Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

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

# SECURITIES	EXCHANGE	ACT	OF	1934

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

# GLOBAL	PAYMENTS	INC.

(Exact	name	of	registrant	as	specified	in	charter)

Georgia

(State	or	other	jurisdiction	of incorporation	or	organization)

10	Glenlake	Parkway,	North	Tower,	Atlanta,	Georgia

(Address	of	principal	executive	offices)

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

Title	of	each	class

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

(Zip	Code)

Name	of	each	exchange

on	which	registered

Common	Stock,	No	Par	Value New	York	Stock	Exchange

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

(Title	of	Class)

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

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

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the	preceding	12	months	(or	for such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90	days.	Yes		x		No	o

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	web	site,	if	any,	every	Interactive	Data	File	required	to	be	submitted	and	posted	pursuant to	Rule	405	of	Regulation	S-T	(§	232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	and	post	such	files).	Yes	x			No	o Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§	229.405	of	this	chapter)	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.	Yes	o			No	x

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	 See	the	definitions	of	"large	accelerated filer,"	"accelerated	filer"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.

Large	accelerated	filer	x				Accelerated	filer	o

Non-accelerated	filer	o				Smaller	reporting	company	o

(Do	not	check	if	a	smaller	reporting	company)

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

The	aggregate	market	value	of	the	voting	and	non-voting	common	equity	held	by	non-affiliates	computed	by	reference	to	the	price	at	which	the	common	equity	was	last	sold,	or	the	average	bid and	asked	price	of	such	common	equity,	as	of	the	last	business	day	of	the	registrant's	most	recently	completed	second	fiscal	quarter	was	$4,432,452,060.

The	number	of	shares	of	the	registrant's	common	stock	outstanding	at	July	25,	2014	was	68,184,530	shares.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Specifically	identified	portions	of	the	registrant's	proxy	statement	for	the	2014	annual	meeting	of	shareholders	are	incorporated	by	reference	in	Part	III.

|  | GLOBAL	PAYMENTS	INC.<br>2014	FORM	10-K	ANNUAL	REPORT<br>PART	I | Page |
| :--- | :--- | :--- |
| ITEM\t1. | BUSINESS | 4 |
| ITEM\t1A. | RISK\tFACTORS | 13 |
| ITEM\t2. | PROPERTIES | 23 |
| ITEM\t3. | LEGAL\tPROCEEDINGS | 23 |
|  | PART\tII |  |
|  | MARKET\tFOR\tREGISTRANT'S\tCOMMON\tEQUITY,\tRELATED\tSTOCKHOLDER\tMATTERS\tAND |  |
| ITEM\t5. | ISSUER\tPURCHASES\tOF\tEQUITY\tSECURITIES | 24 |
| ITEM\t6. | SELECTED\tFINANCIAL\tDATA | 26 |
|  | MANAGEMENT'S\tDISCUSSION\tAND\tANALYSIS\tOF\tFINANCIAL\tCONDITION\tAND\tRESULTS\tOF |  |
| ITEM\t7. | OPERATIONS | 27 |
| ITEM\t7A. | QUANTITATIVE\tAND\tQUALITATIVE\tDISCLOSURES\tABOUT\tMARKET\tRISK | 44 |
| ITEM\t8. | FINANCIAL\tSTATEMENTS\tAND\tSUPPLEMENTARY\tDATA | 45 |
|  | CHANGES\tIN\tAND\tDISAGREEMENTS\tWITH\tACCOUNTANTS\tON\tACCOUNTING\tAND\tFINANCIAL |  |
| ITEM\t9. | DISCLOSURE | 82 |
| ITEM\t9A. | CONTROLS\tAND\tPROCEDURES | 82 |
| ITEM\t9B. | OTHER\tINFORMATION | 82 |
|  | PART\tIII |  |
| ITEM\t10. | DIRECTORS,\tEXECUTIVE\tOFFICERS\tAND\tCORPORATE\tGOVERNANCE | 83 |
| ITEM\t11. | \t\t EXECUTIVE\tCOMPENSATION | 83 |
|  | SECURITY\tOWNERSHIP\tOF\tCERTAIN\tBENEFICIAL\tOWNERS\tAND\tMANAGEMENT\tAND\tRELATED |  |
| ITEM\t12. | STOCKHOLDER\tMATTERS | 83 |
| ITEM\t13. | \t\t CERTAIN\tRELATIONSHIPS\tAND\tRELATED\tTRANSACTIONS,\tAND\tDIRECTOR\tINDEPENDENCE | 84 |
| ITEM\t14. | PRINCIPAL\tACCOUNTING\tFEES\tAND\tSERVICES | 84 |
|  | PART\tIV |  |
| ITEM\t15. | EXHIBITS,\tFINANCIAL\tSTATEMENT\tSCHEDULES | 85 |
|  | SIGNATURES | 89 |

# CAUTIONARY	NOTICE	REGARDING

# FORWARD-LOOKING	STATEMENTS

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

We	believe	that	it	is	important	to	communicate	our	plans	for	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,	estimates,	projections	or	plans	that	are	inherently	subject	to	significant	risks,	uncertainties	and	contingencies,	many	of	which	are	beyond	our control,	cannot	be	foreseen	and	reflect	future	business	decisions	that	are	subject	to	change.	Accordingly,	we	cannot	guarantee	you	that	our	plans	and	expectations	will	be achieved.	Our	actual	revenues,	revenue	growth	rates	and	margins,	other	results	of	operations	and	shareholder	values	could	differ	materially	from	those	anticipated	in	our forward-looking	statements	as	a	result	of	many	known	and	unknown	factors,	many	of	which	are	beyond	our	ability	to	predict	or	control.	Important	factors	that	may cause	 actual	 events	 or	 results	 to	 differ	 materially	 from	 those	 anticipated	 by	 our	 forward-looking	 statements	 include	 our	 ability	 to	 safeguard	 our	 data;	 increased competition	from	non-traditional	competitors;	our	ability	to	update	our	products	and	services	in	a	timely	manner;	potential	systems	interruptions	or	failures;	software defects	or	undetected	errors;	our	ability	to	maintain	Visa	and	MasterCard	registration	and	financial	institution	sponsorship;	our	reliance	on	financial	institutions	to provide	clearing	services	in	connection	with	our	settlement	activities;	our	potential	failure	to	comply	with	card	network	requirements;	increased	attrition	of	merchants, referral	partners	or	independent	sales	organizations;	our	ability	to	increase	our	share	of	existing	markets	and	expand	into	new	markets;	unanticipated	increases	in chargeback	liability;	increases	in	credit	card	network	fees;	changes	in	laws,	regulations	or	network	rules	or	interpretations	thereof;	foreign	currency	exchange	and interest	rate	risks;	political,	economic	and	regulatory	changes	in	the	foreign	countries	in	which	we	operate;	future	performance,	integration	and	conversion	of	acquired operations;	loss	of	key	personnel;	and	other	risk	factors	presented	in	Item	1A	-	Risk	Factors	of	this	Annual	Report	on	Form	10-K,	which	we	advise	you	to	review.	These cautionary	statements	qualify	all	of	our	forward-looking	statements,	and	you	are	cautioned	not	to	place	undue	reliance	on	these	forward-looking	statements.

Our	forward-looking	statements	speak	only	as	of	the	date	they	are	made	and	should	not	be	relied	upon	as	representing	our	plans	and	expectations	as	of	any subsequent	 date.	While	we	may	elect	to	update	or	revise	forward-looking	statements	at	some	time	in	the	future,	we	specifically	disclaim	any	obligation	to	publicly release	the	results	of	any	revisions	to	our	forward-looking	statements.

# PART	I

# ITEM	1-	BUSINESS

# Recent	Developments

# Financial	Highlights

In	the	year	ended	May	31,	2014,	or	fiscal	2014,	our	revenue	increased	7.5%	to	$2,554.2	million	from	$2,375.9	million	in	the	year	ended	May	31,	2013,	or	fiscal 2013.	This	increase	in	revenue	was	due	to	growth	driven	by	our	U.S.	direct	channels,	including	the	addition	of	recently	acquired	Payment	Processing,	Inc.	("PayPros"), as	well	as	growth	in	Canada,	our	European	markets	and	the	Asia	Pacific	region.

On	February	28,	2014,	we	closed	a	five-year	senior	unsecured	$1,250.0	million	term	loan	and	a	$1,000.0	million	revolving	credit	facility	with	a	syndicate	of financial	institutions.	The	proceeds	from	the	term	loan	were	used	to	repay	the	outstanding	balance	of	the	previously	existing	term	loan	and	credit	facility	and	to	partially fund	the	acquisition	of	PayPros	on	March	4,	2014.

See	"Item	7	-	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations"	for	a	detailed	explanation	of	our	operating	results.

# Acquisition	of	PayPros

On	March	4,	2014,	we	completed	the	acquisition	of	PayPros	for	$420.0	million	in	cash	plus	$7.7	million	in	cash	for	working	capital,	subject	to	adjustment	based	on a	final	determination	of	working	capital.	We	funded	the	acquisition	with	a	combination	of	cash	on	hand	and	proceeds	from	our	new	debt	facilities	discussed	above. PayPros,	based	in	California,	is	a	provider	of	fully-integrated	payment	solutions	for	small-to-medium	sized	merchants	in	the	United	States.		PayPros	delivers	its	products and	services	through	a	network	of	technology-based	enterprise	software	partners	to	vertical	markets	that	are	complementary	to	the	markets	served	by	Accelerated Payment	Technologies	("APT"),	which	we	acquired	on	October	1,	2012.	See	Note	4	-	Business	and	Intangible	Asset	Acquisitions	and	Joint	Ventures	in	the	notes	to consolidated	financial	statements	for	further	discussion.

# Business	Description

Global	Payments	is	one	of	the	largest	worldwide	providers	of	payment	solutions	for	merchants,	value-added	resellers,	enterprise	software	providers,	financial institutions,	government	agencies,	multi-national	corporations	and	independent	sales	organizations	("ISOs")	located	throughout	North	America,	Europe	and	the	Asia- Pacific	 region	 and	 in	 Brazil.	We	provide	payment	and	digital	commerce	solutions	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.	See	Note	14	-	Segment	Information	in	the notes	to	consolidated	financial	statements	for	additional	segment	information	and	"Item	1A	-	Risk	Factors"	for	a	discussion	of	risks	involved	with	our	operations.

# Merchant	Services	Overview

Our	merchant	acquiring	services	are	similar	around	the	world	in	that	we	enable	our	merchant	customers	to	accept	check,	card,	electronic	and	digital-based payments	at	the	point	of	sale.	Our	primary	business	model	provides	payment	products	and	services	directly	to	merchants	as	our	end	customers.	We	also	provide	similar products	and	services	to	financial	institutions	and	a	limited	number	of	ISOs	that,	in	turn,	resell	our	products	and	services,	in	which	case	the	financial	institutions	and select	ISOs	are	our	end	customers.

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

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

# Credit	and	Debit	Card	Transaction	Processing

Credit	and	debit	networks	establish	uniform	regulations	that	govern	much	of	the	payment	card	industry.	During	a	typical	payment	transaction,	the	merchant	and the	card	issuer	do	not	interface	directly	with	each	other,	but	instead	rely	on	merchant	acquirers	like	Global	Payments	to	facilitate	transaction	processing.	We	perform	a series	of	services	including	authorization,	electronic	draft	capture,	file	transfers	to	facilitate	funds	settlement	and	certain	exception-based,	back	office	support	services such	as	chargeback	and	retrieval	resolution.

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

Under	the	direct	membership	model,	we	are	direct	members	in	various	payment	networks,	allowing	us	to	process	and	fund	transactions	without	third-party sponsorship.	In	this	model,	we	route	and	clear	transactions	directly	through	the	card	brand's	network	and	are	not	restricted	from	performing	funds	settlement.	Otherwise, we	process	these	transactions	similarly	to	how	we	process	transactions	in	the	sponsorship	model.	We	are	required	to	adhere	to	the	standards	of	the	various	networks	in which	we	are	direct	members.	We	maintain	relationships	with	financial	institutions,	which	may	also	serve	as	our	Member	sponsors	for	other	card	brands	or	in	other markets,	to	assist	with	funds	settlement.	In	fiscal	2014,	we	increased	the	number	of	markets	in	which	we	are	Members	in	certain	of	the	payment	networks,	and	we	intend to	continue	to	pursue	membership	in	additional	markets	in	the	future.

# How	a	Card	Transaction	Works

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

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

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

# Business	Segments

# North	America	Merchant	Services	Segment

North	America	merchant	services	revenues	represent	70.8%	of	our	total	consolidated	fiscal	2014	revenues	and	include	operations	in	the	United	States	and	Canada. In	the	United	States,	we	sell	our	services	via	a	direct	sales	force	utilizing	referral	partners	of	agent	banks	and	trade	associations,	integrated	payment	technology,	agent and	enterprise	software	providers	and	VAR	referral	arrangements,	ISOs,	as	well	as	proprietary	telesales	groups.

Direct	 Sales.	Our	direct	sales	channel	receives	qualified	 leads	from	agent	banks	and	 trade	association	referral	partners	for	a	variety	of	mid-sized	 to	 large merchants	with	annual	bankcard	volume	averaging	above	$300,000.	Our	merchant	portfolio	is	also	expanded	through	targeted	campaigns	and	other	lead-generating efforts	by	our	direct	sales	force.	Our	referral	partners	are	paid	referral	fees.

Integrated	Payment	Solutions.	Our	integrated	payment	solutions	channel,	which	includes	APT	and	PayPros,	sells	integrated	payment	technologies	to	more	than 60	vertical	markets,	gaining	market	share	by	signing	new	enterprise	solution	providers	and	new	merchants	within	existing	enterprise	solution	providers	already	supported by	the	Company.

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

Gaming	 and	 Check	 Services.	Our	 U.S. revenue	 also	 includes	 gaming	 and	 check	 services.		As	 part	 of	 our	 direct	 merchant	 service	 offering,	 we	 offer	 a comprehensive	suite	of	cash	access	solutions	to	the	gaming	vertical	market.	These	solutions	include	both	traditional	and	electronic	check	cashing,	credit	and	debit	card cash	advance	and	other	services	specific	this	market.	Our	VIP	LightSpeed	proprietary	software	platform	allows	customers	of	casinos	in	U.S.	and	Canada	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.

We	also	offer	our	merchant	customers	check	verification	and	guarantee	service.	The	majority	of	check	services	involve	providing	check	guarantee	services	for checks	received	by	merchants.		Under	the	guarantee	service,	when	a	merchant	receives	a	check	in	payment	for	goods	and	services,	the	transaction	is	submitted	and analyzed	by	the	Company.	The	Company	either	approves	or	declines	the	check	for	warranty	coverage	under	its	guarantee	service.		If	the	Company	approves	the	check for	warranty	coverage	and	the	merchant	accepts	the	check,	the	merchant	will	either	deposit	the	check	in	its	bank	account	or,	as	in	the	majority	of	instances,	process	it	for settlement	through	the	Company's	electronic	check	acceptance	service.		When	an	approved	check	or	electronic	debit	is	returned	unpaid	by	the	merchant's	bank,	the Company	pays	the	merchant	the	face	value	of	the	check	and,	as	the	assignee	of	the	check,	the	Company	pursues	collection	of	the	amount	of	the	check	from	the checkwriter.	 	As	a	result,	 the	Company	bears	 the	risk	of	 loss	 if	 the	Company	 is	unable	 to	collect	 the	returned	check	from	 the	checkwriter.	 	We	earn	a	fee	for each	guaranteed	check,	which	generally	is	determined	as	a	percentage	of	the	check	amount.

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

# International	Merchant	Services	Segment

International	merchant	services	revenues	represent	29.2%	of	our	total	consolidated	fiscal	2014	revenues	and	are	derived	from	operations	in	Europe	and	the	Asia- Pacific	region.	Our	business	in	Europe	is	primarily	located	in	the	United	Kingdom,	Spain,	the	Republic	of	Malta,	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,	Spain,	the	Republic	of	Malta,	the	Russian	Federation	and	the	Asia-Pacific	region	through	which we	primarily	sell	our	direct	merchant	acquiring	services	while	leveraging	our	bank	referral	relationships.	In	the	Czech	Republic	and	the	Russian	Federation,	we	also provide	indirect	merchant	acquiring	services.

See	Note	14	-	Segment	Information	in	the	notes	to	our	consolidated	financial	statements	for	information	about	each	segment's	operating	income	and	assets.

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

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |
| United\tStates | $1,488,659 | $1,394,675 | $1,234,818 |
| Canada | 320,333 | 311,000 | 332,434 |
| \t\t\tNorth\tAmerica\tmerchant\tservices | 1,808,992 | 1,705,675 | 1,567,252 |
| Europe | 587,463 | 522,593 | 489,300 |
| Asia-Pacific | 157,781 | 147,655 | 147,295 |
| \t\t\tInternational\tmerchant\tservices | 745,244 | 670,248 | 636,595 |
| Consolidated\trevenues | $2,554,236 | $2,375,923 | $2,203,847 |

Our	foreign	operations	subject	us	to	various	risks,	including,	without	limitation,	currency	exchange	risks	and	political,	economic	and	regulatory	risks.	See	Item	1A	- Risk	Factors	for	additional	information	about	these	risks.

# Industry	Overview

# Competition

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

We	have	significant	market	share	in	Canada,	where	we	compete	primarily	with	Chase	Paymentech	Solutions,	Moneris	Solutions,	and	TD	Merchant	Services. Moneris	Solutions	is	a	joint	venture	between	the	Bank	of	Montreal	and	the	Royal	Bank	of	Canada.

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

In	the	United	Kingdom,	we	believe	we	hold	the	number	three	market	position	compared	to	our	primary	competitors	Barclays	and	WorldPay.	In	Spain,	where	we hold	the	number	one	market	share	position,	our	primary	competitors	are	Banco	Bilbao	Vizcaya	Argentaria,	S.A.,	Banco	Popular,	Caja	Madrid,	and	Santander.	 We believe	we	hold	the	number	one	market	share	position	among	nonbank	processors	in	the	Russian	Federation,	which	is	a	highly	fragmented	payments	market.	Our competitors	include	various	financial	institutions,	such	as	Raiffeisen	Bank,	Russian	Standard	Bank,	Sberbank,	and	VTB.	In	the	Czech	Republic,	our	primary	competitors are	Euronet,	First	Data	Corporation,	and	SiNSYS.	In	the	Asia-Pacific	region,	our	primary	competitors	include	financial	institutions	that	offer	merchant	acquiring services	in	each	of	our	eleven	markets.

# Emerging	Trends

As	a	result	of	continued	growth	in	our	industry,	several	large	merchant	acquirers,	including	us,	have	expanded	operations	both	domestically	and	internationally	in the	form	of	acquisitions	and	 the	creation	of	alliances	and	 joint	ventures.	We	believe	that	the	electronic	payment	transaction	processing	industry	will	continue	to consolidate	as	banks	and	independent	processors	that	lack	the	necessary	infrastructure	may	look	to	exit	the	business.

We	believe	that	electronic	and	digital-based	payment	transactions	will	continue	to	grow	in	the	future	and	that	an	increasing	percentage	of	these	transactions	will	be processed	through	emerging	technologies.		To	help	reduce	transaction	costs	and	accelerate	the	transaction	approval	process,	we	have	integrated	new	technologies	into our	service	offerings,	such	as	internet	protocol	communications	and	check	truncation	or	conversion	at	the	point	of	sale.		In	order	to	support	and	integrate	payments	into our	merchants'	various	business	solutions	utilized	through	VARs,	we	created	a	developer	portal	simplifying	the	payment	enablement

process	with	multiple	VARs.		We	are	also	able	to	offer	our	customers	integrated	e-commerce	solutions.		Through	our	VAR	relationships,	we	have	several	products	that support	radio	frequency	identification	for	contactless	payment	cards	as	well	as	near	field	communication	enabled	smartphones	that	contain	mobile	wallet	software, which	position	us	to	participate	in	mobile	payments.	We	also	offer	customers	the	ability	to	accept	payments	utilizing	a	mobile	device	as	a	point	of	sale	terminal.	As mobile	payments	continue	to	evolve	and	are	desired	by	merchants	and	consumers,	we	intend	to	continue	partnering	and	developing	new	products	and	services	that	will leverage	the	benefits	that	these	new	technologies	can	offer	our	customers.		We	also	believe	that	new	markets	will	continue	to	develop	in	areas	that	have	been	previously dominated	by	paper-based	transactions.		We	expect	industries	such	as	e-commerce,	healthcare,	education,	government,	recurring	payments	and	business-to-business	to continue	to	see	transaction	volumes	migrate	to	more	electronic-based	settlement	solutions.		We	believe	that	the	continued	development	of	new	products	and	services	and the	emergence	of	new	vertical	markets	will	be	a	factor	in	the	growth	of	our	business	for	the	foreseeable	future.

# Strategy

We	seek	to	leverage	the	adoption	of,	and	transition	to,	card,	electronic	and	digital-based	payments	by	expanding	market	share	in	our	existing	markets	through	our distribution	channels	and	through	acquisitions	while	also	seeking	to	enter	new	markets	through	acquisitions	around	the	world.	We	intend	to	continue	to	invest	in	and leverage	our	technology	infrastructure	and	our	people	to	increase	our	penetration	in	existing	markets.

# Our	objectives	include	the	following:

•Grow	 and control our direct distribution by adding new	 merchants and partners;

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

•Leverage	 technology	 and	 operational advantages throughout our global footprint;

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

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

•Pursue	potential	domestic	and	international	acquisitions	of,	investments	in,	and	alliances	with	companies	that	have	high	growth	potential	or	significant	market presence.

# Safeguarding	Our	Business

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

In	early	March	2012,	we	identified	and	self-reported	unauthorized	access	into	a	limited	portion	of	our	North	America	card	processing	system	and	potential unauthorized	access	to	servers	containing	personal	information	collected	from	U.S.	merchants	who	applied	for	processing	services.	As	a	result	of	this	event,	certain	card networks	temporarily	removed	us	from	their	lists	of	Payment	Card	Industry	Data	Security	Standards	("PCI	DSS")	compliant	service	providers.	After	remediating	our processes	and	systems,	we	returned	to	the	lists	of	PCI	DSS	compliant	service	providers	in	the	third	quarter	of	fiscal	2013,	and	we	have	received	reports	on	compliance covering	all	of	our	systems.	We	did	not	experience	any	material	loss	of	revenue	that	we	can	confirm	was	related	to	this	event.	However,	any	future	intrusion	could potentially	have	a	negative	 impact	 on	 future	 revenues.	See	Note	2	-	Processing	System	Intrusion	 in	 the	notes	 to	consolidated	financial	statements	for	additional processing	system	intrusion	information.

# Employees

As	of	May	31,	2014,	we	had	4,135	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	employees.

# Regulation

Various	aspects	of	our	business	are	subject	to	regulation	and	supervision	under	federal,	state	and	local	laws	in	the	United	States,	as	well	as	foreign	laws	and regulations.	In	addition,	we	are	subject	to	rules	promulgated	by	the	various	payment	networks,	including	Visa,	MasterCard,	Discover,	American	Express,	CUP	and Interac;	the	Payment	Services	Directive	in	Europe;	as	well	as	a	variety	of	other	regulations,	including	escheat	laws	and	applicable	privacy	and	information	security regulations.	Because	we	provide	data	processing	services	to	banks	and	other	financial	institutions,	we	are	subject	to	examination	by	the	Federal	Financial	Institutions Examination	Council	(the	"FFIEC").	Set	forth	below	is	a	brief	summary	of	some	of	the	significant	laws	and	regulations	that	apply	to	us.	These	descriptions	are	not exhaustive	and	are	qualified	in	their	entirety	by	reference	to	the	particular	statutory	or	regulatory	provision.

# The	Dodd-Frank	Act

In	July	2010,	President	Obama	signed	into	law	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	of	2010	(the	"Dodd-Frank	Act"),	which	resulted in	significant	structural	and	other	changes	to	the	regulation	of	the	financial	services	industry.	The	Dodd-Frank	Act	directed	the	Board	of	Governors	of	the	Federal Reserve	(the	"Federal	Reserve	Board")	to	regulate	the	debit	interchange	transaction	fees	that	a	card	issuer	or	payment	card	network	receives	or	charges	for	an	electronic debit	 transaction.	 	 Pursuant	 to	 Section	 1075	 of	 the	 Dodd-Frank	Act	 (commonly	 referred	 to	 as	 the	 "Durbin	Amendment"),	 these	 fees	 must	 be	 "reasonable	 and proportional"	to	the	cost	incurred	by	the	card	issuer	in	authorizing,	clearing	and	settling	the	transaction.		Effective	in	October	2011,	pursuant	to	regulations	promulgated by	the	Federal	Reserve	Board,	debit	interchange	rates	for	card	issuers	with	assets	of	$10	billion	or	more	are	capped	at	$0.21	per	transaction	and	an	ad	valorem component	of	5	basis	points	to	reflect	a	portion	of	the	issuer's	fraud	losses	plus,	for	qualifying	issuers,	an	additional	$0.01	per	transaction	in	debit	interchange	for	fraud prevention	costs.	The	cap	on	interchange	fees	has	not	had	a	material	direct	impact	on	the	Company's	results	of	operations.

In	addition,	the	rules	contain	prohibitions	on	network	exclusivity	and	merchant	routing	restrictions	that	require	a	card	issuer	to	enable	at	least	two	unaffiliated networks	on	each	debit	card,	prohibit	card	networks	from	entering	into	exclusivity	arrangements,	and	restrict	the	ability	of	issuers	or	networks	to	mandate	transaction routing	requirements.		The	prohibition	on	network	exclusivity	arrangements	took	effect	in	October	2011	for	payment	card	networks	and	in	April	2012	for	most	debit card	issuers.	The	prohibition	on	network	exclusivity	arrangements	was	effective	for	certain	health	and	benefit	cards	and	general-use	prepaid	cards	in	April	2013.	We	do not	expect	the	prohibition	on	network	exclusivity	to	significantly	impact	our	ability	to	pass	on	network	fees	and	other	costs	to	our	customers.

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

# Payment	Network	Rules

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

# Banking	Laws	and	Regulations

The	FFIEC	is	an	interagency	body	comprised	of	the	federal	bank	and	credit	union	regulators	(i.e.	the	Federal	Reserve	Board,	the	Federal	Deposit	Insurance Corporation,	the	National	Credit	Union	Administration,	the	Office	of	the	Comptroller	of	the	Currency	and	the	Bureau	of	Consumer	Financial	Protection).	The	FFIEC examines	large	data	processors	in	order	to	identify	and	mitigate	risks	associated	with	systemically	significant	service	providers,	including	specifically	the	risks	they	may pose	to	the	banking	industry.	In	addition,	we	are	subject	to	Directive	2007/64/EC	in	the	European	Union	(the	"Payment	Services	Directive"),	which	was	implemented	in most	European	Union	member	states	through	national	legislation.	As	a	result	of	this	legislation,	we	are	subject	to	regulation	and	oversight	in	certain	European	Union member	nations,	including	the	requirement	that	we	maintain	specified	regulatory	capital;	however,	these	regulatory	capital	requirements	are	generally	insignificant	to our	total	assets	and	total	equity	and	have	no	material	effect	on	our	liquidity.

# Privacy	and	Information	Security	Laws

We	provide	services	that	may	be	subject	to	various	state,	federal	and	foreign	privacy	laws	and	regulations.	These	laws	and	regulations	include	the	federal	Gramm- Leach-Bliley	Act	of	1999,	which	applies	to	a	broad	range	of	financial	institutions	and	to	companies	that	provide	services	to	financial	institutions,	including	the	check and	gaming	portion	of	our	business.	We	are	also	subject	to	a	variety	of	foreign	data	protection	and	privacy	laws,	including,	without	limitation,	Directive	95/46/EC,	as implemented	in	each	member	state	of	the	European	Union.		Among	other	things,	these	foreign	and	domestic	laws,	and	their	implementing	regulations,	restrict	the collection,	processing,	storage,	use	and	disclosure	of	personal	information,	require	notice	to	individuals	of	privacy	practices,	and	provide	individuals	with	certain	rights to	prevent	use	and	disclosure	of	protected	information.		These	laws	also	impose	requirements	for	safeguarding	and	removal	or	elimination	of	personal	information. Certain	state	laws	also	restrict	our	ability	to	collect	and	utilize	certain	types	of	information	such	as	Social	Security	and	driver's	license	numbers.

# Anti-money	Laundering	and	Counter	Terrorist	Requirements

Certain	portions	of	our	business	are	subject	to	anti-money	laundering	laws	and	regulations,	including	the	Bank	Secrecy	Act,	as	amended	by	the	USA	PATRIOT	Act of	2001	(collectively,	the	"BSA").	The	BSA,	among	other	things,	requires	money	services	businesses	to	develop	and	implement	risk-based	anti-money	laundering programs,	report	large	cash	transactions	and	suspicious	activity	and	maintain	transaction	records.	Regulations	issued	by	the	Office	of	Foreign	Assets	Control	("OFAC") of	the	U.S.	Department	of	Treasury		place	prohibitions	and	restrictions	on	all	U.S.	citizens	and	entities,	including	the	Company,	with	respect	to	transactions	by	U.S. persons	with	specified	countries	and	individuals	and	entities	identified	on	OFAC's	Specially	Designated	Nationals	list	(for	example,	individuals	and	companies	owned or	controlled	by,	or	acting	for	or	on	behalf	of,	countries	subject	to	certain	economic	and	trade	sanctions,	as	well	as	terrorists,	terrorist	organizations	and	narcotics traffickers	identified	by	OFAC	under	programs	that	are	not	country	specific).		Similar	requirements	apply	to	transactions	and	dealings	with	persons	and	entities	specified in	lists	maintained	in	other	countries.	We	have	developed	procedures	and	controls	that	are	designed	to	monitor	and	address	legal	and	regulatory	requirements	and developments	and	that	allow	our	customers	to	protect	against	having	direct	business	dealings	with	such	prohibited	countries,	individuals	or	entities.

# Debt	Collection	Laws

The	check	and	gaming	portion	of	our	business	is	subject	to	the	Fair	Debt	Collection	Practices	Act	and	similar	state	laws	in	connection	with	our	check	guarantee and	recovery	services,	which	guarantee	the	payment	of	checks	or	collection	of	returned	checks	on	behalf	of	certain	merchants.	These	laws	are	designed	to	eliminate abusive,	deceptive	and	unfair	debt	collection	practices	and	require	licensing	at	the	state	level.	We	have	procedures	in	place	to	comply	with	the	requirements	of	these	laws and	are	licensed	in	a	number	of	states	in	order	to	engage	in	collection	in	those	states.

# Escheat	Laws

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

# Foreign	Laws	and	Regulations

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

# Where	to	Find	More	Information

We	file	annual	and	quarterly	reports,	proxy	statements	and	other	information	with	the	U.S.	Securities	and	Exchange	Commission	(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	reports	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	codes	of	ethics	applicable	to	our	directors, senior	financial	officers	and	other	employees,	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	Annual	Report	on	Form	10-K.	You	may	also	telephone	our investor	relations	office	directly	at	(770)	829-8234.	We	are	not	including	the	information	on	our	website	as	a	part	of,	or	incorporating	it	by	reference	into,	this	report.

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

# SEC	Public	Reference	Room

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

NYSE	Euronext 20	Broad	Street

# ITEM	1A-	RISK	FACTORS

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

# Risks	Related	to	Our	Business	and	Operations

# Inability	to	safeguard	our	data	from	continually	evolving	cybersecurity	risks	or	other	technological	risks	could	affect	our	reputation	among	our	merchant	clients and	cardholders	and	may	expose	us	to	penalties,	fines,	liabilities	and	legal	claims.

Under	the	card	network	rules	and	various	national	and	state	laws,	we	are	responsible	for	information	provided	to	us	by	merchants,	ISOs,	third-party	service providers	and	other	agents	(all	of	which	we	refer	to	as	"associated	third	parties"),	which	we	require	in	order	to	approve	merchant	accounts,	process	transactions	and	for the	purpose	of	fraud	prevention.		This	information	includes	confidential	data	such	as:	bankcard	numbers,	names,	addresses,	Social	Security	numbers,	driver's	license numbers	and	bank	account	numbers.		We	process	the	data	and	deliver	our	products	and	services	by	utilizing	computer	systems	and	telecommunications	networks	which are	operated	both	by	us	and	by	third-party	service	providers.		We	have	the	ultimate	liability	to	the	card	networks	and	their	member	financial	institutions	for	our	failure	or the	failure	of	our	associated	third	parties	to	protect	this	information.		While	plans	and	procedures	are	in	place	to	protect	this	sensitive	data,	we	cannot	be	certain	that these	measures	will	be	successful	and	will	be	sufficient	to	counter	all	current	and	emerging	technology	threats	which	are	designed	to	breach	our	systems	in	order	to	gain access	to	confidential	information.

Our	computer	systems	have	been,	and	could	be	in	the	future,	subject	to	penetration,	and	our	data	protection	measures	may	not	prevent	unauthorized	access.	Threats to	our	systems	and	our	associated	third	parties'	systems	can	derive	from	human	error,	fraud	or	malice	on	the	part	of	employees	or	third	parties,	or	may	result	from accidental	technological	failure.	Computer	viruses	can	be	distributed	and	could	infiltrate	our	systems	or	those	of	our	associated	third	parties.	In	addition,	denial	of service	or	other	attacks	could	be	launched	against	us	for	a	variety	of	purposes,	including	to	interfere	with	our	services	or	create	a	diversion	for	other	malicious	activities.

Our	defensive	measures	may	not	prevent	unauthorized	access	or	use	of	sensitive	data.	While	we	maintain	first-	and	third-party	insurance	coverage	that	may	cover certain	aspects	of	cyber	risks,	such	insurance	coverage	may	be	insufficient	to	cover	all	losses.

We	could	also	be	subject	to	liability	for	claims	relating	to	misuse	of	personal	information,	such	as	unauthorized	marketing	purposes	and	violation	of	data	privacy laws.	We	generally	require	that	our	agreements	with	service	providers	who	have	access	to	merchant	and	customer	data	include	confidentiality	obligations	but	we	cannot be	certain	that	these	contractual	requirements	are	always	followed	or	that	they	will	always	prevent	the	unauthorized	use	or	disclosure	of	data.	In	addition,	we	have	agreed in	certain	agreements	to	take	certain	protective	measures	to	ensure	the	confidentiality	of	merchant	and	consumer	data.	The	costs	of	systems	and	procedures	associated with	such	protective	measures	may	increase	and	could	adversely	affect	our	ability	to	compete	effectively.	Any	failure	to	adequately	enforce	or	provide	these	protective measures	could	result	in	liability,	protracted	and	costly	litigation	and,	with	respect	to	misuse	of	personal	information	of	our	merchants	and	consumers,	lost	revenue	and reputational	harm.

Any	type	of	security	breach	or	other	misuse	of	data	described	above	or	otherwise	could	harm	our	reputation	and	deter	existing	and	prospective	customers	from using	our	products	and	services	or	from	making	electronic	payments	generally,	increase	our	operating	expenses	in	order	to	contain	and	remediate	the	breach,	expose	us to	unbudgeted	or	uninsured	liability,	disrupt	our	operations	(including	potential	service	interruptions),	distract	our	management,	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	removal	from	networks'	lists	of	PCI	DSS	compliant	service	providers	could	mean	that	existing	merchant	customers,	sales partners	or	other	third	parties	may	cease	using	or	referring	our	products	and	services.	Also,	prospective	merchant	customers,	sales	partners	or	other	third	parties	may choose	to	terminate	negotiations	with	us,	or	delay	or	choose	not	to	consider	us	for	their	processing	needs.	In	addition,	the	card	networks	could	refuse	to	allow	us	to process	through	their	networks.

For	example,	in	March	2012,	we	identified	and	self-reported	unauthorized	access	into	a	limited	portion	of	our	North	America	card	processing	system	and	potential unauthorized	access	to	servers	containing	personal	information	collected	from	U.S.	merchants	who	applied	for	processing	services.	As	a	result	of	this	event,	certain	card networks	temporarily	removed	us	from	their	lists	of

PCI	DSS	compliant	service	providers.	After	remediating	our	processes	and	systems,	we	returned	to	the	lists	of	PCI	DSS	compliant	service	providers	in	the	third	quarter of	 fiscal	2013.	We	 incurred	 approximately	$114.2	million	of	cumulative	expenses,	net	of	insurance	recoveries,	relating	to	the	incident.	The	impact	on	revenue	of terminations	that	we	can	confirm	related	to	our	temporary	removal	from	the	lists	was	immaterial.	Also,	the	impact	on	revenue	of	merchants,	sales	partners	or	other	third parties	who	have	failed	to	renew,	terminated	negotiations	or	informed	us	they	are	not	considering	us	at	all,	where	we	can	confirm	it	is	due	to	our	removal	from	the	lists, was	immaterial.	This	event	has	resulted	in	inquiries	from	governmental	entities	and	investigation	by	the	Federal	Trade	Commission	("FTC").

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

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

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

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

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

In	addition,	the	products	and	services	we	deliver	to	the	electronic	payments	markets	are	designed	to	process	very	complex	transactions	and	deliver	reports	and	other information	on	those	transactions,	all	at	very	high	volumes	and	processing	speeds.	Any	failure	to	deliver	an	effective	and	secure	product	or	any	performance	issue	that arises	with	a	new	product	or	service	could	result	in	significant	processing	or	reporting	errors	or	other	losses.	As	a	result	of	these	factors,	our	development	efforts	could result	in	increased	costs	that	could	reduce	our	earnings	in	addition	to	a	loss	of	revenue	and	earnings	if	promised	new	products	are	not	timely	delivered	to	our	customers or	do	not	perform	as	anticipated.	We	rely	in	part	on	third	parties,	including	some	of	our	competitors	and	potential	competitors,	for	the	development	of	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,	and	our	failure	to	do	so	could have	a	material	adverse	effect	on	our	business,	operating	results,	and	financial	condition.	For	example,	"EMV"	is	a	credit	and	debit	card	authentication	methodology using	integrated	circuit	cards	(or	"chip	cards")	that	Visa,	MasterCard,	American	Express	and	Discover	mandated	that	U.S.	processors	be	able	to	support	as	of	April	2013 and	that

merchants	be	able	to	support	by	October	2015.	We	have	invested,	and	may	continue	to	invest,	significant	resources	to	develop	and	implement	support	for	EMV	before the	applicable	deadlines.	We	are	not	certain	if	or	when	our	merchants	will	use	or	accept	the	methodology,	or	if	and	when	issuers	will	provide	EMV	cards	to	consumers in	significant	volumes.

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

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

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

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

If	we	fail	to	comply	with	the	applicable	requirements	of	the	card	networks,	they	could	seek	to	fine	us,	suspend	us	or	terminate	our	registrations.	If	our	merchants	or ISOs	incur	fines	or	penalties	that	we	cannot	collect	from	them,	we	could	end	up	bearing	the	cost	of	such	fines	or	penalties.

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

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

We	depend	on	the	efficient	and	uninterrupted	operation	of	our	computer	systems,	software,	data	centers	and	telecommunications	networks,	as	well	as	the	systems and	services	of	third	parties.	In	addition,	we	have	undertaken	the	relocation	of	our	primary	data	center.	We	have	entered	into	agreements	related	to	this	relocation	and	for the	ongoing	management	of	the	data	center.

A	system	outage	or	data	loss	could	have	a	material	adverse	effect	on	our	business,	financial	condition	and	results	of	operations.	Not	only	would	we	suffer	damage to	our	reputation	in	the	event	of	a	system	outage	or	data	loss,	but	we	may	also	be	liable	to	third

parties.	Our	systems	and	operations	or	those	of	our	third-party	providers	could	be	exposed	to	damage	or	interruption	from,	among	other	things,	fire,	natural	disaster, power	loss,	telecommunications	failure,	terrorist	acts,	war,	unauthorized	entry,	human	error,	and	computer	viruses	or	other	defects.	Defects	in	our	systems	or	those	of third	parties,	errors	or	delays	in	the	processing	of	payment	transactions,	telecommunications	failures,	or	other	difficulties	(including	those	related	to	system	relocation) could	result	in	loss	of	revenue,	loss	of	customers,	loss	of	merchant	and	cardholder	data,	harm	to	our	business	or	reputation,	exposure	to	fraud	losses	or	other	liabilities, negative	publicity,	additional	operating	and	development	costs,	fines	and	other	sanctions	imposed	by	card	networks,	and/or	diversion	of	technical	and	other	resources.

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

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

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

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

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

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

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

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

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

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

profitability,	consumers	and	businesses	must	continue	to	use	electronic	payment	methods	that	we	process,	including	credit	and	debit	cards.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In	addition,	since	October	2011,	(i)	a	card	payment	network	may	not	prohibit	a	card	issuer	from	contracting	with	any	other	card	payment	network	for	the processing	of	electronic	debit	transactions	involving	the	issuer's	debit	cards	and	(ii)	card	issuing	financial	institutions	and	card	payment	networks	may	not	inhibit	the ability	of	merchants	to	direct	the	routing	of	debit	card	transactions	over	any	card	payment	networks	that	can	process	the	transactions.	Since	April	2012,	most	debit	card issuers	have	been	required	to	enable	at	least	two	unaffiliated	card	payment	networks	on	each	debit	card.	The	interchange	fee	cap	has	the	potential	to	alter	the	type	or volume	of	card-based	transactions	that	we	process	on	behalf	of	our	merchants.	These	new	regulations	could	result	in	the	need	for	us	to	make	capital	investments	to modify	our	services	to	facilitate	our	existing	merchants'	and	potential	merchants'	compliance	and	reduce	the	fees	we	are	able	to	charge	our	merchants.	These	new regulations	also	could	result	in	greater	pricing	transparency	and	increased	price-based	competition	leading	to	lower	margins	and	higher	rates	of	merchant	attrition.	The requirements	of	the	new	regulations	and	the	timing	of	their	effective	dates	could	result	in	changes	in	our	merchants'	business	practices	that	may	alter	their	delivery	of their	products	and	services	to	consumers	and	the	timing	of	their	investment	decisions,	which	could	change	the	demand	for	our	services	and	alter	the	type	or	volume	of transactions	that	we	process	on	behalf	of	our	merchants.	Any	new	rules	or	regulations	implemented	by	the	CFPB	or	the	FSOC	or	in	connection	with	the	Dodd-Frank	Act that	are	applicable	to	us,	or	any	changes	that	are	adverse	to	us	resulting	from	litigation	brought	by	third	parties	challenging	such	rules	and	regulations,	could	increase	our cost	of	doing	business	or	limit	permissible	activities.

All	persons	engaged	in	commerce,	including,	but	not	limited	to,	us	and	our	merchant	and	financial	institution	customers,	are	subject	to	Section	5	of	the	FTC	Act prohibiting	unfair	or	deceptive	acts	or	practices	("UDAP").	In	addition,	there	are	other	laws,	rules	and	or	regulations,	including	the	Telemarketing	Sales	Act,	that	may directly	impact	the	activities	of	our	merchant	customers	and	in	some	cases	may	subject	us,	as	the	merchant's	payment	processor,	to	investigations,	fees,	fines	and disgorgement	of	funds	in	the	event	we	are	deemed	to	have	aided	and	abetted	or	otherwise	provided	the	means	and	instrumentalities	to	facilitate	the	illegal	activities	of	the merchant	through	our	payment	processing	services.	Various	federal	and	state	regulatory	enforcement

agencies,	including	FTC	and	the	states'	attorneys	general	have	the	authority	to	take	action	against	nonbanks	that	engage	in	UDAP	or	violate	other	laws,	rules	or regulations	and,	to	the	extent	we	are	processing	payments	for	a	merchant	that	may	be	in	violation	of	these	laws,	rules	or	regulations,	we	may	be	subject	to	enforcement actions	and	as	a	result	may	incur	losses	and	liabilities.

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

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

We	have	incurred	significant	indebtedness	that	accrues	interest	at	a	variable	rate,	and	we	may	incur	additional	variable-rate	indebtedness	in	the	future.	Increases	in interest	rates	will	reduce	our	operating	cash	flows	and	could	hinder	our	ability	to	fund	our	operations,	capital	expenditures,	acquisitions,	share	repurchases	or	dividends. We	are	also	subject	to	risks	related	to	the	changes	in	currency	exchange	rates	as	a	result	of	our	investments	in	foreign	operations	and	from	revenues	generated	in currencies	other	than	the	U.S.	dollar.	Revenue	and	profit	generated	by	international	operations	will	increase	or	decrease	compared	to	prior	periods	as	a	result	of	changes in	foreign	currency	exchange	rates.	Volatility	in	currency	exchange	rates	has	affected	and	may	continue	to	affect	our	financial	results.	For	example,	for	fiscal	2014, currency	rate	fluctuations	decreased	our	revenues	by	$10.8	million	and	our	diluted	earnings	per	share	by	$0.05	as	compared	to	the	prior	year,	calculated	by	converting our	fiscal	2014	actual	revenues	and	expenses	at	fiscal	2013	rates.

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	U.S.	dollars	or	limit	our	ability	to	freely	move	currency	in	or	out	of	particular	jurisdictions.	The	occurrence	of	any	of	these	factors	could decrease	the	value	of	revenues	we	receive	from	our	international	operations	and	have	a	material	adverse	impact	on	our	business.

We	may	seek	to	reduce	our	exposure	to	fluctuations	in	interest	rates	or	foreign	currency	exchange	rates	through	the	use	of	hedging	arrangements.	To	the	extent	that we	hedge	our	interest	rate	or	foreign	currency	exchange	rate	exposures,	we	forgo	the	benefits	we	would	otherwise	experience	if	interest	rates	or	foreign	currency exchange	rates	were	to	change	in	our	favor.	Developing	an	effective	strategy	for	dealing	with	movements	in	interest	rates	and	foreign	exchange	rates	is	complex,	and	no strategy	can	completely	insulate	us	from	risks	associated	with	such	fluctuations.	In	addition,	a	counterparty	to	the	arrangement	could	default	on	its	obligation,	thereby exposing	us	to	credit	risk.	We	may	have	to	repay	certain	costs,	such	as	transaction	fees	or	breakage	costs,	if	we	terminate	these	arrangements.	Finally,	our	interest	rate and	foreign	exchange	rate	risk	management	activities	could	expose	us	to	substantial	losses	if	such	rates	move	materially	differently	from	our	expectations.	As	a	result, we	cannot	provide	any	assurance	that	our	hedging	arrangements,	if	any,	will	effectively	manage	our	interest	rate	or	foreign	currency	exchange	rate	sensitivity	or	have the	desired	beneficial	impact	on	our	results	of	operations	or	financial	condition.

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

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

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

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

The	acquisition,	integration,	and	conversion	of	businesses	involve	a	number	of	risks.	Core	risks	are	in	the	area	of	valuation	(negotiating	a	fair	price	for	the	business based	 on	 inherently	 limited	 diligence)	 and	 integration	 and	 conversion	 (managing	 the	 complex	 process	 of	 integrating	 the	 acquired	 company's	 people,	 products, technology	and	other	assets	to	realize	the	projected	value	of	the	acquired	company	and	the	synergies	projected	to	be	realized	in	connection	with	the	acquisition).	In addition,	international	acquisitions	often	involve	additional	or	increased	risks	including,	for	example:	managing	geographically	separated	organizations,	systems,	and facilities;	integrating	personnel	with	diverse	business	backgrounds	and	organizational	cultures;	complying	with	foreign	regulatory	requirements;	fluctuations	in	currency exchange	rates;	enforcement	of	intellectual	property	rights	in	some	foreign	countries;	difficulty	entering	new	foreign	markets	due	to,	among	other	things,	customer acceptance	and	business	knowledge	of	those	new	markets;	and	general	economic	and	political	conditions.

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

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

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

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

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

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

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

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

We	may	also	be	subject	to	costly	litigation	in	the	event	our	products	and	technology	infringe	upon	another	party's	proprietary	rights.	Third	parties	may	have,	or may	eventually	be	issued,	patents	that	would	be	infringed	by	our	products	or	technology.	Any	of	these	third	parties	could	make	a	claim	of	infringement	against	us	with respect	to	our	products	or	technology.	We	may	also	be	subject	to	claims	by	third	parties	for	breach	of	copyright,	trademark	or	license	usage	rights.	Any	such	claims	and any	resulting	litigation	could	subject	us	to	significant	liability	for	damages.	An	adverse	determination	in	any	litigation	of	this	type	could	limit	our	ability	to	use	the intellectual	property	subject	to	these	claims	and	require	us	to	design	around	a	third	party's	patent,	which	may	not	be	possible,	or	to	license	alternative	technology	from another	party,	which	may	be	costly.	In	addition,	litigation	is	time	consuming	and	expensive	to	defend	and	could	result	in	the	diversion	of	the	time	and	attention	of	our management	and	employees.

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

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

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

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

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

# We	may	become	subject	to	additional	U.S.,	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	and	the	amount	of	our	cash	flow	and	have	a	material	adverse	impact	on	our	business.

# Risks	Related	to	Our	Organizational	and	Capital	Structure

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

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

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

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

•incur	additional	indebtedness;

•create	liens;

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

•enter	 into	 certain	 lines	 of	 business;

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

Our	credit	facilities	also	contain	customary	financial	covenants	based	on	our	leverage	ratio	and	our	fixed	charge	coverage	ratio.

A	breach	of	any	of	these	covenants	could	result	in	a	default	under	one	or	more	of	these	agreements,	including	as	a	result	of	cross	default	provisions	and,	in	the	case of	the	revolving	credit	facility,	permit	the	lenders	to	cease	making	loans	to	us.	Upon	the	occurrence	of	an	event	of	default	under	our	credit	facilities,	the	lenders	could elect	to	declare	all	amounts	outstanding	under	our	credit	facilities	to	be	immediately	due	and	payable	and	terminate	all	commitments	to	extend	further	credit.	Such actions	by	those	lenders	could	cause	cross	defaults	under	certain	of	our	other	indebtedness.	If	we	are	unable	to	repay	those	amounts,	the	lenders	under	our	credit facilities	could	accelerate	the	repayment	of	borrowings,	and	we	may	not	have	sufficient	assets	to	repay	our	credit	facilities	as	well	as	the	Company's	other	indebtedness.

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

As	a	result	of	our	acquisitions,	a	significant	portion	of	our	total	assets	consist	of	intangible	assets	(including	goodwill).	Goodwill	and	intangible	assets,	net	of amortization,	together	accounted	for	approximately	46.6%	and	46.2%	of	the	total	assets	on	our	balance	sheet	as	of	May	31,	2014	and	May	31,	2013,	respectively.	We may	not	realize	the	full	value	of	our	intangible	assets	and	goodwill.	We	expect	to	engage	in	additional	acquisitions,	which	may	result	in	our	recognition	of	additional intangible	assets	and	goodwill.	We	evaluate	on	a	regular	basis	whether	all	or	a	portion	of	our	goodwill	and	other	intangible	assets	may	be	impaired.	Under	current accounting	rules,	any	determination	that	impairment	has	occurred	would	require	us	to	write-off	the	impaired	portion	of	goodwill	and	such	intangible	assets,	resulting	in	a charge	to	our	earnings.	An	impairment	of	a	significant	portion	of	goodwill	or	intangible	assets	could	have	a	material	adverse	effect	on	our	business,	financial	condition, and	results	of	operations.

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

The	extent	to	which	we	pay	dividends	on	our	common	stock	and	repurchase	our	common	stock	in	the	future	is	at	the	discretion	of	our	Board	of	Directors	and	will depend	on,	among	other	factors,	our	earnings,	shareholders'	equity,	cash	position,	and	financial	condition.	No	assurance	can	be	given	that	we	will	be	able	to	or	will choose	to	pay	any	dividends	or	repurchase	any	shares	in	the	foreseeable	future.

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

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

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

Section	404	of	the	Sarbanes-Oxley	Act	requires	us	to	evaluate	annually	the	effectiveness	of	our	internal	control	over	financial	reporting	as	of	the	end	of	each	fiscal year	and	to	include	a	management	report	assessing	the	effectiveness	of	our	internal	control	over	financial	reporting	in	our	annual	report.		If	we	fail	to	maintain	the adequacy	of	our	internal	controls,	we	may	not	be	able	to	ensure	that	we	can	conclude	on	an	ongoing	basis	that	we	have	effective	internal	control	over	financial	reporting in	accordance	with	Section	404	of	the	Sarbanes-Oxley	Act.

Further,	this	assessment	may	be	complicated	by	any	acquisitions	we	may	complete.		In	certain	markets,	including,	without	limitation,	China,	the	Republic	of	Malta and	Spain,	our	member	sponsors	perform	payment	processing	operations	and	related	support	services	pursuant	to	services	agreements.		We	expect	that	the	member sponsors	will	continue	to	provide	these	services	until	such	time	as	we	may	integrate	these	functions	into	our	operations.		Accordingly,	we	rely	on	our	member	sponsors to	provide	financial	data,	such	as	revenue	billed	to	merchants,	to	assist	us	with	compiling	our	accounting	records.		As	such,	our	internal	controls	over	financial	reporting could	be	materially	affected,	or	are	reasonably	likely	to	be	materially	affected,	by	the	internal	controls	and	procedures	of	our	member	sponsors	in	these	markets.		In order	to	mitigate	this	risk,	we	have	implemented	internal	controls	over	financial	reporting	which	monitor	the	accuracy	of	the	financial	data	being	provided	by	our member	sponsors.

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

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

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

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

•limit	 the right of shareholders to remove directors;

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

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

# ITEM	2-	PROPERTIES

The	following	summarizes	by	segment	the	type	and	number	of	facilities	we	use	to	operate	our	business	as	of	May	31,	2014:

| Type	of	Facility | Leased | Owned |
| :--- | :--- | :--- |
| North\tAmerica\tmerchant\tservices: |  |  |
| Multi-purpose\t(operations,\tsales,\tadministrative)\toffices | 13 | — |
| Sales\toffices | 1 | — |
|  | 14 | — |
| International\tmerchant\tservices: |  |  |
| Multi-purpose\t(operations,\tsales,\tadministrative)\toffices | 19 | 3 |
| Sales\toffices | 12 | — |
|  | 31 | 3 |
| Total | 45 | 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;	Hong	Kong	Special	Administrative	Region,	China;	Manila,	Philippines;	Moscow, Russia;	and	Barcelona,	Spain.

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

# ITEM	3-	LEGAL	PROCEEDINGS

We	are	party	to	a	number	of	claims	and	lawsuits	incidental	to	our	business.	In	our	opinion,	the	liabilities,	if	any,	which	may	ultimately	result	from	the	outcome	of such	matters,	individually	or	in	the	aggregate,	are	not	expected	to	have	a	material	adverse	impact	on	our	financial	position,	liquidity	or	results	of	operations.

# 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	2014	and	2013.	We	expect	to	continue	to	pay	our	shareholders	a	dividend	per share,	on	a	quarterly	basis,	in	an	amount	comparable	to	the	dividends	indicated	in	the	table.	However,	any	future	determination	to	pay	cash	dividends	will	be	at	the discretion	of	our	Board	of	Directors	and	will	depend	upon	our	results	of	operations,	financial	condition,	capital	requirements	and	such	other	factors	as	the	Board	of Directors	deems	relevant.

|  | High | Low | Dividend	Per	Share |
| :--- | :--- | :--- | :--- |
| Fiscal\t2014: |  |  |  |
| First\tQuarter | $49.75 | $44.84 | $0.02 |
| Second\tQuarter | 64.41 | 47.35 | 0.02 |
| Third\tQuarter | 70.77 | 61.22 | 0.02 |
| Fourth\tQuarter | 73.84 | 64.66 | 0.02 |
| Fiscal\t2013: |  |  |  |
| First\tQuarter | $45.10 | $39.37 | $0.02 |
| Second\tQuarter | 44.43 | 41.01 | 0.02 |
| Third\tQuarter | 51.24 | 42.99 | 0.02 |
| Fourth\tQuarter | 49.90 | 43.37 | 0.02 |

# 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	did	not	issue	any	unregistered	securities	during	our	fiscal	year	ended	May	31,	2014.

# Stock	Performance	Graph

The	following	graph	compares	our	cumulative	shareholder	returns	with	the	Standard	&	Poor's	Information	Technology	Index	and	the	Standard	&	Poor's	500	Index for	the	five	years	ended	May	31,	2014.	The	line	graph	assumes	the	investment	of	$100	in	our	common	stock,	the	Standard	&	Poor's	Information	Technology	Index	and the	Standard	&	Poor's	500	Index	on	May	31,	2009	and	assumes	reinvestment	of	all	dividends.

*$100	of	5/31/09	in	stock	or	index,	including	reinvestment	of	dividends.	Fiscal	year	ending	May	31. Copyright©	2013	S&P,	a	division	of	The	McGraw-Hill	Companies	Inc.	All	rights	reserved.

|  |  |  | S&amp;P |
| :--- | :--- | :--- | :--- |
|  | Global | S&amp;P | Information |
|  | Payments | 500 | Technology |
| May\t31,\t2009 | $100.00 | $100.00 | $100.00 |
| May\t31,\t2010 | 117.53 | 120.99 | 128.47 |
| May\t31,\t2011 | 145.01 | 152.39 | 155.62 |
| May\t31,\t2012 | 118.76 | 151.76 | 167.40 |
| May\t31,\t2013 | 134.32 | 193.15 | 192.71 |
| May\t31,\t2014 | 192.27 | 232.64 | 238.76 |

# Issuer	Purchases	of	Equity	Securities

During	the	fiscal	year	ended	May	31,	2014,	our	Board	of	Directors	authorized	the	repurchase	of	up	to	an	additional	$500.0	million	of	our	common	stock.	Under these	authorizations,	we	repurchased	and	retired	7.8	million	shares	of	our	common	stock	at	a	cost	of	$455.0	million,	including	commissions,	or	an	average	price	of $58.06	per	share,	during	the	fiscal	year	ended	May	31,	2014.

Information	about	the	shares	of	our	common	stock	that	we	repurchased	during	the	quarter	ended	May	31,	2014	is	set	forth	below	(in	millions,	except	share	data):

|  |  |  |  | Dollar	Value	of	Shares |
| :--- | :--- | :--- | :--- | :--- |
|  |  |  | Number\tof\tShares | that\tMay\tYet\tBe |
|  | Number\tof\tShares |  | Purchased\tas\tPart\tof | Purchased\tUnder\tthe |
| Month | Purchased | Average\tPrice\tper\tShare | Publicly\tAnnounced | Plans\tor\tPrograms |
|  |  |  | Plans\tor\tPrograms |  |
| March\t2014 | 205,391 | $71.56 | 205,391 |  |
| April\t2014 | 1,317,517 | 66.71 | 1,317,517 |  |
| May\t2014 | 1,353,477 | 67.86 | 1,353,477 |  |
|  | 2,876,385 | $67.60 | 2,876,385 | $169.6 |

In	addition	to	the	shares	we	repurchased	on	the	open	market,	during	the	quarter	ended	May	31,	2014,	pursuant	to	our	employee	incentive	plans,	we	repurchased 283,050	shares	at	an	average	price	per	share	of	$68.58	in	order	to	satisfy	employees'	tax	withholding	and	payment	obligations	in	connection	with	the	vesting	of	awards of	restricted	stock,	which	we	repurchased	at	fair	market	value	on	the	vesting	date.

# ITEM	6-	SELECTED	FINANCIAL	DATA

You	should	read	the	selected	financial	data	set	forth	below	in	conjunction	with	"Item	7	-	Management's	Discussion	and	Analysis	of	Financial	Condition	and Results	of	Operations"	and	"Item	8	-	Financial	Statements	and	Supplementary	Data"	included	elsewhere	in	this	annual	report.	The	income	statement	data	for	fiscal	years ended	May	31,	2014,	2013,	and	2012	and	the	balance	sheet	data	as	of	May	31,	2014	and	2013	are	derived	from	the	audited	consolidated	financial	statements	included elsewhere	in	this	annual	report.	The	income	statement	data	for	fiscal	years	2011	and	2010	and	the	balance	sheet	data	as	of	May	31,	2012	and	2011	were	derived	from consolidated	financial	statements	included	in	our	annual	report	on	Form	10-K	for	the	fiscal	year	ended	May	31,	2012.	The	balance	sheet	data	as	of	May	31,	2010	was derived	from	audited	consolidated	financial	statements	 included	 in	our	Form	10-K	for	 the	fiscal	year	ended	May	31,	2011.	Amounts	related	to	our	discontinued operations	in	our	statements	of	income	for	fiscal	years	2011	and	2010	were	reclassified	in	fiscal	year	2012	to	conform	to	the	current	presentation.

| Revenue | $2,554,236 | $2,375,923 | $2,203,847 | $1,859,802 | $1,642,468 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\tincome(1) | 405,499 | 357,213 | 307,349 | 331,594 | 323,279 |
| Net\tincome(1) | 269,952 | 238,713 | 217,566 | 229,131 | 223,010 |
| Net\tincome\tattributable\tto\tGlobal\tPayments(1) | 245,286 | 216,125 | 188,161 | 209,238 | 203,317 |
| Per\tshare\tdata: |  |  |  |  |  |
| Basic\tearnings\tper\tshare(1) | $3.40 | $2.78 | $2.39 | $2.62 | $2.51 |
| Diluted\tearnings\tper\tshare(1) | 3.37 | 2.76 | 2.37 | 2.60 | 2.48 |
| Dividends\tper\tshare | 0.08 | 0.08 | 0.08 | 0.08 | 0.08 |
| Balance\tsheet\tdata\t(at\tyear\tend): |  |  |  |  |  |
| Total\tassets | $4,018,650 | $3,125,056 | $2,688,143 | $3,350,531 | $2,039,326 |
| Borrowings\tunder\tshort-term\tlines\tof\tcredit | 440,128 | 187,461 | 215,391 | 270,745 | 79,187 |
| Borrowings\tunder\tlong-term\tdebt\tagreements | 1,393,679 | 963,469 | 312,985 | 354,019 | 421,134 |
| Total\tequity(2) | 1,132,799 | 1,286,607 | 1,300,921 | 1,337,817 | 871,517 |

(1) Includes	a	processing	system	intrusion	credit	of	$7.0	million	in	fiscal	2014	and	charges	of	$36.8	million	and	$84.4	million	in	fiscal	2013	and	2012, respectively.	Also	includes	impairment,	restructuring	and	other	charges	of	$2.6	million	in	fiscal	2010.

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

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

The	following	discussion	and	analysis	contains	forward-looking	statements	about	our	plans	and	expectations	of	what	may	happen	in	the	future.	Forward-looking statements	are	based	on	a	number	of	assumptions	and	estimates	that	are	inherently	subject	to	significant	risks	and	uncertainties,	and	our	results	could	differ	materially from	the	results	anticipated	by	our	forward-looking	statements	as	a	result	of	many	known	and	unknown	factors,	including	but	not	limited	to	those	discussed	in	"Item	1A -	Risk	Factors"	of	this	report.	See	"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	one	of	the	largest	worldwide	providers	of	payment	solutions	for	merchants,	value-added	resellers,	enterprise	software	providers,	financial	institutions, government	agencies,	multi-national	corporations	and	independent	sales	organizations	("ISOs")	located	throughout	North	America,	Europe	and	the	Asia-Pacific	region and	in	Brazil.	We	provide	payment	and	digital	commerce	solutions	and	operate	in	two	business	segments,	North	America	Merchant	Services	and	International	Merchant Services.	We	were	incorporated	in	Georgia	as	Global	Payments	Inc.	in	September	2000	and	spun-off	from	our	former	parent	company	on	January	31,	2001.	Including our	time	as	part	of	our	former	parent	company,	we	have	been	in	the	payments	business	since	1967.	Global	Payments	Inc.	and	its	consolidated	subsidiaries	are	referred	to collectively	as	"Global	Payments,"	the	"Company,"	"we,"	"our"	or	"us,"	unless	the	context	requires	otherwise.

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

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

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

Our	products	and	services	are	marketed	through	a	variety	of	sales	channels	that	include	a	direct	sales	force,	trade	associations,	integrated	payment	technology, agent	and	enterprise	software	providers	and	VAR	referral	arrangements,	ISOs,	as	well	as	proprietary	telesales	groups.	We	seek	to	leverage	the	continued	shift	to electronic	payments	by	expanding	market	share	in	our	existing	markets	through	our	distribution	channels	or	through	acquisitions	in	North	America,	the	Asia-Pacific region	 and	 Europe,	 and	 investing	 in	 and	 leveraging	 technology	 and	 people,	 thereby	 maximizing	 shareholder	 value.	We	 also	 seek	 to	 enter	 new	 markets	 through acquisitions	in	Europe	and	the	Asia-Pacific	and	Latin	America	regions.

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

# Executive	Overview

North	America	merchant	services	segment	revenue	increased	$103.3	million,	 or	6.1%,	 to	$1,809.0	million	in	fiscal	2014	 from	$1,705.7	million	 in	 fiscal	2013. North	America	merchant	services	segment	operating	income	increased	to	$272.3	million	in	fiscal	2014	from	$258.9	million	in	fiscal	2013,	with	operating	margins	of 15.0%	and	15.2%	for	fiscal	2014	and	2013,	respectively.	The	growth	in	the	North	America	merchant	services	segment	is	primarily	due	to	growth	in	our	U.S.	direct channels,	including	the	addition	of	recently	acquired	PayPros,	and	growth	in	Canada,	which	was	partially	offset	by	the	impact	of	changes	in	exchange	rates.

International	 merchant	 services	 segment	 revenue	 increased	$75.0	 million,	 or	11.2%,	 to	$745.2	 million	 in	 fiscal	2014	 from	$670.2	 million	 in	 fiscal	2013. International	merchant	services	operating	income	also	increased	to	$240.2	million	in	fiscal	2014	from	$211.2	million	in	fiscal	2013,	with	operating	margins	of	32.2%	and 31.5%	for	fiscal	2014	and	2013,	respectively.	The	growth	in	the	International	merchant	services	segment	is	due	to	growth	across	our	European	markets	and	in	the	Asia- Pacific	region.

On	February	28,	2014,	we	closed	a	five-year	senior	unsecured	$1,250.0	million	 term	 loan	 and	$1,000.0	million	revolving	credit	facility	with	a	syndicate	of financial	institutions.	The	proceeds	from	the	term	loan	were	used	to	repay	the	outstanding	balance	of	the	previously	existing	term	loan	and	credit	facilities	and	to partially	fund	the	acquisition	of	Payment	Processing,	Inc.	("PayPros")	on	March	4,	2014.	We	have	used	and	will	continue	to	use	the	remaining	capacity	to	support strategic	growth	initiatives,	including	acquisitions	and	ongoing	share	repurchases.

# Results	of	Operations

# Revenues

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

# Operating	Expenses

# Cost	of	Service

Cost	of	service	consists	primarily	of	the	following	costs:	salaries,	wages	and	related	expenses	paid	to	operations	and	technology-related	personnel,	including	those who	monitor	our	transaction	processing	systems	and	settlement	functions;	assessments	and	other	fees	paid	to	card	networks;	transaction	processing	systems,	including third-party	services;	network	telecommunications	capability;	depreciation	and	occupancy	costs	associated	with	the	facilities	performing	these	functions;	amortization	of intangible	assets	and	provisions	for	operating	losses.

# Sales,	General	and	Administrative	Expenses

Sales,	general	and	administrative	expenses	consist	primarily	of	salaries,	wages	and	related	expenses	paid	to	sales	personnel;	non-revenue	producing	customer support	functions	and	administrative	employees	and	management;	commissions	paid	to	ISOs,	independent	contractors,	and	other	third	parties;	advertising	costs;	other selling	expenses;	share-based	compensation	expense	and	occupancy	of	leased	space	directly	related	to	these	functions.

# Processing	System	Intrusion

In	March	2012,	we	identified	and	self-reported	unauthorized	access	into	a	limited	portion	of	our	North	America	card	processing	system	and	potential	unauthorized access	 to	 servers	 containing	 personal	 information	 collected	 from	 U.S.	 merchants	 who	 applied	 for	 processing	 services.	 As	 a	 result	 of	 this	 event,	 we	 incurred approximately	$114.2	million	of	cumulative	expenses,	net	of	insurance	recoveries,	relating	to	the	incident	(including	a	credit	of	$7.0	million	in	fiscal	2014	and	a	charge of	$36.8	million	and	$84.4	million	in	fiscal	2013	 and	2012,	respectively),	and	certain	card	networks	temporarily	removed	us	from	their	lists	of	PCI	DSS	compliant service	providers.	After	remediating	our	processes	and	systems,	we	returned	to	the	lists	of	PCI	DSS	compliant	service	providers	in	the	third	quarter	of	fiscal	2013.	The impact	on	revenue	of	terminations	that	we	can	confirm	related	to	our	temporary	removal	from	the	lists	was	immaterial.	Also,	the	impact	on	revenue	of	merchants,	sales partners	or	other	third	parties	who	have	failed	to	renew,	terminated	negotiations	or	informed	us	they	are	not	considering	us	at	all,	where	we	can	confirm	it	is	due	to	our removal	from	the	lists,	was	immaterial.	We	currently	maintain	first-	and	third-party	insurance	coverage	that	may	cover	certain	aspects	of	cyber	risks.	However,	in	the event	of	a	future	system	intrusion,	we	cannot	provide	any	assurances	that	our	insurance	coverage	will	be	sufficient	to	cover	our	losses.

# Operating	Income	and	Operating	Margin

For	the	purpose	of	discussing	segment	operations,	we	refer	to	operating	income	as	calculated	by	subtracting	segment	direct	expenses	from	segment	revenue. Overhead	and	shared	expenses,	including	share-based	compensation,	are	not	allocated	to	segment	operations;	they	are	reported	in	the	caption	"Corporate."	Similarly, references	to	operating	margin	regarding	segment	operations	mean	segment	operating	income	divided	by	segment	revenue.	We	also	consider	costs	associated	with	the processing	system	intrusion	to	be	a	corporate	expense.

The	following	table	shows	key	selected	financial	data	for	the	fiscal	years	ended	May	31,	2014	 and	2013,	this	data	as	a	percentage	of	total	revenues,	and	the changes	between	fiscal	years	in	dollars	and	as	a	percentage	of	fiscal	2013.

| (dollar	amounts	in	thousands) | 2014 | %	of	Revenue(1) | 2013 | %	of<br>Revenue(1) | Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |  |  |  |
| United\tStates | $1,488,659 | 58.3\t% | $1,394,675 | 58.7% | $93,984 | 6.7\t% |
| Canada | 320,333 | 12.5\t% | 311,000 | 13.1% | 9,333 | 3.0\t% |
| \t\t\t\tNorth\tAmerica\tmerchant\tservices | 1,808,992 | 70.8\t% | 1,705,675 | 71.8% | 103,317 | 6.1\t% |
| Europe | 587,463 | 23.0\t% | 522,593 | 22.0% | 64,870 | 12.4\t% |
| Asia-Pacific | 157,781 | 6.2\t% | 147,655 | 6.2% | 10,126 | 6.9\t% |
| \t\t\t\tInternational\tmerchant\tservices | 745,244 | 29.2\t% | 670,248 | 28.2% | 74,996 | 11.2\t% |
| \t\t\t\t\t\t\t\t\t\tTotal\trevenues | $2,554,236 | 100\t% | $2,375,923 | 100% | $178,313 | 7.5\t% |
| Consolidated\toperating\texpenses: |  |  |  |  |  |  |
| Cost\tof\tservice | $952,225 | 37.3\t% | $862,075 | 36.3% | $90,150 | 10.5\t% |
| Sales,\tgeneral\tand\tadministrative | 1,203,512 | 47.1\t% | 1,119,860 | 47.1% | 83,652 | 7.5\t% |
| Processing\tsystem\tintrusion | (7,000) | (0.3)% | 36,775 | 1.5% | (43,775) | (119.0)% |
| \t\t\t\t\t\t\t\t\t\tOperating\tincome | $405,499 | 15.9\t% | $357,213 | 15.0% | $48,286 | 13.5\t% |
| Operating\tincome\t(loss)\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | $272,251 |  | $258,910 |  | $13,341 | 5.2\t% |
| International\tmerchant\tservices | 240,179 |  | 211,242 |  | 28,937 | 13.7\t% |
| Corporate(2) | (106,931) |  | (112,939) |  | 6,008 | (5.3)% |
| \t\t\t\t\t\t\t\t\t\tOperating\tincome | $405,499 |  | $357,213 |  | $48,286 | 13.5\t% |
| Operating\tmargin\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | 15.0% |  | 15.2% |  | (0.2)% |  |
| International\tmerchant\tservices | 32.2% |  | 31.5% |  | 0.7\t% |  |

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

(2)	Includes	a	processing	system	intrusion	credit	of	$7.0	million	in	fiscal	2014	and	a	charge	of	$36.8	million	in	fiscal	2013.

For	fiscal	2014,	revenues	increased	7.5%	to	$2,554.2	million	compared	to	the	prior	year,	reflecting	growth	in	all	of	our	markets.	Our	revenues	were	affected	by fluctuations	 in	 foreign	 currency	 exchange	 rates.	 For	 the	 year	 ended	May	31,	2014,	 currency	 exchange	 rate	 fluctuations	 decreased	 our	 revenues	 by	$10.8	 million compared	to	the	prior	year,	calculated	by	converting	our	fiscal	2014	actual	revenues	at	fiscal	2013	rates.

North	America	Merchant	Services	Segment.	For fiscal	2014,	revenue	from	our	North	America	merchant	services	segment	increased	6.1%	 to	$1,809.0	million compared	to	the	prior	year.	North	America	revenue	growth	was	driven	by	our	U.S.	direct	channels,	including	recently	acquired	PayPros,	as	well	as	our	ISO	channels	and growth	in	Canada.

We	grow	our	U.S.	revenue	primarily	by	adding	small	and	mid-market	merchants	in	diversified	vertical	markets.	For	fiscal	2014,	our	U.S.	credit	and	debit	card processed	transactions	grew	6.6%	compared	to	the	prior	year,	excluding	the	impact	of	PayPros.

For	fiscal	2014,	our	Canadian	revenue	increased	3.0%	to	$320.3	million	primarily	due	to	credit	card	transaction	growth	and	assessment-based	pricing	changes, partially	offset	by	the	impact	of	changes	in	exchange	rates.	For	fiscal	2014,	our	total	Canadian	transactions	grew	2.5%	compared	to	the	prior	year,	including	4.6%	growth in	credit	card	transactions.

In	direct	merchant	acquiring,	we	provide	processing	services	to	merchants	and,	generally	through	our	relationship	with	a	member	sponsor,	fund	settlement.	We market	our	direct	merchant	services	through	a	variety	of	channels,	including	our	ISO	channel,	whereby	the	ISO	receives	a	share	of	the	merchant	profitability	in	the	form of	a	monthly	residual	payment.	Revenue	for	direct	merchant	services	is	recognized	in	the	amount	of	merchant	billing	net	of	interchange,	and	any	residual	payments	to	the ISO	are	reflected	as	a	component	of	selling,	general	and	administrative	expense.

In	indirect	merchant	acquiring,	the	partner,	typically	a	financial	institution	or	an	ISO,	is	our	customer.	We	provide	processing	services	to	the	indirect	customer's merchants,	but	do	not	provide	sponsorship	or	funds	settlement.	We	bill	the	indirect	customer	fees	for	transactions	and	various	other	services,	which	is	recognized	as revenue.

International	Merchant	Services	Segment.	For	fiscal	2014,	International	merchant	services	revenue	increased	11.2%	to	$745.2	million	compared	to	the	prior	year. Our	Europe	merchant	services	revenue	for	fiscal	2014	increased	12.4%	to	$587.5	million	compared	to	the	prior	year	driven	primarily	by	transaction	growth	in	all	markets as	well	as	growth	in	our	e-commerce	services.	Asia-Pacific	merchant	services	revenue	for	fiscal	2014	increased	6.9%	to	$157.8	million	compared	to	the	prior	year	due largely	to	pricing	increases	and	new	assessments.

Cost	of	Service.	Cost	of	service	increased	10.5%	during	fiscal	2014	compared	to	the	prior	year,	driven	primarily	by	an	increase	in	the	variable	costs	associated with	revenue	growth	and	an	increase	in	amortization	expense	associated	with	our	acquisitions	of	APT	and	PayPros.	As	a	percentage	of	revenue,	cost	of	service	increased to	37.3%	for	fiscal	year	2014	from	36.3%	in	the	prior	year.

Sales,	General	and	Administrative	Expenses.	Sales,	general	and	administrative	expenses	increased	7.5%	during	fiscal	2014	compared	to	the	prior	year	primarily due	to	an	increase	in	commission	payments	to	ISOs,	incremental	costs	related	to	our	acquisitions	of	APT	and	PayPros,	acceleration	of	equity	awards	and	other	costs associated	with	the	retirement	of	our	former	chairman	and	chief	executive	officer	and	charges	related	to	employee	termination	benefits.	As	a	percentage	of	revenues, sales,	general	and	administrative	expenses	remained	unchanged	at	47.1%	for	fiscal	2014	compared	to	fiscal	2013.

Processing	system	intrusion.	 During fiscal	2014,	we	recorded	a	credit	of	$7.0	million	related	to	insurance	recoveries	associated	with	our	processing	system intrusion,	bringing	our	total	insurance	recoveries	recognized	to	date	to	$27.0	million.	We	do	not	expect	any	additional	recoveries.	During	fiscal	2013,	we	recorded	a $36.8	million	charge	related	to	the	incident.	Since	our	identification	of	the	intrusion	in	March	2012,	we	have	 incurred	approximately	$114.2	million	of	cumulative expenses,	net	of	insurance	recoveries,	relating	to	the	incident.

# Operating	Income	and	Operating	Margin	for	Segments

North	America	Merchant	Services	Segment.	Operating	income	in	North	America	merchant	services	segment	increased	5.2%	 to	$272.3	million	 for	 fiscal	2014 compared	to	the	prior	year.	The	increase	in	operating	income	was	primarily	due	to	the	increases	in	transactions	and	volume	in	our	U.S.	direct	channels	as	well	as	growth in	Canada.	This	increase	was	partially	offset	by	amortization	and	other	incremental	costs	associated	with	our	acquisitions	of	APT	and	PayPros	and	foreign	currency translation	in	Canada.	The	operating	margin	was	15.0%	and	15.2%	for	the	fiscal	years	2014	and	2013,	respectively.

International	 Merchant	 Services	 Segment.	Operating income	 in	 International	 merchant	 services	 segment	 increased	13.7%	 to	$240.2	 million	 for	 fiscal	2014 compared	to	the	prior	year.	The	increase	in	operating	income	was	driven	primarily	by	increased	transactions	and	volume	in	Europe	and	the	Asia-Pacific	region	as	well	as pricing	increases	in	the	Asia-Pacific	region.	The	operating	margin	was	32.2%	and	31.5%	for	the	fiscal	years	2014	and	2013,	respectively.

Corporate.	Our	corporate	expenses	decreased	5.3%	 to	$106.9	million	 for fiscal	2014	compared	to	the	prior	year	primarily	due	a	decrease	in	one-time	costs associated	with	the	processing	system	intrusion	partially	offset	by	higher	data	security	expenses	and

share-based	compensation	expense.	Corporate	operating	expenses	includes	a	processing	system	intrusion	credit	of	$7.0	million	for	fiscal	2014	and	a	charge	of	$36.8 million	for	fiscal	2013.

# Operating	Income

During	fiscal	2014,	our	consolidated	operating	income	increased	13.5%	to	$405.5	million	from	$357.2	million	in	the	prior	year.	The	increase	was	primarily	due	to revenue	growth	in	our	North	America	and	International	merchant	services	segments	offset	by	(i)	higher	variable	costs	of	services	associated	with	revenue	growth,	(ii) higher	amortization	and	other	incremental	costs	associated	with	acquisitions,	(iii)	higher	data	security	expenses	and	(iv)	acceleration	of	equity	awards	and	other	costs associated	with	the	retirement	of	our	former	chairman	and	chief	executive	officer,	and	charges	related	to	employee	termination	benefits.	Operating	income	also	reflects the	adjustments	from	the	processing	system	intrusion	credit	of	$7.0	million	and	charge	of	$36.8	million	for	fiscal	2014	and	fiscal	2013,	respectively.

# Other	Income/Expense,	Net

Other	expense,	net,	increased	to	$28.1	million	for	fiscal	2014	compared	to	$22.9	million	in	the	prior	year.	The	increase	is	primarily	due	to	a	$8.2	million	increase in	interest	expense	associated	with	debt	and	the	loss	on	extinguishment	of	debt	of	$2.1	million	that	we	recorded	in	connection	with	the	refinancing	of	our	term	loan	and revolving	credit	facility;	offset	by	a	$5.1	million	reduction	in	the	amount	of	dividends	paid	to	HSBC	Asia	related	to	a	redeemable	noncontrolling	interest	that	HSBC Asia	held	in	Global	Payments	Asia-Pacific.	Such	dividends	are	reflected	as	interest	expense	in	our	consolidated	statements	of	income	in	accordance	with	the	provisions of	ASC	480.	Please	see	Note	4	-	Business	and	Intangible	Asset	Acquisition	and	Joint	Ventures	-	Redeemable	Noncontrolling	Interest	Acquisition	in	the	notes	to consolidated	financial	statements	for	further	discussion.

# Provision	for	Income	Taxes

Our	effective	tax	rates	were	28.5%	and	28.6%	for	the	years	ended	May	31,	2014	and	2013,	respectively.	The	effective	tax	rates	for	the	years	ended	May	31,	2014 and	2013	reflect	adjustments	to	our	U.K.	deferred	tax	asset	due	to	corporate	tax	rate	reductions	in	the	United	Kingdom	of	3%	and	2%,	respectively.	Our	effective	tax rates	differ	from	U.S.	statutory	rates	due	to	domestic	and	international	tax	planning	initiatives	and	income	generated	in	lower	tax	jurisdictions	due	to	international expansion.

| (dollar	amounts	in	thousands) | 2013 | %	of	Revenue<br>(1) | 2012 | %	of	Revenue<br>(1) | Change | %	Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |  |  |  |
| United\tStates | $1,394,675 | 58.7% | $1,234,818 | 56.0% | $159,857 | 12.9\t% |
| Canada | 311,000 | 13.1% | 332,434 | 15.1% | (21,434) | (6.4)% |
| \t\t\t\tNorth\tAmerica\tmerchant\tservices | 1,705,675 | 71.8% | 1,567,252 | 71.1% | 138,423 | 8.8\t% |
| Europe | 522,593 | 22.0% | 489,300 | 22.2% | 33,293 | 6.8\t% |
| Asia-Pacific | 147,655 | 6.2% | 147,295 | 6.7% | 360 | 0.2\t% |
| \t\t\t\tInternational\tmerchant\tservices | 670,248 | 28.2% | 636,595 | 28.9% | 33,653 | 5.3\t% |
| \t\t\t\t\t\t\t\t\t\tTotal\trevenues | $2,375,923 | 100.0% | $2,203,847 | 100.0% | $172,076 | 7.8\t% |
| Consolidated\toperating\texpenses: |  |  |  |  |  |  |
| Cost\tof\tservice | $862,075 | 36.3% | $784,756 | 35.6% | $77,319 | 9.9\t% |
| Sales,\tgeneral\tand\tadministrative | 1,119,860 | 47.1% | 1,027,304 | 46.6% | 92,556 | 9.0\t% |
| Processing\tsystem\tintrusion | 36,775 | 1.5% | 84,438 | 3.8% | (47,663) | (56.4)% |
| \t\t\t\t\tOperating\tincome | $357,213 | 15.0% | $307,349 | 13.9% | $49,864 | 16.2\t% |
| Operating\tincome\t(loss)\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | $258,910 |  | $281,305 |  | $(22,395) | (8.0)% |
| International\tmerchant\tservices | 211,242 |  | 196,137 |  | 15,105 | 7.7\t% |
| Corporate(2) | (112,939) |  | (170,093) |  | 57,154 | (33.6)% |
| \t\t\t\t\tOperating\tincome | $357,213 |  | $307,349 |  | $49,864 | 16.2\t% |
| Operating\tmargin\tfor\tsegments: |  |  |  |  |  |  |
| North\tAmerica\tmerchant\tservices | 15.2% |  | 17.9% |  | (2.7)% |  |
| International\tmerchant\tservices | 31.5% |  | 30.8% |  | 0.7\t% |  |

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

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

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

In	fiscal	2013,	we	grew	our	U.S.	revenue	primarily	by	adding	small	and	mid-market	merchants	in	diversified	vertical	markets,	largely	through	our	ISO	channel. For	fiscal	2013,	our	U.S.	direct	credit	and	debit	card	processed	transactions	grew	11.2%	compared	to	the	prior	year.	Increased	spreads	offset	the	impact	of	a	lower average	ticket	price,	which	decreased	by	0.9%	in	fiscal	2013.	This

decline	in	average	ticket	was	primarily	due	to	a	shift	toward	smaller	merchants	added	through	our	ISO	channel.	Smaller	merchants	tend	to	have	lower	average	tickets than	larger	merchants.

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

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

Cost	of	Service.	Cost	of	service	increased	9.9%	during	fiscal	2013,	compared	to	the	prior	year	primarily	driven	by	revenue	growth.	As	a	percentage	of	revenue, cost	of	service	increased	to	36.3%	for	fiscal	year	2013	from	35.6%	in	the	prior	year.

Sales,	General	and	Administrative	expenses.	Sales,	general	and	administrative	expenses	increased	9.0%	for	fiscal	2013	compared	to	the	prior	year.	In	addition,	as a	percentage	of	revenues,	sales,	general	and	administrative	expenses	increased	to	47.1%	for	fiscal	2013	from	46.6%	in	the	prior	year.	These	increases	were	primarily	due to	an	increase	in	commission	payments	to	ISOs	and	costs	associated	with	our	start	up	operations	in	Brazil.	These	increases	were	somewhat	offset	by	the	elimination	of ISO	commission	payments	previously	made	to	APT	as	a	result	of	our	acquisition	of	APT	on	October	1,	2012.

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

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

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

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

Corporate.	Our	corporate	costs	decreased	33.6%	to	$112.9	million	for	fiscal	2013	compared	to	the	prior	year.	This	decrease	was	primarily	due	to	lower	costs associated	with	the	processing	system	intrusion	and	charges	related	to	two	contractual	disputes	in	fiscal	2012.

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

Other	expense,	net,	increased	to	$22.9	million	for	fiscal	2013	compared	to	$6.9	million	in	the	prior	year	period.	The	increase	was	due	to	higher	debt	balances	as well	as	an	$8.4	million	distribution	to	HSBC	Asia	in	fiscal	2013.	This	distribution	was	characterized	as	interest	expense	in	accordance	with	the	provisions	of	ASC	480. Please	see	Note	4	-	Business	and	Intangible	Asset	Acquisition	and	Joint	Ventures	-	Redeemable	Noncontrolling	Interest	Acquisition	in	the	notes	to	consolidated financial	statements	for	further	discussion.

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

# Noncontrolling	Interests,	Net	of	Tax

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

# Liquidity	and	Capital	Resources

A	significant	portion	of	our	liquidity	comes	from	operating	cash	flows.	Cash	flow	from	operations	is	used	to	make	planned	capital	investments	in	our	business,	to pursue	acquisitions	that	meet	our	corporate	objectives,	to	pay	dividends,	and	to	pay	down	debt	and	repurchase	shares	of	our	common	stock	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,	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,	2014,	we	had	cash	and	cash	equivalents	totaling	$581.9	million.	Of	this	amount,	we	consider	$304.3	million	to	be	available	cash.	Our	available	cash balance	includes	$174.7	million	of	cash	held	by	foreign	subsidiaries	whose	earnings	are	considered	permanently	reinvested	for	U.S.	tax	purposes.	These	cash	balances reflect	our	capital	investments	in	these	subsidiaries	and	the	accumulation	of	cash	flows	generated	by	each	subsidiary's	operations,	net	of	cash	flows	used	to	service	debt locally	and	fund

non-U.S.	acquisitions.	We	believe	that	we	are	able	to	maintain	a	sufficient	level	of	liquidity	for	our	domestic	operations	and	commitments	without	repatriation	of	the earnings	of	these	foreign	subsidiaries.	If	we	were	to	repatriate	some	or	all	of	the	cash	held	by	such	foreign	subsidiaries,	we	do	not	believe	that	the	associated	income	tax liabilities	would	have	a	significant	impact	on	our	liquidity.

Available	cash	excludes	settlement	related	and	merchant	reserve	cash	balances.	Settlement	related	cash	balances	represent	funds	that	we	hold	on	behalf	of	our member	sponsors	when	the	incoming	amount	from	the	card	networks	precedes	the	member	sponsors'	funding	obligation	to	the	merchant.	Settlement	related	cash balances	are	not	restricted;	however,	these	funds	are	generally	paid	out	in	satisfaction	of	settlement	processing	obligations	the	following	day.	Merchant	reserve	cash balances	represent	funds	collected	from	our	merchants	that	serve	as	collateral	to	minimize	contingent	liabilities	associated	with	any	losses	that	may	occur	under	the merchant	agreement	("Merchant	Reserves").	At	May	31,	2014,	our	cash	and	cash	equivalents	included	$124.7	million	related	to	Merchant	Reserves.	While	this	cash	is not	restricted	in	its	use,	we	believe	that	designating	this	cash	to	collateralize	Merchant	Reserves	strengthens	our	fiduciary	standing	with	our	member	sponsors	and	is	in accordance	with	the	guidelines	set	by	the	card	networks.

Operating	activities	provided	net	cash	of	$194.1	million	during	fiscal	2014	compared	to	net	cash	of	$240.5	million	during	the	prior	year.	The	decrease	in	cash	flow from	operating	activities	was	primarily	due	to	the	change	in	net	settlement	processing	assets	and	obligations	of	$137.4	million,	which	is	generally	driven	by	the	timing	of month	end	cut-off,	offset	by	an	increase	in	operating	income	and	favorable	changes	in	prepaid	expenses	and	accrued	liabilities	resulting	from	the	absence	in	fiscal	2014 of	payments	associated	with	the	processing	system	intrusion.

Net	cash	used	in	investing	activities	decreased	from	$528.6	million	in	the	prior	year	to	$501.7	million in fiscal	2014,	primarily	due	to	a	reduction	in	capital expenditures	for	data	center	infrastructure	and	our	authorization	platform.

For	fiscal	2014,	financing	activities	provided	net	cash	of	$218.9	million	compared	to	$183.5	million	in	the	prior	year.	On	February	28,	2014,	we	closed	a	five-year senior	unsecured	$1,250.0	million	term	loan	facility,	paid	off	previously	existing	debt	of	902.5	million	and	paid	fees	and	expenses	of	6.0	million.	In	connection	with	the debt	refinancing,	we	entered	into	a	five-year	senior	unsecured	$1,000.0	million	revolving	credit	facility	under	which	we	borrowed	$140.0	million	during	the	remainder of	fiscal	2014.	In	addition,	we	made	net	borrowings	of	$252.7	million	on	short-term	lines	of	credit	used	to	fund	settlement-related	activities,	and	we	spent	$447.3	million to	repurchase	shares	of	our	common	stock.

In	the	prior	year,	we	borrowed	$700.0	million	under	a	five-year	unsecured	term	loan	facility	of	which	we	repaid	$52.5	million	during	fiscal	2013.	In	addition,	we made	net	payments	of	$27.9	million	on	short-term	lines	of	credit	used	to	fund	settlement-related	activities.	Finally,	we	invested	$242.0	million	to	purchase	HSBC	Asia's 44%	interest	in	GPAP	and	$175.3	million	to	repurchase	shares	of	our	common	stock	during	fiscal	2013.

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	2015,	we	expect	capital	expenditures	to approximate	$95.0	million.

# Long-Term	Debt	and	Credit	Facilities

As	of	May	31,	2014	and	2013,	outstanding	debt	consisted	of	the	following:

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| Lines\tof\tcredit: | (in\tthousands) |  |
| Corporate\tCredit\tFacility\t-\tlong-term | $140,000 | $309,955 |
| Short-term\tlines\tof\tcredit | 440,128 | 187,461 |
| Total\tlines\tof\tcredit | 580,128 | 497,416 |
| Notes\tpayable | 3,679 | 6,014 |
| Term\tloan | 1,250,000 | 647,500 |
| Total\tdebt | $1,833,807 | $1,150,930 |
| Current\tportion | $457,805 | $259,796 |
| Long-term\tdebt | 1,376,002 | 891,134 |
| Total\tdebt | $1,833,807 | $1,150,930 |
| Maturity\trequirements\ton\toutstanding\tdebt\tby\tfiscal\tyears\tare\tas\tfollows\t(in\tthousands): |  |  |
| 2015 | 2015 | $457,805 |
| 2016 |  | 63,150 |
| 2017 | 2017 | 78,776 |
| 2018 |  | 125,325 |
| 2019 | 2019 | 1,108,751 |
| Total |  | $1,833,807 |

On	February	28,	2014,	we	entered	into	an	amended	and	restated	term	loan	agreement	("Term	Loan")	and	an	amended	and	restated	credit	agreement	("Corporate Credit	Facility")	with	a	syndicate	of	financial	institutions.	The	Term	Loan	and	the	Corporate	Credit	Facility	amended	and	restated	the	term	loan	agreement	dated September	28,	2012	and	the	credit	agreement	dated	December	7,	2010,	respectively.

The	Term	Loan	is	a	five-year	senior	unsecured	$1,250.0	million	term	loan.	We	used	proceeds	from	the	Term	Loan	to	partially	fund	our	acquisition	of	PayPros	on March	4,	2014	and	to	repay	the	outstanding	balances	on	our	previously	existing	revolving	credit	facility	and	our	previously	existing	term	loan.

The	Term	Loan	expires	February	28,	2019	and	bears	interest,	at	our	election,	at	either	LIBOR	or	a	base	rate,	in	each	case	plus	a	leverage-based	margin.	As	of May	31,	2014,	the	interest	rate	on	the	Term	Loan	was	1.62%.	Commencing	in	May	2015	and	ending	in	November	2018,	the	Term	Loan	has	scheduled	quarterly	principal payments	of	1.25%,	increasing	up	to	2.50%.	At	maturity,	27.50%	of	the	Term	Loan	will	have	been	repaid	through	scheduled	amortization	and	the	remaining	principal balance	will	be	due.	With	notice,	the	Term	Loan	may	be	voluntarily	prepaid	at	any	time,	in	whole	or	in	part,	without	penalty.	As	of	 May	31,	2014,	the	outstanding balance	of	the	Term	Loan	was	$1,250.0	million.

The	Corporate	Credit	Facility	is	a	five-year	senior	unsecured	revolving	$1,000.0	million	revolving	credit	facility.	The	Corporate	Credit	Facility	expires	February 28,	2019	and	bears	interest,	at	our	election,	at	either	LIBOR	or	a	base	rate,	in	each	case	plus	a	leverage-based	margin.	Borrowing	under	the	Corporate	Credit	Facility	is available	in	various	currencies.	As	of	May	31,	2014,	the	outstanding	balance	of	the	Corporate	Credit	Facility	was	$140.0	million,	and	the	interest	rate	was	1.6%.	The Corporate	Credit	Facility	is	available	for	general	corporate	purposes.

The	Corporate	Credit	Facility	allows	us	to	issue	standby	letters	of	credit	of	up	to	$100.0	million	in	the	aggregate.	Outstanding	letters	of	credit	under	the	Corporate Credit	Facility	reduce	the	amount	of	borrowings	available	to	us.	At	May	31,	2014,	we	had	standby

letters	of	credit	of	$8.1	million.	The	total	available	incremental	borrowings	under	our	Corporate	Credit	Facility	at	May	31,	2014	 was	$851.9	million.	The	Corporate Credit	Facility	is	included	in	long-term	debt	in	the	accompanying	consolidated	balance	sheets	because	we	are	not	contractually	obligated	to	make	repayments	in	the	next twelve	months.

Upon	closing	of	the	Term	Loan	and	the	Corporate	Credit	Facility,	which	occurred	on	February	28,	2014,	we	repaid	the	outstanding	balance	of	$612.5	million	on our	previously	existing	term	loan	and	the	outstanding	balance	of	$290.0	million	on	our	previously	existing	revolving	credit	facility	together	with	accrued	interest	and fees	on	each.	In	connection	with	the	debt	refinancing,	we	recorded	a	loss	of	$2.1	million,	representing	the	write	off	of	debt	issuance	costs	associated	with	the	previously existing	term	loan.	We	reported	this	loss	in	Interest	and	other	expense	in	our	consolidated	statements	of	income	for	the	fiscal	year	ended	May	31,	2014.	We	incurred	fees and	expenses	associated	with	these	new	arrangements	of	approximately	$6.0	million,	which	was	capitalized	as	debt	issuance	costs.	Debt	issuance	costs	are	included	in Other	assets	in	our	consolidated	balance	sheet	at	May	31,	2014	and	are	being	amortized	over	the	term	of	these	new	arrangements.

The	agreements	contain	customary	affirmative	and	restrictive	covenants,	including,	among	others,	financial	covenants	based	on	our	leverage	and	fixed	charge coverage	ratios.	Please	see	"Compliance	with	Covenants"	below.	Each	of	the	agreements	includes	customary	events	of	default,	the	occurrence	of	which,	following	any applicable	cure	period,	would	permit	lenders	to,	among	other	things,	declare	the	principal,	accrued	interest	and	other	obligations	to	be	immediately	due	and	payable.

# Short-term	Lines	of	Credit

We	have	short-term	lines	of	credit	with	banks	in	the	United	States	and	Canada	as	well	as	several	countries	in	Europe	and	Asia	in	which	we	do	business.	The	short- term	lines	of	credit,	which	are	primarily	used	to	fund	settlement,	generally	have	variable	short-term	interest	rates	and	are	subject	to	annual	review.	The	credit	facilities are	generally	denominated	in	local	currency	but	may,	in	some	cases,	facilitate	borrowings	in	multiple	currencies.	For	certain	of	our	lines	of	credit,	the	line	of	credit balance	is	reduced	by	the	amount	of	cash	we	have	on	deposit	in	specific	accounts	with	the	lender	when	determining	compliance	with	the	credit	limit.	Accordingly,	the line	of	credit	balance	may	exceed	the	stated	credit	limit	at	any	given	point	in	time,	when	in	fact	the	combined	position	is	less	than	the	credit	limit.

As	of	May	31,	2014	and	May	31,	2013,	respectively,	we	had	$440.1	million	and	$187.5	million	outstanding	under	these	short-term	lines	of	credit,	with	additional borrowing	capacity	as	of	May	31,	2014	of	$818.5	million	to	fund	settlement.	During	the	year	ended	May	31,	2014,	the	maximum	and	average	borrowings	under	our	lines of	credit	were	$1,000.5	million	 and	$551.6	million,	respectively.	The	weighted-average	interest	rate	on	these	borrowings	was	1.7%	 and	2.1%	 at	May	31,	2014	and May	31,	2013,	respectively.	Our	maximum	borrowed	amount	was	greater	than	our	average	and	period	end	borrowings	due	to	the	timing	of	settlement	funding.

# Notes	Payable

United	Card	Services,	our	subsidiary	in	the	Russian	Federation,	had	notes	payable	with	a	total	outstanding	balance	of	approximately	$3.7	million	at	May	31,	2014. These	notes	had	fixed	annual	interest	rates	of	8.5%	with	maturity	dates	ranging	from	June	2014	through	November	2018.

# Compliance	with	Covenants

There	are	certain	financial	and	non-financial	covenants	contained	in	our	various	credit	facilities	and	Term	Loan.	Our	Term	Loan	and	Corporate	Credit	Facility agreements	include	financial	covenants	requiring	(i)	a	leverage	ratio	no	greater	than	3.50	to	1.00	and	(ii)	a	fixed	charge	coverage	ratio	no	less	than	2.50	to	1.00.	We complied	with	all	applicable	covenants	as	of	and	for	the	year	ended	May	31,	2014.

# 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

We	have	entered	into	sponsorship	or	depository	and	processing	agreements	with	certain	banks.	These	agreements	allow	us	to	use	the	banks'	identification	numbers, referred	to	as	Bank	Identification	Number	("BIN")	for	Visa	transactions	and	Interbank	Card	Association	("ICA")	number	for	MasterCard	transactions,	to	clear	credit card	transactions	through	Visa	and	MasterCard.	Certain	of	such	agreements	contain	financial	covenants,	and	we	were	in	compliance	with	all	such	covenants	as	of May	31,	2014.

# Commitments	and	Contractual	Obligations

The	following	table	summarizes	our	contractual	obligations	and	commitments	as	of	May	31,	2014:

|  | Total | Less	than	1	Year | 1-3	Years | 3-5	Years | 5+	Years |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (in\tthousands) |  |  |
| Operating\tleases\tand\tpurchase\tobligations | $177,604 | $50,296 | $80,940 | $31,972 | $14,396 |
| Total\tdebt,\tincluding\tcurrent\tportion | 1,833,807 | 457,805 | 141,926 | 1,234,076 | — |
| Interest\ton\tlong-term\tdebt(1) | 94,259 | 22,096 | 41,533 | 30,630 | — |

(1)	Interest	on	variable	rate	debt	is	based	on	rates	effective	and	amounts	borrowed	as	of	May	31,	2014.

The	table	above	excludes	other	obligations	that	we	may	have,	such	as	employee	benefit	plan	obligations,	unrecognized	tax	benefits,	and	other	current	and	long- term	liabilities	reflected	in	our	consolidated	balance	sheet.	At	this	time,	we	are	unable	to	make	a	reasonably	reliable	estimate	of	the	timing	of	these	payments;	therefore, such	amounts	are	not	included	in	the	above	contractual	obligation	table.	We	do	not	have	any	material	purchase	commitments	as	of	May	31,	2014.

# Critical	Accounting	Policies

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

Accounting	estimates	necessarily	require	subjective	determinations	about	future	events	and	conditions.	Therefore,	the	following	descriptions	of	critical	accounting estimates	are	forward-looking	statements,	and	actual	results	could	differ	materially	from	the	results	anticipated	by	these	forward-looking	statements.	You	should	read	the following	in	conjunction	with	Note	1	of	the	notes	to	consolidated	financial	statements	and	the	risk	factors	contained	in	"Item	1A	-	Risk	Factors"	of	this	annual	report.

# Reserve	for	Operating	Losses

As	a	part	of	our	direct	merchant	credit	card	and	debit	card	processing	services	and	check	guarantee	services,	we	experience	merchant	losses	and	check	guarantee losses,	which	we	collectively	refer	to	as	"operating	losses."	Merchant	losses	occur	when	we	are	unable	to	collect	amounts	from	merchant	customers	for	any	charges properly	reversed	by	the	issuing	bank.	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	issuing	bank.	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	record	reserves	for	our	estimated	liability	for	operating	losses.	This	estimate	of	losses	is	comprised	of	estimated	known	losses	and	estimated	incurred	but	not reported	losses.	Estimated	known	losses	arise	from	specific	instances	of,	for	example,	merchant	bankruptcies,	closures	or	fraud	of	which	we	are	aware	at	the	balance sheet	date,	but	for	which	the	ultimate	amount	of	associated	loss	will	not	be	determined	until	after	the	balance	sheet	date.	Estimated	known	loss	accruals	are	recorded when	it	is	probable	that	we	have	incurred	a	loss	and	the	loss	is	reasonably	estimable.	Estimated	known	losses	are	calculated	at	the	merchant	level	based	on	chargebacks received	to	date,	processed	volume,	and	historical	chargeback	ratios.	The	estimate	is	reduced	for	any	collateral	that	we	hold.	Accruals	for	estimated	known	losses	are evaluated	periodically	and	adjusted	as	appropriate	based	on	actual	loss	experience.	Incurred	but	not	reported	losses	result	from	transactions	that	we	process	before	the balance	sheet	date	for	which	we	have	not	yet	received	chargeback	notification.	We	estimate	incurred	but	not	reported	losses	by	applying	historical	loss	ratios	to	our direct	merchant	credit	card	and	signature	debit	card	sales	volumes	processed,	or	processed	volume.	Historically,	this	estimation	process	has	been	materially	accurate.

For	the	years	ended	May	31,	2014,	2013,	and	2012,	our	processed	volume	was	$201.2	billion,	$192.8	billion,	and	$180.7	billion,	respectively.	For	these	same periods,	we	recorded	provisions	for	merchant	losses	of	$8.7	million,	$9.5	million,	and	$8.8	million,	respectively.	As	a	percentage	of	processed	volume,	these	charges were	0.0043%,	0.0049%,	and	0.0049%,	respectively,	during	the	above	periods.	For	these	same	years,	we	experienced	actual	losses	of	$9.3	million,	$9.5	million,	and	$9.6 million,	respectively.	We	believe	that	our	estimation	process	has	been	materially	accurate	on	a	historical	basis.	A	10%	increase	or	decrease	in	our	provision	for	merchant losses	as	a	percentage	of	processed	volume	for	the	year	ended	May	31,	2014	would	have	resulted	in	a	decrease	or	increase	in	net	income	of	$0.6	million.	Further,	if	our guarantee	loss	as	a	percentage	of	guarantee	volume	for	our	fiscal	2014	had	equaled	our	guarantee	loss	as	a	percentage	of	guarantee	volume	of	0.0049%	for	the	same prior	year	period,	our	net	income	would	have	decreased	by	$0.9	million.	As	of	May	31,	2014	and	2013,	$1.7	million	and	$2.3	million	respectively	has	been	recorded	for guarantees	associated	with	merchant	card	processing	and	are	included	in	settlement	processing	obligations	in	the	accompanying	consolidated	balance	sheets.

In	our	check	guarantee	service	offering,	we	charge	our	merchants	a	percentage	of	the	gross	amount	of	the	check	and	guarantee	payment	of	the	check	to	the merchant	in	the	event	the	check	is	not	honored	by	the	checkwriter's	bank.	We	have	the	right	to	collect	the	full	amount	of	the	check	from	the	checkwriter	but	have	not historically	recovered	100%	of	the	guaranteed	checks.	Our	check	guarantee	loss	reserve	is	comprised	of	estimated	losses	on	returned	checks	and	estimated	incurred	but not	reported	losses.		We	estimate	the	loss	on	returned	checks	by	applying	historical	collection	rates	to	our	claims	receivable	balance.		We	estimate	incurred	but	not reported	losses	by	applying	historical	loss	ratios	to	the	face	value	of	our	guaranteed	checks.		For	each	of	the	years	ended	May	31,	2014,	2013,	and	2012,	we	guaranteed total	check	face	values	of	$2.6	billion.	For	those	same	periods,	we	recorded	provisions	for	check	guarantee	losses	of	$11.9	million,	$11.7	million,	and	$13.4	million, respectively.	As	a	percentage	of	the	total	guaranteed	check	face	value,	these	charges	were	0.46%,	0.44%,	and	0.51%,	respectively.	For	these	same	years,	we	experienced actual	losses	of	$12.1	million,	$12.0	million,	and	$13.8	million,	respectively.	We	believe	that	our	estimation	process	has	been	materially	accurate	on	a	historical	basis.	A 10%	increase	or	decrease	in	our	percentage	assumption	for	the	year	ended	May	31,	2014	would	have	resulted	in	a	decrease	or	increase	in	net	income	of	$0.8	million. Further,	if	our	guarantee	loss	as	a	percentage	of	guarantee	volume	for	our	fiscal	2014	had	equaled	our	guarantee	loss	as	a	percentage	of	guarantee	volume	of	0.44%	for the	same	prior	year	period,	our	net	income	would	have	increased	by	$0.2	million.	As	of	May	31,	2014	and	2013,	we	had	a	check	guarantee	reserve	of	$3.0	million	and $3.1	million,	respectively,	which	is	included	in	claims	receivable	in	the	accompanying	consolidated	balance	sheets.

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

the	United	States,	Canada,	the	United	Kingdom,	Spain,	the	Asia-Pacific	region	and	the	Russian	Federation	at	a	regional	or	national	level	and	the	related	impact	on	our customers.

# Goodwill	and	Long-lived	Asset	Valuations

Goodwill	is	tested	for	impairment	at	the	reporting	unit	level.	We	test	goodwill	for	impairment	annually	as	of	January	1st	and	more	often	if	an	event	occurs	or circumstances	change	that	would	more	likely	than	not	reduce	the	fair	value	of	a	reporting	unit	below	its	net	carrying	value.	We	have	the	option	of	performing	a qualitative	assessment	of	impairment	to	determine	whether	any	further	quantitative	testing	for	impairment	is	necessary.	The	option	of	whether	or	not	to	perform	a qualitative	assessment	is	made	from	year-to-year	and	can	vary	by	reporting	unit.

As	of	January	1,	2014,	we	elected	to	apply	the	qualitative	goodwill	impairment	assessment	guidance	in	ASC	350-20,	Goodwill,	for	each	of	our	reporting	units. Factors	we	consider	in	the	qualitative	assessment	include	general	macroeconomic	conditions,	industry	and	market	conditions,	cost	factors,	overall	financial	performance of	our	reporting	units,	events	or	changes	affecting	the	composition	or	carrying	value	of	the	net	assets	of	our	reporting	units,	sustained	decrease	in	our	share	price,	and other	relevant	entity	specific	events.	If	we	elect	to	bypass	the	qualitative	assessment	or	if	we	determine,	on	the	basis	of	qualitative	factors,	that	the	fair	value	of	the reporting	unit	is	more	likely	than	not	less	than	the	carrying	value,	a	two-step	quantitative	test	is	required.	In	the	first	step,	the	reporting	unit's	carrying	amount,	including goodwill,	is	compared	to	its	fair	value.	If	the	carrying	amount	of	the	reporting	unit	is	greater	than	its	fair	value,	goodwill	is	considered	impaired	and	step	two	must	be performed.	Step	two	measures	the	impairment	loss	by	comparing	the	implied	fair	value	of	reporting	unit	goodwill	with	the	carrying	amount	of	that	goodwill.	The	implied fair	value	of	goodwill	is	determined	by	allocating	the	fair	value	of	the	reporting	unit	to	all	the	assets	and	liabilities	of	that	unit	(including	unrecognized	intangibles)	as	if the	reporting	unit	had	been	acquired	in	a	business	combination.	The	excess	of	the	fair	value	over	the	amounts	allocated	to	the	assets	and	liabilities	of	the	reporting	unit	is the	implied	fair	value	of	the	goodwill.	The	excess	of	the	carrying	amount	over	the	implied	fair	value	of	the	goodwill	is	the	impairment	loss.

We	have	six	reporting	units:	North	America	Merchant	Services,	U.K.	Merchant	Services,	Asia-Pacific	Merchant	Services,	Central	and	Eastern	Europe	Merchant Services,	Russia	Merchant	Services	and	Spain	Merchant	Services.	Based	on	our	annual	assessment	as	of	January	1,	2014,	we	determined	on	the	basis	of	qualitative factors,	that	the	fair	values	of	the	reporting	units	were	not	more	likely	than	not	less	than	their	respective	carrying	values;	and	therefore,	a	two-step	quantitative	test	was not	required.	We	believe	that	the	fair	values	of	our	reporting	units	are	substantially	in	excess	of	their	carrying	values.

Our	goodwill	impairment	testing	involves	the	use	of	estimates	and	the	exercise	of	judgment	on	the	part	of	management.	Our	assessment	of	the	qualitative	factors discussed	above	involves	significant	judgments	about	expected	future	business	performance	and	general	market	conditions.	Significant	changes	in	our	assessment	of such	qualitative	factors	could	affect	our	assessment	of	the	fair	value	of	one	or	more	of	our	reporting	units	and	could	result	in	a	goodwill	impairment	charge	in	a	future period.

Other	intangible	assets	primarily	represent	customer-related	intangible	assets	(such	as	customer	lists	and	merchant	contracts),	contract-based	intangible	assets (such	as	non-compete	agreements,	referral	agreements	and	processing	rights),	acquired	 technology	and	 trademarks	associated	with	acquisitions.	Customer-related intangible	assets,	contract-based	intangible	assets	and	trademarks	are	amortized	over	their	estimated	useful	lives	of	from	5	to	30	years.	The	useful	lives	for	customer- related	intangible	assets	are	determined	based	primarily	on	forecasted	cash	flows,	which	include	estimates	for	the	revenues,	expenses,	and	customer	attrition	associated with	the	assets.	The	useful	lives	of	contract-based	intangible	assets	are	equal	to	the	terms	of	the	agreements.	The	useful	lives	of	amortizable	trademarks	are	based	on	our plans	to	phase	out	the	trademarks	in	the	applicable	markets.	Acquired	technology	is	amortized	on	a	straight-line	basis	over	its	estimated	useful	life.

Amortization	 for	 most	 of	 our	 customer-related	 intangible	 assets	 is	 calculated	 using	 an	 accelerated	 method.	 In	 determining	 amortization	 expense	 under	 our accelerated	method	for	any	given	period,	we	calculate	the	expected	cash	flows	for	that	period	that	were	used	in	determining	the	acquired	value	of	the	asset	and	divide	that amount	by	the	expected	total	cash	flows	over	the	estimated	life	of	the	asset.	We	multiply	that	percentage	by	the	initial	carrying	value	of	the	asset	to	arrive	at	the amortization	expense	for	that	period.	If	the	cash	flow	patterns	that	we	experience	differ	significantly	from	our	initial	estimates,	we	will	adjust	the	amortization	schedule accordingly.	These	cash	flow	patterns	are	derived	using	certain	assumptions	and	cost	allocations	due	to	a	significant	amount	of	asset	interdependencies	that	exist	in	our business.	During	fiscal	2014,	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.

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	prices	or	discounted	cash	flow	analysis	as	applicable.	We	regularly	evaluate	whether	events	and	circumstances	have	occurred	that	indicate	the	useful	lives of	property	and	equipment	and	finite-life	intangible	assets	may	warrant	revision.	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,	2014	and	2013.

# 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	during	the preliminary	project	stage	are	expensed	as	incurred.	Currently	unforeseen	circumstances	in	software	development,	such	as	a	significant	change	in	the	manner	in	which	the software	is	intended	to	be	used,	obsolescence	or	a	significant	reduction	in	revenues	due	to	merchant	attrition,	could	require	us	to	implement	alternative	plans	with	respect to	a	particular	effort,	which	could	result	in	the	impairment	of	previously	capitalized	software	development	costs.	Such	impairment	would	result	in	a	charge	to	income. Total	software	capitalized	at	May	31,	2014	was	$224.8	million.	Costs	capitalized	during	fiscal	2014,	2013	 and	2012	totaled	$39.1	million,	$29.2	million,	and	$31.3 million,	respectively.	Internally	developed	software	has	an	amortization	period	of	5	to	10	years.	Internally	developed	software	assets	are	placed	into	service	when	they are	ready	for	their	intended	use.

As	of	May	31,	2014,	we	have	placed	into	service	$96.7	million	of	hardware	and	software	associated	with	our	authorization	platform,	$6.1	million	of	which	was placed	in	service	during	fiscal	2014.	The	vision	for	this	platform	is	to	serve	as	a	front-end	operating	environment	for	merchant	processing	and	is	intended	to	replace	a number	of	legacy	platforms	that	have	higher	cost	structures.	Depreciation	and	amortization	associated	with	these	costs	is	calculated	based	on	transactions	expected	to	be processed	over	 the	 life	of	 the	platform.	We	believe	 that	 this	method	 is	more	representative	of	 the	platform's	use	 than	 the	straight-line	method.	We	are	currently processing	transactions	on	this	authorization	platform	in	nine	markets	in	our	Asia-Pacific	region	and	for	a	limited	number	of	U.S.	merchants.	As	these	markets	represent a	small	percentage	of	our	overall	transactions,	depreciation	and	amortization	related	to	this	platform	for	fiscal	2014	was	not	significant.	Depreciation	and	amortization expense	will	increase	as	we	complete	migrations	of	other	merchants	to	this	authorization	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	is	required	to	determine	whether	or	not	some	portion	or	all	of	our	deferred	tax	assets	will	not	be	realized.	To	the	extent	we	determine	that	we	will	not realize	the	benefit	of	some	or	all	of	our	deferred	tax	assets,	then	these	deferred	tax	assets	are	adjusted	through	our	provision	for	income	taxes	in	the	period	in	which	this determination	is	made.	At	May	31,	2014,	our	consolidated	balance	sheet	includes	net	deferred	tax	assets	associated	with	our	United	Kingdom	business	of	$96.7	million. Our	assessment	of	the	recoverability	of	these	deferred	tax	assets	is	based,	in	part,	on	our	projections	of	future	business	performance	and	viable	tax	planning	strategies.	If future	business	performance	fails	to	meet	projections,	we	may	determine	that	some	or	all	of	these	deferred	tax	assets

will	not	be	realized.	In	the	event	of	such	a	determination,	we	would	record	a	valuation	allowance	for	the	amount	deemed	unrecoverable	with	a	corresponding	charge	to the	provision	for	income	taxes.

# New	Accounting	Pronouncements

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

In	May	2014,	the	FASB	issued	Accounting	Standards	Update	("ASU")	2014-09,	"Revenue	from	Contracts	with	Customers(Topic	606)."	The	core	principle	of	the ASU	is	that	an	entity	should	recognize	revenue	for	the	transfer	of	goods	or	services	equal	to	the	amount	that	it	expects	to	be	entitled	to	receive	for	those	goods	or services.	The	ASU	requires	additional	disclosure	about	the	nature,	amount,	timing	and	uncertainty	of	revenue	and	cash	flows	arising	from	customer	contracts,	including significant	judgments	and	changes	in	judgments.	The	amendments	are	effective	for	annual	reporting	periods	beginning	after	December	15,	2016,	including	interim periods	within	that	reporting	period.	Early	application	is	not	permitted.	We	are	evaluating	the	impact	of	this	ASU	on	our	consolidated	financial	statements.

In	April	2014,	the	FASB	issued	ASU	2014-08,	"Presentation	of	Financial	Statements	(Topic	205)	and	Property,	Plant,	and	Equipment	(Topic	360)	Reporting Discontinued	 Operations	 and	 Disclosures	 of	 Disposals	 of	 Components	 of	 an	 Entity."	The	 amendments	 in	 ASU	 2014-11change	 the	 requirements	 for	 reporting discontinued	operations	in	ASC	205-20.	The	amendments	change	the	definition	of	discontinued	operations	by	limiting	discontinued	operations	reporting	to	disposals	of components	of	an	entity	that	represent	strategic	shifts	that	have	(or	will	have)	a	major	effect	on	an	entity's	operations	and	financial	results.	The	amendments	require expanded	disclosures	for	discontinued	operations	and	are	effective	for	fiscal	years,	and	interim	periods	within	those	years,	beginning	after	December	15,	2014.	Early adoption	is	permitted,	but	only	for	disposals	(or	classifications	as	"held	for	sale")	that	have	not	been	reported	in	financial	statements	previously	issued	or	available	for issuance.

In	July	2013,	the	FASB	issued	ASU	2013-11,	"Presentation	of	an	Unrecognized	Tax	Benefit	When	a	Net	Operating	Loss	Carryforward,	a	Similar	Tax	Loss,	or	a Tax	Credit	Carryforward	Exists"	("ASU	2013-11").	The	amendments	in	ASU	2013-11	require	an	entity	to	present	an	unrecognized	tax	benefit	in	the	financial	statements as	a	reduction	to	a	deferred	tax	asset	for	a	net	operating	loss	("NOL")	carryforward,	a	similar	tax	loss,	or	a	tax	credit	carryforward	except	when:	(1)	A	NOL	carryforward, a	similar	tax	loss,	or	a	tax	credit	carryforward	is	not	available	as	of	the	reporting	date	under	the	governing	tax	law	to	settle	taxes	that	would	result	from	the	disallowance of	the	tax	position;	or	(2)	the	entity	does	not	intend	to	use	the	deferred	tax	asset	for	this	purpose	(provided	that	the	tax	law	permits	a	choice).	If	either	of	these	conditions exists,	an	entity	should	present	an	unrecognized	tax	benefit	in	the	financial	statements	as	a	liability	and	should	not	net	the	unrecognized	tax	benefit	with	a	deferred	tax asset.	The	amendment	does	not	affect	the	recognition	or	measurement	of	uncertain	tax	positions	under	ASC	740-5.	The	amendments	in	this	ASU	are	effective	for	fiscal years,	and	interim	periods	within	those	years,	beginning	after	December	15,	2013.	The	amendments	should	be	applied	prospectively	to	all	unrecognized	tax	benefits	that exist	at	the	effective	date.	Retrospective	application	is	permitted.

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

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

# Foreign	Currency	Risk

A	significant	amount	of	our	operations	is	conducted	in	foreign	currencies.	Consequently,	our	revenues	and	income	generated	in	currencies	other	than	the	U.S. dollar	are	affected	by	fluctuations	in	foreign	currency	exchange	rates.	For	fiscal	2014,	currency	rate	fluctuations	decreased	our	revenues	by	$10.8	million	and	our	diluted earnings	per	share	by	$0.05	as	compared	to	the	prior	year,	calculated	by	converting	our	fiscal	2014	actual	revenues	and	expenses	at	fiscal	2013	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,	2014,	2013	 and	2012,	 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	investments	in	foreign	operations.	Relative	to	our	net	investment	in	foreign	operations,	the	assets and	liabilities	of	subsidiaries	whose	functional	currency	is	a	foreign	currency	are	translated	at	the	period-end	rate	of	exchange.	The	resulting	translation	adjustment	is recorded	as	a	component	of	other	comprehensive	income	and	is	included	in	shareholders'	equity.	Translation	gains	and	losses	on	intercompany	balances	of	a	long-term investment	nature	are	also	recorded	as	a	component	of	other	comprehensive	income.

# Interest	Rate	Risk

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

We	have	a	term	loan	and	a	corporate	credit	facility	that	we	use	for	general	corporate	purposes,	as	well	as	various	short-term	lines	of	credit	that	we	use	to	fund settlement	in	certain	of	our	markets.	Interest	rates	on	these	debt	instruments	and	short-term	lines	of	credit	are	based	on	market	rates	and	fluctuate	accordingly.	As	of May	31,	2014,	there	was	$1,830.1	million	outstanding	under	these	variable-rate	debt	arrangements	and	short-term	lines	of	credit.

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

We	did	not	use	interest	rate	derivative	instruments	to	manage	exposure	to	interest	rate	changes	during	fiscal	2014.	The	interest	earned	on	our	cash	investments	and the	interest	paid	on	our	debt	are	based	on	variable	interest	rates	and,	therefore,	the	exposure	of	our	net	income	to	a	change	in	interest	rates	is	at	least	partially	mitigated	as an	increase	in	rates	would	increase	both	interest	income	and	interest	expense,	and	a	reduction	in	rates	would	decrease	both	interest	income	and	interest	expense.

Using	the	May	31,	2014	balances	outstanding	under	these	variable-rate	debt	arrangements,	short-term	lines	of	credit	and	cash	investments,	a	10%	increase	or decrease	in	short-term	interest	rates	on	an	annualized	basis	compared	to	the	interest	rates	as	of	May	31,	2014	would	not	result	in	a	material	adverse	impact	to	pre-tax income,	cash	flows	or	financial	position.

# Derivative	Financial	Instruments

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

# ITEM	8-	FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# To	the	Board	of	Directors	and	Stockholders	of

# Atlanta,	Georgia

We	 have	 audited	 the	 internal	 control	 over	 financial	 reporting	 of	 Global	 Payments	 Inc.	 and	 subsidiaries	 (the	 "Company")	 as	 of	May	31,	2014,	 based	 on	 criteria established	in	Internal	Control	-	Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.	The	Company's management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial reporting,	included	in	the	accompanying	Management	Report	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an	opinion	on	the	Company's internal	control	over	financial	reporting	based	on	our	audit.

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

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

Because	of	the	inherent	limitations	of	internal	control	over	financial	reporting,	including	the	possibility	of	collusion	or	improper	management	override	of	controls, material	misstatements	due	to	error	or	fraud	may	not	be	prevented	or	detected	on	a	timely	basis.	Also,	projections	of	any	evaluation	of	the	effectiveness	of	the	internal control	over	financial	reporting	to	future	periods	are	subject	to	the	risk	that	the	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of compliance	with	the	policies	or	procedures	may	deteriorate.

In	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	May	31,	2014,	based	on	the	criteria	established in	Internal	Control	-	Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	financial	statements	and financial	statement	schedule	as	of	and	for	the	year	ended	May	31,	2014	of	the	Company	and	our	report	dated	July	29,	2014	expressed	an	unqualified	opinion	on	those consolidated	financial	statements	and	financial	statement	schedule.

/s/	DELOITTE	&	TOUCHE	LLP

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Global	Payments	Inc.	and	subsidiaries	(the	"Company")	as	of	May	31,	2014	and	2013,	and	the	related consolidated	statements	of	income,	comprehensive	income,	changes	in	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	May	31,	2014.	Our	audits also	included	the	financial	statement	schedule	listed	in	the	Index	at	Item	15.	These	financial	statements	and	financial	statement	schedule	are	the	responsibility	of	the Company's	management.	Our	responsibility	is	to	express	an	opinion	on	the	financial	statements	and	financial	statement	schedule	based	on	our	audits.

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

In	our	opinion,	such	consolidated	financial	statements	present	fairly,	in	all	material	respects,	the	financial	position	of	Global	Payments	Inc.	and	subsidiaries	as	of May	31,	2014	 and	2013,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	May	31,	2014,	in	conformity	with accounting	principles	generally	accepted	in	the	United	States	of	America.	Also,	in	our	opinion,	such	financial	statement	schedule,	when	considered	in	relation	to	the basic	consolidated	financial	statements	taken	as	a	whole,	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein.

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,	2014,	based	on	the	criteria	established	in	Internal	Control-Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	and	our	report	dated	July	29,	2014	expressed	an	unqualified	opinion	on	the	Company's	internal	control	over	financial reporting.

# CONSOLIDATED	STATEMENTS	OF	INCOME

(in	thousands,	except	per	share	data)

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Revenues | $2,554,236 | $2,375,923 | $2,203,847 |
| Operating\texpenses: |  |  |  |
| Cost\tof\tservice | 952,225 | 862,075 | 784,756 |
| Sales,\tgeneral\tand\tadministrative | 1,203,512 | 1,119,860 | 1,027,304 |
| Processing\tsystem\tintrusion | (7,000) | 36,775 | 84,438 |
|  | 2,148,737 | 2,018,710 | 1,896,498 |
| Operating\tincome | 405,499 | 357,213 | 307,349 |
| Other\tincome\t(expense): |  |  |  |
| Interest\tand\tother\tincome | 13,663 | 10,353 | 9,946 |
| Interest\tand\tother\texpense | (41,812) | (33,282) | (16,848) |
|  | (28,149) | (22,929) | (6,902) |
| Income\tbefore\tincome\ttaxes | 377,350 | 334,284 | 300,447 |
| Provision\tfor\tincome\ttaxes | (107,398) | (95,571) | (82,881) |
| Net\tincome | 269,952 | 238,713 | 217,566 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterests,\tnet\tof\tincome\ttax | (24,666) | (22,588) | (29,405) |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $245,286 | $216,125 | $188,161 |
| Earnings\tper\tshare\tattributable\tto\tGlobal\tPayments: |  |  |  |
| Basic\tearnings\tper\tshare | $3.40 | $2.78 | $2.39 |
| Diluted\tearnings\tper\tshare | $3.37 | $2.76 | $2.37 |

See	Notes	to	Consolidated	Financial	Statements.

# CONSOLIDATED	STATEMENTS	OF	COMPREHENSIVE	INCOME

(in	thousands)

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $269,952 | $238,713 | $217,566 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |
| \t\t\tForeign\tcurrency\ttranslation\tadjustments | 17,034 | 20,629 | (139,722) |
| \t\t\tIncome\ttax\tbenefit\trelated\tto\tforeign\tcurrency\ttranslation\tadjustments | 3,133 | 582 | 6,879 |
| \t\t\tChanges\tin\tunrecognized\tpension\tbenefit\tcosts | 236 | 2,302 | (3,470) |
| \t\t\tIncome\ttax\t(expense)\tbenefit\trelated\tto\tchanges\tin\tunrecognized\tpension\tbenefit\tcosts | (63) | (785) | 1,260 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | 20,340 | 22,728 | (135,053) |
| Comprehensive\tincome | 290,292 | 261,441 | 82,513 |
| \t\t\tLess:\tcomprehensive\tincome\tattributable\tto\tnoncontrolling\tinterests | (31,720) | (30,378) | (3,673) |
| Comprehensive\tincome\tattributable\tto\tGlobal\tPayments | $258,572 | $231,063 | $78,840 |

# CONSOLIDATED	BALANCE	SHEETS

(in	thousands,	except	share	data)

|  | May	31,	2014 | May	31,	2013 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $581,872 | $680,470 |
| Accounts\treceivable,\tnet\tof\tallowances\tfor\tdoubtful\taccounts\tof\t$401\tand\t$509,\trespectively | 214,574 | 189,435 |
| Claims\treceivable,\tnet | 809 | 1,156 |
| Settlement\tprocessing\tassets | 780,917 | 259,204 |
| Inventory | 6,636 | 11,057 |
| Deferred\tincome\ttaxes | 12,963 | 6,485 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 45,673 | 66,685 |
| Total\tcurrent\tassets | 1,643,444 | 1,214,492 |
| Goodwill | 1,337,285 | 1,044,222 |
| Other\tintangible\tassets,\tnet | 535,173 | 400,848 |
| Property\tand\tequipment,\tnet | 369,753 | 348,064 |
| Deferred\tincome\ttaxes | 101,928 | 95,178 |
| Other | 31,067 | 22,252 |
| Total\tassets | $4,018,650 | $3,125,056 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Lines\tof\tcredit | $440,128 | $187,461 |
| Current\tportion\tof\tlong-term\tdebt | 17,677 | 72,335 |
| Accounts\tpayable\tand\taccrued\tliabilities | 290,106 | 262,890 |
| Settlement\tprocessing\tobligations | 451,317 | 162,558 |
| Income\ttaxes\tpayable | 12,390 | 18,870 |
| Total\tcurrent\tliabilities | 1,211,618 | 704,114 |
| Long-term\tdebt | 1,376,002 | 891,134 |
| Deferred\tincome\ttaxes | 209,099 | 170,723 |
| Other\tlong-term\tliabilities | 89,132 | 72,478 |
| Total\tliabilities | 2,885,851 | 1,838,449 |
| Commitments\tand\tcontingencies\t(See\tNote\t15) |  |  |
| Equity: |  |  |
| Preferred\tstock,\tno\tpar\tvalue;\t5,000,000\tshares\tauthorized\tand\tnone\tissued | — | — |
| Common\tstock,\tno\tpar\tvalue;\t200,000,000\tshares\tauthorized;\t68,845,643\tand\t75,426,099\tissued\tand\toutstanding\tat\tMay\t31,\t2014\tand\n2013,\trespectively | — | — |
| Paid-in\tcapital | 183,023 | 202,396 |
| Retained\tearnings | 815,980 | 958,751 |
| Accumulated\tother\tcomprehensive\tloss | (1,776) | (15,062) |
| Total\tGlobal\tPayments\tshareholders'\tequity | 997,227 | 1,146,085 |
| Noncontrolling\tinterests | 135,572 | 140,522 |
| Total\tequity | 1,132,799 | 1,286,607 |
| Total\tliabilities\tand\tequity | $4,018,650 | $3,125,056 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome | $269,952 | $238,713 | $217,566 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\t(used\tin)\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization\tof\tproperty\tand\tequipment | 60,124 | 55,023 | 48,403 |
| Amortization\tof\tacquired\tintangibles | 61,945 | 56,765 | 50,696 |
| Share-based\tcompensation\texpense | 29,793 | 18,427 | 16,391 |
| Provision\tfor\toperating\tlosses\tand\tbad\tdebts | 20,574 | 21,659 | 22,417 |
| Deferred\tincome\ttaxes | (1,799) | 33,112 | (19,498) |
| Other,\tnet | (1,484) | (4,878) | (2,775) |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\tthe\teffects\tof\tacquisitions: |  |  |  |
| Accounts\treceivable | (18,539) | (5,458) | (16,422) |
| Claims\treceivable | (11,569) | (11,858) | (13,519) |
| Settlement\tprocessing\tassets\tand\tobligations,\tnet | (241,431) | (104,007) | (568,335) |
| Inventory | 4,793 | (1,187) | (2,394) |
| Prepaid\texpenses\tand\tother\tassets | 18,995 | (22,978) | 3,511 |
| Accounts\tpayable\tand\tother\taccrued\tliabilities | 9,224 | (39,374) | 85,875 |
| Income\ttaxes\tpayable | (6,480) | 6,587 | 4,609 |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\tactivities | 194,098 | 240,546 | (173,475) |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Business,\tintangible\tand\tother\tasset\tacquisitions,\tnet\tof\tcash\tacquired | (426,524) | (434,016) | (44,274) |
| Capital\texpenditures | (81,411) | (98,590) | (109,876) |
| Principal\tcollections\ton\tfinancing\treceivables | 2,658 | 2,812 | 2,565 |
|  | 3,607 | 1,227 | 1,152 |
| Net\tproceeds\tfrom\tsale\tof\tinvestments\tand\tbusiness |  |  |  |
| Net\tcash\tused\tin\tinvesting\tactivities | (501,670) | (528,567) | (150,433) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Net\tborrowings\t(payments)\ton\tshort-term\tlines\tof\tcredit | 252,667 | (27,930) | (55,354) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 2,690,000 | 1,135,327 | 146,374 |
| Principal\tpayments\tunder\tlong-term\tdebt | (2,260,597) | (482,349) | (184,235) |
| Acquisition\tof\tredeemable\tnoncontrolling\tinterest | — | (242,000) | — |
| Payment\tof\tdebt\tissuance\tcosts | (5,961) | (3,987) | — |
| Repurchase\tof\tcommon\tstock | (447,307) | (175,297) | (99,604) |
| Proceeds\tfrom\tstock\tissued\tunder\tshare-based\tcompensation\tplans | 31,727 | 10,543 | 11,446 |
| Common\tstock\trepurchased\t-\tshare-based\tcompensation\tplans | (5,681) | (10,244) | (4,861) |
| Tax\tbenefit\tfrom\tshare-based\tcompensation\tplans | 6,475 | 1,863 | 1,441 |
| Distributions\tto\tnoncontrolling\tinterests | (36,670) | (16,206) | (27,082) |
| Dividends\tpaid | (5,757) | (6,198) | (6,311) |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | 218,896 | 183,522 | (218,186) |
| Effect\tof\texchange\trate\tchanges\ton\tcash | (9,922) | 3,694 | (30,916) |
| Decrease\tin\tcash\tand\tcash\tequivalents | (98,598) | (100,805) | (573,010) |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tthe\tperiod | 680,470 | 781,275 | 1,354,285 |
| Cash\tand\tcash\tequivalents,\tend\tof\tthe\tperiod | $581,872 | $680,470 | $781,275 |

# CONSOLIDATED	STATEMENTS	OF	CHANGES	IN	EQUITY

|  | Number		of<br>Shares | Paid-in<br>Capital | Retained	Earnings | Accumulated	Other<br>Comprehensive	Income<br>(Loss) | Total	Global<br>Payments<br>Shareholders'<br>Equity | Noncontrolling<br>Interests | Total	Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tMay\t31,\t2013 | 75,426 | $202,396 | $958,751 | $(15,062) | $1,146,085 | $140,522 | $1,286,607 |
| Net\tincome |  |  | 245,286 |  | 245,286 | 24,666 | 269,952 |
| Changes\tin\tunrecognized\tpension\tbenefit\tcosts,\tnet\tof\ttax\nof\t($63) |  |  |  | 173 | 173 |  | 173 |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttax\tof |  |  |  |  |  |  |  |
| $3,133 |  |  |  | 13,113 | 13,113 | 7,054 | 20,167 |
| Stock\tissued\tunder\tshare-based\tcompensation\tplans | 1,901 | 31,727 |  |  | 31,727 |  | 31,727 |
| Common\tstock\trepurchased\t-\tshare-based\tcompensation\nplans | (644) | (14,498) |  |  | (14,498) |  | (14,498) |
| Tax\tbenefit\tfrom\tshare-based\tcompensation\tplans,\tnet |  | 6,351 |  |  | 6,351 |  | 6,351 |
| Share-based\tcompensation\texpense |  | 29,793 |  |  | 29,793 |  | 29,793 |
| Distributions\tto\tnoncontrolling\tinterests |  |  |  |  |  | (36,670) | (36,670) |
| Repurchase\tof\tcommon\tstock | (7,837) | (72,746) | (382,300) |  | (455,046) |  | (455,046) |
| Dividends\tpaid\t($0.08\tper\tshare) |  |  | (5,757) |  | (5,757) |  | (5,757) |
| Balance\tat\tMay\t31,\t2014 | 68,846 | $183,023 | $815,980 | $(1,776) | $997,227 | $135,572 | $1,132,799 |

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

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

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# NOTE	1—SUMMARY	OF	SIGNIFICANT	ACCOUNTING	POLICIES

Business,	Consolidation	and	Presentation—	Global	Payments	Inc.	is	a	worldwide	provider	of	payment	solutions	for	merchants,	value-added	resellers,	enterprise software	providers,	financial	institutions,	government	agencies,	multi-national	corporations	and	independent	sales	organizations	("ISOs")	located	throughout	North America,	Europe	and	the	Asia-Pacific	region	and	in	Brazil.	We	provide	payment	and	digital	commerce	solutions	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.	Global	Payments	Inc.	and	its	consolidated	subsidiaries	are	referred	to collectively	as	"Global	Payments,"	the	"Company,"	"we,"	"our"	or	"us,"	unless	the	context	requires	otherwise.

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

Use	of	estimates—	The	preparation	of	financial	statements	in	conformity	with	GAAP	requires	management	to	make	certain	estimates	and	assumptions	that	affect the	reported	amounts	of	assets	and	liabilities	and	disclosures	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements,	as	well	as	the	reported	amounts	of revenues	and	expenses	during	the	reported	period.	Actual	results	could	differ	from	those	estimates.

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

Cash	and	cash	equivalents—	Cash	and	cash	equivalents	include	cash	on	hand	and	all	liquid	investments	with	an	initial	maturity	of	three	months	or	less	when purchased.	Cash	and	cash	equivalents	include	reserve	funds	collected	from	our	merchants	that	serve	as	collateral	to	minimize	contingent	liabilities	associated	with	any losses	 that	 may	 occur	 under	 the	 merchant	 agreement	 ("Merchant	 Reserves").	We	 record	 a	 corresponding	 liability	 in	 settlement	 processing	 assets	 and	 settlement processing	obligations	in	our	consolidated	balance	sheet.	While	this	cash	is	not	restricted	in	its	use,	we	believe	that	designating	this	cash	to	collateralize	Merchant Reserves	strengthens	our	fiduciary	standing	with	our	member	sponsors	and	is	in	accordance	with	guidelines	set	by	the	card	networks.	As	of	May	31,	2014	and	2013,	our cash	and	cash	equivalents	included	$124.7	million	and	$280.7	million,	respectively,	related	to	Merchant	Reserves.

Certain	of	our	member	sponsors	hold	Merchant	Reserves	on	our	behalf.	In	these	instances,	neither	the	Merchant	Reserve	cash	nor	the	corresponding	liability appears	on	our	consolidated	balance	sheet;	however,	we	have	access	to	the	collateral	in	the	event	that	we	incur	a	merchant	loss.	During	the	year	ended	May	31,	2014,	we transferred	a	significant	amount	of	merchant	reserve	cash	to	one	of	our	member	sponsors	to	whom	we	transferred	a	substantial	portion	of	our	processing	volume.

Our	cash	and	cash	equivalents	include	settlement	related	cash	balances.	Settlement	related	cash	balances	represent	surplus	funds	that	we	hold	on	behalf	of	our member	sponsors	when	the	incoming	amount	from	the	card	networks	precedes	the	member	sponsors'	funding	obligation	to	the	merchant.	Settlement	related	cash balances	are	not	restricted;	however,	these	funds	are	generally

paid	out	in	satisfaction	of	settlement	processing	obligations	the	following	day.	Please	see	Note	3	-	Settlement	Processing	Assets	and	Obligations	and	discussion	below for	further	information.

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

Settlement	processing	assets	and	obligations—	Settlement	processing	assets	and	obligations	represent	intermediary	balances	arising	in	our	settlement	process	for direct	merchants.	In	accordance	with	Accounting	Standards	Codification	("ASC")	210-20,	Offsetting,	we	apply	offsetting	 to	our	settlement	processing	assets	and obligations	where	legal	right	of	set	off	exists.	Please	see	Note	3	-	Settlement	Processing	Assets	and	Obligations	for	further	information.

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

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

As	of	May	31,	2014	and	2013,	$1.7	million	and	$2.3	million,	respectively,	was	recorded	to	reflect	the	reserve	for	operating	losses	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,	2014,	2013	and 2012,	we	recorded	such	expenses	in	the	amounts	of	$8.7	million,	$9.5	million	and	$8.8	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.	We	have	the	right	to	collect	the	full	amount	of	the	check	from	the	checkwriter	but	have	not historically	recovered	100%	of	the	guaranteed	checks.	Our	check	guarantee	loss	reserve	is	comprised	of	estimated	losses	on	returned	checks	and	estimated	incurred	but not	reported	losses.		We	estimate	the	loss	on	returned	checks	by	applying	historical	collection	rates	to	our	claims	receivable	balance.		We	estimate	incurred	but	not reported	losses	by	applying	historical	loss	ratios	to	the	face	value	of	our	guaranteed	checks.		As	of	May	31,	2014	and	2013,	we	had	a	check	guarantee	loss	reserve	of	$3.0 million	and	$3.1	million,	respectively,	which	is	included	in	net	claims	receivable	in	the	accompanying	consolidated	balance	sheets.	For	the	years	ended	May	31,	2014, 2013	 and	2012,	we	recorded	expenses	of	$11.9	million,	$11.7	million	 and	$13.4	million,	respectively,	which	are	included	in	cost	of	service	in	the	accompanying consolidated	statements	of	income.	The	estimated	check	returns	and	recovery	amounts	are	subject	to	the	risk	that	actual	amounts	returned	and	recovered	in	the	future may	differ	significantly	from	estimates	used	in	calculating	the	receivable	valuation	allowance.

As	the	potential	for	merchants'	failure	to	settle	individual	reversed	charges	from	consumers	in	our	merchant	credit	card	processing	offering	and	the	timing	of individual	checks	clearing	the	payors'	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	also	not	practicable	to	estimate	the	extent	to which	merchant	collateral	or	subsequent	collections	of	dishonored	checks,	respectively,	would	offset	these	exposures	due	to	these	same	uncertainties.

Property	and	equipment—	Property	and	equipment	are	stated	at	amortized	cost.	Depreciation	and	amortization	are	calculated	using	the	straight-line	method, except	for	certain	technology	assets	discussed	below.	Leasehold	improvements	are	amortized	over	the	lesser	of	the	remaining	term	of	the	lease	or	the	useful	life	of	the asset.	Maintenance	and	repairs	are	charged	to	operations	as	incurred.

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

As	of	May	31,	2014,	we	had	placed	into	service	$96.7	million	of	hardware	and	software	associated	with	our	authorization	platform.	This	platform	serves	as	a	front- end	operating	environment	for	merchant	processing	and	is	intended	to	replace	a	number	of	legacy	platforms.	Depreciation	and	amortization	associated	with	these	costs	is calculated	based	on	transactions	expected	to	be	processed	over	the	life	of	the	platform.	We	believe	that	this	method	is	more	representative	of	the	platform's	use	than	the straight-line	method.	We	are	currently	processing	transactions	on	this	authorization	platform	in	nine	markets	in	our	Asia-Pacific	region	and	for	a	limited	number	of	U.S. merchants.	As	these	markets	represent	a	small	percentage	of	our	overall	transactions,	depreciation	and	amortization	related	to	this	platform	for	fiscal	2014,	2013	and 2012	was	not	significant.	Depreciation	and	amortization	expense	will	increase	as	we	complete	migrations	of	other	merchants	to	this	authorization	platform.

Goodwill	and	other	intangible	assets—	Goodwill	is	tested	for	impairment	at	the	reporting	unit	level.	We	test	goodwill	for	impairment	annually	as	of	January	1st and	more	often	if	an	event	occurs	or	circumstances	change	that	would	more	likely	than	not	reduce	the	fair	value	of	a	reporting	unit	below	its	net	carrying	value.	We	have the	option	of	performing	a	qualitative	assessment	of	impairment	to	determine	whether	any	further	quantitative	testing	for	impairment	is	necessary.	The	option	of	whether or	not	to	perform	a	qualitative	assessment	is	made	from	year-to-year	and	can	vary	by	reporting	unit.

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),	acquired	technology

and	trademarks	associated	with	acquisitions.	Customer-related	intangible	assets,	contract-based	intangible	assets	and	trademarks	are	amortized	over	their	estimated useful	 lives	of	from	5	 to	30	years.	The	useful	lives	for	customer-related	intangible	assets	are	determined	based	primarily	on	forecasted	cash	flows,	which	include estimates	for	the	revenues,	expenses,	and	customer	attrition	associated	with	the	assets.	The	useful	lives	of	contract-based	intangible	assets	are	equal	to	the	terms	of	the agreements.	The	useful	lives	of	amortizable	trademarks	are	based	on	our	plans	to	phase	out	the	trademarks	in	the	applicable	markets.	Acquired	technology	is	amortized on	a	straight-line	basis	over	its	estimated	useful	life.

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	prices	or	discounted	cash	flow	analysis	as	applicable.	We	regularly	evaluate	whether	events	and	circumstances	have occurred	that	indicate	the	useful	lives	of	property	and	equipment	and	finite-life	intangible	assets	may	warrant	revision.	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,	2014	and	2013.

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.

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.

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	long-term	debt	includes	variable	interest rates	based	on	the	London	Interbank	Offered	Rate	("LIBOR"),	the	Federal	Funds	Effective	Rate	(as	defined	in	the	debt	agreements)	or	the	prime	rate	plus	a	margin based	on	our	leverage	position.	At	May	31,	2014,	the	carrying	amount	of	our	term	loan	and	Corporate	Credit	Facility	approximates	fair	value,	which	is	calculated	using Level	2	inputs.	Please	see	Note	7	–	Long-Term	Debt	and	Credit	Facilities	for	further	information.

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,	2014	and 2013,	our	transaction	gains	and	losses	were	insignificant.

The	assets	and	liabilities	of	subsidiaries	whose	functional	currency	is	a	foreign	currency	are	translated	at	the	period-end	rate	of	exchange.	Income	statement	items are	translated	at	the	weighted	average	rates	prevailing	during	the	period.	The	resulting	translation

adjustment	is	recorded	as	a	component	of	other	comprehensive	income	and	is	included	in	equity.	Translation	gains	and	losses	on	intercompany	balances	of	a	long-term investment	nature	are	also	recorded	as	a	component	of	other	comprehensive	income.

Earnings	per	share—	Basic	 earnings	per	share	is	computed	by	dividing	reported	earnings	available	to	common	shareholders	by	the	weighted	average	shares outstanding	during	the	period.	Earnings	available	to	common	shareholders	is	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	fiscal	years	ended	May	31,	2013	and	2012	excludes	0.3	million	and 0.2	million	shares,	respectively,	related	to	stock	options	that	would	have	an	antidilutive	effect	on	the	computation	of	diluted	earnings	per	share.	For	the	fiscal	year	ended May	31,	2014,	there	were	no	such	shares	to	exclude.	No	additional	securities	were	outstanding	that	could	potentially	dilute	basic	earnings	per	share.

The	following	table	sets	forth	the	computation	of	diluted	weighted	average	shares	outstanding	for	the	years	ended	May	31,	2014,	2013	and	2012:

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Basic\tweighted\taverage\tshares\toutstanding | 72,119 | 77,767 | 78,829 |
| Plus:\tDilutive\teffect\tof\tstock\toptions\tand\tother\tshare-based\tawards | 569 | 460 | 602 |
| Diluted\tweighted\taverage\tshares\toutstanding | 72,688 | 78,227 | 79,431 |

Repurchased	shares—We	account	for	the	retirement	of	repurchased	shares	using	the	par	value	method	under	which	we	allocate	the	cost	of	repurchased	and	retired shares	between	paid-in	capital	and	retained	earnings	by	comparing	the	price	of	shares	repurchased	to	the	original	issue	proceeds	of	those	shares.	When	the	repurchase price	of	the	shares	repurchased	is	greater	than	the	original	issue	proceeds,	the	excess	is	charged	to	retained	earnings.	We	use	a	last-in,	first-out	cost	flow	assumption	to identify	the	original	issue	proceeds	to	the	cost	of	the	shares	repurchased.	We	believe	that	this	allocation	method	is	preferable	because	it	more	accurately	reflects	our	paid- in	capital	balances	by	allocating	the	cost	of	the	shares	repurchased	and	retired	to	paid-in	capital	in	proportion	to	paid-in	capital	associated	with	the	original	issuance	of said	shares.

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

# NOTE	2—PROCESSING	SYSTEM	INTRUSION

In	March	2012,	we	identified	and	self-reported	unauthorized	access	into	a	limited	portion	of	our	North	America	card	processing	system	and	potential	unauthorized access	to	servers	containing	personal	information	collected	from	U.S.	merchants	who	applied	for	processing	services.	We	incurred	approximately	$114.2	million	of cumulative	expenses,	net	of	insurance	recoveries	of	$27.0	million,	relating	to	the	incident.	During	fiscal	2014,	we	recorded	a	credit	of	$7.0	million	related	to	insurance recoveries.	During	fiscal	2013	and	2012,	we	recorded	net	processing	system	intrusion	charges	of	$36.8	million	and	$84.4	million,	respectively.	As	a	result	of	this	event, certain	card	networks	temporarily	removed	us	from	their	lists	of	Payment	Card	Industry	Data	Security	Standards	("PCI	DSS")	compliant	service	providers.	After remediating	our	processes	and	systems,	we	returned	to	the	lists	of	PCI	DSS	compliant	service	providers	in	the	third	quarter	of	fiscal	2013.

# NOTE	3—SETTLEMENT	PROCESSING	ASSETS	AND	OBLIGATIONS

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

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

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

Timing	differences,	interchange	expense,	Merchant	Reserves	and	exception	items	cause	differences	between	the	amount	received	from	the	card	networks	and	the amount	funded	to	the	merchants.	These	intermediary	balances	arising	in	our	settlement	process	for	direct	merchants	are	reflected	as	settlement	processing	assets	and obligations	on	our	balance	sheet.	Settlement	processing	assets	and	obligations	consist	of	the	components	outlined	below:

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

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

•Receivable	from	networks	-	our	receivable	from	the	card	networks	for	transactions	processed	on	behalf	of	merchants	where	we	are	a	direct	member	of	that particular	network.

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

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

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

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

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

•Reserve	for	sales	allowances.

In	accordance	with	ASC	210-20,	Offsetting,	we	apply	offsetting	to	our	settlement	processing	assets	and	obligations	where	legal	right	of	set-off	exists.	In	the sponsorship	model,	we	apply	offsetting	by	Member	because	the	Member	is	ultimately	responsible	for	funds	settlement.	With	these	Member	transactions,	we	do	not	have access	to	the	gross	proceeds	of	the	receivable	from	the	networks	and,	thus,	do	not	have	a	direct	obligation	or	any	ability	to	satisfy	the	payable	that	funds	the	merchant.	In these	situations,	we	apply	offsetting	to	determine	a	net	position	with	each	member	sponsor.	If	that	net	position	is	an	asset,	we	reflect	the	net	amount	in	settlement processing	assets	on	our	balance	sheet	and	we	present	the	individual	components	in	the	settlement	processing	assets	table	below.	If	that	net	position	is	a	liability,	we reflect	the	net	amount	in	settlement	processing	obligations	on	our	consolidated	balance	sheet	and	we	present	the	individual	components	in	the	settlement	processing obligations	table	below.	In	the	direct	membership	model,	offsetting	is	not	applied,	and	the	individual	components	are	presented	as	an	asset	or	obligation	based	on	the nature	of	that	component.

As	of	May	31,	2014	and	2013,	settlement	processing	assets	and	obligations	consisted	of	the	following:

| Interchange	reimbursement | $217,806 | $70,348 |
| :--- | :--- | :--- |
| Receivable\tfrom\tMembers | 206,322 | 117,404 |
| Receivable\tfrom\tnetworks | 430,763 | 126,136 |
| Exception\titems | 5,573 | 2,725 |
| Merchant\tReserves | (79,547) | (57,409) |
|  | $780,917 | $259,204 |
| Settlement\tprocessing\tobligations: |  |  |
| Interchange\treimbursement | $54,459 | $200,319 |
| Liability\tto\tMembers | (5,490) | (27,717) |
| Liability\tto\tmerchants | (407,651) | (120,875) |
| Exception\titems | 6,313 | 12,308 |
| Merchant\tReserves | (96,622) | (223,314) |
| Reserve\tfor\toperating\tlosses | (1,725) | (2,318) |
| Reserves\tfor\tsales\tallowances | (601) | (961) |
|  | $(451,317) | $(162,558) |

# NOTE	4—BUSINESS	AND	INTANGIBLE	ASSET	ACQUISITIONS	AND	JOINT	VENTURES

In	the	years	ended	May	31,	2014,	2013,	and	2012,	we	acquired	the	following	businesses	and	intangible	assets:

|  | Date	Acquired | Percentage<br>Ownership |
| :--- | :--- | :--- |
| Fiscal\t2014 |  |  |
| American\tExpress\tmerchant\tportfolio\t(Czech\tRepublic) | October\t24,\t2013 | 100% |
| PayPros\t(United\tStates) | March\t4,\t2014 | 100% |
| Fiscal\t2013 |  |  |
| Accelerated\tPayment\tTechnologies\t(United\tStates) | October\t1,\t2012 | 100% |
| Banca\tCivica\t(Spain) | December\t12,\t2012 | 100% |
| Fiscal\t2012 |  |  |
| Alfa-Bank\t(Russian\tFederation) | December\t5,\t2011 | 100% |
| HSBC\tMalta\t(Republic\tof\tMalta) | December\t30,\t2011 | 100% |
| CyberSource\tmerchant\tportfolio\t(United\tStates) | January\t31,\t2012 | 100% |

The	business	acquisitions	have	been	recorded	using	the	purchase	method	of	accounting,	and	accordingly,	the	purchase	price	has	been	allocated	to	the	assets acquired	 and	 liabilities	 assumed	 based	 on	 their	 estimated	 fair	 value	 as	 of	 the	 date	 of	 acquisition.	The	 operating	 results	 of	 each	 acquisition	 are	 included	 in	 our consolidated	statements	of	income	from	the	dates	of	each	acquisition.	In	addition	to	these	acquisitions,	in	September	2013,	we	also	restructured	our	business	in	Brazil	to form	a	new	joint	venture,	as	discussed	below.

# Comercia	Global	Payments	Brazil

Effective	September	30,	2013,	CaixaBank,	S.A.	("CaixaBank"),	which	owns	49%	of	Comercia	Global	Payments	("Comercia"),	our	subsidiary	in	Spain,	purchased 50%	of	Global	Payments	Brazil	for	$2.1	million	in	cash	and	a	commitment	to	fund	the	capital	needs	of	the	business	until	such	time	as	its	cumulative	funding	is	equal	to funding	that	we	have	provided	from	inception	through	the	effective	date	of	the	transaction.		The	transaction	created	a	new	joint	venture	which	does	business	as	Comercia Global	Payments	Brazil.		As	a	result	of	the	transaction,	we	deconsolidated	Global	Payments	Brazil,	and	we	apply	the	equity	method	of	accounting	to	our	retained	interest in	Comercia	Global	Payments	Brazil.		We	recorded	a	gain	on	the	transaction	of	$2.1	million	which	is	included	in	interest	and	other	income	in	the	consolidated	statement of	income	for	the	fiscal	year	ended	May	31,	2014.	The	results	of	the	Brazil	operation	from	inception	until	the	restructuring	into	a	joint	venture	on	September	30,	2013 were	not	material	to	our	consolidated	results	of	operations,	and	the	assets	and	liabilities	that	we	derecognized	were	not	material	to	our	consolidated	balance	sheet.

# American	Express	Portfolio

On	October	24,	2013,	we	acquired	a	merchant	portfolio	in	the	Czech	Republic	from	American	Express	Limited	for	$1.9	million.	The	acquired	assets	have	been classified	as	customer-related	intangible	assets	and	contract-based	intangible	assets	with	estimated	amortization	periods	of	10	years.

# PayPros

On	March	4,	2014,	we	completed	the	acquisition	of	100%	of	the	outstanding	stock	of	Payment	Processing,	Inc.	("PayPros")	for	$420.0	million	in	cash	plus	$7.7 million	in	cash	for	working	capital,	subject	to	adjustment	based	on	a	final	determination	of	working	capital.	We	funded	the	acquisition	with	a	combination	of	cash	on hand	and	proceeds	from	our	new	Term	Loan.	PayPros,	based	in	California,	is	a	provider	of	fully-integrated	payment	solutions	for	small-to-medium	sized	merchants	in the	 United	 States.	 	 PayPros	 delivers	 its	 products	 and	 services	 through	 a	 network	 of	 technology-based	 enterprise	 software	 partners	 to	 vertical	 markets	 that	 are complementary	to	the	markets	served	by	Accelerated	Payment	Technologies	("APT"),	which	we	acquired	in	October	2012.	We	acquired	PayPros	to	expand	our	direct distribution	capabilities	in	the	United	States	and	to	further	enhance	our	existing	integrated	solutions	offerings.	This	acquisition	was	recorded	as	a	business	combination, and	the	purchase	price	was	allocated	to	the	assets	acquired	and	liabilities	assumed	based	on	their	estimated	fair	values.	Due	to	the	timing	of	this	transaction,	the allocation	of	the	purchase	price	is	preliminary	pending	final	valuation	of	intangible	assets	and	deferred	income	taxes	as	well	as	resolution	of	the	working	capital settlement	discussed	above.	The	purchase	price	of	PayPros	was	determined	by	analyzing	the	historical	and	prospective	financial	statements.	Acquisition	costs	associated with	this	purchase	were	not	material.

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

The	preliminary	purchase	price	allocation	resulted	in	goodwill,	included	in	the	North	America	merchant	services	segment,	of	$271.6	million.	Such	goodwill	is attributable	primarily	to	synergies	with	the	services	offered	and	markets	served	by	PayPros.	The	goodwill	associated	with	the	acquisition	is	not	deductible	for	tax purposes.	The	customer-related	intangible	assets	and	the	contract-based	intangible	assets	have	an	estimated	amortization	period	of	13	years.	The	acquired	technology	has an	estimated	amortization	period	of	7	years.

The	amount	of	revenue	and	earnings	of	PayPros	since	the	acquisition	date	included	in	the	consolidated	statement	of	income	for	fiscal	2014	is	not	material.	The following	pro	forma	information	shows	the	results	of	our	operations	for	fiscal	year	ended	May	31,	2014	and	May	31,	2013	as	if	the	PayPros	acquisition	had	occurred June	1,	2012.	The	pro	forma	information	is	presented	for	information	purposes	only	and	is	not	necessarily	indicative	of	what	would	have	occurred	if	the	acquisition	had been	made	as	of	that	date.	The	pro	forma	information	is	also	not	intended	to	be	a	projection	of	future	results	due	to	the	integration	of	the	acquired	business.

|  | 2014 | 2014 | 2013 | 2013 |
| :--- | :--- | :--- | :--- | :--- |
|  | (Actual) | (Pro\tforma) | (Actual) | (Pro\tforma) |
|  |  | (in\tthousands,\texcept\tper\tshare\tdata) | (in\tthousands,\texcept\tper\tshare\tdata) |  |
| Total\trevenues | $2,554,236 | $2,628,547 | $2,375,923 | $2,465,319 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | $245,286 | $241,272 | $216,125 | $207,032 |
| Net\tincome\tper\tshare\tattributable\tto\tGlobal\tPayments,\tbasic | $3.40 | $3.35 | $2.78 | $2.66 |
| Net\tincome\tper\tshare\tattributable\tto\tGlobal\tPayments,\tdiluted | $3.37 | $3.32 | $2.76 | $2.65 |

# Accelerated	Payment	Technologies

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

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

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

Prior	to	the	acquisition,	we	processed	transactions	for	the	majority	of	APT's	merchants	via	an	ISO	relationship.	As	a	result,	our	revenue	did	not	materially	change with	this	acquisition	and	the	amount	of	incremental	revenue	and	earnings	of	APT	since	the	acquisition	date	included	in	the	consolidated	statement	of	income	for	fiscal 2013	is	not	material.	With	the	acquisition,	we	no	longer	pay	a	monthly	residual	to	APT.	The	following	pro	forma	information	shows	the	results	of	our	operations	for fiscal	year	ended	May	31,	2013	and	May	31,	2012	as	if	the	APT	acquisition	had	occurred	June	1,	2011.	The	pro	forma	information	is	presented	for	information

purposes	only	and	is	not	necessarily	indicative	of	what	would	have	occurred	if	the	acquisition	had	been	made	as	of	that	date.	The	pro	forma	information	is	also	not intended	to	be	a	projection	of	future	results	due	to	the	integration	of	the	acquired	business.

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

# Redeemable	Noncontrolling	Interest	Acquisition

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

The	purchase	was	treated	as	an	equity	transaction	and	reflected	as	a	financing	cash	outflow	in	our	statement	of	cash	flows.	Accordingly,	no	additional	value	was ascribed	to	the	assets	of	GPAP.	The	difference	between	the	maximum	redemption	amount	of	the	redeemable	noncontrolling	interest	at	 July	26,	2012	and	our	purchase price	was	recorded	as	a	reduction	of	paid-in	capital	of	$96.0	million.	In	accordance	with	ASC	480,	Distinguishing	 Liabilities	 from	 Equity	("ASC	480"),	from	the agreement	date	through	the	close	of	the	transaction,	we	accounted	for	our	commitment	to	purchase	the	remaining	44%	of	GPAP	as	a	freestanding	forward	contract. Accordingly	as	of	July	26,	2012,	we	stopped	attributing	income	to	redeemable	noncontrolling	interest	and	any	subsequent	distributions	to	holders	of	the	redeemable noncontrolling	 interest	were	characterized	as	 interest	expense.	HSBC	Asia	was	entitled	to	dividends	through	the	closing	of	the	transaction	pursuant	to	the	GPAP shareholders'	agreement	and	the	purchase	agreement.	During	fiscal	2013,	we	declared	a	dividend	for	fiscal	year	2012	of	which	$8.4	million	was	paid	to	HSBC	Asia. During	the	third	quarter	of	fiscal	2014,	we	declared	an	additional	dividend	related	to	GPAP	operations	for	fiscal	year	2013	through	the	closing	date	of	which	$3.3 million	was	paid	to	HSBC	Asia.	Such	dividends	are	reflected	as	interest	expense	in	our	consolidated	statements	of	income	in	the	accordance	with	the	provisions	of	ASC 480.

# Banca	Civica

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

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

# Alfa-Bank

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

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

# HSBC	Malta

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

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

# CyberSource	Portfolio

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

# NOTE	5—PROPERTY	AND	EQUIPMENT

As	of	May	31,	2014	and	2013,	property	and	equipment	consisted	of	the	following:

|  | Range	of	Useful<br>Lives	in	Years | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Land | N/A | $1,942 | $1,983 |
| Buildings | 25-30 | 33,996 | 35,216 |
| Equipment | 2-10 | 204,102 | 181,316 |
| Software | 5-10 | 224,766 | 167,084 |
| Leasehold\timprovements | 5-15 | 19,399 | 12,278 |
| Furniture\tand\tfixtures | 5-7 | 3,809 | 5,796 |
| Work\tin\tprogress | N/A | 53,704 | 101,339 |
|  |  | 541,718 | 505,012 |
| Less\taccumulated\tdepreciation\tand\tamortization\tof\tproperty\tand\tequipment |  | 171,965 | 156,948 |
|  |  | $369,753 | $348,064 |

# NOTE	6—GOODWILL	AND	INTANGIBLE	ASSETS

As	of	May	31,	2014	and	2013,	goodwill	and	intangible	assets	consisted	of	the	following:

|  | 2014 | 2013 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Goodwill | $1,337,285 | $1,044,222 |
| Other\tintangible\tassets: |  |  |
| Customer-related\tintangible\tassets | $714,704 | $559,884 |
| Trademarks | 6,140 | 6,390 |
| Acquired\ttechnology | 25,700 | 15,000 |
| Contract-based\tintangible\tassets | 145,967 | 110,234 |
|  | 892,511 | 691,508 |
| Less\taccumulated\tamortization: |  |  |
| Customer-related\tintangible\tassets | 317,629 | 262,649 |
| Trademarks | 4,147 | 3,967 |
| Acquired\ttechnology | 3,531 | 1,248 |
| Contract-based\tintangible\tassets | 32,031 | 22,796 |
|  | 357,338 | 290,660 |
|  | $535,173 | $400,848 |

The	following	table	sets	forth	the	changes	in	the	carrying	amount	of	goodwill	for	the	years	ended	May	31,	2014	and	2013:

| Balance	at	May	31,	2012 | $211,102 | $513,585 | $724,687 |
| :--- | :--- | :--- | :--- |
| Accumulated\timpairment\tlosses | — | — | — |
| Balance\tat\tMay\t31,\t2012 | 211,102 | 513,585 | 724,687 |
| Goodwill\tacquired | 308,518 | 4,445 | 312,963 |
| Effect\tof\tforeign\tcurrency\ttranslation | (445) | 7,017 | 6,572 |
| Balance\tat\tMay\t31,\t2013 | 519,175 | 525,047 | 1,044,222 |
| Accumulated\timpairment\tlosses | — | — | — |
| Balance\tat\tMay\t31,\t2013 | 519,175 | 525,047 | 1,044,222 |
| Goodwill\tacquired | 271,577 | — | 271,577 |
| Effect\tof\tforeign\tcurrency\ttranslation | (4,097) | 25,583 | 21,486 |
| Balance\tat\tMay\t31,\t2014 | 786,655 | 550,630 | 1,337,285 |
| Accumulated\timpairment\tlosses | — | — | — |
| Balance\tat\tMay\t31,\t2014 | $786,655 | $550,630 | $1,337,285 |

Customer-related	intangible	assets,	contract-based	intangible	assets	and	acquired	technology	acquired	during	the	year	ended	May	31,	2014	have	weighted	average amortization	periods	of	13.2	years,	13.2	years	and	6.5	years,	respectively.	Customer-related	intangible	assets,	contract-based	intangible	assets	and	acquired	technology acquired	during	the	year	ended	May	31,	2013	have	weighted	average	amortization	periods	of	11.9	years,	12.3	years	and	8	years,	respectively.	Amortization	expense	of acquired	intangibles	was	$61.9	million,	$56.8	million,	and	$50.7	million	for	fiscal	2014,	2013	and	2012,	respectively.

The	estimated	amortization	expense	of	acquired	intangibles	as	of	May	31,	2014	for	the	next	five	fiscal	years,	calculated	using	the	exchange	rate	at	the	date	of acquisition,	is	as	follows	(in	thousands):

# NOTE	7—LONG-TERM	DEBT	AND	CREDIT	FACILITIES

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| Lines\tof\tcredit: | (in\tthousands) |  |
| Corporate\tCredit\tFacility\t-\tlong-term | $140,000 | $309,955 |
| Short-term\tlines\tof\tcredit | 440,128 | 187,461 |
| Total\tlines\tof\tcredit | 580,128 | 497,416 |
| Notes\tpayable | 3,679 | 6,014 |
| Term\tloan | 1,250,000 | 647,500 |
| Total\tdebt | $1,833,807 | $1,150,930 |
| Current\tportion | $457,805 | $259,796 |
| Long-term\tdebt | 1,376,002 | 891,134 |
| Total\tdebt | $1,833,807 | $1,150,930 |
| Maturity\trequirements\ton\toutstanding\tdebt\tby\tfiscal\tyear\tare\tas\tfollows\t(in\tthousands): |  |  |
| 2015 | 2015 | $457,805 |
| 2016 |  | 63,150 |
| 2017 | 2017 | 78,776 |
| 2018 |  | 125,325 |
| 2019 | 2019 | 1,108,751 |
| Total |  | $1,833,807 |

The	Corporate	Credit	Facility	allows	us	to	issue	standby	letters	of	credit	of	up	to	$100.0	million	in	the	aggregate.	Outstanding	letters	of	credit	under	the	Corporate Credit	Facility	reduce	the	amount	of	borrowings	available	to	us.	At	May	31,	2014,	we	had	standby	letters	of	credit	of	$8.1	million.	The	total	available	incremental borrowings	under	our	Corporate	Credit	Facility	at	May	31,	2014	was

$851.9	million.	The	Corporate	Credit	Facility	is	included	in	long-term	debt	in	the	accompanying	consolidated	balance	sheets	because	we	are	not	contractually	obligated to	make	repayments	in	the	next	twelve	months.

# NOTE	8—ACCOUNTS	PAYABLE	AND	ACCRUED	LIABILITIES

As	of	May	31,	2014	and	2013,	accounts	payable	and	accrued	liabilities	consisted	of	the	following:

|  | 2014 | 2013 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Trade\taccounts\tpayable | $13,076 | $18,497 |
| Compensation\tand\tbenefits | 61,193 | 39,623 |
| Third-party\tprocessing\texpenses | 11,062 | 10,340 |
| Commissions\tto\tthird\tparties | 66,551 | 61,279 |
| Accrued\tfees\tand\tassessment\texpenses | 51,649 | 30,490 |
| Transition\tservice\tfees\tpayable | 1,156 | 16,528 |
| Accrued\tprocessing\tsystem\tintrusion\tcosts | — | 9,021 |
| Other | 85,419 | 77,112 |
|  | $290,106 | $262,890 |

# NOTE	9—INCOME	TAX

The	provision	for	income	taxes	for	the	fiscal	years	ended	May	31,	2014,	2013	and	2012	consisted	of	the	following:

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Current\ttax\texpense: |  |  |  |
| Federal | $49,178 | $16,326 | $52,875 |
| State | 3,856 | 987 | 2,989 |
| Foreign | 48,074 | 36,020 | 35,029 |
|  | 101,108 | 53,333 | 90,893 |
| Deferred\ttax\texpense\t(benefit): |  |  |  |
| Federal | 1,568 | 26,302 | (21,088) |
| State | 1,206 | 3,568 | (813) |
| Foreign | 3,515 | 12,368 | 13,889 |
|  | 6,289 | 42,238 | (8,012) |
| Provision\tfor\tincome\ttaxes | 107,398 | 95,571 | 82,881 |
| Tax\tallocated\tto\tnoncontrolling\tinterests\tin\ta\ttaxable\tentity | (5,230) | (4,178) | (6,604) |
| Net\tincome\ttax\texpense\tattributable\tto\tGlobal\tPayments | $102,168 | $91,393 | $76,277 |

The	following	presents	our	income	before	income	taxes	for	the	fiscal	years	ended	May	31,	2014,	2013	and	2012:

| Income	before	income	taxes	-	U.S. | $153,453 | $137,501 | $103,163 |
| :--- | :--- | :--- | :--- |
| Income\tbefore\tincome\ttaxes\t-\tforeign | 223,897 | 196,783 | 197,284 |
| Income\tbefore\tincome\ttaxes | $377,350 | $334,284 | $300,447 |

Our	effective	tax	rates,	as	applied	to	income	before	income	taxes	for	the	years	ended	May	31,	2014,	2013	and	2012,	respectively,	differ	from	federal	statutory	rates as	follows:

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Federal\tstatutory\trate | 35.0\t% | 35.0\t% | 35.0\t% |
| State\tincome\ttaxes,\tnet\tof\tfederal\tincome\ttax\tbenefit | 0.9 | 0.9 | 0.5 |
| Foreign\tincome\ttaxes | (7.2) | (7.0) | (6.3) |
| Foreign\tinterest\tincome\tnot\tsubject\tto\ttax | (2.1) | (2.8) | (2.2) |
| Tax\tcredits\tand\tother | 3.1 | 3.7 | 1.8 |
| Effective\ttax\trate\tattributable\tto\tGlobal\tPayments | 29.7\t% | 29.8\t% | 28.8\t% |
| Noncontrolling\tinterests | (1.2) | (1.2) | (1.2) |
| Effective\ttax\trate | 28.5\t% | 28.6\t% | 27.6\t% |

Deferred	income	taxes	are	determined	based	on	the	difference	between	the	financial	statement	and	tax	bases	of	assets	and	liabilities	using	enacted	tax	laws	and rates.	Deferred income taxes	as	of	May	31,	2014 and	2013	reflect	the	impact	of	temporary	differences	between	the	amounts	of	assets	and	liabilities	for	financial accounting	and	income	tax	purposes.	As	of	May	31,	2014	and	2013,	principal	components	of	deferred	tax	items	were	as	follows:

| Share-based	compensation | $5,916 | $12,266 |
| :--- | :--- | :--- |
| Bad\tdebt\texpense | 2,802 | 2,292 |
| Foreign\tNOL\tcarryforward | 6,881 | 8,221 |
| U.S.\tNOL\tcarryforward | 22,074 | 243 |
| U.S.\tcapital\tloss\tcarryforward | 1,734 | 20,176 |
| Basis\tdifference\t-\tU.K.\tbusiness | 96,720 | 90,678 |
| Foreign\ttax\tcredit | 11,819 | 14,413 |
| Other\ttax\tcredits | 1,730 | 1,733 |
|  | 149,676 | 150,022 |
| Less:\tvaluation\tallowance | (7,199) | (28,464) |
| Net\tdeferred\ttax\tasset | 142,477 | 121,558 |
| Deferred\ttax\tliabilities: |  |  |
| Taxes\ton\tunremitted\tearnings\tand\tother | 5,470 | 13,729 |
| Foreign\tcurrency\ttranslation | 26,813 | 30,163 |
| Acquired\tintangibles | 149,440 | 90,205 |
| Prepaid\texpenses | 1,800 | 2,523 |
| Property\tand\tequipment | 53,238 | 53,998 |
|  | 236,761 | 190,618 |
| Net\tdeferred\ttax\tliability | (94,284) | (69,060) |
| Less:\tcurrent\tnet\tdeferred\ttax\tasset | 12,887 | 6,485 |
| Net\tnoncurrent\tdeferred\ttax\tliability | $(107,171) | $(75,545) |

The	net	non-current	deferred	tax	asset	and	liability	is	reflected	on	our	consolidated	balance	sheets	as	of	May	31,	2014	and	2013	as	follows:

|  | 2014 | 2013 |
| :--- | :--- | :--- |
|  | (in\tthousands) |  |
| Non-current\tdeferred\tincome\ttax\tasset\tper\tbalance\tsheet | $101,928 | $95,178 |
| Non-current\tdeferred\tincome\ttax\tliability\tper\tbalance\tsheet | (209,099) | (170,723) |
| Net\tnon-current\tdeferred\ttax\tliability | $(107,171) | $(75,545) |

Undistributed	earnings	of	$577.0	million	from	certain	foreign	subsidiaries	are	permanently	invested	abroad	and	will	not	be	repatriated	to	the	United	States	in	the foreseeable	future.	In	accordance	with	FASB	guidance,	because	those	earnings	are	considered	to	be	indefinitely	reinvested,	no	domestic	federal	or	state	deferred	income taxes	have	been	provided	thereon.	Upon	distribution	of	those	earnings,	in	the	form	of	dividends	or	otherwise,	we	would	be	subject	to	both	U.S.	income	taxes	(subject	to an	adjustment	for	foreign	tax	credits)	and	withholding	taxes	payable	to	the	various	foreign	countries.	Because	of	the	availability	of	U.S.	foreign	tax	credits,	it	is	not practicable	to	determine	the	domestic	federal	income	tax	liability	that	would	be	payable	if	such	earnings	were	not	reinvested	indefinitely.

A	valuation	allowance	is	provided	when	it	is	more	likely	than	not	that	some	portion	or	all	of	the	deferred	tax	assets	will	not	be	realized.	Changes	to	our	valuation allowance	during	the	fiscal	year	ended	May	31,	2014	and	2013	are	summarized	below	(in	thousands):

| allowance	during	the	fiscal	year	ended	May	31,	2014	and	2013	are	summarized	below	(in	thousands): |  |
| :--- | :--- |
| Valuation\tallowance\tat\tMay\t31,\t2012 | $(26,090) |
| Allowance\tfor\tNOLs\tof\tforeign\tsubsidiaries | (3,415) |
| Allowance\tfor\tforeign\ttax\tcredit\tcarryforward | 15 |
| Other | 1,026 |
| Valuation\tallowance\tat\tMay\t31,\t2013 | $(28,464) |
| Allowance\tfor\tNOLs\tof\tforeign\tsubsidiaries | 2,822 |
| Release\tof\tallowance\tfor\tcapital\tloss\tcarryforward | 18,061 |
| Other | 382 |
| Valuation\tallowance\tat\tMay\t31,\t2014 | $(7,199) |

NOL	carryforwards	of	foreign	subsidiaries	totaling	$29.8	million	and	U.S.	NOL	carryforwards	previously	acquired	totaling	$63.1	million	at	May	31,	2014	will expire	if	not	utilized	between	May	31,	2017	and	May	31,	2033.	Capital	loss	carryforwards	of	U.S.	subsidiaries	totaling	$4.8	million	will	expire	if	not	utilized	by	May	31, 2017.	Tax	credit	carryforwards	totaling	$8.9	million	at	May	31,	2014	will	expire	if	not	utilized	between	May	31,	2017	and	May	31,	2023.

A	reconciliation	of	the	beginning	and	ending	amounts	of	unrecognized	tax	benefits	for	the	years	ended	May	31,	2014,	2013,	and	2012	is	as	follows:

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Balance\tat\tthe\tbeginning\tof\tthe\tyear | $53,763 | $45,595 | $37,197 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 8,551 | 8,778 | 10,684 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 296 | 142 | 118 |
| Foreign\tcurrency\timpact\tfor\ttax\tpositions | 5,303 | (601) | (2,340) |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (60) | (151) | (64) |
| Settlements\twith\ttaxing\tauthorities | (277) | — | — |
| Balance\tat\tthe\tend\tof\tthe\tyear | $67,576 | $53,763 | $45,595 |

As	of	May	31,	2014,	the	total	amount	of	gross	unrecognized	tax	benefits	that,	if	recognized,	would	affect	the	effective	tax	rate	is	$2.5	million.	The	amount	of unrecognized	tax	benefits	that	will	impact	income	tax	during	the	upcoming	fiscal	year	is	insignificant.

We	recognize	accrued	interest	related	to	unrecognized	income	tax	benefits	in	interest	expense	and	accrued	penalty	expense	related	to	unrecognized	tax	benefits	in sales,	general	and	administrative	expenses.	Interest	and	penalties	recognized	in	the	income	statement	were	insignificant	in	fiscal	years	2014,	2013	and	2012.

We	conduct	business	globally	and	file	income	tax	returns	in	the	U.S.	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,	the	United	Kingdom	and Canada.	We	are	no	longer	subject	to	income	tax	examinations	for	years	ended	on	or	before	May	31,	2006.	We	completed	an	audit	with	the	U.S.	Internal	Revenue	Service ("IRS")	for	fiscal	years	2011	and	2010	with	no	significant	adjustments,	after	which	we	are	no	longer	subject	to	U.S.	federal	income	tax	examinations	by	the	IRS	for	fiscal years	prior	to	2012.

# NOTE	10—SHAREHOLDERS'	EQUITY

During	fiscal	2013,	pursuant	to	the	authorization	described	above,	we	entered	into	an	Accelerated	Share	Repurchase	program	(''ASR'')	with	a	financial	institution to	 repurchase	 an	 aggregate	 of	$125.0	million	 of	 the	 Company's	 common	 stock.	 In	 exchange	 for	 an	 up-front	 payment	 of	$125.0	million,	 the	 financial	 institution committed	to	deliver	a	number	of	shares	during	the	ASR's	purchase	period,	which	ended	on	March	30,	2013.	The	total	number	of	shares	delivered	under	this	ASR was	2.5	million	at	an	average	price	of	$49.13	per	share.

During	fiscal	2014,	our	Board	of	Directors	authorized	the	repurchase	of	up	to	an	additional	$500.0	million	of	our	common	stock.	On	October	7,	2013,	pursuant	to this	authorization,	we	entered	into	an	ASR	with	a	financial	institution	to	repurchase	an	aggregate	of	$100.0	million	of	our	common	stock.	In	exchange	for	an	upfront payment	of	$100.0	million,	the	financial	institution	committed	to	deliver	a	number	of	shares	during	the	ASR's	purchase	period,	which	ended	on	January	9,	2014.	The total	number	of	shares	delivered	under	this	ASR	was	1.6	million	shares	at	an	average	price	of	$60.96	per	share.	These	shares	were	retired	and	accounted	for	as	a reduction	of	shareholders'	equity	in	the	consolidated	balance	sheet.

Shares	repurchased	under	ASRs	were	retired	and	accounted	for	as	a	reduction	of	shareholders'	equity	in	the	consolidated	balance	sheet.	We	accounted	for	the initial	delivery	of	shares	component	of	the	ASR	as	a	repurchase	of	common	stock	for	purposes	of	calculating	earnings	per	share.	We	accounted	for	the	variable component	of	shares	to	be	delivered	under	the	ASR	as	a	forward	contract	indexed	to	our	stock	which	met	all	of	the	applicable	criteria	for	equity	classification,	and, therefore,	was	not	accounted	for	as	a	derivative	instrument,	but	instead	was	also	accounted	for	as	a	component	of	equity.

In	addition	to	shares	repurchased	under	the	ASR,	we	repurchased	and	retired	6.2	million	shares	of	our	common	stock	at	a	cost	of	$355.0	million,	or	an	average	of $57.29	per	share,	including	commissions,	during	fiscal	2014.	As	of	May	31,	2014,	we	had	$169.6	million	of	remaining	authorized	share	repurchases,	including	available authorization	from	existing	resolutions.

# NOTE	11—SHARE-BASED	AWARDS	AND	OPTIONS

As	of	May	31,	2014,	we	had	awards	outstanding	under	four	share-based	employee	compensation	plans.	The	fair	value	of	share-based	awards	is	amortized	as compensation	expense	on	a	straight-line	basis	over	the	vesting	period.

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

The	2011	Plan	permits	grants	of	equity	to	employees,	officers,	directors	and	consultants.	A	total	of	7.0	million	shares	of	our	common	stock	was	reserved	and made	available	for	issuance	pursuant	to	awards	granted	under	the	2011	Plan.

The	following	table	summarizes	the	share-based	compensation	cost	charged	to	income	and	the	related	total	income	tax	benefit	recognized	for	(i)	stock	options, (ii)	restricted	stock	(including	PRSUs	and	TSRs,	each	as	defined	below),	and	(iii)	shares	issued	under	our	employee	stock	purchase	plan.

| Share-based	compensation	expense | $29.8 | $18.4 | $16.4 |
| :--- | :--- | :--- | :--- |
| Income\ttax\tbenefit | $(7.1) | $(5.6) | $(6.0) |

# Restricted	Stock

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

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

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

The	following	table	summarizes	the	changes	in	non-vested	restricted	stock	awards	for	the	years	ended	May	31,	2014	and	2013	(shares	in	thousands):

|  | Shares | Weighted	Average<br>Grant-Date<br>Fair	Value |
| :--- | :--- | :--- |
| Non-vested\tat\tMay\t31,\t2012 | 941 | $44 |
| Granted | 561 | 44 |
| Vested | (315) | 43 |
| Forfeited | (91) | 44 |
| Non-vested\tat\tMay\t31,\t2013 | 1,096 | 44 |
| Granted | 544 | 47 |
| Vested | (643) | 45 |
| Forfeited | (120) | 45 |
| Non-vested\tat\tMay\t31,\t2014 | 877 | $45 |

We	recognized	compensation	expense	for	restricted	stock	of	$28.2	million,	$16.2	million	 and	$13.6	million	in	the	years	ended	May	31,	2014,	2013	 and	2012, respectively.	As	of	May	31,	2014,	there	was	$29.8	million	of	total	unrecognized	compensation	cost	related	to	non-vested	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	our	common	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,	2014,	1.1	million	shares	had	been	issued	under	this	plan,	with	1.3	million	shares	reserved	for	future issuance.	We	recognized	compensation	expense	for	the	plan	of	$0.6	million,	$0.6	million	and	$0.5	million	in	the	years	ended	May	31,	2014,	2013	and	2012,	respectively.

The	weighted	average	grant-date	fair	value	of	each	designated	share	purchased	under this	plan	during the	years	ended	May	31,	2014,	2013 and	2012	 was approximately	$7,	$6	and	$7,	respectively,	which	represents	the	fair	value	of	the	15%	discount.

# Stock	Options

Stock	options	are	granted	at	100%	of	fair	market	value	on	the	date	of	grant	and	have	10-year	terms.	Stock	options	vest	in	25%	increments	over	each	of	the	first four	anniversaries	of	the	grant	date.	The	Plans	provide	for	accelerated	vesting	under	certain	conditions.	There	were	no	options	granted	under	the	Plans	during	the	years ended	May	31,	2014	and	May	31,	2013.

The	following	is	a	summary	of	our	stock	option	activity	as	of	and	for	the	years	ended	May	31,	2014	and	2013:

|  | Options | Weighted	Average<br>Exercise	Price | Weighted<br>Average<br>Remaining<br>Contractual<br>Term | Aggregate<br>Intrinsic	Value |
| :--- | :--- | :--- | :--- | :--- |
|  | (in\tthousands) |  | (years) | (in\tmillions) |
| Outstanding\tat\tMay\t31,\t2012 | 2,145 | $34 | 4.1 | $20.7 |
| Granted | — | — |  |  |
| Forfeited | (72) | 39 |  |  |
| Exercised | (308) | 23 |  |  |
| Outstanding\tat\tMay\t31,\t2013 | 1,765 | 35 | 3.5 | 23.9 |
| Granted | — | — |  |  |
| Forfeited | (65) | 39 |  |  |
| Exercised | (934) | 30 |  |  |
| Outstanding\tat\tMay\t31,\t2014 | 766 | $41 | 3.8 | $21.3 |
| Options\tvested\tand\texercisable\tat\tMay\t31,\t2014 | 725 | $41 | 3.6 | $20.1 |
| Options\tvested\tand\texercisable\tat\tMay\t31,\t2013 | 1,586 | $34 | 3.1 | $22.3 |

The	aggregate	intrinsic	value	of	stock	options	exercised	during	the	fiscal	years	ended	2014,	2013	 and	2012	 was	$24.9	million,	$6.3	million	 and	$4.4	million, respectively.	We	recognized	compensation	expense	for	stock	options	of	$1.0	million,	$1.7	million	and	$2.4	million	in	the	years	ended	May	31,	2014,	2013	and	2012, respectively.	As	of	May	31,	2014,	we	had	$0.1	million	of	total	unrecognized	compensation	cost	related	to	unvested	options	which	we	expect	to	recognize	in	fiscal	2015.

# NOTE	12—SUPPLEMENTAL	CASH	FLOW	INFORMATION

Supplemental	cash	flow	disclosures	and	non-cash	investing	and	financing	activities	for	the	years	ended	May	31,	2014,	2013,	and	2012	are	as	follows:

| Income	taxes	paid,	net	of	refunds | $94,938 | $55,218 | $74,199 |
| :--- | :--- | :--- | :--- |
| Interest\tpaid\t(1) | $33,214 | $29,677 | $13,631 |

(1)	Includes	distributions	to	HSBC	Asia	of	$3.3	million	and	$8.4	million	in	fiscal	2014	and	fiscal	2013,	respectively,	which	were	characterized	as	interest	expense	pursuant	to	ASC 480.	See	Note	4	-	Business	and	Intangible	Asset	Acquisitions	and	Joint	Ventures.

# NOTE	13—NONCONTROLLING	INTERESTS

      The	following	table	details	the	components	of	redeemable	noncontrolling	interest	for	the	fiscal	year	ended	May	31,	2013:

For	the	fiscal	years	ended	May	31,	2014,	2013	and	2012,	net	income	included	in	the	consolidated	statements	of	changes	in	equity	is	reconciled	to	net	income presented	in	the	consolidated	statements	of	income	as	follows:

| Net	income	attributable	to	Global	Payments | $245,286 | $216,125 | $188,161 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tattributable\tto\tnonredeemable\tnoncontrolling\tinterests | 24,666 | 20,774 | 17,804 |
| Subtotal\tper\tstatement\tof\tchanges\tin\tequity | 269,952 | 236,899 | 205,965 |
| Net\tincome\tattributable\tto\tredeemable\tnoncontrolling\tinterest | — | 1,814 | 11,601 |
| Net\tincome | $269,952 | $238,713 | $217,566 |

The	following	table	is	the	reconciliation	of	net	income	attributable	to	noncontrolling	interests	to	comprehensive	income	attributable	to	noncontrolling	interests	for the	fiscal	years	ended	May	31,	2014	and	May	31,	2013:

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
|  |  | (in\tthousands) |  |
| Net\tincome\tattributable\tto\tnoncontrolling\tinterests,\tnet\tof\ttax | $24,666 | $22,588 | $29,405 |
| Foreign\tcurrency\ttranslation\tattributable\tto\tnonredeemable\tnoncontrolling\tinterests | 7,054 | 7,217 | (22,991) |
| Foreign\tcurrency\ttranslation\tattributable\tto\tredeemable\tnoncontrolling\tinterest | — | 573 | (2,741) |
| Comprehensive\tincome\tattributable\tto\tnoncontrolling\tinterests,\tnet\tof\ttax | $31,720 | $30,378 | $3,673 |

# NOTE	14—SEGMENT	INFORMATION

# General	Information

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

# Information	About	Profit	and	Assets

We	evaluate	performance	and	allocate	resources	based	on	the	operating	income	of	each	segment.	The	operating	income	of	each	segment	includes	the	revenues	of the	segment	less	those	expenses	that	are	directly	related	to	those	revenues.	Operating	overhead,	shared	costs	and	certain	compensation	costs	are	included	in	Corporate	in the	following	table.	Interest	expense	and	income	and	income	tax	expense	are	not	allocated	to	the	individual	segments.	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,	2014,	2013,	and	2012:

| United	States | $1,488,659 | $1,394,675 | $1,234,818 |
| :--- | :--- | :--- | :--- |
| Canada | 320,333 | 311,000 | 332,434 |
| \t\t\tNorth\tAmerica\tmerchant\tservices | 1,808,992 | 1,705,675 | 1,567,252 |
| Europe | 587,463 | 522,593 | 489,300 |
| Asia-Pacific | 157,781 | 147,655 | 147,295 |
| \t\t\tInternational\tmerchant\tservices | 745,244 | 670,248 | 636,595 |
| \tConsolidated\trevenues | $2,554,236 | $2,375,923 | $2,203,847 |
| Operating\tincome\t(loss)\tfor\tsegments: |  |  |  |
| North\tAmerica\tmerchant\tservices | $272,251 | $258,910 | $281,305 |
| International\tmerchant\tservices | 240,179 | 211,242 | 196,137 |
| Corporate\t(1) | (106,931) | (112,939) | (170,093) |
| \t\t\t\t\tConsolidated\toperating\tincome | $405,499 | $357,213 | $307,349 |
| Depreciation\tand\tamortization: |  |  |  |
| North\tAmerica\tmerchant\tservices | $60,970 | $48,882 | $35,479 |
| International\tmerchant\tservices | 54,728 | 57,520 | 60,462 |
| Corporate | 6,371 | 5,386 | 3,158 |
| Consolidated\tdepreciation\tand\tamortization | $122,069 | $111,788 | $99,099 |

(1)	Includes	a	processing	system	intrusion	credit	of	$7.0	million	in	fiscal	2014	and	charges	of	$36.8	million	and	$84.4	million	in	fiscal	2013	and	2012,	respectively.

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,	2014	and	2013:

# NOTE	15—COMMITMENTS	AND	CONTINGENCIES

# Leases

We	conduct	a	major	part	of	our	operations	using	leased	facilities	and	equipment.	Many	of	these	leases	have	renewal	and	purchase	options	and	provide	that	we	pay the	cost	of	property	taxes,	insurance	and	maintenance.	Rent	expense	on	all	operating	leases	for	fiscal	2014,	2013	and	2012	was	$16.0	million,	$16.5	million,	and	$16.0 million,	respectively.

      Future	minimum	lease	payments	for	all	non-cancelable	operating	leases	at	May	31,	2014	were	as	follows:

# Legal

# Operating	Taxes

We	define	operating	taxes	as	taxes	that	are	unrelated	to	income	taxes,	such	as	sales,	property,	value-add	and	other	business	taxes.	During	the	course	of	operations, we	must	interpret	the	meaning	of	various	operating	tax	matters	in	the	United	States	and	in	the	foreign	jurisdictions	in	which	we	do	business.		Taxing	authorities	in	those various	jurisdictions	may	arrive	at	different	interpretations	of	applicable	tax	laws	and	regulations	as	they	relate	to	such	operating	tax	matters,	which	could	result	in	the payment	of	additional	taxes	in	those	jurisdictions.		As	of	May	31,	2014	and	2013,	we	did	not	have	liabilities	for	contingencies	related	to	operating	tax	items	based	on management's	best	estimate	given	our	history	with	similar	matters	and	interpretations	of	current	laws	and	regulations.

We	have	entered	into	sponsorship	or	depository	and	processing	agreements	with	certain	banks.	These	agreements	allow	us	to	use	the	banks'	identification numbers,	referred	to	as	a	Bank	Identification	Number	("BIN")	for	Visa	transactions	and	an	Interbank	Card	Association	("ICA")	number	for	MasterCard	transactions,	to clear	credit	card	transactions	through	Visa	and	MasterCard.	Certain	of	these	agreements	contain	financial	covenants,	and	we	were	in	compliance	with	all	such	covenants as	of	May	31,	2014.

# NOTE	16—QUARTERLY	CONSOLIDATED	FINANCIAL	INFORMATION	(UNAUDITED)

Summarized	quarterly	results	for	the	years	ended	May	31,	2014	and	2013	are	as	follows	(in	thousands,	except	per	share	data):

|  | August	31 | November	30 | February	28 | May	31 |
| :--- | :--- | :--- | :--- | :--- |
| 2014: |  |  |  |  |
| Revenues | $629,685 | $634,122 | $616,452 | $673,977 |
| Operating\tincome(1) | 107,384 | 111,907 | 97,291 | 88,917 |
| Net\tincome | 71,708 | 79,857 | 60,121 | 58,266 |
| Net\tincome\tattributable\tto\tGlobal\tPayments | 64,643 | 73,897 | 55,121 | 51,625 |
| Basic\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.88 | 1.02 | 0.77 | 0.73 |
| Diluted\tearnings\tper\tshare\tattributable\tto\tGlobal\tPayments | 0.87 | 1.02 | 0.76 | 0.72 |

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

(1)	Includes	a	processing	system	intrusion	credit	of	$7.0	million	and	a	charge	of	$36.8	million	for	the	years	ended	May	31,	2014	and	May	31,	2013,	respectively.

# SCHEDULE	II

# Valuation	&	Qualifying	Accounts

| Description | Balance	at	Beginning<br>of	Year | Charged	to	Costs<br>and	Expenses | Acquired	Balances | Uncollectible	Accounts	Write-<br>Off | Balance	at	End	of<br>Year |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (in\tthousands) |  |  |
| Allowance\tfor\tdoubtful\taccounts |  |  |  |  |  |
| May\t31,\t2012 | $472 | $165 | $— | $105 | $532 |
| May\t31,\t2013 | 532 | 444 | — | 467 | 509 |
| May\t31,\t2014 | 509 | 174 | — | 282 | 401 |
| Reserve\tfor\toperating\tlosses-Merchant\tcard\tprocessing |  |  |  |  |  |
| (1) |  |  |  |  |  |
| May\t31,\t2012 | 3,102 | 8,848 | — | 9,625 | 2,325 |
| May\t31,\t2013 | 2,325 | 9,484 | — | 9,491 | 2,318 |
| May\t31,\t2014 | 2,318 | 8,658 | — | 9,252 | 1,724 |
| Reserve\tfor\tsales\tallowances-Merchant\tcard\tprocessing |  |  |  |  |  |
| (1) |  |  |  |  |  |
| May\t31,\t2012 | 3,275 | 3,913 | — | 6,315 | 873 |
| May\t31,\t2013 | 873 | 2,074 | — | 1,986 | 961 |
| May\t31,\t2014 | 961 | 1,330 | — | 1,690 | 601 |
| Reserve\tfor\toperating\tlosses-Check\tguarantee\nprocessing |  |  |  |  |  |
| May\t31,\t2012 | 3,870 | 13,404 | — | 13,839 | 3,435 |
| May\t31,\t2013 | 3,435 | 11,731 | — | 12,022 | 3,144 |
| May\t31,\t2014 | 3,144 | 11,916 | — | 12,062 | 2,998 |
| Deferred\ttax\tasset\tvaluation\tallowance |  |  |  |  |  |
| May\t31,\t2012 | 28,629 | (2,539) | — | — | 26,090 |
| May\t31,\t2013 | 26,090 | 2,374 | — | — | 28,464 |
| May\t31,\t2014 | 28,464 | (21,265) | — | — | 7,199 |

(1)Included	in	settlement	processing	obligations.

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

None.

# ITEM	9A-	CONTROLS	AND	PROCEDURES

# Evaluation	of	Disclosure	Controls	and	Procedures

As	of	May	31,	2014,	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,	2014,	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,	2014.		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	(1992).	As	of	May	31,	2014,	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,	2014	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	AND	CORPORATE	GOVERNANCE

We	incorporate	by	reference	in	this	Item	10	information	about	our	directors,	executive	officers	and	our	corporate	governance	contained	under	the	headings "Election	of	Directors"	and	"Information	Concerning	Our	Executive	Officers"	and	information	about	compliance	with	Section	16(a)	of	the	Securities	and	Exchange	Act of	1934	by	our	directors	and	executive	officers	under	 the	heading	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	from	our	proxy	statement	 to	be delivered	in	connection	with	our	2014	Annual	Meeting	of	Shareholders	to	be	held	on	November	19,	2014.

We	have	adopted	codes	of	ethics	that	apply	to	our	senior	financial	officers.	The	senior	financial	officers	include	our	Chief	Executive	Officer,	Chief	Financial Officer,	Chief	Accounting	Officer,	Controller	or	persons	performing	similar	functions.	 The	code	of	ethics	is	available	in	the	investor	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.	We intend	to	satisfy	the	disclosure	requirement	under	Item	5.05	of	Form	8-K	regarding	an	amendment	to,	or	a	waiver	from,	a	provision	of	our	code	of	ethics	by	posting	such information	on	our	website	at	the	address	and	location	set	forth	above.

As	previously	reported,	effective	June	30,	2014,	our	Board	of	Directors	promoted	David	E.	Mangum	from	Senior	Executive	Vice	President	and	Chief	Financial Officer	to	President	and	Chief	Operating	Officer	and	appointed	Cameron	M.	Bready	as	Executive	Vice	President	and	Chief	Financial	Officer.	Solely	for	purposes	of	this Annual	Report	on	Form	10-K	and	the	certifications	attached	hereto,	which	are	filed	shortly	after,	and	relate	to	a	fiscal	period	that	precedes,	the	effective	date	of	Mr. Mangum's	promotion	and	Mr.	Bready's	appointment,	Mr.	Mangum	performed	the	function	of	"principal	financial	officer"	(or	the	equivalent	of	"chief	financial	officer").

# ITEM	11-	EXECUTIVE	COMPENSATION

We	incorporate	by	reference	in	this	Item	11	the	information	relating	to	executive	and	director	compensation	contained	under	the	headings	"Compensation, Discussion,	and	Analysis,"	"Director	Compensation"	and	"Report	of	the	Compensation	Committee"	from	our	proxy	statement	to	be	delivered	in	connection	with	our 2014	Annual	Meeting	of	Shareholders.

# 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	2014 Annual	Meeting	of	Shareholders.

The	following	table	provides	certain	information	as	of	May	31,	2014	concerning	the	shares	of	the	Company's	common	stock	that	may	be	issued	under	existing equity	compensation	plans.	For	more	information	on	these	plans,	see	Note	11	to	notes	to	consolidated	financial	statements.

| Plan	category | Number	of	securities	to	be<br>issued	upon	exercise	of<br>outstanding	options,	warrants<br>and	rights<br>(a) | Weighted-average	exercise<br>price	of	outstanding	options,<br>warrants	and	rights<br>(b) | Number	of	securities<br>remaining	available	for<br>future	issuance	under<br>equity	compensation	plans<br>(excluding	securities<br>reflected	in	column	(a))<br>(c) |
| :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders | 766,801 | $40.85 | 8,945,694 |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tsecurity\tholders | — | — | — |
| Total | 766,801 | $40.85 | 8,945,694 |

The	information	presented	in	the	table	above	includes	shares	of	common	stock	available	for	issuance	other	than	upon	the	exercise	of	an	option,	warrant	or	right under	the	Employee	Stock	Purchase	Plan	and	the	2011	Incentive	Plan.	In	addition,	it	includes	977,296	shares	authorized	under	the	Amended	and	Restated	2005 Incentive	Plan	and	584,004	shares	authorized	under	the	2000

Long-Term	Incentive	Plan.	As	previously	disclosed,	we	do	not	intend	to	issue	shares	under	either	the	Amended	and	Restated	2005	Incentive	Plan	or	the	2000	Long- Term	Incentive	Plan.

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

We incorporate	by	reference in this	Item	13 the information	regarding	certain	relationships	and	related transactions	between	us	and	our	affiliates	and the independence	of	our	directors	contained	under	the	headings	"Certain	Relationships	and	Related	Transactions"	and	"Board	Independence"	from	our	proxy	statement	to be	delivered	in	connection	with	our	2014	Annual	Meeting	of	Shareholders.

# 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	"Ratification	of	the Reappointment	of	Auditors"	from	our	proxy	statement	to	be	delivered	in	connection	with	our	2014	Annual	Meeting	of	Shareholders.

# PART	IV

# ITEM	15-	EXHIBITS,	FINANCIAL	STATEMENT	SCHEDULES:

(a)			The	following	documents	are	filed	as	part	of	this	Annual	Report

# (1)	Consolidated	Financial	Statements

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

| Our	consolidated	financial	statements	listed	below	are	set	forth	in	"Item	8-Financial	Statements	and	Supplementary	Data"	of	this	report: |  |
| :--- | :--- |
|  | Page\tNumber |
| Reports\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 45 |
| Consolidated\tStatements\tof\tIncome\tfor\tthe\tyears\tended\tMay\t31,\t2014,\t2013\tand\t2012 | 47 |
| Consolidated\tStatements\tof\tComprehensive\tIncome\tfor\tthe\tyears\tended\tMay\t31,\t2014,\t2013\tand\t2012 | 48 |
| Consolidated\tBalance\tSheets\tas\tof\tMay\t31,\t2014\tand\t2013 | 49 |
| Consolidated\tStatements\tof\tCash\tFlows\tfor\tthe\tyears\tended\tMay\t31,\t2014,\t2013\tand\t2012 | 50 |
| Consolidated\tStatements\tof\tChanges\tin\tEquity\tfor\tthe\tyears\tended\tMay\t31,\t2014,\t2013,\tand\t2012 | 51 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 54 |

# (2)	Financial	Statement	Schedules

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

# (3)	Exhibits

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

10.23+ 2011	Incentive	Plan,	incorporated	by	reference	to	Exhibit	99.1	to	the	Company's	Current	Report	on	Form	8-K	filed	September	29,	2011.

10.25*+ Form	of	Performance	Unit	Award	(Performance	Shares)	(2013	fiscal	year)	pursuant	to	the	2011	Incentive	Plan.

10.27*+ Form	of	Performance	Unit	Award	(TSRs)	(2013	fiscal	year)	pursuant	to	the	2011	Incentive	Plan.

10.29*+ Form	of	Stock-Settled	Restricted	Stock	Unit	Award	pursuant	to	the	2011	Incentive	Plan.

10.30*+ Form	of	Stock-Settled	Restricted	Stock	Unit	Award	(Hong	Kong	employees)	pursuant	to	the	2011	Incentive	Plan.

10.31*+ Form	of	Stock-Settled	Restricted	Stock	Unit	Award	(Canada	employees)	pursuant	to	the	2011	Incentive	Plan.

10.32+ Amended	and	Restated	2014	Non-Employee	Director	Compensation	Plan,	dated	April	1,	2014	(sub-plan	to	the	Global	Payments	Inc.	2011	Incentive Plan,	dated	September	27,	2011),	incorporated	by	reference	to	Exhibit	10.1	to	the	to	the	Company's	Current	Report	on	Form	8-K	filed	May	28,	2014.

101.1* The	following	financial	information	from	the	Annual	Report	on	Form	10-k	for	the	year	ended	May	31,	2014,	formatted	in	XBRL	(eXtensible Business	Reporting	Language)	and	filed	electronically	herewith:	(i)	the	Consolidated	Statements	of	Income;	(ii)	the	Consolidated	Statements	of Comprehensive	Income;	(iii)	the	Consolidated	Balance	Sheets;	(iv)	the	Consolidated	Statements	of	Cash	Flows;	(v)	the	Consolidated	Statements	of Changes	in	Equity;	and	(vi)	the	Notes	to	Consolidated	Financial	Statements.

# *				Filed	with	this	report.

+				Represents	a	management	contract	or	compensatory	plan	or	arrangement.

# (b)	Exhibits

# (c)				Financial	Statement	Schedules

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	Global	Payments	Inc.	has	duly	caused	this	report	to	be	signed	on	its behalf	by	the	undersigned,	thereunto	duly	authorized,	on	July	29,	2014.

/s/	Jeffrey	S.	Sloan

# Jeffrey	S.	Sloan

Chief	Executive	Officer (Principal	Executive	Officer)

/s/	David	E.	Mangum

# David	E.	Mangum

President	and	Chief	Operating	Officer (Principal	Financial	Officer)

# /s/	Daniel	C.	O'Keefe

# Daniel	C.	O'Keefe

# Senior	Vice	President	and	Chief	Accounting	Officer

# (Principal	Accounting	Officer)

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


what is the total value of securities issued and approved by security holders , ( in millions ) ?
  shares_issued = 766801
 price = 40.85
 value = shares_issued * price
 answer = value / 1000000