also	charge	other	fees	unrelated	to	the	number	of transactions	or	the	transaction	value.

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.	These	amounts	also	include	cash	that	we	hold	related	to	reserve	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.	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

# FINANCIAL	STATEMENTS—(Continued)

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,	2010	and 2009,	our	cash	and	cash	equivalents	included	$199.4	million	and	$163.6	million,	respectively,	related	to	Merchant	Reserves.

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

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	of	either	organization	("Member")	sponsoring	us	and	our	adherence	to	the	standards	of	the	Visa	and MasterCard	networks.	We	have	five	primary	financial	institution	sponsors	in	the	United	States,	Canada,	the	United	Kingdom,	the	Asia-Pacific	region	and	the	Russian Federation	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	Visa	and	MasterCard.	Visa	and	MasterCard	set	the	standards	with	which	we	must	comply.	Certain	of the	member	financial	institutions	of	Visa	and	MasterCard	are	our	competitors.

We	also	provide	credit	card	transaction	processing	for	Discover	Financial	Services	or	Discover	Card	("Discover")	and	are	designated	as	an	acquirer	by	Discover. Our	agreement	with	Discover	allows	us	to	acquire,	process	and	fund	transactions	directly	through	Discover's	network	without	the	need	of	a	financial	institution. Otherwise,	we	process	Discover	transactions	similarly	to	how	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.

Funds	settlement	refers	to	the	process	of	transferring	funds	for	sales	and	credits	between	card	issuers	and	merchants.	Depending	on	the	type	of	transaction,	either the	credit	card	interchange	system	or	the	debit	network	is	used	to	transfer	the	information	and	funds	between	the	Member	and	card	issuer	to	complete	the	link	between merchants	and	card	issuers.

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.	In	certain	of	our	markets,	merchant	funding	primarily	occurs	after	the	Member	receives	the	funds	from	the	card	issuer	through	the	card networks	creating	a	net	settlement	obligation	on	our	balance	sheet.	In	our	other	markets,	the	Member	funds	the	merchants	before	the	Member	receives	the	net	settlement funds	from	the	card	networks,	creating	a	net	settlement	asset	on	our	balance	sheet.	In	the	United	Kingdom	and	certain	markets	in	the	Asia-Pacific	region,	the	Member provides	the	payment	processing	operations	and	related	support	services	on	our	behalf	under	a	transition	services	agreement.	In	such	instances,	we	do	not	reflect	the related	settlement	processing	assets	and	obligations	in	our	consolidated	balance	sheet.	The	Member	will	continue	to	provide	these	operations	and	services	until	the integration	to	our	platform	is	completed.	After	our	integration,	the	Member	will	continue	to	provide	funds	settlement	services	similar	to	the	functions	performed	by	our Members	in	the	United	States	and	Canada	at	which	point	the	related	settlement	assets	and	obligations	will	be	reflected	in	our	consolidated	balance	sheet.

Timing	differences,	interchange	expenses,	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	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	a	joint	deposit	account	or	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	assesses	a 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.

Settlement	processing	assets	and	obligations	represent	intermediary	balances	arising	in	our	settlement	process	for	direct	merchants.	Settlement	processing	assets consist	primarily	of	(i)	our	receivable	from	merchants	for	the	portion	of	the	discount	fee	related	to	reimbursement	of	the	interchange	expense	("Interchange reimbursement"),	(ii)	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	Members"),	and	(iii)	exception	items,	such	as	customer	chargeback	amounts	receivable	from	merchants	("Exception	items"),	all	of	which	are reported	net	of	(iv)	Merchant	Reserves	held	to	minimize	contingent	liabilities	associated	with	charges	properly	reversed	by	a	cardholder	("Merchant	Reserves"). Settlement	processing	obligations	consist	primarily	of	(i)	Interchange	reimbursement,	(ii)	our	liability	to	the	Members	for	transactions	for	which	we	have	not	funded merchants	on	behalf	of	the	Members	but	for	which	we	have	received	funding	from	the	Members	("Liability	to	Members"),	(iii)	Exception	items,	(iv)	Merchant	Reserves, (v)	the	fair	value	of	our	guarantees	of	customer	chargebacks	(see	Reserve	for	operating	losses	below),	and	(vi)	the	reserve	for	sales	allowances.	In	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,	we	reflect	the	amount	of	this	funding as	a	component	of	"Liability	to	Members."

As	of	May	31,	2010	and	2009,	our	settlement	processing	assets	primarily	related	to	our	processing	for	direct	merchants	in	certain	Asia-Pacific	markets	and	the Russian	Federation,	while	our	settlement	processing	obligations	primarily	related	to	our	processing	for	direct	merchants	in	the	United	States,	Canada,	and	other	Asia- Pacific	markets.

| Interchange	reimbursement | $19 | $222 |
| :--- | :--- | :--- |
| Receivable\tfrom\tMembers | 12,258 | 6,631 |
| Exception\titems | 1,748 | 553 |
| Merchant\tReserves | (284) | (731) |
| Total | $13,741 | $6,675 |
| Settlement\tprocessing\tobligations: |  |  |
| Interchange\treimbursement | $194,341 | $179,763 |
| Liability\tto\tMembers | (259,947) | (129,295) |
| Exception\titems | 6,254 | 10,507 |
| Merchant\tReserves | (199,077) | (162,870) |
| Fair\tvalue\tof\tguarantees\tof\tcustomer\tchargebacks | (5,810) | (3,507) |
| Reserves\tfor\tsales\tallowances | (871) | (1,532) |
| Total | $(265,110) | $(106,934) |

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,	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.

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	known	losses	and	a	projection	of	future	losses	based	on	a	percentage	of	direct merchant	sales	volumes	processed.	Historically,	this	estimation	process	has	been	materially	accurate.

As	of	May	31,	2010	and	2009,	$5.8	million	and	$3.5	million,	respectively,	have	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, 2010,	2009,	and	2008,	we	recorded	such	expenses	in	the	amounts	of	$9.6	million,	$7.1	million,	and	$5.7	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	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	based	on	historical	and	projected	loss experiences.	As	of	May	31,	2010	and	2009,	we	have	a	check	guarantee	loss	reserve	of	$4.2	million	and	$4.0	million,	respectively,	which	is	included	in	net	claims receivable	in	the	accompanying	consolidated	balance	sheets.	Expenses	of	$14.9	million,	$17.9	million,	and	$23.9	million	were	recorded	for	the	years	ended	May	31, 2010,	2009	and	2008,	respectively,	for	these	losses	and	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	cost.	Depreciation	and	amortization	are	calculated	using	the	straight-line	method,	except	for certain	technology	discussed	below.	Leasehold	improvements	are	amortized	over	the	lesser	of	the	remaining	term	of	the	lease	or	the	useful	life	of	the	asset.	We	capitalize the	costs	related	to	computer	software	developed	or	obtained	for	internal	use.	Maintenance	and	repairs	are	charged	to	operations	as	incurred.

During	fiscal	2010,	we	placed	into	service	$54.9	million	of	hardware	and	software	associated	with	our	next	generation	technology	processing	platform,	referred	to as	G2.	This	platform	is	planned	to	be	the	new	front-end	operating	environment	for	our	merchant	processing	in	the	United	States,	Asia-Pacific,	the	United	Kingdom,	and Canada,	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	seven	markets	in	our	Asia-Pacific	region.	As	these	markets	represent	a	small	percentage	of our	overall	transactions,	depreciation	and	amortization	related	to	our	G2	platform	for	fiscal	2010	was	not	significant.	Depreciation	and	amortization	expense	will	increase as	we	complete	migrations	of	other	markets	to	the	G2	platform.

Goodwill	and	other	intangible	assets—We	completed	our	most	recent	annual	goodwill	and	indefinite-life	intangible	asset	impairment	test	as	of	January	1,	2010 and	determined	that	no	impairment	charges	were	required	as	of	that	date.

Recoverability	of	goodwill	is	measured	at	the	reporting	unit	level	and	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,	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	of	goodwill	is	the	impairment	loss.	As	a	result	of	our	January	1,	2009	impairment	test,	we	recorded	an	impairment	charge	of	$147.7 million	related	to	our	Money	Transfer	segment	during	our	third	quarter	of	fiscal	2009.	On	May	26,	2010,	we	completed	the	disposition	of	our	money	transfer	businesses. Please	see	Note	3—Discontinued	Operations	for	further	information.

Amortization	for	most	of	our	customer-related	intangible	assets	is	calculated	using	the	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.	In	addition,	if	the	cash	flow	patterns	that	we	experience	are	less	favorable	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.

Impairment	of	long-lived	assets—We	regularly	evaluate	whether	events	and	circumstances	have	occurred	that	indicate	the	carrying	amount	of	property	and equipment	and	finite-life	intangible	assets	may	not	be

recoverable.	When	factors	indicate	that	these	long-lived	assets	should	be	evaluated	for	possible	impairment,	we	assess	the	potential	impairment	by	determining	whether the	carrying	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	values, discounted	cash	flows,	or	external	appraisals,	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,	2010.

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.

During	fiscal	2010,	we	recorded	a	deferred	tax	asset	of	$90.0	million	($87.5	million	at	May	31,	2010)	associated	with	the	purchase	of	the	remaining	49%	interest in	HSBC	Merchant	Services	LLP.	Please	see	Note	2	—Business	and	Intangible	Asset	Acquisitions	for	further	information.

Our	effective	tax	rates,	reflected	as	the	provision	for	income	taxes	divided	by	income	from	continuing	operations	before	income	tax,	including	the	effect	of noncontrolling	interests,	were	29.6%,	33.0%,	and	35.6%	for	the	years	ended	May	31,	2010,	2009,	and	2008	respectively.	Please	see	Note	9—Income	Taxes	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.	We	estimate	the	fair	value	of	our	2009	term	loan	was	$247.0 million	at	May	31,	2010	($246.1	million	carrying	value).	We	estimate	the	fair	value	of	our	2008	term	loan	was	$160.6	million	at	May	31,	2010	($165.0	million	carrying value)	and	$176.5	million	at	May	31,	2009	($185.0	million	carrying	value).	Our	subsidiary	in	the	Russian	Federation	has	notes	payable	with	interest	rates	ranging	from 8.0%	to	10.5%	and	maturity	dates	ranging	from	March	2011	through	July	2015.	At	May	31,	2010,	we	believe	the	carrying	amount	of	these	notes	approximates	fair value.	Please	see	Note	6—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	certain	of	our customers.	We	have	determined	these	arrangements	to	be	direct	financing	leases.	Accordingly,	we	have	$24.2	million	and	$25.4	million	of	financing	receivables included	in	prepaid	and	other	current	assets	(current	portion)	and	other	assets	(long-term	portion)	in	our	May	31,	2010	and	May	31,	2009	consolidated	balance	sheets, respectively.

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,	2010, 2009	and	2008	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.	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.	Income	statement	items	are	translated	at	the	average	rates prevailing	during	the	period.

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	(loss)	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,	2010,	2009	and	2008	excludes	incremental shares	of	0.5	million,	0.9	million,	and	0.6	million	related	to	stock	options,	respectively.	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	basic	and	diluted	shares	outstanding	for	the	years	ended	May	31,	2010,	2009	and	2008:

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Basic\tweighted\taverage\tshares\toutstanding | 81,075 | 80,160 | 79,765 |
| Plus:\tdilutive\teffect\tof\tstock\toptions\tand\trestricted\tstock\tawards | 1,045 | 889 | 1,371 |
| Diluted\tweighted\taverage\tshares\toutstanding | 82,120 | 81,049 | 81,136 |

Basic	weighted	average	shares	outstanding	for	the	years	ended	May	31,	2009	and	2008,	increased	from	amounts	previously	reported	by	442	thousand	and 247	thousand,	respectively.	Diluted	weighted	average	shares	outstanding	for	the	years	ended	May	31,	2009	and	2008,	increased	from	amounts	previously	reported	by 57	thousand	and	157	thousand,	respectively.	Such	increases	resulted	from	the	adoption	of	recent	guidance	as	discussed	below.

Stock	awards	and	options—We	expense	the	fair	value	of	options	over	the	vesting	period.	We	use	the	Black-Scholes	valuation	model	to	calculate	the	fair	value	of share-based	awards.	Please	see	Note	11—Share-based	awards	and	options	for	further	information.

New	accounting	pronouncements—In	December	2009,	the	Financial	Accounting	Standards	Board	("FASB")	issued	ASU	2009-17,	"Improvements	to	Financial Reporting	by	Enterprises	Involved	with	Variable	Interest	Entities"	(ASU	2009-17).	ASU	2009-17	amends	prior	accounting	for	variable	interests	and	requires	a	company to	perform	an	analysis	to	determine	whether	its	interests	give	it	a	controlling	financial	interest	in	a	variable	interest	entity.	A	company	must	also	assess	whether	it	has	the power	to	direct	the	activities	of	the

variable	interest	entity	and	whether	it	has	the	obligation	to	absorb	losses	or	the	right	to	receive	benefits	that	could	potentially	be	significant	to	the	variable	interest entity.	ASU	2009-17	requires	an	ongoing	reassessment	of	whether	a	company	is	the	primary	beneficiary	of	a	variable	interest	entity,	eliminates	the	quantitative	approach previously	required	for	determining	the	primary	beneficiary	of	a	variable	interest	entity	and	expands	required	disclosures.	ASU	2009-17	is	effective	for	our	fiscal	year beginning	June	1,	2010	and	is	not	expected	to	have	an	impact	on	our	consolidated	financial	statements.

We	have	a	noncontrolling	interest	that	includes	redemption	provisions	that	are	not	solely	within	our	control,	commonly	referred	to	as	a	redeemable	noncontrolling interest.	This	redeemable	noncontrolling	interest	remains	in	the	mezzanine	section	of	the	consolidated	balance	sheet.	The	guidance	allows	for	a	choice	of	either	accreting redeemable	noncontrolling	interest	to	its	redemption	value	over	the	redemption	period	or	recognizing	changes	in	the	redemption	value	immediately	as	they	occur.	We have	elected	to	recognize	the	changes	in	the	redemption	value	immediately.	The	presentation	and	disclosure	requirements	of	the	guidance	have	been	applied retrospectively.	The	retrospective	adoption	of	the	guidance	resulted	in	recording	the	maximum	redemption	amount	of	our	redeemable	noncontrolling	interests	with	a corresponding	decrease	in	retained	earnings	for	all	periods	presented.	Please	see	Note	12—Noncontrolling	Interests	for	further	information.

# NOTE	2—BUSINESS	AND	INTANGIBLE	ASSET	ACQUISITIONS

These	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.

On	June	12,	2009,	we	purchased	the	remaining	49%	of	HSBC	Merchant	Services	LLP	(the	"LLP")	from	HSBC	Bank	plc	("HSBC	UK")	for	$307.7	million	in cash.	We	used	existing	lines	of	credit	to	complete	the	transaction.	In	addition,	HSBC	extended	our	current	ten-year	exclusive	marketing	alliance	agreement	whereby	the bank	provides	merchant	referrals	and	bank	sponsorship	to	Global	Payments	to	June	2019.	The	purchase	of	the	remaining	49%	of	the	LLP,	which	was	recorded	as	an equity	transaction,	and	therefore,	as	a	reduction	of	redeemable	noncontrolling	interest.	Accordingly,	no	additional	value	was	ascribed	to	the	assets	of	the	LLP	and	there was	no	purchase	price	allocation	for	this	transaction.	As	a	result,	our	tax	basis	in	the	LLP	exceeds	our	book	basis	and	we	recorded	a	deferred	tax	asset	on	the	purchase date	in	the	amount	of	$90.0	million	($87.5	million	at	May	31,	2010)	with	a	corresponding	increase	to	retained	earnings.	Additionally,	the	purchase	of	our	49%	interest	in the	LLP	is	reflected	as	a	financing	cash	outflow	in	our	statement	of	cash	flows	because	it	was	treated	as	an	equity	transaction.

On	July	10,	2009,	we	entered	into	a	new	term	loan	to	pay	down	the	credit	facility	used	to	purchase	the	remaining	49%	interest	in	the	LLP.	Please	see	Note	6— Long-term	Debt	and	Credit	Facilities	for	further	information.

On	September	28,	2009,	we	completed	the	acquisition	of	Auctionpay,	Inc.,	a	provider	of	fully	integrated	payment	processing	and	software	solutions	for fundraising	activities	for	$22.0	million	in	cash.	The	purpose	of	this	acquisition	was	to	expand	our	direct	acquiring	business	into	a	vertical	market	that,	to	date,	is	still heavily

dependent	on	cash	and	check	as	the	primary	means	of	payment.	The	purchase	price	was	determined	by	analyzing	the	historical	and	prospective	financial	statements.	This business	acquisition	was	not	material	to	our	consolidated	financial	statements	and	accordingly,	we	have	not	provided	pro	forma	information	relating	to	this	acquisition.

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

None	of	the	goodwill	associated	with	the	acquisition	is	deductible	for	tax	purposes.	The	customer-related	intangible	assets	have	estimated	amortization	periods	of 14	years.	The	contract-based	intangible	assets	have	estimated	amortization	periods	of	2	years.	The	trademark	has	an	estimated	amortization	period	of	8	years.

# Other	2010	Acquisitions

On	April	21,	2010,	we	completed	an	asset	purchase	agreement	with	HealthCard	Systems	and	NationalCard	Processing	Systems.	Under	the	terms	of	the	agreement we	paid	a	total	of	$11.7	million.	The	purpose	of	this	acquisition	was	to	expand	our	merchant	services	portfolio	in	North	America.	The	purchase	price	was	determined	by analyzing	the	historical	and	prospective	financial	statements.	This	business	acquisition	was	not	material	to	our	consolidated	financial	statements	and	accordingly,	we have	not	provided	pro	forma	information	relating	to	this	acquisition.

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

None	of	the	goodwill	associated	with	the	acquisition	is	deductible	for	tax	purposes.	The	customer-related	intangible	assets	have	estimated	amortization	periods	of 5	years.

In	addition,	on	March	31,	2010,	we	acquired	a	contract-based	intangible	asset	in	our	United	States	merchant	services	channel	for	$0.8	million.	These	intangible assets	are	being	amortized	on	a	straight-line	basis	over	its	estimated	useful	live	of	5	years.

We	acquired	our	initial	51%	majority	ownership	interest	in	the	LLP	on	June	30,	2008.	We	paid	HSBC	UK	$438.6	million	for	our	interest.	We	funded	the acquisition	using	a	combination	of	excess	cash	and	proceeds	of	a	term	loan.

The	purpose	of	this	acquisition	was	to	establish	a	presence	in	the	United	Kingdom	and	position	Global	Payments	for	further	expansion	into	Western	Europe.	The key	factors	that	contributed	to	the	decision	to	make	this	acquisition	include	historical	and	prospective	financial	statement	analysis	and	HSBC	UK's	market	share	and retail	presence	in	the	United	Kingdom.	The	purchase	price	was	determined	by	analyzing	the	historical	and	prospective	financial	statements	and	applying	relevant purchase	price	multiples.

The	purchase	price	totaled	$441.6	million,	consisting	of	$438.6	million	cash	consideration	plus	$3.0	million	of	direct	out	of	pocket	costs.	The	following	table summarizes	the	purchase	price	allocation	(in	thousands):

| Goodwill<br>Customer-related	intangible	assets<br>Contract-based	intangible	assets<br>Trademark<br>Property	and	equipment<br>Other	current	assets | $299,474<br>	 117,063<br>13,462<br>2,209<br>22,328<br>112 |
| :--- | :--- |
| Total\tassets\tacquired | \t 454,648 |
| Noncontrolling\tinterest\tin\tequity\tof\tsubsidiary\t(at\thistorical\tcost) | (13,014) |
| Net\tassets\tacquired | $441,634 |

All	of	the	goodwill	associated	with	the	acquisition	is	expected	to	be	deductible	for	tax	purposes.	The	customer-related	intangible	assets	have	amortization	periods of	13	years.	The	contract-based	intangible	assets	have	amortization	periods	of	7	years.	The	trademark	has	an	amortization	period	of	5	years.

The	following	unaudited	pro	forma	information	shows	the	results	of	our	operations	for	the	years	ended	May	31,	2010,	2009	and	2008	as	if	the	acquisition	of	both the	51%	and	49%	interests	of	HSBC	UK	had	occurred	on	June	1,	2007.	The	unaudited	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	unaudited	pro	forma	information	is	also	not	intended	to	be	a projection	of	future	results	expected	due	to	the	integration	of	the	acquired	business.

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Total\trevenues | $1,642,468 | $1,483,251 | $1,367,042 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $219,109 | $78,888 | $224,759 |
| Net\tincome\tattributable\tto\tGlobal\tPayments\tfor\tthe\tperiod | $204,360 | $63,882 | $216,698 |
| Net\tincome\tattributable\tto\tGlobal\tPayments\tper\tshare,\tbasic | $2.52 | $0.80 | $2.72 |
| Net\tincome\tattributable\tto\tGlobal\tPayments\tper\tshare,\tdiluted | $2.49 | $0.79 | $2.67 |

# ZAO	United	Card	Service

On	April	30,	2009,	we	completed	the	acquisition	of	all	outstanding	stock	of	ZAO	United	Card	Service	("UCS"),	a	leading	direct	merchant	acquirer	and	indirect payment	processor	in	the	Russian	Federation,	from	ZAO	United	Investments.	Under	the	terms	of	the	agreement,	we	paid	a	total	of	$75.0	million	in	cash	to	acquire	UCS of	which	$20	million	remains	in	escrow	until	January	1,	2013,	to	satisfy	any	liabilities	discovered	post-closing	that	existed	at	the	purchase	date.

The	purpose	of	this	acquisition	was	to	establish	an	acquiring	presence	in	the	Russian	market	and	a	foundation	for	other	direct	acquiring	opportunities	in	Central and	Eastern	Europe.	The	purchase	price	was

determined	by	analyzing	the	historical	and	prospective	financial	statements.	This	business	acquisition	was	not	material	to	our	consolidated	financial	statements	and accordingly,	we	have	not	provided	pro	forma	information	relating	to	this	acquisition.

| Goodwill | 35,429 |
| :--- | :--- |
| Customer-related\tintangible\tassets | 16,900 |
| Trademark | 3,200 |
| Property\tand\tequipment | 19,132 |
| Financing\treceivables | 12,481 |
| Other\tlong-term\tassets | 640 |
| Total\tassets\tacquired | 98,500 |
| Current\tliabilities\nNotes\tpayable\nDeferred\tincome\ttaxes\tand\tother\tlong-term\tliabilities | (7,228)\n(8,723)\n(7,549) |
| Total\tliabilities\tassumed | (23,500) |
| Net\tassets\tacquired | $75,000 |

The	goodwill	associated	with	the	acquisition	is	not	deductible	for	tax	purposes.	The	customer-related	intangible	assets	have	amortization	periods	of	9	to	15	years. The	trademark	has	an	amortization	period	of	10	years.

# Global	Payments	Asia-Pacific	Philippines	Incorporated

On	September	4,	2008,	Global	Payments	Asia-Pacific,	Limited	("GPAP"),	the	entity	through	which	we	conduct	our	merchant	acquiring	business	in	the	Asia- Pacific	region,	indirectly	acquired	Global	Payments	Asia-Pacific	Philippines	Incorporated	("GPAP	Philippines"),	a	newly	formed	company	into	which	HSBC	Asia Pacific	contributed	its	merchant	acquiring	business	in	the	Philippines.	We	own	56%	of	GPAP	and	HSBC	Asia	Pacific	owns	the	remaining	44%.	We	purchased	our	share of	GPAP	Philippines	for	$10.9	million.	The	purpose	of	this	acquisition	was	to	expand	our	presence	in	the	Asia-Pacific	market.	This	business	acquisition	was	not	material to	our	consolidated	financial	statements	and	accordingly,	we	have	not	provided	pro	forma	information	relating	to	this	acquisition.

None	of	the	goodwill	associated	with	the	acquisition	is	deductible	for	tax	purposes.	The	customer-related	intangible	assets	have	amortization	periods	of	11	years. The	contract-based	intangible	assets	have	amortization	periods	of	7	years.	The	trademark	has	an	amortization	period	of	5	years.

# Money	Transfer	Branch	Locations

During	2009,	we	completed	the	second	and	final	series	of	money	transfer	branch	location	acquisitions	in	the	United	States	as	part	of	an	assignment	and	asset purchase	agreement	with	a	privately	held	company.	The	purpose	of	this	acquisition	was	to	increase	the	market	presence	of	our	DolEx-branded	money	transfer	offering. The	purchase	price	of	these	acquisitions	was	$787	thousand	with	$739	thousand	allocated	to	goodwill	and	$48	thousand	allocated	to	intangibles.

This	business	acquisition	was	not	material	to	our	consolidated	financial	statements	and	accordingly,	we	have	not	provided	pro	forma	information	relating	to	this acquisition.

# Discover

During	the	year	ended	May	31,	2008,	we	acquired	a	portfolio	of	merchants	that	process	Discover	transactions	and	the	rights	to	process	Discover	transactions	for our	existing	and	new	merchants	for	$6.0	million.	The	purchase	of	the	portfolio	was	structured	to	occur	in	tranches.	During	fiscal	2009,	additional	tranches	were purchased	for	$1.4	million.	As	a	result	of	this	acquisition,	we	now	process	Discover	transactions	similarly	to	how	we	currently	process	Visa	and	MasterCard transactions.	The	purpose	of	this	acquisition	was	to	offer	merchants	a	single	point	of	contact	for	Discover,	Visa	and	MasterCard	card	processing.	The	customer-related intangible	assets	have	amortization	periods	of	10	years.	These	business	acquisitions	were	not	material	to	our	consolidated	financial	statements	and	accordingly,	we	have not	provided	pro	forma	information	relating	to	these	acquisitions.

In	connection	with	these	Discover	related	purchases,	we	have	sold	the	contractual	rights	to	future	commissions	on	Discover	transactions	to	certain	of	our	ISOs. Contractual	rights	sold	totaled	$7.6	million	during	the	year	ended	May	31,	2008	and	$1.0	million	during	fiscal	2009.	Such	sale	proceeds	are	generally	collected	in installments	over	periods	ranging	from	three	to	nine	months.	During	fiscal	2009,	we	collected	$4.4	million	of	such	proceeds,	which	are	included	in	the	Proceeds	from sale	of	investment	and	contractual	rights	in	our	consolidated	statement	of	cash	flows.	We	do	not	recognize	gains	on	these	sales	of	contractual	rights	at	the	time	of	sale. Proceeds	are	deferred	and	recognized	as	a	reduction	of	the	related	commission	expense.

During	fiscal	2008,	we	acquired	a	majority	of	the	assets	of	Euroenvios	Money	Transfer,	S.A.	and	Euroenvios	Conecta,	S.L.,	which	we	collectively	refer	to	as	LFS Spain.	LFS	Spain	consisted	of	two	privately-held	corporations	engaged	in	money	transmittal	and	ancillary	services	from	Spain	to	settlement	locations	primarily	in	Latin America.	The	purpose	of	the	acquisition	was	to	further	our	strategy	of	expanding	our	customer	base	and	market	share	by	opening	additional	branch	locations.

During	fiscal	2008,	we	acquired	a	series	of	money	transfer	branch	locations	in	the	United	States.	The	purpose	of	these	acquisitions	was	to	increase	the	market presence	of	our	DolEx-branded	money	transfer	offering.

The	following	table	summarizes	the	purchase	price	allocations	of	all	these	fiscal	2008	business	acquisitions	(in	thousands):

The	customer-related	intangible	assets	have	amortization	periods	of	up	to	14	years.	The	contract-based	intangible	assets	have	amortization	periods	of	3	to	10

# years.

These	business	acquisitions	were	not	material	to	our	consolidated	financial	statements	and	accordingly,	we	have	not	provided	pro	forma	information	relating	to these	acquisitions.

In	addition,	during	fiscal	2008,	we	acquired	a	customer	list	and	long-term	merchant	referral	agreement	in	our	Canadian	merchant	services	channel	for	$1.7 million.	The	value	assigned	to	the	customer	list	of	$0.1	million	was	expensed	immediately.	The	remaining	value	was	assigned	to	the	merchant	referral	agreement	and	is being	amortized	on	a	straight-line	basis	over	its	useful	life	of	10	years.

# NOTE	3—DISCONTINUED	OPERATIONS

On	May	26,	2010,	we	completed	the	disposition	of	our	DolEx	and	Europhil-branded	money	transfer	businesses	to	an	affiliate	of	Palladium	Equity	Partners,	LLC for	$85.0	million.	Under	the	terms	of	the	sale	and	purchase	agreement,	we	received	net	proceeds	of	$60.2	million	($85.0	million	less	$24.8	million	remaining	in	the business	at	closing),	subject	to	final	working	capital	adjustments.

The	operating	results	of	the	money	transfer	segment	have	been	reported	as	discontinued	operations	as	follows:

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Revenues | $117,882 | $139,218 | $143,621 |
| Operating\tincome\t(loss)\t(includes\timpairment\tcharge\tof\t$147,664\tin\tfiscal\t2009) | 7,724 | (131,117) | 13,636 |
| Estimated\tloss\ton\tdisposal | (24,567) | — | — |
| Other\t(expense)\tincome | (229) | 275 | 1,008 |
| (Loss)\tincome\tbefore\tincome\ttaxes | (17,072) | (130,842) | 14,644 |
| Income\ttax\tbenefit\t(provision) | 13,171 | (1,997) | (5,027) |
| (Loss)\tincome\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | $(3,901) | $(132,839) | $9,617 |

The	estimated	loss	on	disposal	includes	estimated	costs	to	sell	of	$1.5	million.	The	fiscal	year	2010	income	tax	benefit	includes	$15.7	million	of	tax	benefits associated	with	the	disposition.	The	impairment	charge	in	fiscal	year	2009	was	not	deductible	for	tax	purposes.	The	notes	to	the	consolidated	financial	statements	have been	adjusted	to	exclude	discontinued	operations	unless	otherwise	noted.

# NOTE	4—PROPERTY	AND	EQUIPMENT

As	of	May	31,	2010	and	2009,	property	and	equipment	consisted	of	the	following:

|  | in	Years | 2010 | 2009 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Land | N/A | $1,891 | $2,288 |
| Buildings | 14-40 | 34,344 | 38,356 |
| Equipment | 2-5 | \t 126,963 | 122,200 |
| Software | 5-10 | \t 103,429 | 55,474 |
| Leasehold\timprovements | 5-15 | 8,594 | 13,731 |
| Furniture\tand\tfixtures | 5-7 | 4,034 | 6,525 |
| Work\tin\tprogress | N/A | 24,085 | 58,841 |
|  |  | \t 303,340 | 297,415 |
| Less\taccumulated\tdepreciation\tand\tamortization\tof\tproperty\tand\tequipment |  | \t 119,402 | 121,189 |
|  |  | $183,938 | $176,226 |

Depreciation	and	amortization	expense	of	property	and	equipment	was	$35.9	million,	$35.4	million,	and	$28.9	million	for	fiscal	2010,	2009	and	2008, respectively.

# NOTE	5—GOODWILL	AND	INTANGIBLE	ASSETS

As	of	May	31,	2010	and	2009,	goodwill	and	intangible	assets	consisted	of	the	following:

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Goodwill | $569,090 | $625,120 |
| Customer-related\tintangible\tassets | 322,053 | 390,232 |
| Trademarks,\tindefinite\tlife | — | 32,944 |
| Trademarks,\tfinite\tlife | 8,046 | 8,414 |
| Contract-based\tintangible\tassets | 20,087 | 16,064 |
|  | 919,276 | 1,072,774 |
| Less\taccumulated\tamortization\ton: |  |  |
| Customer-related\tintangible\tassets | 136,333 | 181,908 |
| Trademarks | 2,691 | 2,594 |
| Contract-based\tintangible\tassets | 6,052 | 5,058 |
|  | 145,076 | 189,560 |
|  | $774,200 | $883,214 |

The	following	table	discloses	the	changes	in	the	carrying	amount	of	goodwill	for	the	years	ended	May	31,	2010	and	2009:

|  | America<br>merchant<br>services | International<br>merchant<br>services | Discontinued<br>operations | Total |
| :--- | :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |  |
| Balance\tat\tMay\t31,\t2008 | $196,114 | $110,011 | $191,011 | $497,136 |
| Goodwill\tacquired | 863 | 340,326 | 739 | 341,928 |
| Impairment\tcharge | — | — | (136,800) | (136,800) |
| Purchase\tprice\tallocation\tadjustments | — | 1,715 | — | 1,715 |
| Effect\tof\tforeign\tcurrency\ttranslation | (8,575) | (65,734) | (4,550) | (78,859) |
| Balance\tat\tMay\t31,\t2009 | \t 188,402 | 386,318 | 50,400 | 625,120 |
| Goodwill\tacquired | 17,695 | — | — | 17,695 |
| Purchase\tprice\tallocation\tadjustments | — | (790) | — | (790) |
| Disposition | — | — | (49,836) | (49,836) |
| Effect\tof\tforeign\tcurrency\ttranslation | 3,968 | (26,503) | (564) | (23,099) |
| Balance\tat\tMay\t31,\t2010 | $210,065 | $359,025 | $— | $569,090 |

Trademarks	with	a	finite	life,	customer-related	intangible	assets	and	contract-based	intangible	assets	acquired	during	the	year	ended	May	31,	2010	have	weighted average	amortization	periods	of	8.0	years,	9.7	years	and	4.6	years,	respectively.	Trademarks	with	a	finite	life,	customer-related	intangible	assets	and	contract-based intangible	assets	acquired	during	the	year	ended	May	31,	2009	have	weighted	average	amortization	periods	of	8.3	years,	13.2	years	and	6.9	years,	respectively. Amortization	expense	of	acquired	intangibles	was	$32.8	million,	$30.9	million,	and	$15.1	million	for	fiscal	2010,	2009	and	2008,	respectively.

The	estimated	amortization	expense	of	acquired	intangibles	as	of	May	31,	2010	for	the	next	five	fiscal	years	is	as	follows	(in	thousands):

# NOTE	6—LONG-TERM	DEBT	AND	CREDIT	FACILITIES

•	 Philippines—a	revolving	facility	with	HSBC	Bank,	Philippines,	for	up	to	350	million	Pesos	and	$1.5	million	United	States	dollars	to	fund	merchants	prior	to receipt	of	corresponding	settlement	funds	from	the	card	associations.	The	facility	has	variable	short	term	interest	rates	plus	a	margin.	As	of	May	31,	2010	the interest	rates	on	the	facility	was	4.5%	for	the	Pesos	tranche	and	0.8%	for	the	United	States	dollars	trance.	This	facility	is	subject	to	annual	review.

Prior	to	entering	into	this	facility	HSBC	funded	all	Hong	Kong	merchant	payments	pursuant	to	our	marketing	alliance	agreement.	Accordingly,	the associated	funding	obligation	was	included	in	settlement	processing	on	our	consolidated	balance	sheets.	From	the	effective	date	of	this	facility,	this	funding obligation	is	included	in	lines	of	credit	from	the	effective	date	of	the	credit	facility	on	our	consolidated	balance	sheets.

On	June	23,	2008,	we	entered	into	a	five	year	unsecured	$200.0	million	term	loan	agreement	with	a	syndicate	of	banks	in	the	United	States	to	partially	fund	our HSBC	Merchant	Services	LLP	acquisition.	The	term	loan	bears	interest,	at	our	election,	at	the	prime	rate	or	LIBOR,	plus	a	margin	based	on	our	leverage	position.	As	of May	31,	2010	and	2009,	the	interest	rate	on	the	term	loan	was	1.4%.	The	term	loan	calls	for	quarterly	principal	payments	of	$5.0	million	beginning	with	the	quarter ended	August	31,	2008	and	increasing	to	$10.0	million	beginning	with	the	quarter	ending	August	31,	2010	and	$15.0	million	beginning	with	the	quarter	ending August	31,	2011.	As	of	May	31,	2010,	the	outstanding	balance	of	the	term	loan	was	$165.0	million.	The	$5.0	million	quarterly	principal	payment	scheduled	for	May	31, 2010	was	paid	on	June	1,	2010,	as	the	contractual	payment	due	date	fell	on	a	holiday.

# Compliance	with	Covenants

There	are	certain	financial	and	non-financial	covenants	contained	in	our	various	credit	facilities	and	term	loans.	We	complied	with	these	covenants	as	of	May	31, 2010.

# NOTE	7—ACCOUNTS	PAYABLE	AND	ACCRUED	LIABILITIES

As	of	May	31,	2010	and	2009,	accounts	payable	and	accrued	liabilities	consisted	of	the	following:

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Trade\taccounts\tpayable | $15,426 | $36,858 |
| Compensation\tand\tbenefits | 31,663 | 30,801 |
| Third\tparty\tprocessing\texpenses | 13,767 | 10,846 |
| Commissions\tto\tthird\tparties | 38,729 | 34,525 |
| Assessment\texpenses | 14,237 | 13,715 |
| Transition\tservices\tpayable\tto\tHSBC\tUK\tand\tHSBC\tAsia\tPacific | 9,594 | 14,258 |
| Other | 50,159 | 26,697 |
|  | $173,575 | $167,700 |

# NOTE	8—RETIREMENT	BENEFITS

# Pension	Plans

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	2010,	2009	and	2008	were actuarially	determined.

The	following	tables	provide	a	reconciliation	of	the	aggregate	pension	plan	changes	in	the	benefit	obligations	and	fair	value	of	assets	over	the	two	year	period ending	May	31,	2010	and	a	statement	of	estimated	future	benefit	payments	at	May	31	for	each	year:

# Changes	in	benefit	obligations

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $9,469 | $9,346 |
| Interest\tcost | 652 | 630 |
| Actuarial\tloss\t(gain) | 2,337 | (211) |
| Benefits\tpaid | (336) | (296) |
| Balance\tat\tend\tof\tyear | $12,122 | $9,469 |

# Changes	in	plan	assets

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | $6,984 | $8,873 |
| Actual\treturn\ton\tplan\tassets | \t 1,050 | (1,793) |
| Employer\tcontributions | 243 | 200 |
| Benefits\tpaid | (336) | (296) |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | $7,941 | $6,984 |

# Amounts	recognized	in	consolidated	balance	sheets

|  | (in	thousands) |  |
| :--- | :--- | :--- |
| Current\tassets | $— | $— |
| Noncurrent\tliabilities | (4,181) | (2,485) |
| Total | $(4,181) | $(2,485) |

# Information	about	accumulated	benefit	obligation

# Other	changes	in	plan	assets	and	benefit	obligations	recognized	in	other	comprehensive	income	(loss)

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Net\tactuarial\tloss\t(gain) | $1,843 | $2,289 | $(689) |
| Amortization\tof\tnet\tloss | (210) | — | (40) |
| Amortization\tof\tprior\tservice\tcost | (14) | (14) | (14) |
| Total\trecognized\tin\tother\tcomprehensive\tloss\t(income) | $1,619 | $2,275 | $(743) |

The	estimated	net	loss	and	prior	service	cost	for	the	defined	benefit	pension	plans	that	will	be	amortized	from	accumulated	other	comprehensive	income	into	net periodic	benefit	cost	over	the	next	fiscal	year	are	not	significant.

# Amounts	recognized	in	accumulated	other	comprehensive	income	(loss)

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Net\tactuarial\tloss | $4,545 | $2,911 | $622 |
| Prior\tservice\tcost | 88 | 102 | 116 |
| Deferred\tincome\ttax\tbenefit | (1,684) | (1,099) | (267) |
| Total | $2,949 | $1,914 | $471 |

# Weighted	average	assumptions	used	to	determine	benefit	obligations	(at	end	of	period)

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Discount\trate—Qualified\tPlan | 5.75% | 7.00% | 6.75% |
| Discount\trate—SERP | 5.75 | 7.00 | 6.75 |
| Rate\tof\tincrease\tin\tcompensation\tlevels | N/A | N/A | N/A |

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Discount\trate—Qualified\tPlan | 7.00% | 6.75% | 6.00% |
| Discount\trate—SERP | 7.00 | 6.75 | 6.00 |
| Expected\tlong-term\trate\tof\treturn\ton\tassets | 8.00 | 8.00 | 8.00 |
| Rate\tof\tincrease\tin\tcompensation\tlevels | N/A | N/A | N/A |

The	expected	long-term	return	on	plan	assets	was	derived	by	applying	the	weighted-average	target	allocation	to	the	expected	return	by	asset	category	shown	in	the table	below.	These	assumptions	and	allocations	were	evaluated	using	input	from	a	third	party	consultant.	Overall,	the	expected	return	assumption	for	each	asset	class utilized	is	based	on	expectation	of	future	returns.

# Plan	assets

The	pension	plan	weighted	average	asset	allocations	at	May	31,	2010	and	2009	by	asset	category	are	as	follows:

| Asset	Category | 2010 | 2009 | Target<br>2010 | Expected<br>Return |
| :--- | :--- | :--- | :--- | :--- |
| Equity\tsecurities | 56.0% | 56.0% | 70.0% | 9.0% |
| Debt\tsecurities | 38.0 | 39.0 | 30.0 | 5.7 |
| Real\testate | 2.0 | 1.0 | 0.0 | 0.0 |
| Cash\tequivalents | 4.0 | 4.0 | 0.0 | 0.0 |
| Total | 100.0% | 100.0% | 100.0% | 8.0% |

Our	investment	policy	and	strategies	for	plan	assets	involve	a	balanced	approach	to	achieve	our	long-term	investment	objectives.	We	selected	a	blended investment	approach	to	diversify	the	asset	pool	while	reducing	the	risk	of	wide	swings	in	the	market	from	year-to-year.	The	pension	plan's	investment	goals	are	to generate	a	return	in	excess	of	8.0%	over	a	full	market	cycle.	The	investment	portfolio	contains	enough	diversification	of	investments	to	reduce	risk	and	provide	growth of	capital	and	income.	The	securities	investment	guideline	details	the	categories	of	investments	that	are	not	eligible	for	investment	without	specific	approval.	These include	the	following:	short	sales,	margin	transactions,	commodities	or	other	commodity	contracts,	unregistered	securities,	investment	in	companies	that	have	filed	a petition	for	bankruptcy	or	investments	for	the	purpose	of	exercising	control	of	management.

# Contributions

We	expect	to	contribute	$0.6	million	to	the	noncontributory	defined	benefit	pension	plan	in	fiscal	2011.	We	do	not	expect	to	make	contributions	to	the	SERP	in fiscal	2011.

# Estimated	future	benefit	payments

The	following	benefit	payments	are	expected	to	be	paid	during	the	years	ending	May	31	(in	thousands):

| 2011 | $338 |
| :--- | :--- |
| 2012 | 358 |
| 2013 | 420 |
| 2014 | 443 |
| 2015 | 484 |
| 2016-2020 | $3,466 |

# Employee	Retirement	Savings	Plan

We	have	a	deferred	compensation	401(k)	Plan.	The	plan	provides	tax	deferred	amounts	for	each	participant	consisting	of	employee	elective	contributions	and certain	of	our	matching	contributions.	We	contributed	$2.1	million,	$2.1	million	and	$1.8	million	to	the	401(k)	Plan	in	each	of	the	years	ended	May	31,	2010,	2009	and 2008,	respectively.

We	also	have	defined	contribution	plans	in	the	United	Kingdom	and	Asia-Pacific.	For	the	year	ended	May	31,	2010	and	2009,	we	contributed	$1.5	million	and $1.3	million,	respectively,	to	the	United	Kingdom	plan.	We	contributed	$1.9	million,	$0.6	million	and	$0.5	million	to	the	plans	in	the	Asia-Pacific	in	each	of	the	years ended	May	31,	2010,	2009	and	2008,	respectively.

# NOTE	9—INCOME	TAXES

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

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Current\ttax\texpense: |  |  |  |
| Federal | $37,151 | $64,308 | $69,633 |
| State | 1,561 | 4,758 | 4,523 |
| Foreign | \t 14,266 | 6,927 | 4,957 |
|  | \t 52,978 | \t 75,993 | \t 79,113 |
| Deferred\ttax\texpense: |  |  |  |
| Federal | \t 23,240 | 2,381 | 4,427 |
| State | 1,933 | 349 | 650 |
| Foreign | 9,228 | 6,529 | 1,371 |
|  | \t 34,401 | 9,260 | 6,448 |
| Provision\tfor\tincome\ttaxes | \t 87,379 | \t 85,252 | \t 85,561 |
| Tax\tallocated\tto\tnoncontrolling\tinterest\tin\ta\ttaxable\tentity | (587) | (1,622) | (700) |
| Net\tincome\ttax\texpense | $86,792 | $83,630 | $84,861 |

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

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterest—U.S. | $189,116 | $204,947 | $227,860 |
| Income\tbefore\tincome\ttaxes\tand\tnoncontrolling\tinterest—Foreign | \t 121,273 | 87,322 | 18,899 |
| Income\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes | \t 310,389 | \t 292,269 | \t 246,759 |
| Noncontrolling\tinterest,\tnet\tof\ttax | (15,792) | (36,961) | (8,061) |
| Tax\texpense\tallocated\tto\tnoncontrolling\tinterest | (587) | (1,622) | (700) |
| Income\tfrom\tcontinuing\toperations\tattributable\tto\tGlobal\tPayments\tbefore\tincome\ntaxes | $294,010 | \t 253,686 | \t 238,998 |

Our	effective	tax	rates,	as	applied	to	income	before	income	taxes	on	continuing	operations	including	the	effect	of	noncontrolling	interest,	for	the	years	ended May	31,	2010,	2009,	and	2008	respectively,	differ	from	federal	statutory	rates	as	follows:

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Federal\tstatutory\trate | 35.0% | 35.0% | 35.0% |
| State\tincome\ttaxes,\tnet\tof\tfederal\tincome\ttax\tbenefit | 0.8 | 1.3 | 1.4 |
| Foreign\tincome\ttaxes | (3.3) | (2.4) | (1.1) |
| Foreign\tinterest\tincome\tnot\tsubject\tto\ttax | (1.9) | (1.7) | 0.0 |
| Tax\tcredits\tand\tother | (1.0) | 0.8 | 0.3 |
| Effective\ttax\trate | 29.6% | 33.0% | 35.6% |

Deferred	income	taxes	as	of	May	31,	2010	and	2009	reflect	the	impact	of	temporary	differences	between	the	amounts	of	assets	and	liabilities	for	financial accounting	and	income	tax	purposes.	Our	investments	in	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.

As	of	May	31,	2010	and	2009,	principal	components	of	deferred	tax	items	were	as	follows:

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Deferred\ttax\tassets: |  |  |
| Equity\tcompensation | $11,956 | $11,681 |
| Bad\tdebt\texpense | 3,038 | 3,298 |
| Foreign\tNOL\tcarryforward | 3,754 | 4,903 |
| U.S.\tNOL\tcarryforward | 2,826 | — |
| U.S.\tcapital\tloss\tcarryforward | 18,011 | — |
| Basis\tdifference—UK\tbusiness | 87,474 | — |
| Tax\tcredits | 2,685 | 6,116 |
|  | \t 129,744 | 25,998 |
| Less:\tvaluation\tallowance | (22,406) | (9,513) |
| Net\tdeferred\ttax\tasset | \t 107,338 | 16,485 |
| Deferred\ttax\tliabilities: |  |  |
| Accrued\texpenses\tand\tother | 495 | 5,025 |
| Foreign\tcurrency\ttranslation | 32,258 | 32,813 |
| Acquired\tintangibles | 40,885 | 41,484 |
| Prepaid\texpenses | 4,354 | 4,719 |
| Property\tand\tequipment | 24,389 | 5,060 |
|  | \t 102,381 | 89,101 |
| Net\tdeferred\ttax\tasset\t(liability) | 4,957 | (72,616) |
| Less:\tcurrent\tnet\tdeferred\ttax\tasset | 2,752 | 3,789 |
| Net\tnoncurrent\tdeferred\ttax\tasset\t(liability) | $2,205 | $(76,405) |

As	required	by	FASB	guidance,	we	offset	current	and	non-current	deferred	tax	assets	and	deferred	tax	liabilities	by	tax	jurisdiction	for	purposes	of	balance	sheet presentation.	The	following	is	a	reconciliation	of	the	non-current	deferred	tax	assets	and	liabilities	reflected	on	our	balance	sheets	to	the	amounts	disclosed	above	for footnote	purposes,	which	do	not	reflect	offsetting	by	tax	jurisdiction:

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,	2010	are	summarized	below	(in	thousands):

| Valuation	allowance	at	May	31,	2009 | $(9,513) |
| :--- | :--- |
| Allowance\tfor\tnet\toperating\tlosses\tof\tforeign\tsubsidiaries | 1,584 |
| Allowance\tfor\tU.S.\tcapital\tloss\tcarryforward | (18,011) |
| Other | 3,534 |
| Valuation\tallowance\tat\tMay\t31,\t2010 | $(22,406) |

Net	operating	loss	carryforwards	of	foreign	subsidiaries	totaling	$21.6	million	and	U.S.	net	operating	loss	carryforwards	acquired	during	the	current	fiscal	year totaling	$7.9	million	at	May	31,	2010	will	expire	if	not	utilized	between	May	31,	2014	and	May	31,	2017.	Capital	loss	carryforwards	of	U.S.	subsidiaries	totaling	$18.0 million	will	expire	if	not	utilized	by	May	31,	2015.	Tax	credit	carryforwards	totaling	$2.7	million	at	May	31,	2010	will	expire	if	not	utilized	between	May	31,	2014	and May	31,	2020.

Due	to	the	June	12,	2009	acquisition	of	the	remaining	49%	interest	from	in	HSBC	Merchant	Services	LLP,	our	tax	basis	in	the	LLP	exceeds	our	book	basis	and we	recorded	a	deferred	tax	asset,	currently	valued	at	$87.5	million.	Please	see	Note	2—Business	and	Intangible	Asset	Acquisitions	for	further	information.

As	of	May	31,	2010,	other	long-term	liabilities	included	liabilities	for	unrecognized	income	tax	benefits	of	$20.8	million.

A	reconciliation	of	the	beginning	and	ending	amount	of	unrecognized	tax	benefits	is	as	follows	(in	thousands):

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Balance\tat\tthe\tbeginning\tof\tthe\tyear | $10,313 | $3,713 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | \t 13,106 | 7,258 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 151 | 167 |
| Foreign\tcurrency\timpact\tfor\ttax\tpositions | (796) | 237 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (2,024) | (1,062) |
| Settlements\twith\ttaxing\tauthorities | — | — |
| Balance\tat\tthe\tend\tof\tthe\tyear | $20,750 | $10,313 |

As	of	May	31,	2010,	the	total	amount	of	gross	unrecognized	tax	benefits	that,	if	recognized,	would	affect	the	effective	tax	rate	is	$1.4	million.

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	2010,	2009	and	2008.

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,	United	Kingdom	and Canada.	With	few	exceptions,	we	are	no	longer	subject	to	income	tax	examinations	for	years	ended	May	31,	2004	and	prior.

# NOTE	10—SHAREHOLDERS'	EQUITY

On	April	23,	2010,	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	or	as	otherwise	may	be	determined	by	us,	subject	to	market	conditions,	business	opportunities,	and	other	factors.	Under	this	authorization,	we repurchased	2,382,890	shares	of	our	common	stock	at	a	cost	of	$100.0	million,	or	an	average	of	$41.97	per	share,	including	commissions.	Repurchased	shares	are	held as	treasury	stock.

In	addition,	we	have	$13.0	million	remaining	under	the	authorization	from	our	original	share	repurchase	program	initiated	during	fiscal	2007.	These	repurchased shares	were	retired	and	are	available	for	future	issuance.	We	did	not	repurchase	shares	under	this	plan	in	fiscal	2010.	This	authorization	has	no	expiration	date	and	may be	suspended	or	terminated	at	any	time.

# NOTE	11—SHARE-BASED	AWARDS	AND	OPTIONS

As	of	May	31,	2010,	we	have	four	share-based	employee	compensation	plans.	For	all	share-based	awards	granted	after	June	1,	2006,	compensation	expense	is recognized	on	a	straight-line	basis.	The	fair	value	of	share-based	awards	granted	prior	to	June	1,	2006	is	amortized	as	compensation	expense	on	an	accelerated	basis	from the	date	of	the	grant.

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"),	and	an	Amended and	Restated	2000	Non-Employee	Director	Stock	Option	Plan	(the	"Director	Plan")	(collectively,	the	"Plans").	Effective	with	the	adoption	of	the	2005	Plan,	there	are	no future	grants	under	the	2000	Plan.	Shares	available	for	future	grant	as	of	May	31,	2010	are	2.7	million	for	the	2005	Plan	and	0.4	million	for	the	Director	Plan.

Certain	executives	are	also	granted	Performance-Based	Restricted	Stock	Units	("RSU"s).	RSUs	represent	the	right	to	earn	shares	of	Global	stock	if	certain performance	measures	are	achieved	during	the	grant	year.	The	target	number	of	RSUs	and	target	performance	measures	are	set	by	our	Compensation	Committee.	RSUs are	converted	to	a	stock	grant	only	if	the	Company's	performance	during	the	fiscal	year	exceeds	pre-established	goals

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

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| Share-based\tcompensation\tcost | $18.1 | $14.6 | $13.8 |
| Income\ttax\tbenefit | $(6.3) | $(5.2) | $(4.9) |

# 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 with	respect	to	25%	of	the	shares	granted,	an	additional	25%	after	two	years,	an	additional	25%	after	three	years,	and	the	remaining	25%	after	four	years.	The	Plans provide	for	accelerated	vesting	under	certain	conditions.	We	have	historically	issued	new	shares	to	satisfy	the	exercise	of	options.

The	following	is	a	summary	of	our	stock	option	plans	as	of	and	for	the	years	ended	May	31,	2010	and	2009:

|  |  | Weighted | Remaining |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Average | Contractual |  |
|  |  | Exercise | Term | Aggregate |
|  | Options | Price | (years) | Intrinsic\tValue |
|  | (in\tthousands) |  |  | (in\tmillions) |
| Outstanding\tat\tMay\t31,\t2008 | 4,536 | $27 |  |  |
| Granted | 260 | 43 |  |  |
| Forfeited | (91) | 39 |  |  |
| Exercised | (412) | 22 |  |  |
| Outstanding\tat\tMay\t31,\t2009 | 4,293 | 28 |  |  |
| Granted | 285 | 43 |  |  |
| Forfeited | (179) | 28 |  |  |
| Exercised | (1,357) | 23 |  |  |
| Outstanding\tat\tMay\t31,\t2010 | 3,042 | 31 |  |  |
| Options\tvested\tand\texercisable\tat\tMay\t31,\t2010 | 2,369 | $28 | 3.9 | $33 |
| Options\tvested\tand\texercisable\tat\tMay\t31,\t2009 | 3,292 | $28 | 4.6 | $24 |

The	aggregate	intrinsic	value	of	stock	options	exercised	during	the	fiscal	years	2010,	2009	and	2008	was	$30.1	million,	$8.1	million	and	$16.9	million, respectively.	As	of	May	31,	2010,	we	had	$4.9	million	of	total	unrecognized	compensation	cost	related	to	unvested	options,	which	we	expect	to	recognize	over	a weighted	average	period	of	1.7	years.

The	weighted	average	grant-date	fair	values	of	each	option	granted	in	fiscal	2010,	2009,	and	2008	under	each	plan	are	as	follows:

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
| 2005\tPlan | $14 | $13 | $13 |
| Director\tPlan | $15 | $13 | $15 |

The	fair	value	of	each	option	granted	during	fiscal	2010,	2009	and	2008	was	estimated	on	the	date	of	grant	using	the	Black-Scholes	valuation	model	with	the following	weighted	average	assumptions	used	for	the	grants	during	the	respective	period:

The	risk-free	interest	rate	is	based	on	the	yield	of	a	zero	coupon	United	States	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.

# Restricted	Stock

Shares	awarded	under	the	restricted	stock	program,	issued	under	the	2000	Plan	and	2005	Plan,	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.	Compensation	expense	is	recognized	ratably	during	the	escrow	period	of	the	award.

Grants	of	restricted	shares	are	subject	to	forfeiture	if	a	grantee,	among	other	conditions,	leaves	our	employment	prior	to	expiration	of	the	restricted	period.	Grants of	restricted	shares	generally	vest	one	year	after	the	date	of	grant	with	respect	to	25%	of	the	shares	granted,	an	additional	25%	after	two	years,	an	additional	25%	after three	years,	and	the	remaining	25%	after	four	years.

The	following	table	summarizes	the	changes	in	non-vested	restricted	stock	awards	for	the	years	ended	May	31,	2010	and	2009	(share	awards	in	thousands):

|  |  | Weighted		Average |
| :--- | :--- | :--- |
|  |  | Grant-Date |
|  | Shares | Fair\tValue |
| Non-vested\tat\tMay\t31,\t2008 | 518 | $39 |
| Granted | 430 | 43 |
| Vested | (159) | 39 |
| Forfeited | (27) | 41 |
| Non-vested\tat\tMay\t31,\t2009 | 762 | 42 |
| Granted | 420 | 42 |
| Vested | (302) | 41 |
| Forfeited | (167) | 43 |
| Non-vested\tat\tMay\t31,\t2010 | 713 | 42 |

The	weighted	average	grant-date	fair	value	of	share	awards	granted	in	the	year	ended	May	31,	2008	was	$38.	The	total	fair	value	of	share	awards	vested	during	the years	ended	May	31,	2010,	2009	and	2008	was	$12.4	million,	$6.2	million	and	$4.1	million,	respectively.

We	recognized	compensation	expense	for	restricted	stock	of	$12.1	million,	$9.0	million,	and	$5.7	million	in	the	years	ended	May	31,	2010,	2009	and	2008.	As	of May	31,	2010,	there	was	$21.1	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,	2010,	0.9	million	shares	had	been	issued	under	this	plan,	with	1.5	million	shares	reserved	for	future	issuance.

The	weighted	average	grant-date	fair	value	of	each	designated	share	purchased	under	this	plan	was	$7,	$6	and	$6	in	the	years	ended	May	31,	2010,	2009	and 2008,	respectively.	These	values	represent	the	fair	value	of	the	15%	discount.

# NOTE	12—NONCONTROLLING	INTERESTS

Effective	June	1,	2009,	we	adopted	the	FASB	guidance	on	noncontrolling	interests.	The	following	table	details	the	components	of	redeemable	noncontrolling interests	for	the	fiscal	years	ended	2010	and	2009:

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Beginning\tbalance | $399,377 | $87,390 |
| Increase\tin\tredeemable\tnoncontrolling\tinterests\tresulting\tfrom\tacquisitions | — | 429,897 |
| Acquisition\tof\tredeemable\tnoncontrolling\tinterest | (307,675) | — |
| Net\tincome\tattributable\tto\tredeemable\tnoncontrolling\tinterests,\tnet\tof\ttax | 7,763 | 29,490 |
| Distributions\tto\tredeemable\tnoncontrolling\tinterest | (11,896) | (25,461) |
| Increase\t(decrease)\tin\tfair\tvalue\tof\tredeemable\tnoncontrolling\tinterests | 15,103 | (121,939) |
| Ending\tbalance | $102,672 | $399,377 |

For	the	fiscal	years	ended	2010,	2009	and	2008,	net	income	included	in	the	consolidated	statements	of	changes	in	shareholders'	equity	is	reconciled	to	net	income presented	in	the	consolidated	statements	of	income	as	follows:

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $ 203,317 | $ 37,217 | $162,754 |
| Net\tincome\tattributable\tto\tnonredeemable\tnoncontrolling\tinterest,\tnet\tof\ttax | 8,029 | 7,471 | 8,860 |
| Subtotal | 211,346 | 44,688 | 171,614 |
| Net\tincome\t(loss)\tattributable\tto\tredeemable\tnoncontrolling\tinterest,\tnet\tof\ttax | 7,763 | 29,490 | (799) |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $ 219,109 | $ 74,178 | $170,815 |

# NOTE	13—SEGMENT	INFORMATION

# General	information

We	have	historically	operated	in	three	reportable	segments,	which	were	defined	as	North	America	Merchant	Services,	International	Merchant	Services,	and Money	Transfer.	Beginning	with	the	three	months	ended	November	30,	2009,	our	Money	Transfer	segment	has	been	reported	as	discontinued	operations.	The	following tables	reflect	our	segments	included	in	continuing	operations.	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,	2010,	2009,	and	2008:

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Revenues: |  |  |  |
| United\tStates | $902,844 | $805,557 | $731,214 |
| Canada | 317,272 | 301,294 | 267,249 |
| North\tAmerica\tmerchant\tservices | \t 1,220,116 | \t 1,106,851 | 998,463 |
| Europe | 315,023 | 265,121 | 59,778 |
| Asia-Pacific | 107,329 | 90,334 | 72,367 |
| International\tmerchant\tservices | 422,352 | 355,455 | 132,145 |
| Consolidated\trevenues | $1,642,468 | $1,462,306 | $1,130,608 |
| Operating\tincome\tfor\tsegments: |  |  |  |
| North\tAmerica\tmerchant\tservices | $275,386 | $272,972 | $275,355 |
| International\tmerchant\tservices | 113,699 | 82,763 | 17,674 |
| Corporate | (65,806) | (63,189) | (53,989) |
| Impairment,\trestructuring\tand\tother | — | — | (1,317) |
| Consolidated\toperating\tincome | $323,279 | $292,546 | $237,723 |
| Depreciation\tand\tamortization: |  |  |  |
| North\tAmerican\tmerchant\tservices | $26,221 | $23,443 | $26,208 |
| International\tmerchant\tservices | 40,564 | 38,074 | 12,176 |
| Discontinued\toperations | 1,363 | 4,263 | 5,192 |
| Corporate | 519 | 508 | 458 |
| Consolidated\tdepreciation\tand\tamortization | $68,667 | $66,288 | $44,034 |

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,	2010	and	2009:

|  | 2010 | 2009 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| United\tStates | $263,385 | $302,048 |
| Canada | 165,862 | 158,978 |
| Europe | 447,683 | 516,093 |
| Asia-Pacific | 81,208 | 80,976 |
| Latin\tAmerica | — | 1,345 |
|  | $958,138 | $1,059,440 |

# NOTE	14—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	2010,	2009	and	2008	was	$32.8	million,	$30.2	million,	and	$30.4 million,	respectively.

Future	minimum	lease	payments	for	all	noncancelable	leases	at	May	31,	2010	were	as	follows:

|  | Operating<br>Leases |
| :--- | :--- |
| 2011 | $9,856 |
| 2012 | 3,803 |
| 2013 | 2,538 |
| 2014 | 1,580 |
| 2015 | 928 |
| Thereafter | 1,428 |
| Total\tfuture\tminimum\tlease\tpayments | $20,133 |

# Legal

We	are	party	to	a	number	of	claims	and	lawsuits	incidental	to	our	business.	In	the	opinion	of	management,	the	reasonably	possible	outcome	of	such	matters, individually	or	in	the	aggregate,	will	not	have	a	material	adverse	impact	on	our	financial	position,	liquidity	or	results	of	operations.

# Taxes

We	define	operating	taxes	as	tax	contingencies	that	are	unrelated	to	income	taxes,	such	as	sales	and	property	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,	2010	and	2009	we	did	not	have	a	liability	for	operating	tax	items.	The	amount	of	the	liability	is	based	on	management's	best	estimate	given	our history	with	similar	matters	and	interpretations	of	current	laws	and	regulations.

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	for	Visa	transactions	and	Interbank Card	Association	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,	2010.

On	June	18,	2010,	CIBC	provided	notice	that	it	will	not	renew	its	sponsorship	with	us	for	Visa	in	Canada	after	the	initial	ten	year	term.	As	a	result,	their	Canadian Visa	sponsorship	will	expire	in	March	2011.	We	are

pursuing	alternatives	to	CIBC's	sponsorship,	including	filing	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	and	negotiating	with	other	financial	institutions.

# Disposition

During	fiscal	2009,	we	sold	a	20%	interest	in	Global	Payments	Credit	Services	("GPCS"),	a	leading	credit	information	company	in	Russia,	to	Equifax	Decision Systems,	BV	("Equifax")	for	$3.0	million	in	cash	(the	"GPCS	sale").	Due	to	capital	contribution	requirements	included	in	the	GPCS	shareholders	agreement,	we deferred	a	gain	of	$2.8	million	on	the	sale	of	the	interest.	We	anticipate	that	we	will	recognize	this	gain	once	we	have	fulfilled	our	capital	contribution	requirements.

# NOTE	15—SUPPLEMENTAL	CASH	FLOW	INFORMATION

Supplemental	cash	flow	disclosures	and	non-cash	investing	and	financing	activities	for	the	years	ended	May	31,	2010,	2009	and	2008	are	as	follows:

|  | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Supplemental\tcash\tflow\tinformation: |  |  |  |
| Income\ttaxes\tpaid,\tnet\tof\trefunds | $72,649 | $87,591 | $72,827 |
| Interest\tpaid | $12,728 | $10,425 | $6,339 |
| Accrued\tliability\tfor\trepurchase\tof\tcommon\tstock | $1,920 | — | — |
| Financing\treceivables: |  |  |  |
| Investment\tin\tequipment\tfor\tfinancing\tleases | $(1,932) | — | — |
| Principal\tcollections\tfrom\tcustomers\t–\tfinancing\tleases | 1,753 | — | — |
| Net\tincrease\tin\tfinancing\treceivables | $(179) | — | — |

# NOTE	16—QUARTERLY	CONSOLIDATED	FINANCIAL	INFORMATION	(UNAUDITED)

Summarized	quarterly	results	for	the	years	ended	May	31,	2010	and	2009	(in	thousands,	except	per	share	data)	are	as	follows:

|  | August	31 | November	30 | February	28 | May	31 |
| :--- | :--- | :--- | :--- | :--- |
| 2010: |  |  |  |  |
| Revenues\t(1) | $409,932 | $408,951 | $398,535 | $425,050 |
| Operating\tincome\t(1) | 89,243 | 88,702 | 73,849 | 71,485 |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax\t(1) | 60,256 | 61,314 | 50,729 | 50,711 |
| Income\t(loss)\tfrom\tdiscontinued\toperations,\tnet\tof\ttax\t(1) | 2,188 | 4,868 | 722 | (11,679) |
| Net\tincome\tattributable\tto\tGlobal\tPayments\t(1) | 57,831 | 62,835 | 48,461 | 34,190 |
| Basic\tearnings\tper\tshare\t(1) | 0.72 | 0.77 | 0.60 | 0.42 |
| Diluted\tearnings\tper\tshare\t(1) | 0.71 | 0.76 | 0.59 | 0.42 |
| 2009: |  |  |  |  |
| Revenues\t(1) | $368,960 | $365,884 | $359,528 | $367,934 |
| Operating\tincome\t(1) | 88,619 | 77,882 | 62,383 | 63,662 |
| Income\tfrom\tcontinuing\toperations,\tnet\tof\ttax\t(1) | 62,946 | 57,206 | 42,700 | 44,165 |
| Income\t(loss)\tfrom\tdiscontinued\toperations,\tnet\tof\ttax\t(1) | 2,902 | 3,040 | (141,418) | 2,637 |
| Net\tincome\t(loss)\tattributable\tto\tGlobal\tPayments\t(1) | 57,527 | 48,907 | (106,776) | 37,559 |
| Basic\tearnings\tper\tshare\t(loss)\t(1) | 0.72 | 0.61 | (1.33) | 0.47 |
| Diluted\tearnings\tper\tshare\t(loss)\t(1) | 0.71 | 0.60 | (1.33) | 0.46 |

(1) Amounts	related	to	our	discontinued	operations	in	fiscal	quarters	prior	to	November	30,	2009	have	been	reclassified	to	conform	with	current	presentation.	Please see	Note	3	–	Discontinued	Operations	for	further	information.

# SCHEDULE	II

# Valuation	&	Qualifying	Accounts

(1) Included	in	settlement	processing	obligations

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

# ITEM	9A—CONTROLS	AND	PROCEDURES

# Evaluation	of	Disclosure	Controls	and	Procedures

As	of	May	31,	2010,	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,	2010,	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,	2010.	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,	2010,	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,	2010	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	2010	Annual	Meeting	of	Shareholders	to	be	held	on	September	30,	2010.

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	2010	Annual	Meeting	of	Shareholders	to	be	held	on	September	30,	2010.

# 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	2010	Annual	Meeting	of	Shareholders	to	be	held	on	September	30,	2010.

We	have	four	compensation	plans	under	which	our	equity	securities	are	authorized	for	issuance.	The	Global	Payments	Inc.	Amended	and	Restated	2000	Long- Term	Incentive	Plan,	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan,	the	Non-Employee	Director	Stock	Option	Plan,	and	Employee	Stock	Purchase Plan	have	been	approved	by	security	holders.	The	information	in	the	table	below	is	as	of	May	31,	2010.	For	more	information	on	these	plans,	see	Note	11	to	notes	to consolidated	financial	statements.

| Plan	category | Number	of	securities	to<br>be	issued	upon<br>exercise<br>of	outstanding<br>options,	warrants	and<br>rights<br>(a) | Weighted-<br>average		exercise<br>price	of	outstanding<br>options,	warrants<br>and	rights<br>(b) | Number	of	securities<br>remaining	available	for<br>future	issuance	under<br>equity	compensation	plans<br>(excluding	securities<br>reflected	in	column	(a))<br>(c) |
| :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders: | 3,042,337 | $31.44 | 4,632,007(1) |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tsecurity\tholders: | — | — | — |
| Total | 3,042,337 | $31.44 | 4,632,007(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	and	an	Amended	and	Restated	2000 Non-Employee	Director	Stock	Option	Plan.

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

We	incorporate	by	reference	in	this	Item	13	the	information	regarding	certain	relationships	and	related	transactions	between	us	and	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—Director	Independence"	from	our	proxy	statement	to	be	delivered	in	connection	with	our	2010	Annual	Meeting	of	Shareholders	to	be	held	on September	30,	2010.

# ITEM	14—PRINCIPAL	ACCOUNTING	FEES	AND	SERVICES

We	incorporate	by	reference	in	this	Item	14	the	information	regarding	principal	accounting	fees	and	services	contained	under	the	heading	"Auditor	Information" from	our	proxy	statement	to	be	delivered	in	connection	with	our	2010	Annual	Meeting	of	Shareholders	to	be	held	on	September	30,	2010.

# 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:

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.

10.3* Amendment	to	Employment	Agreement	for	Paul	R.	Garcia,	filed	as	Exhibit	10.3	to	the	Registrant's	Form	10-Q	dated	February	28,	2009,	File	No. 001-16111,	and	incorporated	herein	by	reference

10.4* Employment	Agreement	for	James	G.	Kelly,	filed	as	Exhibit	99.1	to	the	Registrant's	Form	8-K/A	dated	June	2,	2006,	File	No.	001-16111,	and incorporated	herein	by	reference.

10.5* Amendment	to	Employment	Agreement	for	James	G.	Kelly,	filed	as	Exhibit	10.4	to	the	Registrant's	Form	10-Q	dated	February	28,	2009,	File	No. 001-16111,	and	incorporated	herein	by	reference.

10.6* Amendment	to	Employment	Agreement	for	James	G.	Kelly,	filed	as	Exhibit	10.1	to	the	Registrant's	Form	8-K	dated	April	21,	2010,	File	No.	001- 16111,	and	incorporated	herein	by	reference.

10.7* Amended	and	Restated	Employment	Agreement	for	Joseph	C.	Hyde	dated	November	3,	2008,	filed	as	Exhibit	10.6	to	the	Registrant's	Form	10-Q dated	February	28,	2009,	File	No.	001-16111,	and	incorporated	herein	by	reference.

10.9* Amendment	to	Employment	Agreement	for	Suellyn	P.	Tornay	dated	June	1,	2001,	filed	as	Exhibit	10.5	to	the	Registrant's	Form	10-Q	dated February	28,	2009,	File	No.	001-16111,	and	incorporated	herein	by	reference.

10.10* Amended	and	Restated	2000	Long-Term	Incentive	Plan,	filed	as	Exhibit	10.9	to	the	Registrant's	Annual	Report	on	Form	10-K	dated	May	31, 2003,	File	No.	001-16111,	and	incorporated	herein	by	reference.

10.12* Second	Amendment	to	Amended	and	Restated	2000	Long-Term	Incentive	Plan,	dated	December	15,	2008	filed	as	Exhibit	10.1	to	the	Registrant's Form	10-Q	dated	February	28,	2009,	File	No.	001-16111,	and	incorporated	herein	by	reference.

10.13* 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.

10.14* Amendment	to	the	Third	Amended	and	Restated	2000	Non-Employee	Director	Stock	Option	Plan,	dated	March	28,	2007	filed	as	Exhibit	10.21	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* Amended	and	Restated	2000	Employee	Stock	Purchase	Plan	filed	as	Exhibit	99.2	to	the	Registrant's	Registration	Statement	on	Form	S-8	dated January	16,	2001,	File	No.	001-16111,	and	incorporated	herein	by	reference.

10.16* Form	of	Global	Payments	Inc.	Supplemental	Executive	Retirement	Plan	as	amended,	filed	as	Exhibit	10.12	to	the	Registrant's	Registration Statement	on	Form	10	dated	December	28,	2000,	File	No.	001-16111,	and	incorporated	herein	by	reference.

10.18* Form	of	Performance	Unit	Award	(U.S.	Officers)	pursuant	to	the	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan	filed	as Exhibit	10.3	to	the	Registrant's	Quarterly	Report	on	Form	10-Q,	dated	November	30,	2006,	File	No.	001-16111	and	incorporated	herein	by reference.

10.19* 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.

10.20* 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.

10.21* Form	of	Non-Statutory	Stock	Option	Award	pursuant	to	the	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan	(Hong	Kong employees)	filed	as	Exhibit	10.6	to	the	Registrant's	Quarterly	Report	on	Form	10-Q,	dated	November	30,	2006,	File	No.	001-16111	and incorporated	herein	by	reference.

10.22* Form	of	Non-Statutory	Stock	Option	Award	pursuant	to	the	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan	(certain	Asia- Pacific	employees)	filed	as	Exhibit	10.7	to	the	Registrant's	Quarterly	Report	on	Form	10-Q,	dated	November	30,	2006,	File	No.	001-16111	and incorporated	herein	by	reference.

10.23* Form	of	Restricted	Stock	Award	pursuant	to	the	Global	Payments	Inc.	Amended	and	Restated	2005	Incentive	Plan	filed	as	Exhibit	10.8	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	99.

# (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	28,	2010.

# Paul	R.	Garcia

Chairman	of	the	Board	of	Directors	and

# Chief	Executive	Officer

(Principal	Executive	Officer)

# David	E.	Mangum

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	Registrant	the	following	persons	on	behalf	of	Global Payments	Inc.	and	in	the	capacities	and	on	the	dates	indicated.

| Signature |  | Title | Date |
| :--- | :--- | :--- | :--- |
| /S/\t\t\t\tPAUL\tR.\tGARCIA | Chairman\tof\tthe\tBoard |  | July\t28,\t2010 |
| Paul\tR.\tGarcia |  |  |  |
| /S/\t\t\t\tWILLIAM\tI\tJACOBS | Lead\tDirector |  | July\t28,\t2010 |
| William\tI\tJacobs |  |  |  |
| /S/\t\t\t\tEDWIN\tH.\tBURBA,\tJR. | Director |  | July\t28,\t2010 |
| Edwin\tH.\tBurba,\tJr. |  |  |  |
| /S/\t\t\t\tALEX\tW.\t(PETE)\tHART | Director |  | July\t28,\t2010 |
| Alex\tW.\t(Pete)\tHart |  |  |  |
| /S/\t\t\t\tRAYMOND\tL.\tKILLIAN | Director |  | July\t28,\t2010 |
| Raymond\tL.\tKillian |  |  |  |
| /S/\t\t\t\tRUTH\tANN\tMARSHALL | Director |  | July\t28,\t2010 |
| Ruth\tAnn\tMarshall |  |  |  |
| /S/\t\t\t\tALAN\tM.\tSILBERSTEIN | Director |  | July\t28,\t2010 |
| Alan\tM.\tSilberstein |  |  |  |
| /S/\t\t\t\tMICHAEL\tW.\tTRAPP | Director |  | July\t28,\t2010 |

# INDEX	TO	EXHIBITS



Question: what is the percentage change in the total fair value of non-vested shares from 2009 to 2010?
Answer: -4.1%